Agenda of Wellington Water Committee

12 16 December 2019

Wellington Water Committee

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

Monday 16 December 2019 commencing at 1.00pm

PRESENT:	Cr J Brash (GWRC)
	Cr D Bassett (HCC)
	Mayor A Baker (PCC)
	Mayor A Beijen (SWDC)
	Mayor W Guppy (UHCC)
	Cr S Rush (WCC)
	Mr T Parai (Te Runanga o Toa Rangatira)
	Ms K Skelton (Taranaki Whānui ki Te Upoko o Te Ika)

IN ATTENDANCE: Deputy Mayor T Lewis (Alternate, Hutt City Council)
Deputy Mayor G Emms (Alternate, South Wairarapa District Council)
Deputy Mayor H Swales (Alternate Upper Hutt City Council)
Cr I Pannett (Alternate Wellington City Council)

Mr D Wright, Chair, Wellington Water Ltd
Mr P Barry, Board Member Wellington Water Ltd

Ms C Brophy, Board Member Wellington Water Ltd

Ms W Walker, Chief Executive, Porirua City Council
Mr P Kelly, Chief Executive, Upper Hutt City Council
Mr C Crampton, Chief Executive, Wellington Water Ltd

Mr A van Paassen, Communications Engagement Manager, Wellington Water Ltd (part meeting)

Ms S Cuthbert, Principal Advisor to the Chief Executive, Wellington Water Ltd

Mr D Baxter, City Engineer, Wellington City Council

Ms S Gain, General Manager Corporate Services, Greater Wellington Regional Council

Ms K Stannard, Divisional Manager Democratic Services

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.

4.	Procedure to Elect the Chair and Deputy Chair (19/1389) Report No. WWC2019/1(2)/239 by the Divisional Manager, Democratic Services
	Resolved: (Mayor Baker/Cr Bassett) Minute No. WWC 191(2)01 “That the Committee: (i) receives and notes the contents of the report; (ii) chooses voting system B (election by the greatest number of votes) for the election of the Committee Chair and Deputy Chair; (iii) agrees that, in the event of a tie under voting system A, the candidate to be excluded from the next round of voting shall be resolved by lot as described in section 14 of the officer’s report; 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.”
	The Chief Executive, Porirua City Council called for nominations for Chair. One nomination was received. In response to a question from Cr Swales, the Chief Executive, Porirua City Council confirmed there were no voting rights for Alternate members of the committee

	Resolved: (Mayor Baker/Cr Brash) Minute No. WWC 191(2)02 “That Cr Bassett be elected as Chair of the Wellington Water Committee.”
	Cr Bassett assumed the Chair. He thanked members for their confidence in him. He stated that in early 2020 he was keen to commence a review of the governance of the Committee. He outlined several challenges facing the Committee including the new regulator, a new Bill and trying to obtain capital from the government to assist with major projects. The Chair called for nominations for Deputy Chair. One nomination was received.
	Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 191(2)03 “That Mayor Guppy be elected as Deputy Chair of the Wellington Water Committee.”

Shareholder Resolution in lieu of Annual General Meeting (19/1392)

Report No. WWC2019/1(2)/240 by Wellington Water Ltd

The Chief Executive, Porirua City Council elaborated on the report.

In response to Cr Brash’s request for a copy of the Quarterly Report July – October 2019, the Divisional Manager Democratic Services, Hutt City Council agreed to send her a copy.

Resolved: (Cr Bassett/Cr Brash) Minute No. WWC 191(2)04

“That the Committee:

(i) notes the report;

(ii) notes that the Annual Report was published on 30 September 2019 which fulfilled the relevant statutory requirements; and

(iii) resolves not to hold an Annual General Meeting of Wellington Water Limited for the 2018/19 financial year.”

Extension of the Wellington Water Ltd Board Chair's Term (19/1391)

Report No. WWC2019/1(2)/241 by Wellington Water Ltd

The Chair elaborated on the report. He added that it was preferable to retain Wellington Water Ltd’s Board Chair while the proposed governance review was undertaken. He confirmed he had spoken with Mr David Wright, the current Board Chair, and
Mr Wright agreed to remain in the position until the end of July 2020.

In reponse to a question from a member, the Chair advised extending the Board Chair’s tenure until the end of July 2020 would ensure the governance review was completed, prior to the appointment of a new Board Chair.

Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 191(2)05

“That the Committee approves an extension of the Board Chair’s term for six months until 31 July 2020.”

Meeting Schedule 2020 (19/1390)

Memorandum dated 6 December 2019 by the Divisional Manager, Democratic Services

Resolved: (Cr Bassett/Cr Brash) Minute No. WWC 191(2)06

“That the Committee agrees to the meeting schedule for 2020 as follows:-

(a) Thursday, 5 March 2020 commencing at 2pm followed by a workshop (Greater Wellington Regional Council);

(b) Wednesday, 3 June 2020 commencing at 10am followed by a workshop (Upper City Council);

(c) Wednesday, 30 September commencing at 10am followed by a workshop (Porirua City Council); and

(d) Wednesday, 25 November 2020 commencing at 10am followed by a workshop (Wellington City Council)”

Letter of Expectation (19/1393)

Report No. WWC2019/1(2)/242 by the Chief Executive, Porirua City Council

The Chief Executive, Porirua City Council elaborated on the report. She explained Wellington City Council (WCC) had requested minor changes to the Letter of Expectation which were not included in the report. She added the changes requested altering the order of priorities, placing “Delivering Core Business” as the first priority of the list and adding “10%” after 40 litres to the last sentence of the Sustainability of Water section.

The Chair added the proposed changes did not materialistically alter the Letter of Expectaiton.

In response to a question from a member, the Chief Executive, Porirua City Council advised the Statement of Intent would be prepared shortly and that it could include any further changes which may arise from the Company Update Report.

Members agreed that the priority: “Delivering Core Business”, be amended to: “Delivering Core Business to Provide Value for Money”.

In response to a question from an Alternate, the Chief Executive, Porirua City Council advised WCC had requested the changes.

Cr Brash requested wording changes in the Climate Change paragrah to better articulate who the “we” related to and that there were individual council climate change targets that needed to be met.

The Chief Executive, Wellington Water Ltd agreed to the proposed amendments as discussed during the item.

Resolved: (Cr Bassett/Cr Brash) Minute No. WWC 191(2)07

“That the Committee:

(i) receives the report;

(ii) approves the 2020-2023 shareholder Letter of Expectation to Wellington Water Limited (attached as Appendix 1 to the report) subject to amendments made at the meeting; and

(iii) authorises the Wellington Water Committee Chair to sign the letter.”

Company Update Report (19/1394)

Report No. WWC2019/1(2)/243 by Wellington Water Ltd

The Chief Executive, Wellington Water Limited (‘the company’) elaborated on the report.

With regard to Environmental Scanning, the Chief Executive of the company advised that many of the issues had been discussed at the workshop and more information concerning the proposed water reforms would be available later in the week. He added that there were no updates regarding the National Resources Plan.

With regard to the Quarterly Report, the Chief Executive of the company explained the number of service requests had steadily increased since 2016 for a number of reasons. He advised the transfer to the new alliance had resulted in a backlog of requests. He noted all resources were being directed to addressing all service requests including non-urgent requests. He acknowledged targets for each council were currently not being met and that talks were ongoing with officers from each council. He added officers were discussing how to manage the increase in reports of leakages within the required response times, budgets and with the new delivery model. He further added that WWL would release all data in upcoming reports, and that a risk management approach was being taken to dealing with leakages.

The Chief Executive of the company explained the increase in the number of reported leaks could be due to less reliable data being available, fragile networks which were susceptable to shaking and the fact that some networks were reaching their end of life. He added that the focus of the company was to lift performance and to work within a risk management approach.

In response to questions from members, the Chief Executive of the company explained response target times varied for each council and talks were ongoing with officers from all councils. He acknowledged a report would be presented to each council outlining realistic steps forward for each individual council. He also acknowledged concerns regarding the company’s ability to comply with the aspirations of Greater Wellington Regional Council to be carbon zero by 2030. He advised that the company proposed to conduct a public communications exercise in the New Year to help explain the leakages repair issues. He reiterated the 40% increase in reportings of leaks and the issues facing the company.

The Board Chair of the company stated that with increased budgets, the company would be able to increase its response rates. He added the company was currently deploying existing resources as efficiently as it was able to, within budgets, and that the increased number of leaks was the issue.

In response to a question from a member, the Chief Executive of the company advised the company was in the process of reporting to each council regarding leaks and response times.

Deputy Mayor Swales expressed concern that if targets were not being met, the company should bring the situation to the attention of each council immediately rather than waiting for a quarterly report. She added if resourcing was an issue then that should be dealt with under some urgency. She highlighted that Upper Hutt City Council was not prepared to accept that the situation was a ‘business as usual’ occurrence.

The Chief Executive of the company advised that the company was preparing for the next Long Term Plan cycle with each council and was planning to engage with officers in early 2020. He also advised that moving forward, the company intended to report on the four priorities of each council at each quarter rather than yearly.

Cr Brash congratulated the company on the water conservation media campaign.

Resolved: (Mr Parai/Mayor Beijen) Minute No. WWC 191(2)08

“That the Committee notes and receives the information contained in the report.”

OTHER BUSINESS

The Chair advised that a recommended programme regarding the government review would be circulated as soon as possible once he had discussed the issue with the Deputy Chair.

Deputy Mayor Swales requested an action sheet be circulated with the minutes of each meeting.

The Chair advised that the number of Wellington Water Ltd Board members would be be assessed during the upcoming governance review. He added that with the current requirement for unanimous support for any constitutional changes, alterations to governance took time.

There being no further business the Chair declared the meeting closed at 1.50pm.

D Bassett

CHAIR

CONFIRMED as a true and correct record

Dated this 5^th day of March 2020

ACTION SHEET – Matters arising from the Wellington Water Committee Meeting of

6 December 2019

ITEM	ACTION	PERSON	TIME FRAME	ACTIONED
Item 5 – Shareholder Resolution in Lieu of AGM	Quarterly Report send to Cr Brash	Divisional Manager Democratic Services, HCC	Prior to Christmas 2019
Item 8 – Letter of Expectation	Final copy to be signed	Chair, WW Committee	As soon as possible.
Item 9 – Company Update Report	Briefing Paper presented to each council regarding moving forward on the leakages issue	Chief Executive, WWL	A soon as possible
Item 9 – Company Update Report	Public communications regarding repairing leaks	Chief Executive, WWL	Early 2020
Item 9 – Company Update Report	Second Quarterly Report sent to council officers	Chief Executive, WWL	By end of December 2019
Item 9 – Company Update Report	LTP cycle talks with council officers	Chief Executive, WWL	Beginning early 2020
Item 9 – Company Update Report	Reporting on each of the four priorities for each council	Chief Executive, WWL	Each Quarterly Report

16 05 March 2020

Wellington Water Committee

21 February 2020

File: (20/185)

Report no: WWC2020/2/63

Wellington Water Governance Review

Purpose of Report

1. The purpose of this report is to record the outcomes of the workshop on Wellington Water governance issues held on 10 February 2020 and recommend next steps

Recommendations

That the Committee:

(i) receives the information;

(ii) notes the outcomes of the workshop held on 10 February 2020 to address governance issues raised in the previous triennium;

(iii) notes the mechanisms available to each shareholding Council and mana whenua members to hold the Wellington Water company to account (letter of expectation, statement of intent, and key performance indicators in the context of an active working relationship); and

(iv) agrees to address the Wellington Water structure and governance arrangements once the Government’s water reform intentions are clear in relation to service delivery.

Background

2. Wellington Water Ltd was established in 2014, with Wellington, Hutt City, Upper Hutt, Porirua and Greater Wellington as shareholding councils. It was a further aggregation to a model first established in 2003 with Capacity Ltd as a council-controlled organisation with Wellington and Hutt cities as foundation shareholding councils.

3. In 2019, South Wairarapa District Council joined as a shareholding council and mana whenua representatives were also included on the Wellington Water Committee. At this time changes were made to the governance documents and approval sought from each council to agree these changes. Both the change process and some of the wording in the documents were criticised at the time and the Wellington Water Committee (2016-19) made a recommendation to the incoming Wellington Water Committee (2019 -22) that a governance review should be undertaken to work through issues of concern.

4. As a result the Chair of the Wellington Water Committee called a workshop on 10 February 2020 with Wellington Water committee members and Mayors and Chief Executives of shareholding councils.

Concerns identified

5. The workshop identified a range of issues spanning both operational and governance matters. The following table identifies and groups those issues into themes.

Issue identified	Possible action to address	Governance/ Management
Control
Two levels of governance (Board and Wellington Water Committee) are confusing	Clarify roles, responsibilities and delegations (e.g. authority to make submissions)	Management action to clarify/amend Committee’s terms of reference
Loss of council control – inadequate reporting to councils	Require formal performance reporting as per Local Government Act (LGA)	Governance requirement achievable within current arrangements
Wellington Water “out there doing their own thing”	Hold to account through performance reporting against Statement of Intent (SOI)	Governance requirement achievable within current arrangements
Role of Board/Committee
Lack of clarity about agreed roles/priorities of committee/need for strong leadership on joined up region	Agree more regional approach and outcomes expected. Amend the Committee’s terms of reference to reflect this.	Governance issue achievable within current arrangements
Ensure appropriate mix of skills on the Wellington Water Committee and Board	Develop skills matrix for membership of the Committee and Board. Appoint new Board members to fill vacancies.	Governance requirement achievable within current arrangements
Focus on future needs/innovation	Refocus Statement of Intent to focus on innovation Ensure funding is adequate for innovation.	Governance requirement achievable within current arrangements
Operational performance of Wellington Water
Quality of work/delivery to expectations	Client performance monitoring through service level agreement/contract	Management action
Basics not affordable to councils	Councils to budget appropriately to meet rising standards Need to explore funding mechanisms including the new “special purpose vehicle” Advocate to Government on sector wide funding issues	Political and management actions
Complex change environment
Climate change, growth pressures, rising community expectations, rising costs, pressure to reduce rates increases	Need to examine structural and management options that may be more fit for purpose	Governance review
Government reform in three waters favouring aggregation and consideration of asset ownership	Need to examine structural and management options that may be more fit for purpose Need to consider whether current model could cope with expansion	Governance review

Discussion

6. Many of the issues raised in the workshop could be managed without requiring a change to the governance model. They centre largely on operational issues that can be addressed through the current governance model or communication/accountability issues that can be tackled by each local authority through regular reporting at both management and governance levels.

7. Strengthening the Board by filling the current vacancies, focussing on the statement of intent and developing a coherent work programme for the Wellington Water Committee are strategies that can meet the concerns expressed at the workshop.

8. The issue still outstanding is the need to position Wellington Water for the future, particularly in light of the Government’s water reform package

9. The stronger regulatory environment foreshadowed in the Taumata Arowai – the Water Services Regulatory Bill will impose higher standards for water supply authorities. The Government has also indicated interest in an aggregated service delivery model because of the constraints obvious in the current disaggregated model. It is unclear however what the optimum move would be for the region to improve its model of ownership and delivery of three waters infrastructure.

10. There are several theoretical possibilities ranging from further aggregation, transfer of asset ownership, separate billing and potential volumetric charging at one end of the change spectrum to little or no change at the other. Given the uncertainty around the Government’s intentions and the timing of any service delivery indications (2021 at the earliest) it is recommended that the Wellington Water Committee take no further steps at this stage.

11. Subsequent to the Wellington Water workshop, Wellington City has announced that it is mounting a Mayoral Taskforce to look at the issues surrounding the well-publicised water infrastructure failures in that city. The scope of the Taskforce has now been agreed and it is clear that this is a broad ranging review of issues including community stakeholders, iwi, water experts and elected members.

Conclusion

12. The timing for an evidence-based and dispassionate regional discussion on water governance arrangements is best placed after the Government has made its intentions clear and Wellington City’s Mayoral taskforce has concluded its deliberations.

Appendices

There are no appendices for this report.

Author: Wendy Walker

Chief Executive, Porirua City Council

MEMORANDUM 18 05 March 2020

Our Reference 20/214

TO: Chair and Members

Wellington Water Committee

FROM: External Author (Wellington Water Ltd)

DATE: 02 March 2020

SUBJECT: Draft Half Year Report 2019/20

Recommendation

That the Committee receives the Half Year Report 2019/20 for the six months ended 31 December 2019 attached as Appendix 1 to the memorandum.

Purpose of Memorandum

1. To present the draft Half Year Report 2019/20.

Summary

2. Under the Local Government Act 2002, Wellington Water’s Board is required to deliver a Half Year Report 2019/20 to its shareholders within two months after the end of the first half of each financial year.

3. The Half Year Report shows the financial and non-financial performance of Wellington Water Ltd for the period 1 July 2019 to 31 December 2019. Unlike the Annual Report, the Half Year Report2019/20 is not audited.

4. It is a requirement for councils to publish the Half Year Report on their internet site within one month of receiving it.

5. The draft Half Year Report 2019/20 is attached as Appendix 1 to the memorandum.

Financial Statements

6. The Financial Statements show a surplus before tax of $1.6M. This is because revenue exceeded expenditure for the council capex programme which is a result of the programme being behind programme for the first half of the financial year. Councils fully fund their individual capex programmes which means that any variance to budget at year end, be it under or over, will not result in a surplus or deficit in Wellington Water’s financial statements.

Evaluation of Performance

7. Wellington Water Ltd has made good progress towards its goals. Overall performance has been pleasing with some noteworthy results and some results that could have been better. Wellington Water Ltd is working hard to strengthen its performance management framework to ensure the reported performance accurately represents the company’s actual performance.

8. During the first half of the 2019/20 financial year the integration into Wellington Water Ltd of the network maintenance Alliance with Fulton Hogan took effect and the Contractor Panel was initiated. In both of these cases the benefits of a more collaborative way of working, that will benefit Wellington Water, its suppliers and most importantly the people of the region, is beginning to be seen. The first of four wastewater treatment plants also transitioned to the new contract with Veolia. The remaining three will all transition by 30 June 2020.

9. South Wairarapa District Council became a sixth shareholding council. The drinking water is not compliant with the national standard and this has resulted in an unachieved company result on this measure. Wellington Water is actively working, in conjunction with the council, to address this issue.

10. Wellington Water Ltd continues to face challenges in councils’ three waters networks with increasing numbers of reported water leaks and two major wastewater network failures. These issues have also impacted directly on the performance reported in the Half-year Report.

11. Wellington Water reports against 45 performance measures for the 2019/20 financial year, as outlined in its Statement of Intent. After the first half of the financial year 32 (71%) were on track to be achieved or partially achieved with a further 9 (20%) not measured for the first half of the year.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 2019 20 Half Year Report	19

Author: External Author (Wellington Water Ltd)

35 05 March 2020

Wellington Water Committee

01 March 2020

File: (20/210)

Report no: WWC2020/2/70

Wellington Water Ltd's Draft Statement of Intent 2020-23

Purpose of Report

1. To invite feedback on Wellington Water Ltd’s (the company’s) draft Statement of Intent 2020-23 (SOI): Our Water, Our Future.

Recommendations

That the Committee receives, considers and provides feedback on Wellington Water Ltd’s draft Statement of Intent by Friday, 17 April 2020.

Summary

1. The purpose of a Statement of Intent (SOI) is to-

a) State publicly the activities and intentions of a council-controlled organisation (CCO) for the year and the objectives to which those activities will contribute

b) Provide an opportunity for shareholders to influence the direction of the organisation; and

c) Provide a basis for the accountability of the directors to their shareholders for the performance of the organisation.

2. There is a statutory requirement for the board of a CCO to deliver to its shareholders a draft SOI by 1 March each year. The company’s Board has considered the draft SOI and endorsed its release to the Wellington Water Committee and councils for consultation.

3. The Wellington Water Committee has a responsibility under its Terms of Reference to receive, consider and provide agreed feedback and recommendations to the Company on its draft SOI. Feedback is invited to be sent to Porirua City Council wendy.walker@poriruacity.govt.nz by 17 April 2020.

4. The company’s Statement of Intent: Our Water, Our Future was initially developed in 2018 to align with councils’ 2018-2021 Long Term Plans (LTP) and was refreshed in 2019. We aim to create an enduring three year document while still meeting the requirements under the Local Government Act 2002 to include three year rolling financial projections and performance targets that don’t align with the three year LTP cycle. Note, the financials in Appendix 4 of the draft SOI relate to years three –five of the councils’ 2018-28 LTPs. We are currently working with our councils to prepare advice for their 2020-2030 LTPs and this will be reflected in the Company’s next SOI. We expect our next SOI to reflect a step change in the work we do to respond to the challenges the region currently faces.

5. This year, the company’s strategic intentions remain largely the same as the previous two years as all work must fit within the current funding arrangements we have with our councils. We have aimed to lift our story to a more strategic level and clearly set out our priorities which stem from the priorities that the councils give us each year via the Letter of Expectations (LoE). We have included the Water Committee’s 2020-23 LoE as an appendix to the SOI. The table in Appendix 2 sets out how the councils’ priorities are included in the document.

6. Over the past four months, we have been reviewing our performance measures by developing a comprehensive framework driven by business expertise and experience. The work has included refreshing our three outcomes, developing a new set of impact statements and refining our performance measures. A complete set of measures, including the compulsory DIA measures, is set out in appendix 2.

7. The changes we have made to our performance framework are part of our commitment to become a high performing organisation and the journey of continual improvement. We believe this set of measures is a vast improvement on what we had and will enable us to tell our performance story across our business activities as part of our reporting processes. We aim to continue to improve the performance framework as part of our next SOI which will align with councils’ new LTPs.

8. Our SOI story in a nutshell:

a) Vibrant cities need quality infrastructure and Wellington Water has been tasked by its six councils to look after the water part. The Wellington region is growing, society’s values are changing, waters assets are ageing and the water sector is undergoing reform.

b) Underpinning the success of the Wellington Water model and the work we do for our communities is the trust we build with our councils, mana whenua partners and customers.

c) Our starting point is Ngā Wai Hangarua; our destination is Te Ika Rō Wai: a perfect balance between land, water people in the way we work.

d) Our main areas of focus over the next three years reflect our councils’ priorities: To look after existing water assets, support regional growth, reduce water consumption, improve water quality and reduce carbon emissions.

e) We will also undertake our core business well: plan, operate & maintain, renew assets, make improvements and attend to emergencies.

f) Advising our councils on their long term planning is a big part of our work over the next year and we have already started this work.

g) We aim to be a high performing organisation and so we will continue to grow our people and capability, partner and collaborate well with others, get better at demonstrating value for money and tell a better performance story.

h) And we will remain responsive to the pending regulatory changes and ensure our business is ready.

Next Steps

9. The Wellington Water Committee and shareholding councils can provide feedback through Porirua City Council wendy.walker@poriruacity.govt.nz by 17 April 2020.

10. We are available to attend each council’s meeting to present the draft SOI to councillors. We will also seek feedback from staff during the consultation period.

11. Following feedback from the committee, we will refine the content of the document and deliver the final version to you for your next meeting on 3 June 2020.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 DRAFT SOI 2020_23	36
2 ⇩	Appendix 2 Table showing how the Letter of Expectations has been met in the SOI	77

Author: External Author (Wellington Water Ltd)

Attachment 2

Appendix 2 Table showing how the Letter of Expectations has been met in the SOI

Attachment B: Table showing how the Letter of Expectation has been met in the draft Statement of Intent

Letter of Expectation Priorities

How this has been addressed in the draft SOI

Ref. in SOI

Te Mana o Te Wai – promoting Māori values and outcomes in the management of the three waters

· Reflect the outcomes of Te Mana o Te Wai

· Support the Water Committee to optimise mana whenua participation

· Develop a plan for implementing the partnership agreement in place with mana whenua

We aim to uphold values of Te Mana of Te Wai and support mana whenua in their role as kaitiaki.

We will support the Water Committee to optimise mana whenua participation.

We will develop a plan for implementing the agreement we have in place with mana whenua.

Our focus during 2020/21 is to:

· complete a set of te ao Māori principles which guide investment priority and work these into our long-term plan advice to councils;

· construct and implement a te ao Māori programme focused on the concept of te mana o te mauri o te wai; and

· ensure our people understand the traditions and tikanga of our mana whenua partners.

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Achieving agreed levels of service and value for money

· Ensure customers receive the agreed levels of service

· Provide basic operational services within the agreed timeframes and to a high quality.

· Health and safety to remain an important operational priority.

· Procurement, construction and cost estimation processes are applied to all capital works.

· Develop a framework that comprehensively captures value add and demonstrates improvements

Central to our work is making sure councils’ assets operate and perform at an optimal level.

We aim to achieve the levels of service agreed with our councils and provide operational services within the agreed timeframes and to a high quality.

We’ll continue to increase health and safety engagement, participation and accountability at all levels.

Procurement, construction and estimation processes will be applied to all capital works

Our aims for delivering value-for-money over the next year will be a framework including”

· Having the Water Industry Commission for Scotland review our long term plan proposals for councils and benchmark them against mature companies overseas

· Continue to review projects to ensure they are delivering on our key proposals and remain consistent with the scope

· Measure the costs of our consulting advice and pipe laying rates

· Set the basis for how we will measure a real improvement in the efficiency of our operations and maintenance alliance with Fulton Hogan.

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Provide support for the Long Term Plan and Infrastructure Strategy development

· Advice to support the development of councils’ infrastructure strategies and long term plans

· Make step change improvements to your strategic framework in time for the 2021-2014 SOI to improve linkages between programmes of work and long range outcomes

· Capture the total cost of providing water services to the community

We are currently preparing our advice for councils 2021-31 long term plans.

Over time we will look to improve linkages between our programmes of work and the long range outcomes we are looking to achieve.

Our long term plan advice will be in the form of multiple investment options with comparative impacts on household rates.

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Responding to growth needs

· Work with councils to support the process and ensure optimised investment.

· Ensure councils have high level plans for key growth areas

· Work with councils’ planning teams to ensure the three waters are considered in an integrated way and district plans and policies reduce the impacts of growth. Eg. Providing for green infrastructure.

Across our councils we will continue to provide strategic advice to respond to significant growth pressures and deliver a programme of future growth planning studies.

We will work with councils around their water policies and District Plans.

Our investment and decision making models will help us to plan for growth and increased demand without any detriment to the environment.

We will consider the use of green infrastructure which can provide additional environmental amenity and resilience benefits.

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Sustainability of water

· Advise on options to ensure the supply of drinking water is sustainable now and into the future

· Advise on activities that will lead to reduced demand

· Provide a proposal to reduce water demand by 10% per person per day

We are looking to reduce the day-to-day demand for water consumption by improving network management (reducing leaks and optimising water pressure) and helping residential customers to use water more efficiently through education campaigns. We will also be improving our understanding of drinking water demand and supply through increasing our data and analytics capability.

We will provide advice on reducing drinking water consumption as part of our long term plan advice to our councils.

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Climate change

· Explore ways to mitigate the environmental impacts of climate change

· Investigate broader initiatives for responding to climate change issues

Our response to climate change impact need to include both making our own contribution to reducing carbon emissions, and ensuring our services remain resilient to the changing climate.

We will provide advice as part of our long term place advice to council.

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Prepare the company for the impending regulatory change

· Update the councils on the implications of any new legislation

· Assist the Water Committee prepare joint submissions

We will be undertaking business cases to assess the impact on our councils’ infrastructure and the company in time for councils’ long term plan investment decisions.

86 05 March 2020

Wellington Water Committee

01 March 2020

File: (20/208)

Report no: WWC2020/2/71

Company Update Report

Purpose of Report

1. To provide the Wellington Water Committee with an overview of the activities of Wellington Water Ltd (the company).

Recommendations

That the Committee receives and notes the information.

Company Update Report

The company report follows the story line of:

a) Looking after existing infrastructure– the section focuses on what has happened over the quarter and what we did about it;

b) Getting ready for the 2021-31 Long Term Plan – Every three years we provide advice to councils on the activities and budgets we think should be included to meet the outcomes desired by owner councils;

c) What have we done with your priorities – this section reports on activities over the quarter focused on your four priorities of:

i. Responding to growth;

ii. Sustainable drinking water supply;

iii. Healthy urban waters: improving the water quality of our streams, rivers and harbours; and

iv. Mitigating carbon emissions.

Firstly, the company reports to you on what is changing around us through our environmental scan.

Environmental Scanning

Wellington City Council Mayoral Taskforce

On 20 February 2020 the Wellington City’s Mayor announced a Mayoral Taskforce on Wellington city’s three waters services. The Terms of Reference of the Taskforce have now been endorsed.

The purpose of Wellington City’s Mayoral Taskforce is for Wellington City Council to conduct an inquiry into the nature and scale of issues facing the water services network and its management, to inform future decisions on how they can best be resolved. The Terms of Reference of the Mayoral Taskforce are said to be wide ranging to ensure all relevant matters to understanding the issues with water services can be understood.

The membership of the Mayoral Taskforce comprise: Wellington City councillors and representation from the Wellington Water Ltd Board, the Wellington Water Committee, Iwi mana whenua, water experts the community.

The Mayoral Taskforce will be reporting back to Wellington City Council with its recommendations. It is intended that any recommendations from the Mayoral Taskforce relating to the other shareholders will be addressed through the Wellington Water Committee.

The Chief Executive of Wellington City Council will also be establishing an advisory group comprising of Council officers, Wellington Water staff and independent experts to support the Mayoral Taskforce to carry out its functions.

The Mayoral Taskforce and Wellington Water Ltd will work together to understand the issues facing water services in Wellington city, and what is required to be done to deliver a sustainable long term water services network that the community can have confidence in.

Water reform

The Government continues to steer through major water reform proposals.

The Taumata Arowai – the Water Services Regulator Bill was introduced into the House in December 2019 and a draft submission has been prepared on behalf of the Committee for its review. There is a separate paper on this topic in the agenda.

The Bill establishes Taumata Arowai – the Water Services Regulator as a new Crown agent and provides for its objectives, functions and operating principles. It also provides for its governance arrangements including the establishment of a board and Māori Advisory Group.

The main issues in the draft submission addresses the proposed dual roles of the regulator (regulator and capability builder) and the resulting size and cost of the entity, which is likely to fall on local government.

The Bill, once enacted, will allow the existing establishment unit within the Department of Internal Affairs to transfer to the new regulator, possibly in late 2020.

The regulatory regime will be set via the Water Services Bill which is expected in the House around April 2020. The consultation period for this Bill is much longer and will go through beyond the general elections. This means there will be a gap between the Crown agency being created and the new regulatory regime going live.

A Cabinet paper on Three Waters Service Delivery and Funding Arrangements has been released. The Government has signalled that it expects local government to make progress on voluntary sector-led reforms to service delivery and has set a one year deadline, beginning in 2020. The Cabinet paper and minutes are attached. Further advice will go to Cabinet in mid-2020, including advice on a possible national three waters infrastructure fund.

The company is continuing to assess the impact of the reform proposals on the business. It will ensure the financial implications of the increased standards any service delivery changes are included within the councils’ long term planning considerations. The company is undertaking a business case assessment to inform this process.

Looking after existing infrastructure

Safe and Healthy Water

We delivered 100% safe drinking water to customers across the Wellington metropolitan region and took initiatives to protect those same customers from the hazards of leaking and overflowing wastewater.

The challenges of protecting people from the hazards of leaking and overflowing wastewater were very clearly demonstrated following the Dixon Street tunnel collapse. As soon as we were aware of the impending spill we closed all the beaches between Oriental Parade and the Port. We posted signs and put a number of our people on the ground to reinforce the risk to human health. The risk was very much reduced by the storage facility under the Michael Fowler Centre which holds 4-5 hours of wastewater. As the storage filled we were able to warn people well in advance of the actual spill.

We delivered drinking water to all customers across the South Wairarapa District Council (SWDC) area but this did not comply with the Drinking Water Regulations. We are working hard to upgrade all the plants and are working towards 100% safe drinking water by the end of the calendar year.

Respectful of the environment

Our long run target of zero uncontrolled spills of wastewater to the environment was not achieved during quarter 2 because of the Dixon Street spill over a two day period. This resulted in beaches in the inner harbour closed for 9 days while the wastewater was naturally diluted and disinfected by the sea and sun, and the Rahui ran its course.

We have applied to the Greater Wellington Regional Council (GWRC) for an emergency consent to discharge the wastewater to the sea.

The length of discharge could have been much longer had it not been for the efforts of the Wellington Water family. First we established an overland pumping option which was then replaced by a semi-permanent pipe laid on top of Willis Street. Regrettably the semi-permanent pipe closed Willis Street and this has affected traffic movements and businesses in this area. We have promised Wellington City Council (WCC) to have the permanent solution in place by 31 March 2020.

The collapse of the connection between the wastewater line and the tunnel into the interceptor tunnel to Moa Point is a much bigger job as it is complex and very deep. We are still developing the options.

We are currently managing five consent issues with the GWRC as follows:

Ø Dixon Street collapse discharge;

Ø Moa Point waste water outfall quality outside limits due to sludge pipeline failure;

Ø Houghton Bay overflow due to blockage of weir;

Ø Martinborough wastewater plant discharging due to human error and failure of equipment; and

Ø Kingston water burst resulting in sediment discharge to Island Bay.

Resilient Infrastructure

Our service request performance improved significantly over the quarter but it is still not meeting the target response times specified by councils.

Our overall customer satisfaction from call backs is 83% up from 66% in quarter 1. Complaints and escalations have reduced from 165 to 46. Eighty percent of complaints stem from the WCC area.

We are getting close to meeting the performance targets for some councils but are a long way off for the WCC. We are doing much better on attendance of urgent call outs but still have a large backlog in non-urgent call outs. This is most likely to deteriorate further during quarter 3 because of the normal seasonal increase in service issues due to the dryer summer months and customers increased levels of reporting as they see water being wasted.

In individual quarter 2 performance reports to councils we explained that due to the increase in the number of service requests and the increases in cost of doing the work, we cannot meet the targeted levels of service for the funding provided. We are working through these issues with councils directly.

We have also explained why we believe our new Alliance delivery model is providing increased value to councils as it beds in. We are keenly aware this model has still to demonstrate its true value. We expect to see steadily increased performance over the next six months so long as we don’t have any more emergencies.

We have increased the levels of service in the work we do by providing enhanced customer service, enhancing the quality of the data associated with the repairs we do, and we are ensuring all our people work safe working hours (max 70 per week).

On the cost side we set ourselves the target of delivering the service for the same budget, plus CPI. In doing so we have avoided a nominal 5.5% increase in cost experienced by other local authorities as they have re-tendered their infrastructure contracts. Of course this is hard to prove because budgets have had to increase to account for the increased workload.

It is a shame in our minds that the number of service requests and the increased costs of doing the work have masked this value we have created.

We are already getting insight from our field crews around data. We now know that nearly 50% of all service requests relate to tobies or residential connections. The good news is that our pipe network is not causing all the breaks but the bad news is that workmanship and materials used at the roadside are failing more often. We have found that a mechanical “push” connection in these locations are only lasting 12 years. We are eliminating this element from all future repairs.

Our renewals and capital programme is proceeding satisfactorily. We present our investment case on the Omāroro Reservoir to WCC in early April. This is a significant asset as it provides operational resilience, allows for growth, and provides storage in the event of a major earthquake. The reservoir significantly boosts the water supply to the CBD which includes up to 100,000 people travelling into the city from the other council areas.

We had one weather emergency event during the quarter which was a heavy rainfall event which caused flooding in Porirua City Council (PCC), Hutt City Council (HCC) and Upper Hutt City Council (UHCC).

Getting ready for the 2021/31 Long Term Plan

Every three years we provide you with strategic advice and asset management advice to support the delivery of your Long Term Plan (LTP) to your rate payers. Over the past three years we have really worked hard to improve the evidence base to support our proposals.

We are delivering the advice in three stages, as follows:

1. Early signals advice (honest and open feedback across the priority areas);

2. Option generation (we look into a number of investment options); and

3. You select the preferred option (we provide the preferred investment option for inclusion within the LTP).

We are currently in the middle of stage 1. Early signals presentations have been given to HCC and PCC. Early signals presentations are planned for UHCC, WCC and finally GWRC.

We have engaged the Water Industry Commission for Scotland to peer review our work and provide independent advice back to councils.

Your priorities

Growth

We continue to progress our growth cell investigations across the region and work with councils to develop plans to enable growth. Over the last quarter we have started on the growth catchments in UHCC area.

Refer to the LTP paper for updates on the three other council priorities.

The company

The 2019 year was a year of consolidation in the way we deliver our services. We have completed the execution of our service delivery strategy with the exception of transferring the remaining wastewater plants into the new regional wastewater contract.

We still have work to do to fully embed the new Alliance with Fulton Hogan into Wellington Water. Bringing together two cultures is not that easy but we are making good progress. We still have some rub points with council contact centres to iron out but the deployment of some new business processes by June 2021 should straighten this out fully.

We are well into the work of re-baselining our performance management system. You will recall we received advice form Audit NZ that our performance management system had a number of gaps and in its current form would not pass the 19/20 audit. This work has affected councils because we couldn’t fully report quarter 1 and we had to use confidence ranges on some metrics for quarter 2. Every quarter we are improving our systems and by the end of the 19/20 year we should be well set up with a fully transparent, auditable performance management system councils can have confidence in.

We had a lift in the number of Health and Safety incidents during the quarter. These were related to contractors working on our emergency events. Maintaining standards while working long hours and inducting new suppliers onto our sites is challenging. We are now seeing this situation settle down.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 Three-waters-service-delivery-and-funding-arrangements-approach-to-reform	87

Author: External Author (Wellington Water Ltd)

draft 123 05 March 2020

Wellington Water Committee

01 March 2020

File: (20/209)

Report no: WWC2020/2/72

Wellington Water Committee Draft Update for Councils

Purpose of Report

To discuss the proposal to provide each shareholder council with an update on Wellington Water activities and approve the Committee’s initial report.

Recommendations

That the Committee:

(i) approves the draft Wellington Water Committee Update report; and

(ii) authorises the Chair to finalising the Wellington Water Committee Update report and forwarding it to each Council.

Summary

There is no formal procedure by which the Wellington Water Committee reports back to the six shareholder councils.

It is recommended that the attached report be approved by the Committee, to be finalised by the Chair and forwarded to each council.

The Chair is available to speak to the report at each council meeting if required.

Context

The Wellington Water Committee meets quarterly as a joint committee of councils under the Local Government Act 2002, and in accordance with its Terms of Reference set out in the Shareholders and Partnership Agreement.

There is no formal procedure for how the Committee is expected to report back into the six shareholder councils. To date, it is up to the individual representatives and their council as to how this is done.

Although some representatives may table the minutes from the Committee’s meetings and/or provide a verbal report back to their Council, for some, it might mean that elected members are not receiving a regular update on the activities of the Committee or Wellington Water from a governance perspective.

A formal reporting mechanism could help with the dissemination of information back into the councils and ensure elected members are kept up to date. The report could be prepared for the Committee to review as a draft, based on the Committee agenda. It would then be finalised following the meeting, prior to forwarding it to each council.

The Committee Chair is available to talk to the report at each Council meeting if required.

A draft report has been prepared as an initial concept and is attached for your feedback.

Next steps

If the outlined approach is supported, the draft report will be finalised and forwarded to each council for their agendas.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 Wellington Water Committee Update for Councils following 5 March meeting	124

Author: External Author (Wellington Water Ltd)

Attachment 1

Appendix 1 Wellington Water Committee Update for Council following 5 March meeting

Wellington Water Committee Update for Councils

This report has been prepared by the Wellington Water Committee for the purpose of updating councils on the activities of the Committee.

The Wellington Water Committee met on the 5 March 2020 and discussed the following items.

Wellington City Council Mayoral Taskforce

On 20 February 2020 the Wellington City’s Mayor announced a Mayoral Taskforce on Wellington city’s three waters services. The Terms of Reference of the Mayoral Taskforce have now been endorsed by Wellington City Council.

The membership of the Mayoral Taskforce comprise Wellington City councillors and representation from the Wellington Water Ltd Board, the Wellington Water Committee, Iwi mana whenua and the community.

The Mayoral Taskforce and Wellington Water will work together to understand the issues facing water services in Wellington city, and what is required to be done to deliver a sustainable long term water services network that the community can have confidence in.

Three Waters Reform

The Government continues to steer through major water reform proposals.

The Taumata Arowai – the Water Services Regulator Bill was introduced into the House in December 2019 and the Water Committee has made a joint submission.

The main issues to the draft submission addresses the proposed dual roles of the regulator (regulator and capability builder) and the resulting size and cost of the entity, which is likely to fall on local government.

The Bill, once enacted, will allow the existing establishment unit within the Department of Internal Affairs to transfer to the new regulator, possibly in late 2020.

The rest of the new regulatory regime will be set via the Water Services Bill which is expected in the House around April 2020. The consultation period for this Bill is much longer and will go through beyond the general elections.

No further announcements have been made by the Government about capital funding assistance to the sector.

The company is continuing to assess the impact of the reform proposals on the business. It will be important to ensure the financial implications of the increased standards are included within the councils’ long term planning considerations.

Wellington Water Statement of Intent

Wellington Water Ltd tabled its draft Statement of Intent (SOI) that sets out its strategic intentions for 2020/2021. The SOI has been drafted in response to the Letter of Expectations issued by the owner councils and responds to councils’ 2018-2028 Long Term Plans and annual plans for 2020/2021.

The company’s strategic intentions remain largely the same as the previous two years as their work must fit within the current funding arrangements with the councils.

The document is now out for consultation with councils. The Water Committee has a role to collate the councils’ feedback to the company. We are aiming to have the councils’ feedback received by 17 April 2020.

Councils’ Long Term Plans

Wellington Water Ltd provides your council with strategic advice and asset management advice to support the delivery of your Long Term Plan (LTP).

The advice is being delivered in three stages, as follows:

1. Early signals advice (honest and open feedback across the priority areas);

2. Option generation (looking into different investment options); and

3. The Council selects the preferred option (the company provides the preferred investment option for inclusion within the Long Term Plan).

The company is currently in the middle of stage one.

Early signals presentations have been given to Hutt City Council and Porirua City Council. Early signals presentations are planned for Upper Hutt City Council, Wellington City Council and Greater Wellington Regional Council.

The company has engaged the Water Industry Commission for Scotland to peer review its work and provide independent advice back to councils.

Wellington Water Ltd’s Company reporting – Half year and Company Report

The Committee received Wellington Water Ltd’s Half Year Report and a quarterly update.

During the first half of the 2019/20 year, the network maintenance alliance, Fulton Hogan, was integrated into the company. A Contractor Panel was also initiated. The benefits of a more collaborative way of working, that will benefit Wellington Water, its suppliers and most importantly, the people of the region, is beginning to be seen.

The first of four wastewater treatment plants also transitioned to the new contract with Veolia.

South Wairarapa District Council became a sixth shareholding council. The drinking water is not compliant with the national standard and this has resulted in the company not achieving on this measure. The company is actively working, in conjunction with the council, to address this issue.

The company continues to face challenges with councils’ three waters networks with increasing numbers of reported water leaks and two major wastewater network failures: the Dixon Street tunnel collapse and discharge into the Wellington harbour and the Moa Point sludge pipeline failure.

There are currently five consent issues with the Greater Wellington Regional Council as follows:

· Dixon Street collapse discharge

· Moa Point wastewater outfall quality outside limits due to sludge pipeline failure

· Houghton Bay overflow due to blockage of a weir

· Martinborough wastewater plant discharge due to human error and failure of equipment; and

· Kingston water burst resulting in sediment discharge to Island Bay.

The company is getting close to meeting the service delivery performance targets for some councils with the exception of Wellington City Council.

131 05 March 2020

Wellington Water Committee

02 March 2020

File: (20/215)

Report no: WWC2020/2/73

Long Term Plans Update

Purpose of Report

1. This report provides an update on our approach and progress in shaping up the Three Waters component of our client councils’ 2021/31 Long Term Plans (LTPs).

Recommendations

That the Committee:

(i) receives the report; and

(ii) notes that Wellington Water Ltd will work across our client councils to help them to reach agreement on regional Long Term Plan investment priorities such as those for bulk water and jointly-owned wastewater systems.For the reason(s)

Summary

2. Wellington Water is developing the Three Waters component of the 2021/31 LTPs for our six client councils.

3. The relatively widespread election of new councillors provides a useful opportunity to engage with our client councils on the Three Waters issues that the region faces over the next 30 years. Recent, high-profile asset failures have also served to highlight the issues.

4. We are improving how we facilitate our stakeholders understanding of the issues and strengthening the link between the level of investment and achievement of long term outcomes, including through presenting indicative investment requirements (‘early LTP investment signals’) directly to each council.

5. For the first time we will be presenting proposed LTP programmes with indicative rates impacts. This will enable the region’s ratepayers to better understand the impact of the investment required to achieve the desired long term outcomes.

6. The extent of the investment required for the bulk water network will need to be agreed between GWRC and the four city councils. These investments contribute to the city councils’ total Three Waters costs through the bulk water levy. Similar agreement will need to be reached in relation to shared wastewater treatment assets.

Responding to our Regional Challenges

7. During the next six months, we will be preparing the Three Waters components of our client councils’ LTPs.

8. As part of the council engagement process we are presenting a consolidated picture of the range of challenges that we face in the region over the next 30+ years and to the nature of our proposed responses, as well as introducing new political stakeholders to the nature and state of the Three Waters services.

9. During our Council inductions we are outlining the Three Waters strategic priorities facing the region identified through our engagement with councils over the last 12 months. These priorities are:

a. looking after existing assets (including through renewals & critical service upgrades);

b. enabling growth;

c. ensuring a sustainable water supply;

d. enhancing the health of our urban waters; and

e. responding to climate change through both mitigation and adaptation.

10. We are also signalling that this prioritisation will see a lesser focus placed on other key issues such as seismic resilience and urban flooding.

11. The sense that we are getting from the induction discussions we have had to-date, and from the associated engagement with CEOs and their executive teams, is that this LTP brings with it an opportunity to engage on the need to increase investment levels across all Three Waters activities. For example, HCC requested an ‘early LTP investment signals’ presentation setting out the scale of the investment required in both opex and capex if meaningful outcomes are to be achieved across the priority areas.

Near term investment towards long term objectives

12. The majority of our service goals will require decades of investment and effort to achieve their long term performance objectives. Many performance objectives and targets are also expected to change over the next 30 years as community expectations shift, and to become more challenging to achieve through the impacts of growth and climate change.

13. Until recently, our engagement and documentation has not clearly articulated the company’s confidence in how we are tracking towards the long-term performance objectives over the relatively short LTP cycles. For example, we know that our stormwater modelling work will ultimately reveal the true extent of risk to habitable floor flooding, which is likely to be a higher number of properties than previously anticipated. However, our progress over the next 3-6 years with respect to this outcome, and the number of habitable floors impacted, is not fully transparent to our key stakeholders.

Three Waters Regional Investment Statements

14. Providing our client councils with a concise document that clearly and simply describes the state of their Three Waters networks, the challenges that we face and the nature of the interventions is not an easy task. The Three Waters services are interdependent, and the issues we are facing are complex and are often regional or cross city boundaries.

15. In response to this issue, we have devised a new key artefact to improve the level of knowledge and engagement across the region. The Three Waters Regional Investment Statement (Appendix 1) highlights the key priorities for investment by setting out:

a. the key challenges and drivers for change regionally

b. current and future performance ratings

c. our short- and medium-term objectives in addressing the challenges

d. the nature of the interventions across infrastructure, policy and education.

16. The intention is that the Statement will inform the simple investment story that sits at the front of each council’s proposed LTP programme.

Providing an early signal of investment needs

17. As noted above, in response to discussions with their new CEO and mayor, HCC requested that we provide them with a report outlining the state of their networks and services, the extent of the problems and challenges, and an indication of the funding and investment required to achieve the targeted outcomes. This was to give the councillors and understanding of what would be required in the upcoming LTP, and the consequences for ratepayers.

18. These ‘early LTP investment signals’ were presented to the councillors on 29 January. The story identified the need for a significant uplift in both opex (+25%) and capex (+$240m over 10 years). HCC has now asked us to come back to them in a few months’ time and present three potential options: a refined version of the material already presented, the same scenario but also including planned growth, and a scenario with a slower renewals programme^{^[1]}. It is expected that these will be used to inform pre-LTP consultation specifically on Three Waters issues.

19. We are now in the process of scheduling similar discussions with our other client councils (together with pre-briefings for their leadership teams) and expect that this will result in similar requests to present alternative options with different prioritisation and timescales.

Renewals – looking after the existing assets

20. The renewal of existing assets is critical to ensuring we continue to deliver safe and reliable services. Your current LTPs are largely based on existing funding envelopes, with some changes where councils have agreed to increase funding to improve specific service goals and outcomes (such as resilience, reducing wastewater overflows, etc.)

21. Operating under a relatively fixed budget means that renewals have remained at essentially the same level. An increase renewal activity can be expected to be required as assets move closer to nominal end-of-life and as age- and condition-related issues start to emerge. As we progressively gain more knowledge about the state of existing assets this is giving us a better picture of the extent of renewals likely to be required in future LTPs.

22. Renewals planning for the 2021/31 LTP has been proceeding using all available data to compile end-of-life projections at asset level, but for a significant proportion of assets the lack of condition data has meant that ‘text book’ lives have had to be adopted.

23. Regionally we are expecting a significant increase in renewal investment need over the course of the next and future LTPs. This will also require a material uplift in the opex required to undertake condition assessment and engineering investigations.

Sustainable Water Supply

24. As outlined in previous meetings, and discussed in a separate paper for this meeting, the metropolitan region has a sustainable water supply challenge. High growth and persistently high demand will result in more frequent water restrictions unless gross per capita demand by around 10% within the next 5-6 years.

Healthy Urban Waters

25. Improving the health of our urban waters is one of the most complex issues that we will face over the next 30 years. Action is essential, and the requirement is being driven through both public expectation and national and regional standards.

26. During the past quarter, we have established a directional strategy that identifies the expected key activities. These include a range of capex, opex and policy-based interventions that will be prioritised in the 2021/31 LTP. This includes investments that support other outcomes, including investment in growth (capacity upgrades) and targeted asset renewals (replacing leaky pipes).

27. Part of the solution will involve investment in wastewater pipes and treatment plants (WWTP) that are jointly owned by our client councils (i.e. Seaview WWTP that is owned by HCC and UHCC, and Porirua WWTP which is a JV between PCC and WCC). Alignment will need to be achieved between the co-owners about the level and timing of investment as part of the LTP process.

Climate Change pressures

28. Climate change requires both mitigation (reducing emissions) and adaptation (responding to the change) responses. Increasing dry periods, rainfall intensification and sea level rise will impact water supply, urban flooding and our wider water services.

29. We are developing good network models to help us understand and plan for the impacts of climate range but more work is required together with councils to understand risks and vulnerabilities and make the appropriate land use decisions (i.e. “defend” or “retreat”) that consider water services as part of the overall picture.

30. We have established the amount of greenhouse gas emissions arising from the Three Waters activities and the company’s operations. Our next steps include working with you and the councils to set emission reduction targets for the 21/31 LTP, including identifying the investment needs.

Reaching agreement on bulk water investment

31. The cost of the bulk water services delivered for GWRC are allocated across the city councils (i.e. HCC, PCC, UHCC, WCC) through the bulk water levy and form part of their total Three Waters costs. Any increase in investment is ultimately passed through to the cities’ ratepayers.

32. Planned bulk water investments include projects to deliver on the drinking water safety plan, to ensure a sustainable water supply and meet the drought resilience level of service and provide seismic resilience (i.e. the cross-harbour pipeline).

33. As part of this LTP process the relevant councils (i.e. GWRC and the city councils) will need to reach agreement on which investments are to be included. The costs and benefits (i.e. the outcomes) of the bulk water projects will need to be weighed against those from other priority areas as the total investment required across all priorities is likely to be unaffordable.

Next Steps

34. We will continue to engage with our political stakeholders on the challenges and proposed responses, and to work with council officers on the development of the LTPs over the next six months. This includes completing the ‘early LTP investment signals’ discussions with GWRC, UHCC and WCC.

35. We will also be engaging with mana whenua on our proposed approach to the key challenges. This is a good opportunity to strengthen our partnership and gain a richer understanding of what is important to Iwi.

36. We expect to prepare two or three investment options for each council, and to provide estimates of the rates impacts using our own financial model. This will provide a greater understanding of the link between the programmes of work, the achievement of outcomes, and the cost to the customer.

No.	Title	Page
1 ⇩	Appendix 1 5.A RIS Three Waters Dashboard .2	133

Author: External Author (Wellington Water Ltd)

137 05 March 2020

Wellington Water Committee

02 March 2020

File: (20/217)

Report no: WWC2020/2/74

Climate Change

Purpose of Report

1. This report provides an overview of Wellington Water’s proposed response to climate change (see Appendix 1).

Recommendations

That the Committee:

(i) notes the report;

(ii) provides feedback on the proposed response programme and its alignment to your councils’ climate change strategies and action plans; and

(iii) notes proposed emission reduction targets and the associated investment needs will be included in all of council Long Term Plan (LTP ) proposals an consolidated for presentation to the Committee at its June meeting.

Summary

2. Responding to climate change is one of Wellington Water’s key regional priorities. Our response includes mitigating greenhouse gas emissions from our operations and capital investment, working with our client councils and communities to adapt and remain resilient to climate change, and establishing governance over our climate change risks and the overall response programme.

3. The setting and achievement of an operational emissions reduction target (or targets) for Wellington Water will require specific councils to commit to the necessary investments. We will provide information on the potential reduction targets and the associated investments at the next Committee meeting in June.

Climate change is a critical risk to our water services

4. Our water services are highly integrated into climate processes, and climate change will have impacts on all three waters:

(a) Drinking water will be affected by changes in seasonal water availability and sea level rise (for the aquifer).

(b) Wastewater will be affected by rainfall intensity, temperature, groundwater levels and coastal erosion.

5. Climate change will have impacts across all of our customer outcomes and most, if not all of our service goals. For example, it is explicitly acknowledged in the goal that “we minimise the impact of flooding on people’s lives and proactively plan for the impacts of climate change”.

The need to respond has been established at the national and local level

6. The recent passing into legislation of the Zero Carbon Act will see the establishment of national greenhouse gas emissions ‘budgets’ (limiting the total amount of emissions) that our client councils and Wellington Water will need to operate within. The legislation also enables the new Climate Change Commission to require Wellington Water to provide it with its climate change adaptation plans. Consideration of climate change is already a requirement under the RMA.

7. The majority of our client councils have declared climate change emergencies and three have set emissions reductions targets and have developed or are developing plans for achieving these targets while others are looking at establishing strategies or targets. These targets, action plans and strategies already, or will ultimately incorporate WWL’s delivery of the water services.

8. Climate change is already recognised in our current Statement of Intent, including explicitly through the measure that “our customers will feel confident we’re working to understand and reduce our carbon emissions because we’ll have a target for reduced operational emissions and a plan for achieving the target” (#15).

Our response must incorporate mitigation, adaptation and risk governance

9. To meet these national and local requirements our response will need to include both mitigation (reducing our emissions) and adaptation (managing the impacts of climate change). Our mitigation activities need to encompass both our operational emissions and the emissions resulting from our capital investment. Our adaptation activities cannot be undertaken in isolation – they must be part of an overall community and infrastructure response lead by the councils.

10. The completion of our operational greenhouse gas emissions inventory earlier this year has enabled us to identify the potential options for emissions reduction. Achieving these reductions will require specific capital and operating expenditure from individual councils if we are to achieve an overall WWL target. We expect to present proposed targets and the associated investment needs to you at your June meeting.

11. An important part of our response is ensuring that we have governance in place to monitor our risks and the delivery of the response programme. Having good governance in place is also a requirement of the new Zero Carbon Act. Clause 5ZV of the Act enables the government or the new Climate Change Commission to require entities such as WWL to report on its climate change adaptation risks and risk management.

12. The attached presentation slides (Appendix 1) summarise the issues we face and the proposed response across the four response areas of governance, operational carbon reduction, capital carbon reduction, and adaptation.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 Our response to climate change	138

Author: External Author (Wellington Water Ltd)

Attachment 1

Appendix 1 Sustainable Water Supply Policy

Water Committee Meeting

Sustainable Water Supply Target and Policy

Purpose

1. Our Sustainable Water Supply Policy sets out the objectives and principles we will adopt to deliver on our councils’ stated preference for conserving water over constructing a new source. This paper presents our proposed Policy and water conservation target for the Water Committee’s feedback and endorsement prior to their being presented to our client councils during the development of 2021/31 Long Term Plans.

Note* The sustainable water supply programme commenced prior to SWDC joining WWL and has been based around HCC, PCC, UHCC and WCC all sharing a common water supply. The target and policy reflects this scenario, but it is anticipated that it can also be adapted to suit SWDC’s specific water supply challenges and climate change objectives. This will be explored in the second half of this financial year so that relevant activities can be considered for the next SWDC LTP.

Recommendations

It is recommended that the Committee:

(i) notes the report;

(ii) provides feedback on, and endorses in principle the target and policy; and

(iii) discusses the implications of the current shortfall in the drought resilience level of service and the absence of data and information to support residential water use efficiency.

Summary

2. We are not achieving our target level of service for drought resilience. We have insufficient supply capacity to be able to meet demand in a 1-in-50-year drought event (i.e. a 2% likelihood of shortage) due to capacity constraints at the Te Marua Water Treatment Plant (WTP). An upgrade to the WTP is in the design phase but the capital investment is not yet included in Greater Wellington Regional Council’s (GWRC) Annual or Long Term Plans (LTP). As noted in a separate paper discussing the development of LTPs, the city councils and GWRC will need to be aligned on the need and timing for this investment.

3. With forecast growth and at the existing level of demand, the date that a new water source will be required will be earlier than the previous estimate of 2040, and potentially as early as 2026. The new source and associated network capacity increases are expected to cost more than $250m and be difficult to consent.

4. Conserving water is also the best approach environmentally (including with respect to climate change), culturally and strategically.

5. To avoid commencing the development of the new source within the next two LTP periods we need to reduce gross water demand from 360 litres per person per day (l/p/d) down to 320 l/p/d and complete the Te Marua WTP upgrade, both within the next 5-6 years.

6. The draft Sustainable Water Supply Policy (Appendix 1) aligns with the preference expressed by our client councils that we prioritise water conservation ahead of constructing a new source. It describes at a high level our objectives and the principles we will adopt to achieve the required demand reduction.

7. We have also developed our Sustainable Water Supply Action Plan, setting out the work programmes and projects required to achieve the demand reduction target, consistent with the Policy. The Action Plan is being used to inform the preparation of our ‘early LTP investment signals’ presentations and draft LTP programmes. The majority of the projects are currently unfunded or will require an increase on existing funding (especially opex).

8. The level of leakage and the water demand relative to other similar cities and networks suggests the targeted level of savings can be achieved. However, with limited information about where and how water is being used, the need for customer behaviour change that we can only attempt to influence and cannot control, and the relatively short timeframe, means that achieving the targeted savings will be challenging.

9. Managing demand on SWDC’s water supplies will support the long term sustainability of water supply for the district. Per capita water use is high, though will be influenced through it being a more rural environment. We will consider the issues and options for ensuring a sustainable water supply for SWDC in the second half of the financial year.

We are not achieving our drought resilience level of service

12. Our client councils have identified that enabling growth is a key strategic priority for us in the 2021/31 LTPs. Planning to meet future growth and manage demand is also one of our 12 service goals.

13. A key result area for this service goal is that the water supply network meets normal demand except where a drought is more severe than in a 1-in-50-year return period event. This level of service is often referred to as being a 2% chance of shortage.

14. Should a drought of this severity occur, the expectation is that we would progressively work through the water use restriction levels (sprinkler bans, outdoor use bans) and accessing emergency allocations before commencing water use rationing.

15. We have been reporting to our client councils that we have not been achieving the expected level of service since 2017. While there is sufficient water supply and storage available to meet the 2% target, constraints in the Te Marua WTP mean that we would be unable to meet normal demand from about a 1-in-15 year event (8% likelihood). Should an event of this magnitude occur we would commence water use restrictions while still having relatively high volumes available in the storage lakes.

Meeting the level of service requires an upgrade of the Te Marua WTP

16. The preferred upgrade approach for Te Marua WTP has been identified and is now in detailed design.

17. At this stage only the design costs have been included in GWRC’s Annual Plan. The capital investment is not included in either the Annual Plan or the current LTP. The cost of the upgrade is currently estimated to be in the order of $15-20m.

18. Our level of drought resilience will get progressively worse as growth occurs, increasing the likelihood that restrictions will be required. Discussions will now need to commence with GWRC and the city councils that pay the bulk water levy about moving this project into the capital programme for the 2021/31 LTP as part of the overall sustainable water supply package.

Growth rates are exceeding earlier forecasts

19. The most recent population figures for the Wellington metropolitan region show that growth rates are exceeding both historical rates and the rate anticipated when the water supply and demand balance was last reviewed in 2017. Recent growth has been close to 2% per annum and the forecasts used for regional planning purposes (Forecast ID and Stats NZ High Growth) show a similar rate continuing for the immediate future.

20. Total growth is projected to be in the order of 60,000 (Forecast ID) to 80,000 (Stats NZ High) by 2040. This is an increase of 15-20% from today. With the trend towards smaller number of inhabitants per house there will be an even greater percentage increase in the number of connections.

Figure 1: Regional population projections, with the current population estimate shown in red. The recent growth rate is consistent with the Stats NZ High growth scenario (light blue) and ahead of Forecast ID (purple).

Per capita water demand is no longer decreasing

21. From around 2010 to 2016 per capita water demand tracked steadily downwards from around 450 l/p/d to around 360 l/p/d. The reason for this decline is understood to be the result of a combination of changes to operational leakage management and some customer behaviour change (such as through installing water efficient fittings, etc.).

22. Since around 2014, gross per capita demand has remained at the same level. The limited information we have suggests that total absolute demand (i.e. megalitres per year) is increasing across all demand sources (i.e. leakage, commercial and residential). The increase in reported leaks over recent years suggests that at least some of the total demand increase is a result of network leakage.

Figure 2: Trend in regional water usage over time. Total usage (blue numbers above bars) declined year-on-year until around 2014. Most of the improvement over that period appears to be through reduced leakage

High growth and high demand have brought forward the need date for a new source

23. When we last reviewed the supply-demand balance in 2017 the forecast growth was lower than today. This means that the earlier forecast that we would need a new source available by 2040 is no longer valid.

24. Using the latest growth estimates and the current gross per capita demand the new source is now forecast to be required somewhere around 2033 (Forecast ID) and potentially as early as 2026 (Stats NZ High).

25. These forecasts relate to our having sufficient water to meet demand. The Te Marua WTP upgrade needs to be completed regardless of how the growth unfolds, to enable us to treat the water when we need it.

An initial 10% demand reduction is required for the investment to be deferred

26. The earliest forecast need date for the new source is just six years away. This reflects that our system is already operating at close to 90% of capacity, and means that we need to move quickly to reduce consumption if the investment is to be deferred^{^[2]}.

27. As a minimum, we need to achieve savings that offset growth. Anything less will push us even closer to (or beyond) the minimum level of service and investment in the new source.

28. Our modelling indicates that we need to achieve a reduction of 10% on a per capita basis over the next 5-6 years to offset forecast growth over that same period. This represents a reduction of 40 litres per person per day in gross demand, from the current actual demand of about 360 l/p/d^{^[3]} down to 320 l/p/d.

29. In gross demand terms, this reduction would hold average daily demand at around 150 megalitres per day (ML/d). The total savings required is 8 – 16 ML/d, depending on which growth forecast is applied.

Conserve or construct? Conserve is a clear winner

30. In our current situation we have two choices, to ‘conserve’ water (i.e. increased demand management) or to ‘construct’ a new water source and additional treatment. The conserve option stacks up the best economically, environmentally, culturally and strategically:

Why not construct?

Why conserve?

Carbon emissions from construction & ongoing operations

Diminishes the freshwater source & Te Mana o te Wai

Environmental impact of site footprint

$250m+ investment added to bottom line of financially challenged city councils

Limited contribution to regional resilience

Perpetuates inefficient water use behaviours

Reduces emissions from energy and treatment

Aligned with national and regional freshwater policy

Enhances Te Mana o te Wai

Leaves more water in the natural environment

Reduces investment needs for new drinking water infrastructure (reservoirs, etc.)

Supports regional resilience

Increases community connection to water

Increases window for new, distributed water source options to become viable (i.e. renewables-powered packaged desalination)

Poor alignment with national and regional policy, and council and Wellington Water strategy

Good alignment with national and regional policy, and council and Wellington Water strategy

Our sustainable water supply policy needs to set the direction for ongoing demand reduction

31. Our client councils have expressed a preference for water conservation over constructing a new source. They have asked that we develop a draft policy that sets out our objectives and strategic direction.

32. Further reductions beyond this initial 10% are also likely going to be required if the investment in the new source is to be deferred for more than just a few years. As noted above, demand reduction is also the best approach from environmental, cultural and strategic perspectives. The Policy (Attachment A) has been written with the long term objectives in mind, rather than the immediate requirement for a 10% reduction.

33. The Policy has been written to be consistent and aligned with the Safe Drinking Water Policy. The Policy and associated Action Plan are expected to be presented to the councils as part of the LTP development programme.

Our Action Plan sets out how we intend to deliver on the target and the policy

34. The draft policy recognises that reductions will be required across network leakage, commercial and extraordinary demand, and residential demand for the initial 10% saving to be achieved. Our Sustainable Water Supply Action Plan sets out the work programmes and projects expected to be required to achieve the demand reduction, consistent with the policy.

35. The response encompasses many kilometres of network and thousands of customers. This means that a broad range of interventions is going to be required to deliver the targeted savings. There is no ‘silver bullet’ that will deliver the majority or all of the savings^{^[4]}.

36. The Action Plan is being used to inform the current Annual Plan and LTP development process, including the ‘early LTP investment signals’ presentations.

The Action Plan will require an increase on existing funding levels

37. The programmes are a combination of new activities and the refinement and expansion of existing activities. They are either un-funded or will require an increase on existing funding levels (i.e. leak detection and repair, education and behaviour change) and will require a significant increase in resourcing (especially opex). Councils will need to trade off paying these additional costs now, to avoid higher additional costs (for the new source) in the future.

Achieving a 10% reduction will be challenging

38. When compared to industry benchmarks our level of network leakage and our average residential customer demand are relatively high. The information we have relating to our commercial customers also suggests that there is scope for efficiency gains. At a high level, the potential savings available are expected to be well in excess of the initial 10% target.

39. The challenges for us are that we have limited information about where and how water is used, and that much of the saving will need to come from customer behaviour change that we can only attempt to influence (and not directly control) and where we have limited drivers with which to exert that influence. Reaching the customer is difficult and it takes time to build the necessary connections and trust. Behaviour change projects in other cities have typically only achieved change of a few percent, and have had the drivers of drought and volumetric charging to support the change.

40. Achieving a 10% reduction in per capita demand within 5-6 years is perceived to be a ‘stretch’ target. We will need to move quickly to collect more information (for example from the new Small Area Meters or SAMs) and to test and validate initiatives at a small scale, and will need our councils to agree to the required step change in funding and directly support the necessary policy and educational activities.

Our customers want to save more, but have no information about how much water they use

41. Our customers are also signalling an appetite for action in this area – our 2018 customer engagement survey showed that 70% of customers thought that conservation was necessary, and 65% of customers thought they should be conserving more water. In the absence of meters, our customers have no information about how much they are using and how much they could save.

42. Based on the experience of other councils, a move to universal metering can be expected to reduce residential water demand in the order of 15-20%, primarily through the ability to identify leaks in the customer supply pipe or in the house and fittings. A reduction in demand of this order would deliver close to, if not all of the savings target.

We are not ignoring the potential need for the new source

43. As discussed above, there is relatively little headroom available between existing demand and the capacity of the existing system (with the Te Marua WTP upgrade). That headroom will reduce rapidly if growth occurs at the high end of the projections or if per capita demand increases.

44. Our activities over the coming years need to include establishing closer monitoring of the supply-demand balance (including tracking the effectiveness of the interventions and identifying the trigger point for investment) and initial preparatory work for a new source (i.e. scoping the requirements and identifying potential options).

45. This closer focus on the supply-demand balance is also likely to be required as GWRC considers water allocations in the Whaitua process and as we get closer to re-consenting the existing water takes around 2031-33.

South Wairarapa has its own specific challenges, but will likely have similar objectives

46. SWDC operates public water supplies serving the communities of Featherston, Greytown, Martinborough, and Pirinoa. Greytown and Featherston share their supply, with dedicated supplies and networks for Martinborough and Pirinoa.

47. The current focus in SWDC is on ensuring that these supplies meet the safe drinking water standards. The level of demand can have some impact on this outcome, through influencing how the various sources are used. Beyond this, factors such as climate change and abstraction reductions required under the NRP will mean that achieving sustainable water supplies will also be a strategic priority.

48. The reduction targets will clearly need to be different, and we will need to look at how the policy and action plan will apply in the SWDC context. Some changes may be required to the policy, and the action plan may require a different focus or some specific activities. We will look into this over the coming months, with the objective of being able to inform SWDC’s 2021/31 LTP.

Attachment 1

Appendix 1 Draft WW Committee Submission on Taumata Arowai Bill for feedback

X March 2020

Clerk of the Committee

Health Committee

Parliament Buildings

WELLINGTON

Via email: Health@parliament.govt.nz

Submission on Taumata Arowai Bill

From: Wellington Water Committee

Attached is a submission on the Taumata Arowai Bill (the Bill) on behalf of the Wellington Water Committee.

The Wellington Water Committee appreciates the opportunity to provide a submission on the Bill. The Committee is made up of representatives from six councils within the Wellington region, and mana whenua: Taranaki Whānui and Ngāti Toa Rangatira.

We would appreciate appearing before the select committee.

Yours sincerely

David Bassett

Chair

Wellington Water Committee

Encl: Wellington Water Committee submission

Wellington Water Committee Submission on Taumata Arowai Bill

Introduction

The Wellington Water Committee represents the six councils that own Wellington Water Ltd as a council controlled organisation. The owners are: Hutt City, Porirua City, Upper Hutt City, Wellington City, South Wairarapa District and Greater Wellington Regional councils.

The Committee provides governance oversight of Wellington Water as a joint committee of the councils.

The councils own the three waters networks and fund Wellington Water to manage the infrastructure and associated services (water supply, wastewater and stormwater) from source to sea. Wellington Water acts as the councils’ trusted advisor and is the network manager responsible for planning, maintaining, operating, renewing and upgrading the three waters assets for its owner councils.

Submission

General comments

The Wellington Water Committee make the following general comments:

1. It is positive to see a Te Ao Māori focus within the Bill and the heralding of an integrated approach. We believe the establishment of the Māori Advisory Group and giving effect to Te Mana o te Wai is a good way to make this happen.

2. We believe safe water is the foundation of a good economy. Enabling safe water for everyone is vital and serves the country’s broader interests.

3. It is positive that the Bill responds to the major issue the sector is facing around building capability and capacity. It has taken a number of years to build the current capability within Wellington Water and this continues to be a challenge, despite the organisation’s size reaching around 200 FTE. This challenge is largely around attracting people into the sector and it is likely to continue given the current state of the labour markets.

4. Despite the sophistication of the capability held within Wellington Water, drinking water incidents can be expected to occur from time to time because the working environment is constantly changing. We are, however, now at a point with developing our capability where responding to a reasonably sized drinking water incident could be handled as a matter of course from a technical perspective, although there would be a significant strain on resources.

5. Managing small, privatised water supplies on the other hand is a challenging situation. It appears from the Bill and the intended size of the Crown Entity that the regulator intends to manage small suppliers via a ‘hands on’ approach. While we commend the intent of the regulator to work with the water sector to bring the entities that pose the greatest public health risk up to standard, we do not support the regulator undertaking a dual role. We believe we will attain better results for our communities if the regulator confines its role to being a regulator and remaining independent, rather than actively supporting suppliers out in the field. To do so is likely to create potential conflicts of interest if it comes to enforcement of standards that the regulator has assisted in implementing.

6. We see it as the regulator’s role to empower councils to get on and fix the problems we face by allowing local government to join forces and collectively form a centre of excellence. Industry bodies could also play a part. We want to see the capability staying within the sector instead of being siphoned off to a centralised agency. It’s important that the technical expertise stays within the sector and communities, especially in preparation for any big events. We believe Council owned water entities are best placed to nurture relationships with smaller suppliers.

7. If the Government plans to consolidate the number of water suppliers and intends on supporting change, we suggest that this should be the role for another agency, not the water regulator. We do not believe it is the role of the regulator to take initiatives to consolidate the sector or coordinate cross subsidisation.

8. This Bill does not provide for an ability to levy local government for the costs of operating the new regulator, although we understand the mechanism will be included in the Water Services Bill. We are concerned that the Government’s intention behind funding the new regime and the potential impact on rates and capex is not fully set out for the public’s consideration at the stage the Taumata Arowai Bill is being considered. These considerations are directly related to the type of entity the regulator should be, and while we applaud the Government’s initiative to set up a stand- alone entity that is dedicated to overseeing our water systems, we consider the entity’s size should be limited, having regard to cost. The public need to know what the Government’s long term plans are in order to devise a payment system that is fair.

9. We would support a targeted, user pays, approach to allocating the regulator’s operating costs. It is not fair that communities who have already invested in building capability through consolidated service models should once again be expected to pay for assistance not used. Based on the figures set out in the Regulatory Impact Statement and Wellington Water having around 12% of the country’s ratepayers, Wellington Water shareholder councils could be asked to generate an additional $3.6M for the regulator’s annual operational costs from ratepayers. Having built its own capability, it difficult to justify why Auckland and Wellington should have to pay for a centralised approach that will need to focus on suppliers that pose the greatest risk.

10. Further clarification is required around the role and powers of the regulator while the Water Services Bill is still going through the House. Due to the complexities to be worked out, there is a risk that the regulator will be established and incurring cost while the regime is still being developed.

Specific comments on the Taumata Arowai Bill

11. Clause 10(c): We would support “Building and maintaining capability” being replaced with “facilitate and enable”.

12. As a Crown Agency, it would be expected that the regulator would be required to “give effect to” Government policy. A mechanism making this explicit for this could be included in the Bill as it has been for Kainga Ora – Homes and Communities Bill.

13. What is the scope of the regulator’s role? How far will the regulator reach into the operator processes and procedures? Will they go as far as overseeing the implementation of water safety plans and auditing whether levels of service are delivered? In the event of water contamination, will the regulator require actions from those outside of the water sector such as doctors to report certain illnesses?

14. Insert an explicit requirement for the regulator to be proactive and take an educational approach, not just reactive and enforcement focused.

15. We would support consideration being given to additional principles that apply to the regulator such as:

· The approach the regulator will take to work with the sector. For example, in regards to risk assessments, the approach taken could be proportionate, fair and equitable in the way the regime treats different types of operators?

· Transparency around proposed cost-efficiency or cost recovery mechanisms (such as how a levy or licensing fees will be used)

· Having least impact on the environment

· Having regard to climate change

· Having a transparent compliance and enforcement strategy that is evidence-informed, risk-based, responsive, and proportionate to the risks or harms being identified/managed.

16. If different, how will the role of the Responsible Minister (who monitors the regulator) interface with the Minister of Local Government?

17. We consider it appropriate for the Board to also have knowledge, experience and capability in local government matters.

[1] This request is not yet formal, but is expected to be ratified at a council meeting on 3 March. The requirement to look at options was noted in HCC’s press release following the presentation.

[2] As noted above, the investment in the Te Marua WTP upgrade is also required.

[3] This is about 96% of our planning standard of 374 l/p/d. This value of 374 l/p/d has sometimes incorrectly been referred to as the current demand level.

[4] Except perhaps for universal metering to detect customer leakage, as discussed later in this paper.

Cr J Brash	Greater Wellington Regional Council
Cr D Bassett (Chair)	Hutt City Council
Mayor A Baker	Porirua City Council
Mayor A Beijen	South Wairarapa District Council
Mayor W Guppy	Upper Hutt City Council
Cr S Rush	Wellington City Council
Mr T Parai	Te Runanga o Toa Rangatira
Ms K Skelton	Taranaki Whānui ki Te Upoko o Te Ika
Cr J van Lier	Greater Wellington Regional Council (Alternate)
Deputy Mayor T Lewis	Hutt City Council (Alternate)
Cr R Leggett	Porirua City Council (Alternate)
Deputy Mayor G Emms	South Wairarapa District Council (Alternate)
Deputy Mayor H Swales	Upper Hutt City Council (Alternate)
Cr I Pannett	Wellington City Council (Alternate)
Ms N Solomon	Te Runanga o Toa Rangatira (Alternate)
Ms K Tamanui	Taranaki Whānui ki Te Upoko o Te Ika (Alternate)