Councils claim they will have to increase rates as TasWater pursues a $1.5 billion capital expenditure program which includes removing all Tasmanian towns from permanent boil water alerts in two years.
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The plan will see the organisation increase borrowing but axe spending in other areas
The TasWater board, following a meeting on Tuesday, resolved undertake the 10-year program, funded by $500 million in increased loans and $25 million a year in savings.
TasWater chairman Miles Hampton said this would include money saved from freezing annual distributions to councils at $20 million and halving dividend payments to less than $10 million for seven years from July 2018.
“The effective cost to councils over the period will exceed $150 million,” he said.
The move has angered councils who claim to have been blindsided by the decision.
Local Government Association of Tasmania president Doug Chipman said councils were "shocked at the unilateral decision by TasWater to slash annual distributions”.
He said the loss of money would meant councils would need to raise rates or cut services.
The capital expenditure program will allow TasWater to remove 24 towns from boil water and public health alerts.
Mr Hampton said TasWater expected to halve the number of towns on alerts by June 30 next year and the remaining towns the following year.
He said it made economic sense to complete the project over a short period rather than dragging out the process through smaller projects.
The plan will also dedicate $300 million towards upgrading or replacing seven wastewater treatment plants around the Tamar River.
Mr Hampton said the organisation would increase its debt from $400 to $900 million for the works program.
He said TasWater was forced to take the decision after it was unable to secure state or federal government funding assistance this year.
“In the absence of that funding commitment, TasWater has determined that it can no longer delay tackling the critical water quality issues,” Mr Hampton said.
Mr Hampton said there was a $80 million funding shortfall in the program that would be addressed by operational savings.
“I don’t expect there will be job losses in the pipeline simply because of the decision we have made,” Mr Hampton said.
“We have a workforce that is in place to help us tackle a massive capital program. When we come to the end of that program, you wouldn’t expect us to maintain the same workforce.”
