Central Otago ratepayers could be facing a $3 million bill to bring their water up to the standards required under the new Health (Drinking Water) Amendment Act.
The amendment, which came into effect on July 1, makes it compulsory for public and private water supplies to comply with the new standards.
Central Otago District Council utility services manager Peter Greenwood said in a report prepared for the council the overall cost could be as much as $7 million, although the district's water supplies could qualify for part of $13.7 million in subsidies available nationwide over the next 10 years.
The "deprivation index", which was based on each town's ability to pay, meant subsidies would be available for the towns, ranging from 95% for Roxburgh down to 20% for Alexandra.
The council has been tackling the issue of water quality for its public drinking water supplies for the past two years.
Central Otago's water supplies are all E grade, as they are deemed to come from unsecured sources.
Alexandra's water is expected to cost the most to upgrade at about $2 million.
Ultraviolet light technology would be required to ensure it was up to standard.
Cromwell's water could cost as much as $880,000 to fix, with Roxburgh, Ranfurly and Clyde making up the remainder of the $3.2 million.
However, the level of funding would not address the problem of lime in the water, something of particular concern in Alexandra, where the added cost of regularly replacing elements in electrical equipment has been a burden on ratepayers.
The latest resident opinion survey indicated considerable dissatisfaction over the problem and the council has received complaints.
Mr Greenwood said it would cost about $6 million to address the issue.
A major difficulty in Central Otago was the huge amount of water needing to be treated as much town supply was used for irrigation.
Council contracts and assets manager Murray Washington warned last year the practice would considerably inflate the cost of the upgrades.
