Agenda of Wellington Water Committee

Wellington Water Committee

2 March 2017

Order Paper for the meeting to be held in the

Upper Hutt City Council, 838-842 Fergusson Drive, Upper Hutt,

on:

Tuesday 7 March 2017 commencing at 1.00pm

Membership

Deputy Mayor D Bassett (Chair)	Hutt City Council
Mayor W Guppy	Upper Hutt City Council
Mayor M Tana	Porirua City Council
Cr C I Pannett	Wellington City Council
Cr J Brash	Greater Wellington Regional Council
Cr D Ogden	Greater Wellington Regional Council (Alternate)
Mayor R Wallace	Hutt City Council (Alternate)
Cr R Leggett	Porirua City Council (Alternate)
Cr G McArthur	Upper Hutt City Council (Alternate)
TBC	Wellington City Council (Alternate)

For the dates and times of Council Meetings please visit www.huttcity.govt.nz

Wellington Water Committee

Purpose

The Wellington Water Committee ("the Committee") is established to:

· Provide governance oversight of the network infrastructure for the delivery of bulk water, water reticulation, wastewater and stormwater services in the areas of Lower Hutt City, Porirua City, Upper Hutt City and Wellington City ("the four cities");

· Provide governance oversight of Wellington Water Limited; and

· Provide a forum for the representatives of Wellington Water Limited's shareholders (being Wellington Regional Council and the local authorities for the four cities) ("the Shareholders") to meet, discuss and co-ordinate on relevant issues and, through their representatives, exercise their powers.

Status

The Committee is a joint committee of the Lower Hutt City Council, Porirua City Council, Upper Hutt City Council, Wellington City Council and Wellington Regional Council.

Specific responsibilities

The Committee's responsibilities are:

Governance oversight responsibilities

Governance oversight of Wellington Water Limited and of the network infrastructure for the delivery of bulk water, water reticulation, wastewater and stormwater services in the areas of the four cities, including by:

· Receiving and considering the half-yearly and annual reports of Wellington Water Limited;

· Receiving and considering such other information from Wellington Water Limited as the Committee may request on behalf of the Shareholders and/or receive from time to time;

· Undertaking performance and other monitoring of Wellington Water Limited;

· Considering and providing recommendations to the Shareholders on proposals from Wellington Water Limited;

· Providing co-ordinated feedback, and recommendations as needed, on any matters requested by Wellington Water Limited or any Shareholder;

· Providing recommendations to the Shareholders regarding the relevant network infrastructure owned by each Shareholder;

· Providing recommendations to the Shareholders regarding water conservation;

· Agreeing the annual Letter of Expectation to Wellington Water Limited;

· Receiving, considering and providing agreed feedback and recommendations to Wellington Water Limited on its draft statement of intent;

· Receiving, considering and providing recommendations to the Shareholders regarding Wellington Water Limited's final statement of intent.

· Agreeing when Shareholder meetings, or resolutions in lieu of Shareholder meetings, are required, without prejudice to Shareholder and board rights to call meetings under Wellington Water Limited's constitution;

· Seeking and interviewing candidates for Wellington Water Limited's board as needed and approving director appointments and/or removals;

· Approving the remuneration of directors of Wellington Water Limited;

· Monitoring the performance of the board of Wellington Water Limited; and

· Providing recommendations to the Shareholders regarding changes to these terms of reference, the Shareholders' Agreement and the constitution of Wellington Water Limited.

Shareholders' responsibilities

To the extent that each Shareholder delegates its relevant powers to the Committee member it appoints, the Committee will provide a forum for the Shareholders to meet and exercise their powers in relation to Wellington Water Limited.

Membership

The membership of the Committee will total five persons, as follows:

· One member appointed by Hutt City Council;

· One member appointed by Porirua City Council;

· One member appointed by Upper Hutt City Council;

· One member appointed by Wellington City Council; and

· One member appointed by Wellington Regional Council.

[Each appointee must be an elected member of the appointing Shareholder.]

Chairperson

The Chairperson and Deputy Chairperson will be elected by the Committee once all Committee members have been appointed.

Quorum

For a meeting of the Committee to have a quorum, three members, or their appointed alternates, must be present.

Where the Committee is providing a forum for the Shareholders to meet and exercise their powers in relation to Wellington Water Limited, the requirements of Wellington Water Limited's constitution will prevail.

[Note: Clause 11.3 of the company’s constitution provides that Directors shall be appointed and removed by the unanimous resolution of the shareholders. For this matter the quorum is therefore all five members or their alternates.]

Alternates

Each member appointed to the Committee must have an alternate appointed by the relevant Shareholder. The alternate may attend and vote at meetings of the Committee, but only in the event that the primary member is unable to do so.

Decision-making

The Committee will strive to make all decisions by consensus.

In the event that a consensus on a particular matter before the Committee is not able to be reached, each member of the Committee has a deliberative vote. In the situation where there is an equality of votes cast on a matter, the Chairperson does not have a casting vote and therefore the matter subject to the vote is defeated and the status quo is preserved.

Other than for those matters for which the Committee has effective decision-making capacity through these terms of reference, each Shareholder retains its full powers to make its own decisions on matters referred to it by the Committee.

Standing Orders

The Wellington Regional Council's Standing Orders apply, subject to the provisions for meeting quorum and decision making as set out in these terms of reference taking precedence.

Remuneration

Each Shareholder will be responsible for remunerating its representative on the Committee for any costs associated with that person's membership of the Committee.

Administration

Reports to be considered by the Committee may be submitted by any of the Shareholders or Wellington Water Limited.

Duration of the Committee

In accordance with clause 30(7) of Schedule 7 to the Local Government Act 2002, the Committee is not deemed to be discharged following each triennial election.

Appendix

Common delegations

Governance oversight responsibilities

· Each Shareholder will delegate to the Committee the responsibilities and powers necessary to participate in and carry out the Committee's governance oversight responsibilities.

Shareholders' responsibilities

· Each Shareholder will delegate to its appointed Committee member and, in accordance with these terms of reference, that person's alternate, all responsibilities and powers in relation to the agreement of:

o when Shareholder meetings, or resolutions in lieu of Shareholder meetings, are required (without prejudice to Shareholder and Board rights to call meetings under Wellington Water Limited's constitution); and

o the appointment, removal and remuneration of Wellington Water Limited's directors.

HUTT CITY COUNCIL

Wellington Water Committee

Meeting to be held in the Upper Hutt City Council, 838-842 Fergusson Drive, Upper Hutt on

Tuesday 7 March 2017 commencing at 1.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

3. Presentation

Where Wellington Water is up to with Resilience (17/388)

Verbal update provided by Mark Kinvig, Group Manager Network Strategy and Planning, Wellington Water Limited

4. CONFLICT OF INTEREST DECLARATIONS

5. Minutes

Meeting minutes Wellington Water Committee, 1 December 2016 5

6. Wellington Water Limited Directors' Fees (17/205)

Memorandum dated 10 February 2017 by the Wellington Water Limited 11

7. Wellington Water Company Update Report (17/313)

Report No. WWC2017/1/35 by the Wellington Water Limited 15

8. Draft Statement of Intent 2017-20 for Consultation (17/318)

Report No. WWC2017/1/36 by the Divisional Manager, Secretariat Services, Hutt City Council 21

9. Half Year Report for Wellington Water (17/321)

Report No. WWC2017/1/37 by the Wellington Water Limited 59

10. Wellington Water Annual General Meeting (17/324)

Report No. WWC2017/1/38 by the Wellington Water Limited 110

11. Resilience Update and Endorsement of the Wastewater Strategic Case (17/335)

Report No. WWC2017/1/39 by the Wellington Water Limited 113

12. Information Item

2017 Wellington Water Forum (17/356)

Memorandum dated 27 February 2017 by the Divisional Manager, Secretariat Services, Hutt City Council 135

13. QUESTIONS

With reference to section 32 of Standing Orders, before putting a question a member shall endeavour to obtain the information. Questions shall be concise and in writing and handed to the Chair prior to the commencement of the meeting.

14. EXCLUSION OF THE PUBLIC

15. Board Membership (17/258)

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.


Board Membership	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

This resolution is made in reliance on section 48(1) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as specified in Column (B) above.”

Kathryn Stannard

DIVISIONAL MANAGER SECRETARIAT SERVICES

5 1 December 2016

HUTT CITY COUNCIL

Wellington Water Committee

Minutes of a meeting held in the Hutt City Council Chambers, 2nd Floor,
30 Laings Road, Lower Hutt on

Thursday 1 December 2016 commencing at 1.00pm

PRESENT: Deputy Mayor D Bassett (Chair) (HCC)

Mayor W Guppy (Deputy Chair) (UHCC)

Mayor M Tana (PCC)

Cr I Pannett (WCC)

Cr J Brash (GWRC)

IN ATTENDANCE: Cr R Leggett (Alternate PCC)

Cr G McArthur (Alternate UHCC)

Mr T Stallinger, Chief Executive, HCC

Mr C Crampton, Chief Executive, Wellington Water Ltd

Mr J Strahl, Chair, Wellington Water Ltd

Ms J Bryan, Principal Advisor, Wellington Water Ltd

Mr A Wilson, Chief Asset Officer, WCC

Ms W Walker, Chief Executive Officer, PCC

Ms K Stannard, Divisional Manager, Secretariat Services, HCC

Ms H Clegg, Minute Taker, HCC

PUBLIC BUSINESS

The Chief Executive, Hutt City Council, took the Chair at 1pm for the start of the meeting to facilitate the election of a new Chair.

1. APOLOGIES

There were no apologies.

2. PUBLIC COMMENT

There was no public comment.

3. CONFLICT OF INTEREST DECLARATIONS

There were no conflict of interest declarations.

Procedure to elect the Chair and Deputy
Chair (16/1288)

Report No. WWC2016/5/252 by the Divisional Manager, Secretariat Services

The Divisional Manager, Secretariat Services elaborated on the report.

Resolved: Minute No. WWC 16501

“That the Committee:

(i) receives the report;

(ii) notes the content of the report;

(iii) chooses voting system B (election by the greatest number of votes) for the election of the Committee Chair and Deputy Chair; and

(iv) agrees that, in the event of a tie under voting system B, the candidate to be elected shall be resolved by lot as described in section 14 of this report.”

5. ELECTION OF THE CHAIR AND DEPUTY CHAIR

Mr Stallinger then called for nominations for the position of Chair of the Wellington Water Committee.

Deputy Mayor Bassett was nominated by Mayor Guppy and seconded by
Cr Brash.

There were no further nominations, Deputy Mayor Bassett was declared the elected Chair of Wellington Water Committee.

Deputy Mayor Bassett then took the Chair and thanked the Committee for its support.

Deputy Mayor Bassett then called for nominations for the position of Deputy Chair of the Wellington Water Committee.

Mayor Guppy was nominated by Deputy Mayor Bassett and seconded by
Cr Pannett.

There were no further nominations, Mayor Guppy was declared the elected Deputy Chair of Wellington Water Committee.

Letter of Expectation 2017/18 (16/1296)

Report No. WWC2016/5/253 by the Divisional Manager, Secretariat Services

The Chief Executive, HCC elaborated on the history and process for the Letter of Expectation.

In response to a question from a member, the Chief Executive, Wellington Water Ltd (the company) explained that he was visiting each Council to obtain specific areas of direction for each of the key work areas (growth, resilience, water quality and reduction in flooding). He further explained that the intended aim was to rationalise all consents through the region. He agreed that, given recent earthquake and flooding events, the Letter of Expectation should reflect the preparedness of the cities in the event of significant earthquakes that could impact on the Wellington region. He also agreed that the company would look at a one budget concept for operational funding for each Council. This would consist of each Council paying to the company the full operating budget for three waters in 12 monthly instalments.

In response to a further question from a member, the Chair of the company expressed appreciation of the positive directions being asked of it this year along with explicit performance and outcomes requirements, adding that in the past the focus had been on compliance. He was satisfied with the company’s performance to date.

Resolved: Minute No. WWC 16506

“That the Committee:

(i) receives the report; and

(ii) agrees to the 2017-18 Letter of Expectation to Wellington Water Limited with minor amendments attached as Appendix 1 to the report and authorises the Committee Chair to sign the letter.”

Wellington Water Company Update (16/1308)

Report No. WWC2016/5/254 by the WW

The Chief Executive of the company elaborated on the report. He outlined the minor network damage resulting from the recent earthquake. He highlighted that the empty Tawa Reservoir had been damaged.

In relation to the resilience of the network, the Chief Executive of the company explained that central government was rapidly moving to update Regional Response Plans. This had flow on effects for all those agencies responsible for parts of the plan. He also explained another focus for the company was improving personal resilience at home, especially in terms of water storage and waste water management, and risk reduction in the networks. He added that this latest event had served to highlight how utility providers were placed after an event.

In response to a question from a member, the Chief Executive of the company explained that there were a number of agencies who meet after an event and that currently Wellington Lifelines Group was meeting with all utility providers. He added that it was vital, after an event, that the region responded regionally and not individually.

Mayor Guppy highlighted that the Mayoral Forum supported regional efforts and that measures to ensure all Councils worked together were taken very seriously.

In response to a further question from a member, the Chief Executive of the company highlighted that the issue of personal resilience, with regard to waste management, would be reported to the Committee in 2017.

Members agreed that the issue would need to be carefully managed as it may come at a significant cost to individuals.

In response to question from a member, the Chief Asset Officer WCC advised that the Tawa reservoir was empty when the earthquake struck and this was a time when a reservoir was at its weakest. He highlighted that investigations were continuing into the stability of the roof and whether this needed replacing. He added the Tawa community was receiving water via other storage areas in the network.

The Chair thanked the company for its work to date. The Chair of the company stated that he was pleased with the way the company was performing and was conscious of the high level of performance demanded by the Committee.

Resolved: Minute No. WWC 16503

“That the Wellington Water Committee receives and notes the report.”

Verbal Update from Deputy Mayor Bassett on discussions with Mayors from Kapiti Coast and the three Wairarapa Councils

The Chair explained that he had met with all Councils represented on the Committee who all indicated they were happy with the direction of the Committee. He then visited the other Councils not represented on the Committee and received positive responses from all of them. He added that South Wairarapa District Council had been receiving advice from WWL with regard to asset management.

The Chair advised that he had recently briefed the Minister about the positive progress made by the Committee. He noted that the Minister was satisfied with the region’s progress and had requested to be updated on a six-monthly basis.

In response to a question from a member, the Chief Executive of the company advised that there would be an incremental increase in workloads if each new Council became shareholders which may have an impact on costs. He added that there was no plan to provide an operational input for these new Councils.

The Chair confirmed that the Local Government Commission had not introduced any requirements which may impact on local authority Long Term Plans and that it was encouraged by the Wellington Water Committee model.

Draft Agenda for the 2017 Regional Water Forum (16/1314)

Report No. WWC2016/5/255 by the Divisional Manager, Secretariat Services

The Chair elaborated on the report.

Resolved: Minute No. WWC 16504

“That the Committee:

(i) receives the memorandum; and

(ii) agrees to the agenda items outlined in section 5 of the memorandum for the Regional Water Forum to be held on Thursday 9 March 2017 commencing at 9.30am.”

10.

Meeting Schedule 2017 (16/1289)

Memorandum dated 18 November 2016 by the Divisional Manager, Secretariat Services

The Divisional Manager, Secretariat Services elaborated on the report.

Resolved: Minute No. WWC 16505

“That the Committee agrees to the meeting schedule for 2017 as follows:-

Tuesday, 7 March – 1 pm (Upper Hutt City Council)

Wednesday, 31 May - 1 pm (Porirua City Council)

Thursday, 7 September - 1 pm (Wellington City Council)

Wednesday, 22 November – 1 pm (Greater Wellington Regional Council.”

11. QUESTIONS

There were no questions.

There being no further business the Chair declared the meeting closed at 2pm.

Deputy Mayor D Bassett

CHAIR

CONFIRMED as a true and correct record

Dated this 7^th day of March 2017

MEMORANDUM 11 07 March 2017

Our Reference 17/205

TO: Chair and Members

Wellington Water Committee

FROM: External Author (Wellington Water Ltd)

DATE: 10 February 2017

SUBJECT: Wellington Water Limited Directors' Fees

Recommendation

That the Committee:-

(i) notes the advice from Hutt City Council regarding the current directors’ fees of the Board of Wellington Water Ltd attached as Appendix 1 to the memorandum;

(ii) suggests an increase be authorised of:-

$2,500pa for ordinary directors, taking ordinary directors to $22,500pa;

$2,500pa for the Chair of the Audit Committee taking that director to $25,000pa; and

$2,500pa for the Chair, taking that director to $42,500pa; and

(iii) notes that this would represent a total annual increase of $10,000pa. The increase would be effective as from (1 March 2017).

Background

1. The current director fees are $20,000 pa for directors and $40,000 pa for the Chair. These were last set in January 2014.

2. Since that time the size and scope of the company’s activities has increased significantly. Greater Wellington Regional Council has joined and additional resources form both Wellington City and Porirua City Councils have been assumed.

3. Additional responsibilities and time have occurred with the introduction of the new Health and Safety legislation and a separate Audit Committee of the Wellinton Water Limited Board has been established on which all directors sit. Mr David Benham is the Chair.

4. The approved budget for directors’ fees has been underspend for the last two years as the size of the Board has reduced from six to five directors.

5. Given the time since the last review and the increased scope, a modest increase is suggested.

Approvals Required

6. The Companies Act enables the Board of a company to authorise payment of directors’ fees. The constitution of Wellington Water Limited requires the shareholders prior approval before the Board can do so. The five shareholding councils have delegated to their representatives on the Wellington Water Committee this power.

Appendices

No.	Title	Page
1 ⇩	Current Directors' Fees of the Board	13

Author: External Author (Wellington Water Ltd)

Wellington Water Limited

Attachment 1

Current Directors' Fees of the Board

Purpose of Attachment

1. To advise the Wellington Water Committee of the current directors’ fees of the Board of Wellington Water Ltd (the Board).

Remuneration Review

2. Process for Directors Pay Review

Wellington Water Ltd’s constitution provides that the Board may only authorise payment of directors’ fees only with the shareholders’ approval.

Under the Wellington Water Committee’s terms of reference, the Committee has the responsibility of agreeing the remuneration of directors of the company. Approval requires a simple majority.

Movement in directors’ fees

3. Under the proposal from the Board, the percentage increase in directors fees are as follows:

Role	Current fees	Proposed fees	Percentage increase
Ordinary directors	$20,000	$22,500	12.5%
Chair of Audit	$22,500	$25,000	11.11%
Chair of the Board	$40,000	$42,500	6.25%

4. The movement in directors’ median fees over the last three years are as follows (based on the Institute of Directors -Directors’ Fees Report 2016):

Role	Directors’ fees (median)
Role	2014	2015	2016	Movement %
Non-executive directors	$40,000	$41,610	$42,994	7.49%
Non-executive Chair	$51,000	$52,500	$54,000	5.88%

5. Note that directors of CCOs in the Wellington region have usually been remunerated at the lower quartile.

Non-executive Chairperson annual fees – breakdown (based on the Institute of Directors -Directors’ Fees Report 2016)

	Lower quartile	Median	Upper quartile	Average
General	36,000	$54,000	$86,400	$77,317
CCOs	$30,000	$50,000	$79,470	$55,325
Electricity, gas, water and waste	$53,500	$84,000	$145,000	$104,547

6. Non-executive directors annual fees – breakdown (based on the Institute of Directors -Directors’ Fees Report 2016)

	Lower quartile	Median	Upper quartile	average
CCOs	$25,000	$36,000	$48,125	$35,879
Electricity, gas, water and waste	38,500	$57,000	$90,099	$62,767

Joycelyn Raffills

General Manager Governance and Regulatory

Hutt City Council

21 07 March 2017

Wellington Water Committee

22 February 2017

File: (17/318)

Report no: WWC2017/1/36

Draft Statement of Intent 2017-20 for Consultation

1. To invite Council feedback on the draft Statement of Intent (SOI) 2017-20.

Recommendation

It is recommended that the Committee receives, considers and provides feedback on the draft Wellington Water Limited’s Statement of Intent by 4 April 2017.

Comment

2. Under the Local Government Act 2002, the Board of Wellington Water Limited must deliver to its shareholders a draft SOI before 1 March 2017.

3. The Board of Wellington Water Limited has considered the draft SOI and endorsed its release to the Wellington Water Committee and Councils for consultation. It contains direction provided by the Wellington Water Committee’s Letter of Expectations.

4. The Committee and shareholding Councils can provide feedback through Hutt City Council tony.stallinger@huttcity.govt.nz by 4 April 2017.

Appendices