Australia's United Water is being sued for allegedly charging its overhead costs in Papakura and elsewhere in New Zealand to South Australian water users.
The South Australian Government claims the private water company issued false and misleading invoices worth "tens of millions of dollars" to, among other things, cover its
operations in New Zealand and Ballarat, Victoria.
SA Water has begun proceedings in the Supreme Court in what Acting Premier Kevin Foley has called "unprecedented action" by a State Government in the interests of taxpayers.
United Water has provided water and wastewater services to about 15,000 Papakura customers since 1997 under a 30-year franchise agreement with the Papakura District Council. It has other contracts in Franklin, Waitomo, Thames-Coromandel, Ruapehu, Wellington and Queenstown.
The New Zealand chief executive for United Water, Brian Saunders, said there were a lot of assertions and rumours going around.
He said the company's New Zealand overheads were paid for locally.
"The contract we have got in Papakura is such that it is separated from our other operations. Our pricing from our franchise with Papakura District Council limits us to passing through the (wholesale) Watercare cost to ... be lower than the Auckland average. That takes away any opportunity to profiteer," Mr Saunders said.
Water Pressure Group spokeswoman Penny Bright said the case illustrated why water services should not be privatised.
She called for an investigation by an appropriate authority into United Water's New Zealand operations.
The Papakura franchise excludes the district from being part of a single, publicly-owned water and wastewater company planned for the Auckland Super City.
The court action in South Australia arose from a pricing review done in 2001 but only became apparent during the 2006 pricing negotiations.
Mr Foley was reported in the Australian media as saying the State Government tried, without success, to resolve the issue through negotiation.
SA Water has alleged that in 2001 United Water began charging the costs of its research, business and industry development, including "all of its corporate overhead costs, including those related to United Water's operations in New Zealand and Ballarat" to local water users. United Water, based in Adelaide, is a subsidiary of the French company Veolia.
