Agenda of Wellington Water Committee

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.

Wellington Water Committee

Meeting to be held in the Hutt City Council Chambers, Level 2, 30 Laings Road,
Lower Hutt on

Thursday 29 November 2018 commencing at 1.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

Mayor Wayne Guppy.

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. CONFLICT OF INTEREST DECLARATIONS

4. Minutes

Meeting minutes Wellington Water Committee, 10 September 2018 9

5. Three Waters Review Update (18/1835)

Report No. WWC2018/5/338 by Wellington Water Ltd 14

6. Update on Discussions with Iwi (18/1877)

Verbal update from the Chief Executive, Wellington Water Ltd

7. Update on Discussions with Other Councils (18/1834)

Verbal update from the Chair

8. Letter of Expectation 2019/2020 (18/1813)

Memorandum dated 15 November 2018 by the Chief Executive, Hutt City Council 43

9. Shareholder Resolution in lieu of Annual General Meeting (18/1833)

Report No. WWC2018/5/337 by Wellington Water Ltd 48

10. Shareholders Agreement and Constitution (18/1875)

Report No. WWC2018/5/341 by the Chief Executive, Hutt City Council 51

11. Company Update Report (18/1812)

Report No. WWC2018/5/334 by Wellington Water Ltd 112

12. Planning for the 2021/31 Long Term Plans (18/1814)

Report No. WWC2018/5/335 by Wellington Water Ltd 119

13. Planning for Growth (18/1815)

Report No. WWC2018/5/336 by Wellington Water Ltd 122

14. Alliance Implication Plan and Water Quality (18/1876)

Verbal Update from the Chief Executive, Wellington Water Ltd

15. Meeting Schedule 2019 (18/1698)

Memorandum dated 13 November 2018 by the Divisional Manager, Democratic Services, Hutt City Council 125

Kathryn Stannard
Divisional Manager Democratic Services

13 10 September 2018

Wellington Water Committee

Minutes of a meeting held in the Porirua City Council Chambers, 16 Cobham Court, Porirua on

Monday 10 September 2018 commencing at 1.00pm

PRESENT:	Deputy Mayor D Bassett, (Chair) Hutt City Council
	Mayor W Guppy, (Deputy Chair) Upper Hutt City Council
	Mayor M Tana, Porirua City Council
	Cr I Pannett, Wellington City Council
	Cr J Brash, Greater Wellington Regional Council (until 2.50pm)

APOLOGIES: There were no apologies.

IN ATTENDANCE: Cr R Leggett, Alternate, Porirua City Council

Cr P Gilberd, Alternate, Wellington City Council

Mayor L Patterson, Masterton District Council

Mr D Hopman, Infrastructure Manager, Masterton District Council

Mayor J Booth, Carterton District Council
Ms J Davies, Chief Executive, Carterton District Council

Mayor V Napier, South Wairarapa District Council

Mr B Patchett, General Manager City Growth and Partnerships, Porirua City Council

Mr T Stallinger, Chief Executive, Hutt City Council

Mr D Baxter, City Engineer, Wellington City Council

Mr C Crampton, Chief Executive, Wellington Water Ltd

Mr M Kinvig, Group Manager, Network Strategy and Planning, Wellington Water Ltd

Ms K Stannard, Divisional Manager Democratic Services, Hutt City Council

Ms H Clegg, Minute Taker

PUBLIC BUSINESS

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.

The meeting adjourned at 1.17pm and resumed at 2.12pm.

4.	THREE WATERS REVIEW
	Members discussed the proposed submission to be presented to the Minister of Local Government during the third week of September.
	Resolved: Minute No. WWC 18401 “That the Committee: (i) agrees to submit a proposal to government’s three waters review that supports: (a) a partnership between central government, local government and iwi; (b) national standards and a national regulator for the three waters; (c) a co-investment model to fund the step changes needed to meet national standards; (d) economic regulation, but only to the extent of ensuring transparency, consistent asset management standards and to oversee the co-investment; (e) asset ownership and related governance decisions remaining in local and regional councils; (f) highlighting successes under the Wellington Water Ltd model and assisting regional shared service delivery by willing councils such as funding the costs of transition (central government funding); (ii) agrees the submission will be revised and circulated by email for final comment this week; (iii) agrees the submission feedback will be provided to the Minister with the qualification that it is not Council approved but the views of the individual Councils will be presented later in the process; and (iv) endorses the submission subject to being satisfied with the final document.”

	Resolved: Minute No. WWC 18402 “That the Committee formally thanks the Wellington Water Ltd’s management team who worked on the submission along with Mr Stallinger, Chief Executive of Hutt City Council and the contribution of officers from the nine local authorities.”
	Resolved: Minute No. WWC 18403 “That the Committee formally thanks the Chair for his work on the three waters review to date.”

5. Minutes

Resolved: Minute No. WWC 18404

“That the minutes of the meeting of the Wellington Water Committee held on Tuesday, 29 May 2018, be confirmed as a true and correct record.”

LOCAL AUTHORITIES INTERESTED IN JOINING WELLINGTON WATER LTD

The Chair advised that he was in continual dialogue with all regional local authorities with regard to joining Wellington Water Ltd. He further advised that if there were any changes to the shareholder structure then details of the changes would be reported back to Wellington Water Committee for agreement.

Members agreed that such conversations should continue. However, members noted that no such conversations should be initiated outside of the region, without prior advice to members.

The Chair advised that information detailing the intentions of the Horowhenua and Manawatu District Councils to engage a consultant to advise them on their review of three waters would be sent to all members.

Mayor Napier advised that, although there was still a long way to go, her Council would potentially be interested in joining Wellington Water Ltd.

7.	Company Update Report (18/1402) Report No. WWC2018/4/219 by Wellington Water Ltd
	Members provided feedback on the Company Update report as follows: · The use of blue or black coloured boxes was not recommended as it was difficult to read. · Clarification was requested as to whether state housing was required to supply water tanks and if not then it was suggested they should be. · Clarification was requested on the level of resilience planning from the retirement villages in the region. · Confirmation was requested as to whether there were any drinking water bores north of the Paremata Bridge and the meaning of the word “quinquedential” used under point five of the Progress on Project Goals. In response to questions from members, the Chief Executive, Wellington Water Ltd (the company) advised there were 450 people employed by the organisation, including contractors. He confirmed dry weather overflows were a challenging issue and there were lessons learned from the Harbour Bores exercise. Information on the lessons learned would be reported to the Committee in due course. In response to questions from a member, the Chief Executive of the company advised the national requirement for the standard of rivers and streams was “Level C”. He noted that it was up to each community to decide whether they wanted that level or a higher level. He further advised he would provide a written response to a query regarding the level of education provided for house washing firms which use chlorination and other chemicals. In response to a question from a member concerning the fire hydrant repair programme, the Group Manager, Network Strategy and Planning of the company advised the work was ongoing. He noted that the capacity of each hydrant was being assessed at the same time. He estimated the programme would take two years to complete. With regard to the pipe across the river at Silverstream, he advised that the company was holding ongoing discussions with Greater Wellington Regional Council. Members noted that flood and seismic concerns were currently being investigated. The Chief Executive of the company acknowledged the survey questions did not include ownership of the company. He acknowledged a need to make it clear that Councils jointly owned the company.
	Resolved: Minute No. WWC 18405 “That the Committee receives the Company Update Report.”
8.	Sustainable Water Supply (18/1406) Report No. WWC2018/4/220 by Wellington Water Ltd (WWL)
	The Group Manager, Network Strategy and Planning, WWL (the company) elaborated on the report. Members noted that a 20% population growth in the region would produce further demand on water. Members further noted that achieving an overall daily reduction in water usage by all was required. Members observed that in areas where water meters had been installed, instant water usage savings had been made and leakages appeared to be the biggest area of water wastage. The Chair asked officers to investigate why the Wellington region appeared to be more wasteful with its water than other regions. He believed that a 100 year future plan was required, not a 30 year one. Members expressed concern about apparent conflicts between some aims contained in the Executive Summary. In response to a question from a member in regard to resilience in power, the Group Manager, Network Strategy and Planning of the company advised that a report would be reported to the Committee in due course. He added that treatment plants had back-up generators and fuel storage at each site which would ensure the treatment plants worked for a short time after a disaster. Cr Brash left the meeting at 2.50pm.
	Resolved: Minute No. WWC 18406 “That the Committee: (i) endorses the Strategic Case for Sustainable Water Supply attached as Appendix 1 and Appendix 2 to the report; and (ii) encourages development of a business case.”

There being no further business the Chair declared the meeting closed at 2.54pm.

Deputy Mayor D Bassett

CHAIR

CONFIRMED as a true and correct record

Dated this 29^th day of November 2018

16 29 November 2018

Wellington Water Committee

19 November 2018

File: (18/1835)

Report no: WWC2018/5/338

Three Waters Review Update

Purpose of Report

1. To update the Wellington Water Committee on progress by Central Government on its three waters review.

Recommendation

It is recommended that the Committee receives and notes the information.

Background

2. The Government has launched a three waters review because it believes maintaining the current water system is not sustainable and presents public health risks.

3. The Government undertook a first stage of consultation with interested parties up until October 2019. The Wellington region through this Committee submitted to Government its ideas for an improved national water system. This is contained within Appendix 1 to the report.

Government’s next stage announced

4. On 20 November 2019, the Minister for Local Government, Nanaia Mahuta and Health Minister, David Clark, announced the next stage in the three waters review.

5. The main elements of this announcement are:

· In the Minister’s mind there is a clear case for change - a step change to regulation of drinking water and targeted reform of environmental regulation of wastewater and stormwater services within the existing RMA framework

· The Government is developing a cross-departmental 18 month policy work programme which will result in Cabinet reviewing the first tranche of policy proposals in June 2019

· First up is system-wide reform of regulation of drinking water, targeted change to environmental regulation of wastewater, new measures for wastewater and stormwater, and a review of institutional arrangements (water regulator). Report back to Cabinet is due June 2019.

· The initial tranche of policy work will be completed before considering options for service delivery arrangements, economic regulation and proposals to improve oversight and stewardship across the three waters system. These other items are due for report back to Cabinet in late 2019.

· Drafting of legislation will commence following Cabinet’s initial set of decisions in June 2019.

What can reasonably be expected

6. Drinking water and environmental regulation:

· Drinking water and environmental regulation will set national standards for safe water and stormwater/ wastewater discharges

· A new regulator for drinking water

· Stormwater and wastewater discharges to be regulated by the regional council (and maybe overseen by a higher regulatory body).

7. Service delivery options proposed

· The Government has said there are three waters service delivery arrangements that will be the subject of further analysis and engagement

o Voluntary sector-led reform with regulation in place

o Three waters fund with voluntary service delivery improvements

o Aggregated, dedicated, publicly owned water/wastewater providers

· Cabinet has clarified that the above three options does not preclude investigation of other options.

8. Economic regulation

· To require more transparency on the performance of the three waters, there will be a requirement to provide costs and set out future risks

· Options are likely to be either light handed information disclosure or stronger price-quality regulation.

9. Oversight and Stewardship

· Will consider the systems for managing three waters as a whole, including who will regulate the three waters

· Will consider how to structure Central Government.

Appendix 2 sets out the Government’s timetable for its reform programme.

How does this compare to our submission

10. On balance, the announcements are highly aligned with our submission. Appendix 3 provides a table which provides a detailed comparison. There are no obvious areas where the Government has signalled change which is different from the Committee’s submission.

Next Steps

11. The Company will stay alongside the review as its progresses and will work with the GWRC to explore the impact of environmental regulation.

Appendices

No.	Title	Page
1 ⇩	3 Waters presentation Final draft to WWC	17
2 ⇩	Timeline for Govt Work Programme	41
3 ⇩	Analysis of Wellington Water Committee submission and the Government’s direction	42

Author: External Author (Wellington Water Ltd)

Attachment 3

Analysis of Wellington Water Committee submission and the Government’s direction

Timeline for the Central Government’s work programme

Ministers of Local Government, Health and Environment will report back to Cabinet with detailed policy proposals for regulation of the three waters to enable drafting of legislation to commence:
• drinking water
• wastewater
• stormwater
• regulatory institutional arrangements

Introduction in the House of any legislation required to support the reforms

Analysis of Wellington Water Committee submission and the Government’s direction

The Company believes the recommendations and the intent of the reform process are highly aligned with the submission the region delivered to the Minister of Local Government in September 2018. The table below compares the key components to the Committee’s submission and the Government’s announcement.

Elements of WWL’s submission	Central Government’s announcement	Outcome
National standards and a national regulator for the three waters	The Government has made drinking water and environmental regulation the top priority, saying there is a case for step change reform to regulation for drinking water. To be included in the first tranche of policy work. Report to Cabinet in June 2019.	Aligned
Economic regulation, but only to the extent of ensuring transparency, consistent asset management standards and to oversee the co-investment	The Government has said there is likely to be a case for economic regulation and is included in the work programme, report to Cabinet in late 2019.	Aligned
Assisting regional shared service delivery by willing councils such as funding the costs of transition (central government funding) And Central/local co-investment model to fund the step changes needed to meet national standards	The Government has said there are three waters service delivery arrangements that will be the subject of further analysis and engagement. Establishing a central government three waters fund (co-investment) to support voluntary, service delivery improvements is one of the options. This approach involves the creation of a national, long-term fund, as a mechanism for supporting improvements to current service delivery arrangements and /or incentivising voluntary changes.	Aligned
Asset ownership and related governance decisions remaining in local and regional councils	The Government has said there are three waters service delivery arrangements that will be the subject of further analysis and engagement. Two of the options would keep asset ownership with councils.	Aligned
Partnership between central government, local government and iwi	There will be ongoing engagement with stakeholders, iwi and Maori throughout the reform process.	Not taken up

MEMORANDUM 44 29 November 2018

Our Reference 18/1813

TO: Chair and Members

Wellington Water Committee

FROM: Tony Stallinger

DATE: 15 November 2018

SUBJECT: Letter of Expectation 2019/2020

Recommendations

It is recommended that the Committee:

(i) receives the report; and

(ii) approves the 2019/2020 shareholder Letter of Expectation to Wellington Water Limited attached as Appendix 1 to the memorandum and authorises the Committee Chair to sign the letter.

Purpose of Memorandum

1. For the Wellington Water Committee (the Committee) to approve the 2019/2020 shareholder Letter of Expectation to Wellington Water Limited (the Company).

Background

2. The Committee members have the delegated authority from each of the five Councils who make up the shareholding of the Company to agree to the annual Letter of Expectation (LoE).

3. The objective of the LoE is to provide shareholders with the opportunity to state their priorities to the Company which will then be included in the Company’s Statement of Intent (SOI). The board of the Company must deliver a draft SOI by 1 March 2019.

4. The priorities to be included in the LoE should include those flowing from the Councils’ overall objectives as expressed in their Long Term Plans in relation to the three waters, and also respond to short to medium priorities important in the minds of shareholders.

Comment

5. As the 2019/2020 financial year represents year two of the Councils’ Long Terms Plans, the changes set out in the attached draft Letter of Expectation are a refinement on what was agreed last year.

6. The key changes are:

· Identifying the Government’s Three Waters Review as a priority for the Company and ensuring it is ready to proactively respond to impending changes in the regulatory framework, as well as assisting its neighbours to prepare for change.

· Emphasising the importance of supporting council’s response to growth.

· Investment in the building of a financial model that allows for increased transparency around the cost of water services and the calculation of a household rate.

Communication

7. No later than 15 December 2018, or an alternative date agreed by the shareholders, the Chair of the Committee will circulate the agreed LoE to the Chair of the Board, the Chief Executive of the Company and to all Shareholders.

Legal Considerations

8. Officers recognise that the matters referenced in this report may have a high degree of importance to affected or interested parties.

9. The matter requiring decision in this report has been considered by officers against the requirements of Part 6 of the Local Government Act 2002 (the Act). Part 6 sets out the obligations of local authorities in relation to the making of decisions.

Significance of the Decision

10. Part 6 requires the Committee to consider the significance of the decision. The term ‘significance’ has a statutory definition set out in the Act.

11. Officers have considered the significance of the matter and recommend that the matter be considered to have low significance. Officers do not consider that a formal record outlining consideration of the decision-making process is required in this instance.

Appendices

No.	Title	Page
1 ⇩	Draft Letter of expectation 2019-2020	45

Author: Tony Stallinger

Chief Executive

Hutt City Council

Attachment 1

Draft Letter of expectation 2019-2020

Wellington Water Committee

C/- Hutt City Council

Private Bag 31912

Lower Hutt 5040

29 November 2018

David Wright
Chairman
Wellington Water Limited
Private Bag 39804
Wellington Mail Centre

Tena koe David,

Letter of Expectations 2019/2020

This Letter of Expectation sets out areas of focus we would like to see Wellington Water Ltd address. I invite you to consider these expectations as you prepare your organisation’s draft Statement of Intent (SOI) for the 2019/2020 financial year.

Priority areas

We have identified four priority areas:

1. Proactively respond to the Government’s Three Waters Review

2. Continue to strengthen a customer centred approach

3. Support council’s response to growth

4. Prepare for the Long Term Plan 2021/31 and the development of a Three Waters financial model

These priorities are discussed in more detail below.

Proactively respond to the Government’s Three Waters Review

We would like to be kept well briefed on the Government’s Three Waters Review. We expect the company to stay close to the review and help the region get ready to proactively respond to any increased level of regulation and associated opportunities that might arise.

We would also like the company to continue to support neighbouring councils and identify opportunities to work with others to deliver better water services for customers.

Continue to strengthen a customer centred approach

We can see the company is making good progress shifting the way the company thinks about its customers and putting customers at the heart of everything it does. Given customers also come to councils’ contact centres, we are keen to work in a cohesive way to enable a single view of customer data and identify opportunities for improving customer experiences. We would like to see the company be driven by key customer metrics (ie. complaints) and progress being made in this area.

Investment decisions we make for three waters are ultimately on behalf of rate paying customers. We therefore consider it appropriate to allow the Regional Service Plan (including asset management plans) and 30 year infrastructure strategies and, changes to them over time, to be influenced by customers. We therefore encourage you to involve the Customer Panel and mana whenua in the company’s service planning work.

Support council’s response to growth

In response to the region experiencing steady urban growth, we want the company to support us in an integrated way. We would like to see improved network planning to support the growth areas and ensuring the cost of network improvements are clear. This way we will be informed about what is required to be built and what it will cost.

We would also like the company to work with our planning teams to ensure three waters are considered in an integrated way and ensure District Plans and policies reduce the impacts of growth e.g. provision of green infrastructure.

Prepare for the Long Term Plan 2021/31 and the development of a Three Waters financial model

We note the pleasing progress the company has made in terms of planning against the three outcomes and the services goals. Over the next two years we would like to see greater detail on what type of activities are needed to address the service level gaps across all service goals.

In anticipation of greater economic regulatory oversight, we would like the company to begin to make the costs of providing three waters services much more transparent to our customers. We would like you to partner up with our finance teams to ensure the first stage is completed within a year.

As you develop a financial model which supports greater transparency over the costs, we would also like you to build it in a way which would allow the company to recommend a household rate for water services rather than meeting historical budget levels. We expect the model to capture all three water activities over the 10 years.

Using this model we would like you to offer various rate options for our considerations which provides the optimal balance of investment between capex/opex and between the three outcomes to deliver the long run improvements needed.

We anticipate this work will deliver improved results in the 2021/31 long term plan and then be consolidated for the 2024/34 long term plan.

Other priorities

Changing environment

We also would like you to keep abreast of the changing environment in which we operate and brief us on issues that impact our three waters work. This includes the Government’s broader reform programme such as water quality of rivers and streams, affordable housing, and the policy work being done to transition to a low-emissions and climate-resilient future.

We would expect the company to continue to provide leadership on some of these challenges to the water sector.

We expect the Company to continue to operate in line with its original intent in the meantime and ensure that any changes to its operating model are made in close consultation with shareholders and communities.

In conclusion

We look forward to working with Wellington Water Ltd and receiving the draft SOI by 1 March 2019.

Yours sincerely

David Bassett

Chair, Wellington Water Committee

49 29 November 2018

Wellington Water Committee

19 November 2018

File: (18/1833)

Report no: WWC2018/5/337

Shareholder Resolution in Lieu of Annual General Meeting

Purpose of Report

1. To seek approval from the representatives on the Wellington Water Committee as shareholders in Wellington Water Limited, not to hold an annual general meeting for Wellington Water Limited.

Recommendations

It is recommended that the Committee:

(i) receives the report;

(ii) notes that the annual report was published on 30 September 2017 and 28 September 2018 which fulfilled the relevant statutory requirements;

(iii) agrees not to have an annual general meeting of Wellington Water for the 2016/17 and 2017/18 financial years; and

(iv) notes that the Auditor General has appointed Audit New Zealand as auditor on their behalf for the 2016/17, 2017/18 and 2018/19 financial years.

Background

Annual Financial Statements

2. On 20 September 2018 the Directors adopted the financial statements of the company for the year ended 30 June 2018. The financial statements included an unmodified audit report. On 28 September 2018 the annual report was published and this was received by the Wellington Water Committee.

3. For the previous year ending 30 June 2017 the Directors adopted the financial statements of the company on 20 September 2017 which also included an unmodified audit opinion. The annual report was published and received by the Wellington Water Committee on 30 September 2017.

4. The annual reports contained the annual financial statements and all other information required to be reported to shareholders.

The Companies Act 1993

5. Under section 120 of the Companies Act 1993, the board of a company must call an annual general meeting of shareholders to be held no later than six months after the balance date of the company. However, it is unnecessary for the company to hold a meeting if everything required to be done at that meeting is done by written resolution of the shareholders passed in accordance with section 122 of the Companies Act 1993. The last resolution was passed on 7 March 2017 for the 2015/16 year.

Discussion

6. The purpose of holding an annual general meeting would be for the shareholders to reappoint Audit New Zealand on behalf of the Auditor General as the Company’s auditors and to pass a resolution regarding the auditor’s fees and expenses.

7. As a council controlled organisation, the Auditor General is the auditor for Wellington Water under section 70 of the Local Government Act 2002, so no appointment of the auditor is required. The Auditor General has indicated to the directors that Audit New Zealand would be reappointed to act on their behalf as auditor for the 2016/17, 2017/18 and 2018/19 financial years. Fees for the audit are agreed with directors of Wellington Water.

8. As the Wellington Water Committee has previously received the annual report for 2016/17, and 2017/18 and no auditor appointment is required, no annual general meeting is necessary. It is recommended that the shareholders resolve not to hold an annual general meeting in respect of the 2016/17 and 2017/18 financial years, as prescribed in section 122 of the Companies Act.

Appendices

No.	Title	Page
1 ⇩	Shareholders’ Resolution in lieu of Annual General Meeting	50

Author: External Author (Wellington Water Ltd)

Attachment 1

Shareholders Agreement - Nov 2018 amendments - v1_1

Wellington Water Committee

25 November 2018

File: (18/1875)

Report no: WWC2018/5/341

Shareholders Agreement and Constitution

Purpose of Report

1. To seek the Wellington Water Committee’s endorsement of the proposed amendments to the governance documentation for Wellington Water Limited ("WWL" or "Company") before being reported to the Shareholder councils.

Recommendations

It is recommended that the Committee:

(i) receives the report;

(ii) endorses the proposed changes for the Shareholders’ Agreement attached as Appendix 1 to the report;

(iii) endorses the proposed changes to the Constitution attached as Appendix 2 to the report; and

(iv) forwards the Shareholders’ Agreement and Constitution to the Shareholder councils for approval.

Background

2. At its meeting on 10 September 2018 the Wellington Water Committee (“the Committee”) resolved to invite all neighbouring councils to participate in developing a joint submission to the Government’s Three Waters Review. Following endorsement of the submission by the Committee, it was formally approved by seven councils within the Greater Wellington region and, along with the support of mana whenua, was delivered to the Minister of Local Government.

3. In addition, the Committee agreed to review the governance documentation for the WWL to coincide with the submission to allow other local authorities to become shareholders in the Company. In preparation for the meeting, the Chair has sought support from each mayor of the region about the approach set out in this report.

4. This report proposes amendments to the Shareholders’ Agreement (“SHA”) and Constitution (“Constitution”) to provide for:

· The ability of other interested local authorities to become shareholders in the Company, and

· The desire for partnership with mana whenua and inclusion in decision-making processes by making Mana Whenua Partners members of the Committee and ensuring that WWL Board members possess Te Ao Māori knowledge and skills.

5. A copy of the proposed documentation is attached as Appendix 1 and Appendix 2 to the report and the updates shown marked-up.

Additional Shareholders

6. The Shareholders Agreement ("SHA"), and the Constitution, currently contemplate a fixed number shareholders, being the five current shareholders. Accordingly, the updates are focussed on referring to shareholders more generally (as opposed to specifically in relation to the existing five shareholders) and to ensure that the various decision-making mechanisms are able to be applied in the event of additional local authority shareholders joining. To elaborate, the updates provide the following:

Constitution

· Clause 3 – By referring to shareholding as set out in the share register of the Company, we can avoid the need to amend the shareholding as set out in the Constitution if one or more new shareholder(s) join the Company.

· Clause 4.5 – To make it explicitly clear that all shareholders must be party to the SHA, including in the case of new shareholders, by acceding to the then existing SHA.

SHA

· Parties – To enable one or more new shareholder(s) to accede to the SHA by executing Deed(s) of Accession in the form required by WWL.

· Clause 1.5 – By referring to shareholding as set out in the share register of the Company, we can avoid the need to amend the shareholding as set out in the SHA if one or more new shareholder(s) join the Company.

· Clause 1.6 – To expressly set out the process by which one or more additional local authorities or council controlled organisations may become new Company shareholders.

· Clause 13.1 – To remove shareholder contact details from the SHA so that there would not be any requirement to update the SHA as new shareholder(s) join the Company.

Note that the addition of a new shareholder will also require the following steps to be taken:

· The proposed new shareholder making a request to the Company and the then existing shareholders for the proposed new shareholder to be issued shares in the Company.

· The Board of the Company passing a resolution (and signing associated certificates and other documentation as required under the Companies Act 1993) to issue, in such classes and on such terms as the Board thinks fit, shares in the Company to the proposed new shareholder. This will include Class A Shares and Class B Shares, and any amounts payable by the proposed new shareholder to the Company for those shares.

· Class A Shareholders of the Company (as defined in the Constitution) passing a Special Resolution waiving the pre-emptive provisions in section 45 of the Companies Act.

· All of the shareholders of the Company unanimously agreeing to the issue of new shares to the proposed new shareholder, pursuant to Schedule 2 of the Shareholders' Agreement, and to waive the pre-emptive provisions in section 45 of the Companies Act.

· The proposed new shareholder complying with all statutory and regulatory obligations and requirements in order for it to lawfully be able to become a shareholder in a council controlled organisation, including pursuant to the Local Government Act 2002 (note that this needs to be completed by the proposed new shareholder, rather than the Company).

· The proposed new shareholder entering into a Deed of Accession acceding to the Shareholders' Agreement.

· The Company updating its share register to record any new shareholding.

· The proposed new shareholder appointing an elected member to be a member of the Wellington Water Committee.

· The proposed new shareholder entering into a Service Level Agreement with WWL.

Partnership with Mana Whenua

7. The Constitution and SHA do not currently provide for participation by mana whenua, so more extensive updates are required, including key amendments as set out below. Throughout the SHA, updates have been made to ensure Committee Members have equal status and roles (whether nominated by Mana Whenua Partner Entities ("MWPEs") or Council shareholders).

Constitution

· Clause 11.9 - To expressly demonstrate the requirement (albeit at a high level) of the WWL Board having knowledge and experience of relevant issues affecting mana whenua.

SHA

· Parties – To enable one or more MWPEs to become parties to the SHA by executing Deed(s) of Accession in the form required by WWL. This then attracted some other amendments, to reflect the MWPEs role under the SHA, including under clauses 1.2 and 1.3.2.

· Clause 2.1 - To emphasise the importance of The Treaty of Waitangi / Te Tiriti o Waitangi and confirm WWL's commitment to its principles.

· Clauses 2.2 to 2.4 – To provide for the process by which a Māori authority may be formally recognised as a MWPE and joined as a party to the SHA; and to provide for the cessation of a MWPE being party to the SHA (for example, where the Company withdraws from the geographical location where the MWPE is mana whenua).

· Clause 3.2 – To provide that the membership of the Wellington Water Committee shall comprise, in addition to the elected members appointed by each shareholder, a Committee Member (and an Alternate) nominated by each MWPE and jointly appointed by the shareholders.

· Clause 3.3 – To clarify that the nominating MWPE may give written notice to WWL to remove and replace its nominated Committee Member and / or their Alternate.

· Clause 3.5 – To clarify that all Committee Members are expected to be in attendance at meetings of the Committee and that all parties to the SHA will use their reasonable endeavours to ensure their appointed or nominated Committee Member (or their Alternate) is in attendance at each meeting of the Committee.

· Clauses 6.3-6.5 – To provide that the Letter of Expectation and Statement of Intent processes also involve the MWPEs, and not just the Shareholders.

· Clause 8 – To clarify that all parties are expected to act in a spirit of collaboration and under the principle of no surprises.

· Clause 9 – To broaden application of the dispute resolution provisions to all parties (including the MWPEs), not just the shareholders.

· Previous clause 10.2 – To remove the ability for one shareholder to terminate another shareholder's participation in the SHA – given the structure of the Company, including every shareholder having a service level agreement with the Company, it is unlikely to ever be beneficial for a shareholder to be excluded from the rights and constraints of the SHA.

· Clause 10.5 – To clarify that where a council Shareholder withdraws from the Company, the MWPE from the geographic area covered by that shareholder will also withdraw from the SHA.

· Clause 11.1 – To require each party to ensure that its nominated and/or appointed Committee Member will keep confidential information obtained from the Company – this will naturally cover each MWPEs and its nominated Committee Member.

· Clause 14.8 – To clarify that the SHA does not give rights to any person not a party to the SHA.

· Schedule 1, Board Skills Matrix – To add a new requirement so that at least one director possesses the experience and expertise sought from mana whenua.

· Schedule 3, Terms of Reference ("TOR") - To bring the TOR in line with the intent of the updated SHA, including updating the quorum for a meeting of the Committee to a majority of Committee Members and referring to the interests of the parties to the SHA (which include MWPE) rather than the interests of the shareholders.

Note, the SHA does not set a maximum number of Committee Members, nor does it fix the relative proportion of Committee Members appointed by Shareholders vis-à-vis those nominated by MWPEs. Therefore, when considering whether to add further MWPEs and their nominated Committee Members, the Committee is advised to be cognisant of the balance of Council versus non-Council interests on the Committee.

Miscellaneous Changes

8. The opportunity has also been taken to suggest some tidy-up changes as follow:

· Clause 11.2 – To clarify that Class A shareholders are also entitled to jointly remove directors, not just to simply jointly appoint them.

· Clause 12.21 – To correct a typo.

· Clause 21.1, definition of "Board Skills Matrix" – To clarify that this is as set out in the SHA – while previously used in the Constitution, this term was undefined and there was no reference to where the Board Skills Matrix can be found.

· Clause 21.2.7 – To ensure a working day under the Constitution is interpreted consistently with the requirements of the SHA.

· Terms of reference (governance oversight responsibilities) – To clarify that the Committee's responsibilities do not include proving recommendations regarding the relevant network structure owned by each Shareholder, but instead include providing recommendations in relation to regional studies that the Shareholders should be cognisant of. This reflects current practice.

· Terms of reference (standing orders) – To clarify that it is the standing orders of the party providing secretariat services to the Committee that apply, rather than those of GWRC.

Appendices

No.	Title	Page
1 ⇩	Shareholders Agreement - Nov 2018 amendments - v1_1	56
2 ⇩	WWL Constitution - Nov 2018 amendments - v1	88

Author: Tony Stallinger

Chief Executive

Hutt City Council

114 29 November 2018

Wellington Water Committee

15 November 2018

File: (18/1812)

Report no: WWC2018/5/334

Company Update Report

Purpose of Report

1. To provide the Wellington Water Committee with assurance that the company is performing to agreed outcomes.

Recommendation

It is recommended that the Committee receives the Company Update Report.

The 2021/31 Long Term Plan

2. It seems very early to be discussing the next update of the Long Term Plans but to provide the best advice to our client councils we need to be talking to you now about the methodology. Over the next two years the evidence which supports our asset management planning will increase significantly. This in turn means we will be able to understand the activities necessary to achieve the levels of service your councils decide upon. Deciding on how quickly we move our council stated levels of service is dependent on funding and the rates your council sets for the three waters. This year we will for the first time be able to present to councils the impact on rates of accelerating or slowing down the attainment of long term level of service goals. We are able to do this because council officers and Wellington Water are partnering up on the way rates are constructed and presented.

3. In the agenda you will find a more detailed paper on how we propose to engage with you on the Long Term Planning process. One of our ideas is to have a workshop every meeting about one of the key issues our region faces now and into the future. The first one will focus on Water Quality Issues.

Statutory Documents

4. We are underway with our updated Statement of Intent. Because we wrote a three year Statement of Intent last year we are not planning on too many changes this time around. There will always be some but the objective is to keep it feeling the same and focusing on repeatable measures.

2018/19 Performance

5. We are now four months into the financial year and things are progressing satisfactorily. The normal standard dashboards are included as Appendix 1 and Appendix 2 to the report.

The highlights:

a) Service Delivery Alliance

We have announced Fulton Hogan as our partner for delivering customer services across the region. Fulton Hogan is a national company which we required for resilience planning. They are also family orientated which matches well with our company values.

We are now in the process of agreeing on an implementation plan which will get us ready for the transition from Citycare to our new service delivery model on 1 July 2019. A key component of the implementation plan is an efficient structure between ourselves and Fulton Hogan so we can reduce costs to re-invest in improved customer service. Part of our plan to improve customer service is to invest in a better customer management system. This will interface with council call centres all the way through to the task ordering system for our crews and back around to closing out the issue with customers.

We have developed a transition plan between ourselves, Fulton Hogan and Citycare to ensure we get a smooth transition and do not put our customers at risk over this period.

b) Capex Contractor Panel Announced

We have confirmed our Capex Contractor panel which will go live from 1 July 2019. This panel will work in tandem with our consultant panel and together they will aim to smooth out the delivery of capex works and deliver better value for money.

c) Molesworth Water Leak Closed Out

We had a big pipework failure in our water network which affected a number of large businesses in Molesworth Street. Our customer care approach worked exceedingly well and customer feedback was that we have improved considerably since the last time we worked in that street. We also took the opportunity to remind the Ministry of Health of the need to store water for resilience reasons. They currently store none. The Police Headquarters do store water and could function adequately until the water came back on.

The challenges:

a) Porirua Wastewater Overflow

Due to our error an overflow occurred at the Porirua Wastewater Treatment Plant. The Greater Wellington Regional Council is investigating the incident and will advise us of their decisions shortly. For the first time in our history we proactively went to the community with the Porirua City Council and apologised to the communities who may have been directly affected by the overflow.

b) Two serious near misses involving electricity

Electricity is considered a critical risk in that it has the potential to seriously hurt or kill you. We have had two serious near misses and as a consequence of one we shut down all the sites of the contractor involved. We have allowed this contractor to return to work but only after substantial overhaul of the company’s approach and with additional controls from us.

The Region’s Growth Agenda just keeps growing

6. Across all our retail client councils growth is becoming a bigger and bigger issue. To respond in the best manner we need to understand the impacts of growth on our networks before providing advice to councils. Generally, this has been adhoc but now the scale and extent of growth has got bigger, we need to be more systematic in our advice. We have reached agreements with our client councils for additional funds to accelerate some network designs to provide the best advice to councils on key growth calls. You have a more detailed report on this in the agenda.

Next steps flowing from our three waters submission

7. While the Government was considering our submission on the Three Waters we said we would keep making progress with two elements:

· Formally partner up with iwi; and

· Work with willing councils of our region if they are interested in becoming a shareholder in Wellington Water Ltd.

Good progress has been made with iwi. At this meeting you will receive representation from iwi to join the Wellington Water Committee and you will receive marked up copies of the shareholders agreement that would permit this if you decided to proceed.

We will provide an update on progress with South Wairarapa District Council at the meeting.

Appendices

No.	Title	Page
1 ⇩	Performance Overview Quarter One (Sept 2018)	115
2 ⇩	3 Waters Dashboard	116
3 ⇩	Health and Safety Report	117

Author: External Author (Wellington Water Ltd)

Attachment 3

Health and Safety Report

Health and Safety Update Report (attachment to CE’s Company Update Report).

Serious Near Misses

1. In October, we’ve had two serious near misses. Two separate contractors struck electricity cables while undertaking capital works on our behalf. One incident involved an excavator working around overhead wires where the spotter that aids in helping the excavator to steer clear of the over service momentarily lost sight of the cable. This meant the cable was hit by the extended excavator arm. Fortunately no one was injured, and it was agreed a moment of inattention had caused the incident to occur. The contractor is showing positive signs of addressing this risk.

2. The second serious near miss where a contractor struck an underground cable was more concerning as it was found their processes and culture were symptomatic of the incident. The excavator driver knew an unidentified cable was in the vicinity of his excavation. However, he decided to continue scrapping the top layer of fill instead of confirming what the cable was and exactly where it was underground. He subsequently struck it, causing the 400v cable to spark.

3. Working around services is one of our critical risks which is something that has the potential to seriously injure or kill us. The overhead service strike was serious. However, we got the assurance we needed from the contractor that adequate risk controls were in place. The same can’t be said for the underground service strike which caused us to make a clear and bold statement to suspend Dews Construction from all work on our projects.

4. Dews were suspended, not based on the one incident but a history of below par performance, and we were not confident that they demonstrated the necessary corrective and preventative actions to work safely. This decision wasn’t made lightly as we understood the implications it had on Dew’s 35 staff and our work programme’s delivery. However, it was the right thing to do to put ‘people first, every time’.

5. Following a significant overhaul of Dew’s systems and processes, along with increased oversight from ourselves and the Consultancy Panel, which includes daily site visits, we have allowed Dews to recommence work on our projects. They also have demonstrated changes in their organisational culture and attitude towards health and safety. We are continuing to maintain oversight over Dews’ performance.

Health and Safety Insights

6. In Quarter One we’ve identified three common health and safety risks and are implementing controls to prevent harm. They are; hydrogen sulphide gas across our wastewater networks, unsafe electrical boards, and inadequate eye protection.

7. Hydrogen sulphide is a gas common to all waste water networks and is caused by the breakdown of sewage. This presents a risk to our workers. We are getting a better and more consistent understanding of what the risk is at our pump stations and treatment plants. We’re modifying our hydrogen sulphide monitoring and also improving our processes and controls to ensure the safety of our workers.

8. We’ve found a number of old electrical switch boards which have unsafe and unprotected elements, and if touched could result in electrocution. We have temporarily made the boards safe and will progressively replace them with newer safe switch boards.

9. A number of eye injuries have been reported that are associated with cutting, grinding and welding. In all cases, eye protection was worn but seems unsuitable for the work we do. We have been working with NZ Safety to design tailored eye protection that will adequately protect our staff whilst undertaking this work. A prototype is currently being developed.

Health and Safety Culture

10. “People First, Every Time”. This is our health and safety vision and it drives us to ensure our workers are kept safe, and also our wider family, including our contractors, consultants and suppliers. We aim to build a competent workforce who knows when something isn’t safe, and feel confident to stop work if they don’t feel safe.

11. We are seeing good engagement with our vision and behaviours from the management level but are increasingly seeking to engage with those working in the trenches. In order for our workers to be equipped to work safely, we need them engaged with our vision and behaviours. We are working with our supply chain to share learnings from incidents and also getting out on site more, not with a clip-board but with the intentions of building strong and enduring relationships that will ultimately result in increased maturity across our supply chain.

Speeding

12. We had previously reported issues with staff regularly speeding. This quarter we have seen the lowest number of speed events. By monitoring vehicle safety in Eroad we identified teams and individuals that weren’t demonstrating improved driving behaviours. Through education we’ve eliminated the issue of ‘speeders’. Whilst we still have some speed events across our fleet, a large portion are singular events that are not direct indicators of unsafe driving; such as speed limit transition zones. Our education programme is increasingly focused on journey safety as opposed to holding a compliance view of zero speed events.

121 29 November 2018

Wellington Water Committee

15 November 2018

File: (18/1814)

Report no: WWC2018/5/335

Planning for the 2021/31 Long Term Plans

Purpose of Report

1. The purpose of this report is to set out our approach to planning for the 2021/31 Long Term Plans.

Recommendations

It is recommended that the Committee receives the report.

Summary

1. Development of the Three Waters regional service plan to inform our client councils Long Term Plans is one of our key company offerings and the most significant value for money opportunity for the region.

2. To enable a richer conversation with our client councils on various service planning options, we have established a two year programme to strengthen our asset management approach and build a financial model that will enable us to calculate a sustainable Three Waters rate based on the right balance of opex and capex activities.

3. The development of this programme is a significant maturity step for the company and will require engagement with our client councils over the next two years, leading up to the 2021/31 Long Term Plan.

4. This work programme will also strengthen our company performance for future water sector changes including likely Three Waters regulation.

Background and Context

5. We have established a programme of work, which will enable us to cost various levels of service options and how these would translate into a water rate for each of our client councils. Three key work streams have been established:

a) Development of a Three Waters financial model;

b) Improving our asset management maturity; and

c) Engagement with client councils over the next two years.

6. It is anticipated that this work will reach full maturity over the next two Long Term Plan cycles in time for the 2024/34 Long Term Plan.

7. This work aligns well with our company maturity and responds well to the likely changes that will impact the water sector within the next three years, which include:

a) Higher standards and national consistency;

b) Potential regulation;

c) Increasing transparency with respect to the cost and level of service; and

d) Increasing customer expectations.

The Methodology

Development of the Financial Model

8. This part of the programme involves understanding the council components of the Three Waters costs to form a financial model.

9. This financial model can be used to determine various service level cost options and the rate at which they can be achieved across the region. Examples of this relate to the costs to achieve the nationally set 2040 receiving water targets or the legislative requirements to enable urban growth.

10. This work will involve extensive engagement with each of the council finance representatives to develop a transparent methodology.

Service Planning Maturity

11. Building on our service goal investment framework^{^[1]}, we will lift our Smart Investment maturity to the next level to ensure that our future decisions and recommendations are based on a robust totex^{^[2]} approach and meet the needs and expectations of our customers.

12. This increase in maturity is well aligned with our Service Delivery Strategy, particularly with the implementation of the Alliance on 1 July 2019.

13. Ultimately, this could result in our budget recommendations changing the balance of investment between operational and capital activities. It could also place more emphasis on the need to deliver non-asset solutions, such as influencing District Plan provisions to negate the need for future infrastructure investment.

14. This work stream aligns well with our goal to increase our asset management maturity significantly within the next three years in line with ISO55000 (International Standard for Asset Management). Achievement or alignment with a recognised standard is likely to become highly relevant in a more rigorous future regulatory environment.

Client Council Engagement

15. We intend to engage with councils over the next two years, starting this month, to build their level of knowledge that will be required to enable a richer conversation on levels of service and associated costs. We anticipate that this will enable better investment choices leading up to the development of the 2021/31 Long Term Plan.

16. Our engagement plan will follow the key steps below:

Step 1: outline service goal performance, the big challenges and the opportunities set out in the Three Waters strategy.

Step 2: provide an insight into the potential solutions to address the issues, scale of investment and timeframes.

Step 3: introduce high level programme options and implications on water rates.

Step 4: final programme recommendations with visibility over risks and trade-offs and water rate implications.

Appendices

There are no appendices for this report.

Author: External Author (Wellington Water Ltd)

124 29 November 2018

Wellington Water Committee

15 November 2018

File: (18/1815)

Report no: WWC2018/5/336

Planning for Growth

Purpose of Report

1. The purpose of this report is to update the Wellington Water Committee on the results emerging from the National Policy Statement for Urban Development Capacity (NPS-UDC) and the opportunities this presents for future network planning.

Recommendation

It is recommended that the Committee receives the report.

Summary

1. The results from the National Policy Statement for Urban Development Capacity (NPS-UDC) work are showing a shortfall in development capacity in Three Waters infrastructure across the region.

2. The most significant challenge for the company is the condition and lack of capacity in the wastewater networks. These issues have a direct impact on achievement of the legislated outcomes set out in the National Policy Statement for Freshwater Management (NPS-FM).

3. Some of our councils have started to progress their growth strategies and associated infrastructure needs.

4. The growth strategy work presents an opportunity for the company to take a more integrated approach to Three Waters planning across the catchments and set out plans that align with the Three Waters strategy and other infrastructure.

5. This will also strengthen our regional service planning work and enable us to formulate a sustainable water rate[3] that will lift service performance within timeframes agreed by councils.

Background and Context

6. The NPS-UDC requires local authorities to identify market demand for housing and plan effectively for infrastructure. The NPS specifically requires councils to provide for this investment in their Long Term Plans to ensure that it is aligned with growth aspirations.

7. Where planning provisions and infrastructure do not provide sufficient capacity for urban growth, the NPS-UDC requires councils to initiate a response within 12 months to rectify this shortfall.

8. The company has been working with its client councils to identify demand for housing and understand the capacity shortfall in the networks. This work has been progressing well, but it has identified significant wastewater and water network capacity issues.

9. A significant portion of the regional service plan capex investment is targeted to reduce wastewater overflows and leaking networks. This issue has a direct impact on the targets set out in the NPS-FM, which requires a step change in freshwater quality by 2040.

10. The issues associated with stormwater and drinking water are not as challenging to plan for in comparison to the wastewater network. However, the wider catchment flooding issue is a long term challenge to resolve through land use planning policy and overland flow paths.

Planning Opportunity

11. A number of our client councils are focussing on their growth strategies as they experience an increase in development activity. This renewed drive for growth is an opportunity for the company to influence infrastructure provision at the front end of the planning process. Based on current knowledge, there are approximately 20 catchments across the region that is likely to be affected by growth within the foreseeable future.

12. This is an opportunity for the company to use the Three Waters strategy as a basis to drive innovative thinking and practices (for this region) and establish high level network configuration plans that have been well thought through in advance of development. Examples of how the vision set out in the Three Waters strategy could result in better outcomes for these catchments include:

· Application of water sensitive practices to manage stormwater run-off;

· Integrated infrastructure design with roads and parks to manage overland flooding;

· Policies and bylaws that drive better management of wastewater laterals and private drainage arrangements; and

· Policies and practices that improve the management of drinking water consumption.

13. Increasing network capacity for growth purposes is an opportunity to address wastewater performance issues. We know from the Te Awarua-o-Porirua Whaitua work that the levels of E.coli in the freshwater bodies are significantly higher than the 2040 targets set out by central government.

14. The level of contaminants in the region’s freshwater presents us with a significant stormwater and wastewater challenge that will require long term investment and collaboration with others to resolve.

15. Establishing these types of plans for our councils will enable more accurate costing of network development associated with growth, which will enable better decisions on development contribution policies.

16. This work also aligns well with the service planning work for the next two Long Term Plan cycles and provides better information for the financial model and rate setting work referenced in the company’s Statement of Intent 2018/21.

Appendices

There are no appendices for this report.

Author: External Author (Wellington Water Ltd)

[1] The service goal investment framework includes the company’s three outcomes and 12 service goals, which have been shared with the region’s councils

[2] Totex is a mature asset management approach that considers whole lifecycle cost implications of infrastructure investment across opex, capex including non-asset based solutions e.g. policies and education

[3] The sustainable water rate refers to SOI 2018/21 measure 13 – our customers will get a better understanding of where their water rate money is being spent

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 WR Wallace	Hutt City Council (Alternate)
Cr R Leggett	Porirua City Council (Alternate)
Cr G McArthur	Upper Hutt City Council (Alternate)
Cr P Gilberd	Wellington City Council (Alternate)