Information passed to the Otago Daily Times from sources within the council suggested private companies may be used for running both the council's water and wastewater, and representatives from two international companies had already visited Dunedin.
Asked about the issue, council city environment general manager Tony Avery said the council was not negotiating with companies for the work.
But he said staff were considering the future of water and wastewater.
They were doing so, because during annual-plan meetings in January, the council voted for a report on "the service delivery implications and an evaluation of the advantages and disadvantages of options for delivering water and waste services to the community".
Staff had discussed those issues last week, and a meeting would be held on Monday.
Infrastructure services committee chairman Cr Andrew Noone confirmed the three likely options for the future of water and wastewater were council staff continuing to undertake the role, a council-controlled organisation being set up to do the work, or an outside company doing it.
The council, from time to time, looked at ways to make delivery of services more efficient, and get better value for ratepayers, he said.
The ideas had been discussed in the past, but Monday's meeting was the first formal discussion.
"The reality is, there is legislation in place to stop local authorities from selling their water and wastewater," he said.
Other councils were considering the idea of using council-controlled companies for the work.
His personal view was that water and wastewater were core services the council needed to control.
