Auckland could emerge as a new user of millions of dollars of Whangārei water formerly used for Marsden Pt Oil Refinery.
Tukoroirangi Morgan, former Waikato River Authority co-chairman, said that water placed Northland in a strong position with any Three Waters restructuring.
The proposal would combine Whangārei, Far North and Kaipara District councils with Auckland Council into a giant top-of- New Zealand water services entity for Three Waters' drinking water, wastewater and stormwater provision.
Morgan said Auckland had a lot of interest in sourcing water from beyond its city.
The Marsden Pt Oil Refinery uses close to 5 million litres of water a day for the steam used throughout the refining process. This will stop in just over three weeks when the last refining is done at the plant. Whangārei District Council (WDC) will lose $25 million in water rates income over next decade as a result.
Morgan said having the water that would have been used by the refinery available put Northland's three councils in a strong position in the proposed new water services entity.
Auckland has been taking water from the Waikato River since the 1980s, and has now been given the green light for Auckland's Watercare to double its daily water take from the river to 300 million litres.
Meanwhile, the Government is proposing four giant inter-regional water services entities and top-of-New Zealand entity A neighbours entity B, the home of the Waikato River.
But Morgan said Auckland would not be moving from Entity A to Entity B.
"There has to be some collaboration across boundaries to service and sustain ourselves going forward," Morgan said.
He said the inter-regional nature of water supply sources such as the Waikato River for Auckland meant the proposed four water services entities made sense.
Morgan said decisions on who would pay for the infrastructure to get the water to Auckland would be made by the restructure's proposed regional representative groups.
Contention over the makeup of these groups was a major driver in the government in December setting up a formal working group. It was briefed with looking at governance, representation and accountability, among major restructure sticking points. Morgan is a working group member.
He said the regional representative group for entity A would have 14 members: a representative from each of Northland's three district councils, three Northland iwi representatives along with four members each from Tamaki Makarau iwi and Auckland council.
He said Northland having three iwi members representing five iwi was appropriate. There would be a degree of collective representation. Waikato's Entity B had more than 40 iwi with representatives to be chosen from among these.
Co-governance would be a key feature of the new Three Waters model, which put water quality and sustainability Te Mana o te Wai at its heart.
The working group's recommendations to address the widespread national representation, governance and accountability concerns have been given to Local Government Minister Nanaia Mahuta.
Working group chairman Doug Martin urged the Government to take its recommendations onboard.
Among the group's recommendations is public shares for councils to help address concerns over Three Waters infrastructure ownership. It is also proposing a new regional sub-group layer to sit under the regional representative group. Its purpose would be to strengthen local input into the more-removed representation group's decision making.
A water ombudsman has also been proposed to help address individual consumers' concerns about the new water services entities.