Wellington Water Committee

 

28 May 2020

 

 

 

Order Paper for the meeting to be held in the

ZOOM,

on:

 

 

 

 

Wednesday 3 June 2020 commencing at 10.00am

 

 

Membership

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 (Deputy Chair)

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)

 

 

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

 


Wellington Water Committee

Terms of Reference

 

 

Purpose

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

 

·      Provide governance and leadership across issues which are related to the planning, delivery and management of water services to communities serviced by Wellington Water Limited;

·      Provide governance oversight of Wellington Water Limited, including by exhibiting good governance practice;

·      Provide a forum for the representatives of Wellington Water Limited's shareholders and mana whenua to meet, discuss and co-ordinate on relevant issues and, through their representatives, to exercise their powers; and

·      Strive for consistency across all client councils so all customers receive a similar level of service.

 

Status

The Committee is, for the purposes of the Local Government Act 2002, a joint committee of the Lower Hutt City Council, Porirua City Council, Upper Hutt City Council, Wellington City Council, and the Wellington Regional Council.

 

Specific responsibilities

The Committee's responsibilities are:

 

Governance oversight responsibilities

 

Shareholder and mana whenua governance oversight of Wellington Water Limited and of the network infrastructure for the delivery of bulk water, water reticulation, wastewater and stormwater services in the geographical areas of Wellington Water Limited's operations, including by:

 

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

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

    Undertaking performance and other monitoring of Wellington Water Limited;

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

·      Providing co-ordinated feedback, and recommendations as needed, on any matters requested by Wellington Water Limited or any of the parties to the Shareholders and Partnership Agreement;

·      Providing recommendations to the parties to the Shareholders and Partnership Agreement regarding regional studies which the Shareholders need to be cognisant of;

·      Providing recommendations to the parties to the Shareholders and Partnership Agreement regarding water conservation;

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

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

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

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

·      Seeking and interviewing candidates for Wellington Water Limited's Board as needed and recommending to the holders of Class A Shares appointments and/or removals of directors of Wellington Water Limited;

    Recommending the remuneration of directors of Wellington Water Limited;

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

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

 

Membership

The membership of the Committee will be as specified in the Shareholders and Partnership Agreement.   With the exception of the Committee Members nominated by the Mana Whenua Partners Entities, each appointee must be an elected member of the appointing Shareholder.

 

Chairperson

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

 

Quorum

Subject to the below for Committee meetings to appoint directors of Wellington Water Limited, for a meeting of the Committee to have a quorum, a majority of Committee Members, or their appointed Alternates, must be present, and the number making up the majority must include at least an equal number of Shareholder appointed Committee Members as MWPE nominated Committee Members.

 

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

 

Clause 11.3 of the company’s constitution provides that Directors shall be appointed and removed by the unanimous resolution of the Shareholders holding Class A Shares. For this matter the quorum for the Committee meeting is therefore attendance by all Committee Members (or their Alternates) for the holders of the Class A Shares.

 

Alternates

Each Committee Member appointed to the Committee must have an Alternate.

 

Other Shareholder attendee

Each Shareholder-appointed elected member Committee member will be entitled to invite an officer attendee to Committee meetings, provided however that the additional attendee will not have any voting rights on the Committee.

 

Decision-making

The Committee will strive to make all decisions by consensus.

 

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

 

Other than for those matters for which the Committee has effective decision-making capacity through these Terms of Reference, each Shareholder retains its powers to make its own decisions on matters referred to it by the Committee and on matters specified in Part 1 of Schedule 2 to the Shareholders and Partnership Agreement (for clarity, this means that only Shareholders have voting rights in relation to the matters specified in Part 1 of Schedule 2).

 

Secretariat services

Unless otherwise agreed from time to time by all of the elected member Committee Members, the Council for which the Chairperson is an elected member will provide secretariat services to the Committee.   The Chairperson will be responsible for managing the agenda at Committee meetings.

 

Standing Orders

The Standing Orders of the Council providing secretariat services to the Committee will apply to Committee meetings, subject to the provisions for meeting quorum and decision making as set out in these terms of reference taking precedence.

 

Remuneration

Each Shareholder will be responsible for remunerating the elected member Committee Member appointed by it to the Committee, and their Alternate, for any costs associated with those persons' membership on the Committee.

 

The Shareholders will also be responsible for remunerating (in equal shares) the Committee Members nominated by Mana Whenua Partner Entities, and their Alternates, and appointed to the Committee by the Shareholders, for any costs associated with those persons' membership on the Committee.

 

Administration

Reports to be considered by the Committee may be submitted by any of the Shareholders, any of the Mana Whenua Partner Entities, or Wellington Water Limited.

 

Duration of the Committee

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

Appendix

Common delegations by Shareholders

 

Governance oversight responsibilities

 

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

 

Shareholders' responsibilities

 

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

 

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

 

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

 

 

    


Wellington Water Committee

 

Meeting to be held in the ZOOM on

Wednesday 3 June 2020 commencing at 10.00am.

 

ORDER PAPER

 

Public Business

 

1.       APOLOGIES 

2.       PUBLIC COMMENT

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

3.       CONFLICT OF INTEREST DECLARATIONS

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.     

4.       Minutes

Wellington Water Committee, 5 March 2020                                                       11    

5.       COVID-19 and the Impact on Wellington Water's Performance Reporting for 2019-2020 (20/428)

Report No. WWC2020/4/2                                                                                  19

6.       Company Update Report (20/434)

Report No. WWC2020/4/3                                                                                  43

7.       Update on 2020/21 Annual Plans and 2021/31 LTPs (20/435)

Report No. WWC2020/4/4                                                                                  49

8.       A Value for Money Framework for Wellington Water Ltd (20/444)

Report No. WWC2020/4/5                                                                                  59

9.       WELLINGTON WATER COMMITTEE'S GOVERNANCE REVIEW (20/459)

          Verbal Update from the Chair

 

10.     UPDATE ON THE BUSINESS CASE FOR WATER METERING (20/458)

          Verbal Update

11.     GOVERNMENT'S THREE WATERS REVIEW (20/462)

          Verbal Update from the Chair and Deputy Chair

12.     National Council of LGNZ Policy Position on Three Waters Service Delivery (20/469)

Memorandum dated 27 May 2020 by the Head of Democratic Services           81

13.     GENERAL BUSINESS (20/460)

14.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

“That the public be excluded from the following parts of the proceedings of this meeting, namely:

15.     Board Membership (20/474)

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

 

(A)

(B)

(C)

 

 

 

General subject of the matter to be considered.

Reason for passing this resolution in relation to each matter.

Ground under section 48(1) for the passing of this resolution.

 

 

 

Board Membership – Verbal Update

The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).

The withholding of the information is necessary to maintain the effective conduct of public affairs through the free and frank expression of opinions by or between or two members or officers or employees. (s7(2)(f)(i)).

That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

 

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

 

 

 

 

Kathryn Stannard
HEAD OF DEMOCRATIC SERVICES

 

          


                                                                      18                                                5 March 2020

Wellington Water Committee

 

Minutes of a meeting held in the Greater Wellington Regional Council Chambers,
15 Walter Street, Te Aro, Wellington on

 Thursday 5 March 2020 commencing at 2.00pm

 

 

 PRESENT:

Cr J Brash (GWRC)

 

Cr D Bassett (HCC) (Chair)

 

Mayor A Baker (PCC)

 

Mayor A Beijen (SWDC)

 

Mayor W Guppy (UHCC) (Deputy Chair) (until 2.20pm)

 

Cr S Rush (WCC)

 

Ms K Skelton (Taranaki Whānui ki Te Upoko o Te Ika)

APOLOGIES:                  There were no apologies.

 

IN ATTENDANCE:       Cr J van Lier (Alternate GWRC)

Deputy Mayor T Lewis (Alternate HCC)

Cr R Leggett (Alternate PCC)

Deputy Mayor G Emms (Alternate SWDC)

Cr I Pannett (Alternate WCC)

Ms N Solomon (Alternate Te Runanga o Toa Rangatira)

Ms K Tamanui (Alternate Taranaki Whānui ki Te Upoko o Te Ika)
Ms B McKerron, Chief Executive, Wellington City Council

Ms N Wood, Greater Wellington Regional Council

Mr S Mahorey, Greater Wellington Regional Council

Ms S Gain, Greater Wellington Regional Council

Ms W Walker, Chief Executive, Porirua City Council

Ms J Long, Porirua City Council

Mr D Baxter, City Engineer, Wellington City Council

Mr M Ford, Chief Financial Officer, Wellington City Council

Mr D Wright, Chair of Wellington Water Limited

Mr C Crompton, Chief Executive, Wellington Water Limited

Ms S Cuthbert, Principal Advisor, Wellington Water Limited

Mr B Hodgins, Strategic Advisor, Hutt City Council  

Ms D Hunter, Acting Committee Advisor, Hutt City Council

 

 

 

 

 

 

 

 

PUBLIC BUSINESS

 

 

1.       APOLOGIES 

An apology was received from Deputy Chair Mayor Guppy for early departure.

2.       PUBLIC COMMENT

There was no public comment.

 

3.       CONFLICT OF INTEREST DECLARATIONS  

There were no conflict of interest declarations.

 

4.       Minutes

Resolved: (Cr Bassett/Mayor Baker)                                  Minute No. WWC 20201

“That the minutes of the meeting of the Wellington Water Committee held on
Monday, 16 December 2019, be confirmed as a true and correct record.”

 

5.

Wellington Water Governance Review (20/185)

Report No. WWC2020/2/63 by the Chief Executive, Porirua City Council.

 

The Chair updated members on Wellington City Council establishing a Mayoral Taskforce to address the ongoing water issues as well as the Government announcement that there were likely to be changes in terms of the future management of the Three Waters.  

 

Cr Rush updated members regarding the taskforce scope.  He advised that there had been an initial meeting of the Mayoral Taskforce and the scope of the review was still to be determined.  He commented that it was the intention that any recommendations from the Mayoral Taskforce relating to the other shareholders would be addressed through the Wellington Water Committee.

 

In response to questions from members, the Chief Executive of Wellington City Council confirmed that the likely scope of the review was to inquire into specific problems relating to water issues in Wellington.  She also advised that it was to identify initiatives to address these issues by recommending an action plan to Wellington City Council.  She stated that an initial report was expected by the beginning of June to inform their Annual Plan deliberations.

 

The Chief Executive, Porirua City Council elaborated on the report.  She acknowledged that Government had launched a major review to tackle New Zealand’s Three Water issues relating to wastewater, stormwater and drinking water.

 

In response to questions from members, the Chief Executive, Porirua City Council reiterated that the issue still outstanding was the need to position Wellington Water Ltd for the future, particularly in light of the Government’s Water Reform Package. 

 

The Chair foreshadowed a revised recommendation (iv) as follows:

 

(iv) “That the Committee instructs the case manager for Wellington Water to prepare a terms of reference for a governance review that positions Wellington Water for the future and includes scope, key issues, service delivery options and methodology for undertaking the review noting that approval for this will be sought by circulating the draft to members of this committee.”

 

 

Resolved: (Cr Bassett/Mayor Guppy)                                Minute No. WWC 20202

“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)    instructs the case manager for Wellington Water to prepare a terms of reference for a governance review that positions Wellington Water for the future and includes scope, key issues, service delivery options and methodology for undertaking the review noting that approval for this will be sought by circulating the draft to members of this committee.”

Mayor Guppy left the meeting at 2.20pm.

6.

Draft Half Year Report 2019/20 (20/214)

Memorandum dated 2 March 2020 by Wellington Water Ltd

 

Mr Wright, Board Chair Wellington Water Ltd (WWL) elaborated on the memorandum.  He noted that WWL had made good progress towards its goals and overall performance with some noteworthy results and acknowledged some results that could be better.  He highlighted South Wairarapa District Council becoming a six shareholder Council as well as welcoming iwi partners around the table.

In response to questions from members, the Chief Executive, WWL advised that WWL had KPIs in its Statement of Intent, another KPI with Department of Internal Affairs and in shareholding Councils Long Term Plans.  He noted that an external audit would be undertaken on fianncial and non fianncial issues.  He confirmed that they were collaborating with Greater Wellington Regional Council in regard to flood management studies.  

 

Resolved: (Cr Bassett/Cr Rush)                                          Minute No. WWC 20203

“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.”

 

7.

Wellington Water Ltd's Draft Statement of Intent 2020-23 (20/210)

Report No. WWC2020/2/70 by Wellington Water Ltd

 

Mr Wright, Board Chair of Wellington Water Ltd (WWL) elaborated on the memorandum.  He commented that over the past four months, WWL had been reviewing its performance measures by developing a comprehensive framework dirven by business expertise and experience. 

In response to questions from members, the Chief Executive, WWL confirmed that changes had been made to their performance framework as part of their commitment to becoming a high performing organisation and the journey of continual improvement. 

 

Resolved: (Cr Bassett/Cr Brash)                                         Minute No. WWC 20204

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

8.

Company Update Report (20/208)

Report No. WWC2020/2/71 Wellington Water Ltd

 

Mr Wright, Board Chair of Wellington Water Ltd (WWL) elaborated on the memorandum. 

In response to questions from members, the Chief Executive, WWL advised that they were currently in the middle of Stage One.  He also advised that they had engaged Water Industry Commission for Scotland to peer review their work and provide independent advice back to individual Councils.

 

Resolved: (Cr Bassett/Mayor Beijen)                                  Minute No. WWC 20205

“That the Committee receives and notes the information.”  

 

9.

Wellington Water Committee Draft Update for Councils (20/209)

Report No. WWC2020/2/72 by Wellington Water Ltd

 

Mr Wright, Board Chair of Wellington Water Ltd elaborated on the report. 

 

Resolved: (Cr Bassett/Cr Brash)                                         Minute No. WWC 20206

“That the Committee:

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

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

10.

Long Term Plans Update (20/215)

Report No. WWC2020/2/73 by Wellington Water Ltd

 

Mr Wright, Board Chair of Wellington Water Ltd (WWL) elaborated on the report. 

The Chief Executive, WWL commented that this would be the first time that WWL would be presenting proposed Long Term Plan programmes that would indicate rates impacts to each council shareholder.  He stated that this would enable the region’s ratepayers to better understand the impact of the investment required to achieve the desired long term outcomes. 

 

Resolved: (Cr Bassett/Cr Rush)                                          Minute No. WWC 20207

“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.”

 

11.

Climate Change (20/217)

Report No. WWC2020/2/74 by Wellington Water Ltd

 

Resolved: (Cr Brash/Mayor Beijen)                                    Minute No. WWC 20208

“That the Committee:

(i)    notes the report;

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

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

 

12.

Sustainable Water Supply Policy (20/218)

Report No. WWC2020/2/29 by Wellington Water Ltd

 

Cr Brash advised that the Greater Regional Council (GWRC) was devlopng a business case for the five client world.  She asked for support from members for this to continue.  She stated that a business case would be reported back to Wellington Water Ltd. 

Ms Solomon commented that whilst building the business case, GWRC needed to consider how water metering would impact on the Maori community, in particular significant iwi maraes, where the water useage was different. 

Ms Skelton reiterated that GWRC needed to take into account the long running affordability for people around the most vulunerable and poorest areas of our communities.

 

Resolved: (Cr Bassett/Mayor Beijen)                                  Minute No. WWC 20209

“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.”

 

13.

Draft Submission on Taumata Arowai Bill (20/211)

Report No. WWC2020/2/28 by Wellington Water Ltd

 

Resolved: (Cr Bassett/Cr Brash)                                         Minute No. WWC 20210

“That the Committee:

 

(i)      receives and notes the draft submission on the Taumata Arowai Bill attached as Appendix 1 to the report;

 

(ii)     approves the submission subject to feedback from the members; and

 

(iii)    asks the Chair to forward the submission to the Health Committee.”

14.     GENERAL BUSINESS (20/211)

          The Chair advised the following:

 

(i)       Issues relating to fees for Committee members, in particular iwi representatives, had been resolved. 

 

(ii)     The Chief Executive of Porirua City Council and he had been invited to join the New Zealand Minister of Local Government to travel to Hobart to meet with Tasmania Water.  The focus of the four day visit was to discuss how they would move from 29 local authorities to form one entity to run and manage Tasmania Water.  This visit was expected to take place between 31 March 2020 to 3 April 2020. 

 

                 Cr Rush advised that he was now unable to attend the trip because Wellington City Council was unable to get travel insurance due to coronavirus.

 

In closing, the Chair acknowledged the challenging time for water management in the Wellington area.  He wanted to thank all parties for getting together to discuss playing a key role in moving forward. 

 

He thanked Wellington Water Limited staff who had worked tirelessly for the past few months in challenging times. 

 

There being no further business the Chair declared the meeting closed at 3.45pm.

 

 

 

                                                                                                                             Cr D Bassett

CHAIR

 

 

 

CONFIRMED as a true and correct record

Dated this 3rd day of June 2020  

   


                                                                                      19                                                            03 June 2020

Wellington Water Committee

20 May 2020

 

 

 

File: (20/428)

 

 

 

 

Report no: WWC2020/4/2

 

COVID-19 and the Impact on Wellington Water's Performance Reporting for 2019-2020

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Appendix 1 Re prioritisation of Wellington Water s Work Programme Due to Covid-10 and Impact on Performance for 2019-20

20

2

Appendix 2 SOI measures impact of Covid

29

     

 


Attachment 1

Appendix 1 Re prioritisation of Wellington Water s Work Programme Due to Covid-10 and Impact on Performance for 2019-20

 

Covid-19 and the Impact on Wellington Water’s Performance Reporting for 2019-2020

Purpose

1.    To provide an overview of the changes to the company’s work programme due to Covid-19 and the consequential impact on end of year reporting as well as seek a one month extension for the delivery of the company’s Statement of Intent.

Recommendation

2.    It is recommended that the Water Committee:

a)    Notes the company’s refocus on critical front line services due to Covid-19, the central government requirement to only undertake essential services during level 4 alert, and the resulting impact that stopped or scaled back work will have on performance reporting for the 2019/2020 financial year.

b)    Notes the company is developing its Statement of Intent for 2020-23 and alignment will need to occur with the councils’ 2020/2021 annual plans.

c)    Notes a report has been forward to each shareholder council to seek approval to extend the deadline for delivery of Wellington Water’s final Statement of Intent 2020-23 by 1 calendar month (to 31 July 2020) in accordance with the Local Government Act 2002.

Attachment

·    Appendix 2: Impact of Covid-19 on Statement of Intent performance measures

Summary

2.    Due to Covid-19, there has been a need to refocus Wellington Water’s resources on the front line to ensure continuity of service to the community and people are kept safe. The Alert 4 lock down has meant we have been restricted in terms of the work we can do as an essential services provider.

3.    We have reviewed our work, including capex projects, in light of set criteria that has been shared with central government, and all non-critical work has been stopped or scaled back to the bare minimum. As a result, we have reassessed the company’s short to medium term priorities and our focus during Level 4 lock-down has been on:

·    Safeguarding the welfare of staff and suppliers

·    Duplicating the front line

·    Reconfirming the capex programmes of work

·    Revising the Long Term Plan programme of work

·    Completing the implementation of the performance management system, including Maximo. 

4.    The reprioritisation of work will have an impact on our year end performance reporting. We will still be able to report our performance against our measures except for around five measures where we will not have the data available. For around 40 per cent of our measures, the end of year result will be affected in some way due to stopping or scaling back work.

5.    Given the unknowns around the Covid-19 restrictions, we are seeking a 1 calendar month extension from each shareholder council for completion and delivery of the SOI to the councils from 30 June to 31 July 2020.

There has been a need to refocus the organisation

3.    Due to Covid-19, and the Government’s imposed alert levels, we have refocused the organisation to reinforce our ability to continue to deliver front line services and keep our people safe from the risks posed by the virus, while at the same time, ensuring that we deliver only the most critical services as an essential services provider.

4.    Our approach has been to redirect resources within the organisation and apply them to the most critical areas of front line services, including our network and water and wastewater treatment plants, our customer operations group as well as other critical services within the business such as payroll and accounts.

5.    Our effort in the field is focused on keeping our treatment plants running and attending to jobs that pose the greatest risk to the continuity of services to our communities. This approach applies to operations and maintenance work as well as renewals and upgrades. Our response to any arising network emergencies will continue as usual. We will attend to urgent repairs that result in an outage to customers or sewage spillage while holding back on routine jobs.

We have had to scale back our capex work to essential work only

6.    In response to the Covid-19 Level 4 lock-down by the New Zealand Government, we were required to stop all non-essential work. To assist in determining which capex projects were most essential, we prioritised the projects in our 2019/2020 construction programme and made decisions on which projects were critical, and closed down all other sites.

7.    We used a set of four criteria to prioritise the work. The criteria were selected to be consistent with the company’s Service Goals as well as the central government’s goals. The criteria were:

a)    Safe and Healthy Water

b)    Public Health – in the Covid-19 environment this is ‘safe homes and streets’

c)    Enhancing the Environment – for instance, safe disposal of wastewater into the environment

d)    Any activity that if shut down would make the situation worse.

8.    These criteria have been applied to the planned operational capex as well as our renewals and upgrades. Based on the criteria, we have grouped the work into three categories:

a)    Critical – will proceed as an essential service

b)    Urgent – able to be stopped and to recommence as soon as practicable (subject to availability of staff and resources), and

c)    Stop – not critical, not urgent. Will recommence once construction activity is permitted to resume as normal.

We have reassessed the company’s short to mid-term priorities

9.    As a result of the current alert level and the requirements around providing essential services only, we reviewed the company’s most important priorities in order to assess where work could be stopped or scaled back. Our aim was to free up resources to provide for duplication at the front line as well as to ensure people’s safety.

10.  The company’s short to mid-term priorities have been assessed as follows:

 

Company priority

Comment

1

Safeguarding the welfare of staff and suppliers

 

Our focus is to ensure the front line can work safely. This includes implementing social distancing approaches, keeping vulnerable people away from the front line and appropriate use of PPE.

We will ensure back-ups are in place for all key roles so that staff feel they can take sick leave if they are feeling unwell.

We are making sure our people’s wellbeing is supported when working remotely.

We are also conscious of supporting our supply chain over this period and have implemented a policy to continue paying our suppliers to advance cash flow.

2

Duplication to the front line

 

We have had twice the critical resource required available on the front line (excluding any personnel who are considered vulnerable). We continue to redeploy people within the organisation to the most critical areas.

3

Reconfirm the 2019/20 programme, set the 2020/21 capex plan and set the 2021/24 tactical programme with a focus on renewals

The 19/20 capex work programme was stopped except for seven critical projects during Level 4. We have reviewed which projects can be started up once restrictions are lifted.

For 2020/21, our focus will be on completing the renewals which have been delayed due to the impact of the Dixon St and Mt Albert events and the Covid-19 restrictions.

All councils will be reconsidering their annual plans in light of a reduction in revenue and restricted ability to raise rates.

4

Long Term Plan Revised programme

Covid-19 has changed the basis for our early signals long term plan advice and we will be re-thinking our approach. We will continue to support councils in their thinking and have completed a draft presentation to PCC and HCC for their discussions with central government. There may be an opportunity to support broader economic stimulus objectives.

5

Performance Management System & Maximo

We will continue to strengthen the company’s performance management system to ensure robust non-financial reporting. This will include implementing Maximo to improve data capture for some of our time specific measures.

Redirecting resources and undertaking only essential work will have an impact on our non-financial performance reporting

11.  To respond to the current challenges we have had to either stop or scale back business as usual work for Quarter 4. This means we will not be able to deliver on some of our promises set out in the Statement of Intent 2019-2022 (SOI).

12.  By stopping work in some areas, we will not have the requisite data to be able to report against some of the SOI measures. For other measures, we will have the data and be able to report but we will not reach the agreed target.

13.  Our general approach is to report where we can and tell the whole story. We will undertake our customer satisfaction survey and stakeholder surveys to enable our ability to report. These surveys were released in April and will take a couple of months to complete.

14.  A list of our impacted SOI measures are set out in Attachment 2.  A summary of the impact is as follows:

Number of SOI measures that are impacted due to stopping or scaling back work

17

Number of SOI measures that won’t be able to be reported against at year end due to reprioritisation

5

Number of SOI measures that are not impacted by the reprioritisation of work

28

 

15.  While our non-financial performance will be affected by the Covid-19 situation, it’s unclear at this stage how this will unfold. At this stage, our people are still well and particularly due to the duplication approach, we are confident in our ability to deliver on the critical activities.

16. The Department of Internal Affairs measures are not part of the 2019-2022 SOI and therefore will not be included in the annual report. However, we will report against them as part of the quarterly reporting to councils. Approximately half of the measures are expected to be impacted by our reprioritisation of work; however, there is an opportunity to mitigate this impact. For example, we are deprioritising any non-urgent repairs so our response and resolution times are expected to deteriorate. However, as we duplicate our critical staffing levels, there is potential to increase productivity while our people remain healthy and road traffic is at a minimum.

Looking ahead to resuming normal operations and the Statement of Intent

17.  While at this stage we don’t know how long the Covid-19 restrictions will be in place, we are continuing to think about how we will resume normal operations.

18.  The stopping or scaling back of work that can’t be done under the Covid-19 category levels will mean the work is deferred to the 2020/2021 financial year. This will have an impact on the draft SOI which is currently being finalised.

19.  There is a statutory duty for the completed SOI to be delivered to the councils by the beginning of the new financial year.

20.  The Water Committee’s governance oversight responsibilities include “receiving, considering and providing recommendations to the parties to the Shareholders and Partnership Agreement regarding Wellington Water Limited’s final statement of intent”.

21.  Due to recent amendments to the Local Government Act 2002 (clause 4, Schedule 8) the shareholding councils can agree to extend the SOI deadlines by up to 1 calendar month. Given the unknowns around the Covid-19 restrictions, we are seeking from the shareholder councils a 1 month extension for completion of the SOI 2020-2023 from 30 June to 31 July 2020. This would ensure the SOI reflects the priorities set out in the councils’ annual plans.

22.  A report has been forwarded to the councils for their approval of the extension.

23. Audit NZ has also informed us they will be completing their annual report audits for local government within broader timeframes. In the event this affects our ability to deliver our annual report within the statutory deadline, we will apply for an exemption from the Office of the Auditor General.


Attachment 2

Appendix 2 SOI measures impact of Covid

 

Impact of Covid-19 on Statement of Intent non-financial performance measures

 

SOI 2019 Measures

Stop work/ continue during Level 3-4

Report/Don’t report

Rationale

Measure Number

SOI Measure

Target

 

1

Our customers will feel confident that the drinking-water we provide is safe because we’ll maintain compliance with the Drinking-water Standards for New Zealand

Compliant

Continue

Report

 

2

Our customers will not be exposed to any public health risks because we’ll reduce the number of wastewater overflows

<100 dry weather overflows

 

<300 wet weather overflows

Continue

Report

 

3

Our customers will feel confident that our drinking-water service is reliable because we’ll maintain the number of hours drinking-water supply is available

Estimated average <2 hours unavailable per customer per year

Continue

Report

 

4

Our customers will feel confident that our wastewater service is reliable because we’ll improve the availability of the wastewater service

Until we can accurately measure length of wastewater outages and number of houses affected, we’ll target: 20 wastewater complaints per 1,000 connections

 

90 percent of waste water complaints (about loss of service) resolved within one day

Continue

Report

 

5

Our customers will reduce the amount of water they are using at home because they have the information they need to be able to make informed decisions and change their behaviours

Percentage of people surveyed who had seen and understood nominated education messages within same financial year: >27 per cent

Stop

Report

We are stopping our work in reducing water usage and we are stopping our education messages.

The survey goes out in April.

6

Our customers will be able to enjoy our region's beaches because we’ll improve the number of days that monitored beaches (between 1 November and 31 March) are available for swimming

Total number of days monitored beaches are closed is at most five

 

 

Continue

Report

 

7

Our customers will feel confident that our region’s waterways are not adversely affected by our services because we’ll monitor and apply effective methods to manage and improve water-quality

Identify potential intervention strategies

 

 

Select a receiving environment water quality improvement project (i.e. an urban stream) and assess it against intervention

 

Monitor urban stream water-quality to set baseline

Stop

Don’t report

We are stopping our work to improve water quality. We will not have the data to set a baseline.

8

Our customers’ homes and businesses will be protected from flooding because we’ll reduce the number of habitable floors that are predicted to be flooded by a 1:100- year flood event

1 per cent reduction year on year (in the area modelled at the start of year)

Continue

Report

The target won’t be achieved due to Pinehaven and Kilbrinie projects not proceeding – this is not due to reprioritisation.

9

Our customers will be resilient in the event of a natural disaster because we’ll improve the number of households that have drinking-water stored and have a plan for the safe disposal of their wastewater

5 per cent of households with 140+ litres of potable water stored per person

 

Set a baseline for the percentage of households that have appropriate wastewater solutions

 

Stop

Report

We are temporarily ceasing the education programme so achieving the target may be impacted.

 

10

Our customers will have positive interactions with us because we’ll measure and improve their customer experience satisfaction

>80 per cent of surveyed customers rate us good, very good, or excellent

Continue

Report

 

11

Our customers will feel valued because we’ll improve their customer experience satisfaction by acknowledging problems with level of service and working to resolve them within acceptable timeframes

50 per cent of complaints resolved within 10 days

 

80 per cent of complaints resolved within 30 days

 

Continue

Report

 

12

Our customers will be kept safe because our work sites will be safe and result in no members of the public being harmed

Zero incidents reported to us, our supply chain, or client councils

Continue

Report

 

13

Our customers will get a better understanding of where their water rates money is being spent because we’ll improve the transparency of the cost per connection of our services

Analyse results and explore implications

Stop

Don’t report

Work has been deferred until the new financial year so we won’t meet the target.

 

14

Our customers will feel confident we’re creating value for money because we’ll maintain our assets at a sustainable level now and in the future

Normalise results across councils and look for a regional proxy

Stop

Don’t report

Work has been deferred until the new financial year so we won’t have the data to work out a regional proxy.

15

Our customers will feel confident we’re working to understand and reduce our carbon emissions because we’ll have a verifiable target for reduced operational emissions and a plan for achieving that target

Baseline carbon emissions inventory complete and certified emissions management and reduction plan in place

Stop

Report

Carbon emissions work has been stopped so we will not meet the target. Our consultants will continue do some work in the background.

16

We’ll better understand future service needs by completing Future Services Studies

Minimising carbon emissions study completed through setting initial reduction target and action plan

 

Complete flood and flood management study

 

Resilience study completed through gap analysis to identify actions necessary to achieve resilience service levels across the three waters for all customers, and associated action plan

 

Recommended approaches for sustainable drinking water supply, wastewater sludge management and receiving-environment water-quality submitted to smart investment process for prioritisation, alongside other initiatives (together with relevant actions from carbon-emission reduction and service resilience actions plans)

Stop

Report

This work has been stopped so we will not meet the set targets.

17

We’ll make sure future growth is supported by having well thought-out network delivery plans

Network delivery plans developed for identified growth cells (at least five)

Continue

Report

Won’t hit the target due to the Covid-19 disruption to work.

18

We’ll understand how our current networks perform and plan for growth by completing our three water networks modelling programme

66 per cent complete

Continue

Report

 

19

We’ll build our relationships with developers by improving their satisfaction with the advice and services we offer

65 per cent satisfaction

Continue

Report

Will undertake survey in April.

20

We’ll meet all environmental consent requirements in the delivery of our services

Fully compliant

Continue

Report

 

21

We’ll safeguard our drinking-water by completing our regional Water Safety Plan (WSP)

Service delivery improvements arising from the WSP prioritised and implemented

Continue

Report

Some projects relating to the water safety plan have been stopped.

22

We’ll supply wholesome drinking water at an acceptable standard (taste, clarity, and odour) by maintaining satisfaction

< 550 complaints

Continue

Report

 

23

We’ll minimise the impact of sludge odour and landfill disposal by maintaining minimal water content

Landfill bind have dry solids content of > 50 per cent

Continue

Report

 

24

We’ll own customer calls end-to-end (by partnering up with our client council call centres) and manage customers’ expectations by embedding our customer behaviours throughout our business

All customer enquiries are tracked and responded to within 60 minutes

 

95 per cent of customer enquiries raised are resolved within the level of service (Priority 1-3) timeframes

 

Continue

Report

 

25

We’ll be reliable in the delivery of our renewals and capital works programmes by completing planned work within timeframes

95-105 per cent of planned work completed

Stop

Report

Only critical work will proceed so the SOI target will not be reached.

26

We’ll work with our Contractor Panel to be cost-effective by decreasing the cost per kilometre of laying pipes in real terms (adjusted for inflation)

5 per cent reduction year on-
year

Stop

Report

Due to Quarter 4 not being BAU, the full year result will not be a reflection of efficiency. A conversation needs to be had with Audit NZ as to how to report.

27

We’ll work with our Consultant Panel to improve efficiency by reducing costs (from the current 15 per cent of average fees per total construction costs) and lifting our internal capabilities

Reduce (simple projects) to 14 per cent

Stop

Report

Due to Quarter 4 not being BAU, the full year result will not be a reflection of efficiency. A conversation needs to be had with Audit NZ as to how to report.

28

We’ll complete major stormwater projects: Pinehaven Stream; Porirua; and Kilbirnie

Pinehaven Stream (complete detailed design, consenting, commence construction)

 

Porirua Stage 1 (complete detailed design, commence construction)

 

 

Stop

Report

Some projects have been stopped so we won’t achieve targets.

29

We’ll complete major wastewater projects: Seaview; Porirua; and Karori

Porirua network improvements (complete concept design)

Karori network improvements (complete concept design)

Seaview seismic strengthening (complete construction)

Stop

Report

Some projects have been stopped so we won’t achieve targets.

30

We’ll complete major drinking-water projects: Omāroro; Moe-i-te-Rā; Aotea; and Silverstream

Omāroro (complete detailed design and consenting, continue construction)

 

Moe-i-te-Rā (commence consenting)

 

Aotea (complete consenting)

 

Silverstream (complete detailed design and consenting)

 

Cross-Harbour Pipeline (complete concept design)

Stop

Report

Some projects have been stopped so we won’t achieve targets.

31

We’ll respond to customer issues following a significant event (flooding, earthquake, landslip, major service failure) by keeping an accurate record of all issues that occur and working through them with our customers within agreed timeframes

>90 per cent customer experience satisfaction (measured through call-backs)

Stop

Don’t report

We will not conduct/record customer call backs during emergency situations in Q3, therefore will not have any data to report this measure.

32

We’ll grow the water sector’s capabilities by increasing technical capability in our region

Meet set targets

Stop

Don’t report

We will not be focussing on this work for Q4.

33

We’ll build a customer culture by developing consistent customer behaviours and embedding these behaviours in our company and the Alliance

86 per cent of all staff know how their work affects customers

Stop

Report

We are temporarily stopping the customer behaviours work so will not achieve the target.

34

We will understand employee wellness by developing and running a quarterly wellness survey that measures awareness, participation, and satisfaction with our wellness initiatives

Percentage of our people aware [of our] wellness initiatives increases year on year

 

Percentage of our people [that] participate [in] our wellness initiatives increases year on year

 

Percentage of our people  [who are]  satisfied with our wellness initiatives increases year on year

Continue

Report

 

35

We will improve the health and safety of our people by reviewing two health and safety critical risks per year and applying controls to manage risks to an acceptable level

Improved controls progress reported our Senior Leadership Team and the Board

Stop

Report

We are progressing the second critical risk for the year (fatigue). If we return to BAU in late April/ early May, we should be able to achieve this result.

36

We’ll focus on gender equality by removing barriers to workforce participation to enable more gender equity in all functions in the organisation

>35 per cent gender balance in functional roles

Continue

Report

We know the target will not be met but not due to reprioritisation.

37

We’ll maintain our rating as trusted advisor by working with our five client councils to build strong relationships

Maintain trusted advisor rating

Continue

Report

 

38

We’ll improve our relationship with our mana whenua partners by improving their satisfaction with their ability to influence our decisions on future services

65 per cent satisfaction

Continue

Report

 

39

We’ll improve our relationship with our Customer Panel by improving its satisfaction with its ability to influence our future services

65 per cent satisfaction

Continue

Report

 

40

We’ll build our relationship with our suppliers by improving their satisfaction with how easy we are to work with

65 per cent satisfaction

Continue

Report

 

41

We’ll make sure that our services support and align with our client councils’ Long-term Plans by delivering on agreed outcomes

>90 per cent alignment and achievement of agreed outcomes

Continue

Report

 

42

We’ll deliver on what we set out to do by completing capital projects that meet the requirements of the project design briefs

10 per cent sample demonstrates >95 per cent achievement

Continue

Report

 

43

We’ll deliver our service delivery strategy by implementing the Alliance, implementing the Contractor Panel, and introducing a consolidated wastewater treatment plant (WTP) contract

Implementation of Alliance delivering agreed outcomes from 31 July 2019

 

Implementation of Contractor Panel delivering agreed outcomes from 31 July 2019

 

Start phased implementation of new WTP contract

Continue

Report

 

44

We’ll create value for money by delivering two Smart Services ideas each year

Two Smart Service ideas delivered

Continue

Report

 

45

We’ll better support the delivery of our services by identifying where we can streamline and simplify our systems (subject to funding)

Simplification programme plan in place

 

Delivery in line with plan

Continue

Report

 

 

 


                                                                                      43                                                            03 June 2020

Wellington Water Committee

21 May 2020

 

 

 

File: (20/434)

 

 

 

 

Report no: WWC2020/4/3

 

Company Update Report

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Appendix 1 Company Update Report May 2020

44

    

 

 

 

 


Attachment 1

Appendix 1 Company Update Report May 2020

 

Wellington Water Committee

Company Update Report

Purpose

1.    To give the Wellington Water Committee an overview of the matters most important to the ongoing performance of the company.

Attachments

2.    There are no attachments.

Covid-19

3.    On the 24th of March 2020, New Zealand went into lockdown to prevent the community transmission of the Covid-19 virus. On the 14th of May 2020, New Zealand emerged from lockdown (and level 3) into level 2 which can be generally described as “getting back to some normality” with all the new health and safety requirements in place.

4.    The company is an essential service provider. Under the threat of Covid-19 we paused the company, reassessed our priorities and put all our efforts into supporting our frontline people who were operating the treatment plants working on the networks or delivering critical projects.

5.    To assure our council owners we could continue to provide all our services should there be community transmission, we duplicated the number of frontline workers undertaking critical activities and those backing them up in the office (virtual office). As it turned out the virus was kept in check, our staff remained healthy and we kept delivering the services. We also made some in-roads into the backlog of service requests we are carrying so we should see some improvement in response times when we report these both at the end of Q4 and for the entire year in our Annual Report.

6.    While we only attended to critical projects over the lockdown period we released additional waves of projects as we stepped down through level 4 to level 2. All projects are now “live again”. We have estimated the holding costs of the lockdown on projects and reported these to council owners together with any carryovers caused by the 6-8 week hiatus.

7.    We have started to re-occupy the IBM building but we are careful in doing so. We have all learnt a number of lessons from the lockdown including the benefits of new tools like “Zoom” and “Microsoft Teams” and the additional productivity some staff can get from working at home. We are determined to lock in some of these lessons into a more flexible way of working and trusting our people to deliver the work.

8.    We are now focused on the planning for the 20/21 financial year and delivering to you our best advice for your 21/31 Long Term Plan (LTP). Overall we will lose about three months of the year to Covid-19 and we explain the impact this will have on our end of year performance reporting against the 2019/20 Statement of Intent (SOI).


 

Looking after existing infrastructure

9.    Over the last six months we have had to deal with two significant network outages in Wellington City Council. While both are now nearly fully addressed they have raised questions about the inspection and condition assessment regime Wellington Water carries out.

10.  We have reported to councils that our programme of asset inspections and condition assessments have been historically low and have been under pressure as budgets have been put under pressure. This means we are unable to fully account for the condition of our high and very high critical assets at a network level. The consequence of this is that there could be further assets (like Dixon Street) that could fail without warning. The costs of dealing with these failures are significant and in general councils do not hold the contingency for such events (the exception is the Greater Wellington Regional Council).

11.  Councils have indicated they do not wish this situation to continue and Wellington City Council (WCC) and Hutt City Council (HCC) have specifically approved additional funding to ensure we have inspected and assessed the condition of all very high criticality assets over the next financial year. We are looking at the budgets of Upper Hutt City Council (UHCC) and Porirua City Council (PCC) to see if we can re-prioritise expenditure to achieve the same result. As we complete this work we will be able to advise councils of any risks to critical assets and size contingencies appropriately.

12.  Our submission to councils’ LTPs contain appropriate levels of funding to update all inspections and condition assessments over the next four years and then hold a set budget for this work going forward as a core activity. By undertaking ongoing assessments on a regular basis we can assess the rate of deterioration of our assets and therefore improve the predictability of failure thus intervening at the best time. When we are at this point the risk of a sudden, unexpected failure should be minimised.

13.  Customer satisfaction with our service request work spiked at 94% satisfied over April, up from an average of about 80%. We think this is most likely related to people understanding our frontline staff were working with some personal risk and people had more goodwill to share during lockdown. The duplication of staff during lockdown enabled us to clear a lot of the 19/20 backlog of non-urgent service requests. How this flows through to response times will be understood at the end of Q4. We did not report Q3 due to Covid-19.

 

14.  We will continue to struggle to deliver against target response times as our assets are getting older, the cost of doing this work continues to be put under pressure and the expectation of customers continues to rise. On the flip side our Customer Operations Group is working more efficiently and some councils provided additional opex in 20/21 to keep on top of the service requests.

Providing Trusted Advice on your Long Term Plan

15.  The planned cycle of providing advice to you on your long term plans is expected to proceed as follows:

i.      Delivery of “early signals” work;

ii.     Build up options for 3 Waters;

iii.    Provide advice on final options; and

iv.   Set up delivery systems to implement the first three years.

16.  We have now delivered all our early signals work. An update follows:

 

WWL Board

Council Officers

Council

GWRC

HCC

PCC

SWDC

N/A

N/A

N/A

UHCC

-

HCC

-

WCC

 

 

 

 

17.  The object of the early signals work is to give council an open and transparent assessment of the issues and funding needed to manage the three water networks.

18.  The key takeaways were:

i.      Opex funding needs to increase so we understand the condition of the assets better, inspections and monitoring needs to be increased; we need to reduce our consent non-compliance risk; and we need to move from reactive to planned to predictive ways of working on the network.

ii.     A high proportion of our networks will need renewal over the next 30 years. We need to understand the condition of these assets and begin to lift the level of renewals to double what we do now;

iii.    Increased investment is needed to ensure the three water networks stay ahead of growth otherwise environmental effects will increase; and

iv.   We have some significant challenges in front of us:

a.        Reducing drinking water consumption to lift impact on natural resources and defer costly projects;

b.        Improve the water quality of our streams, rivers, harbours and coastlines; and

c. Reduce the amount of carbon we emit.

19.  These issues need to be landed in a post Covid-19 world where council revenues are down and you have struck rates at a level they believe balances the needs of the future with the pressures on communities today.

20.  The next stage is to develop options for each council based on the following priority system:

i.      Making opex funding sustainable;

ii.     Doing the right amount of renewals; and

iii.    Targeting remaining investment to the priorities of growth, drinking water consumption reduction, improving water quality, and reducing our carbon emissions agreed by councils.

 

21.  The GWRC has signalled that it would consider deferring the timing of the Cross Harbour Pipeline due to successful establishment of the above ground drinking water network across the region which provides 20 litres per person per day within 500-1000m of homes. This deferral will reduce the call on the water levy thereby leaving funds with the other councils to address broader three water issues.

22.  We have engaged Alan Sutherland from the Water Industry Commission of Scotland to review all our proposals to councils. He will be available when we provide the final LTP option to give you assurance we are following good practice and the advice is broadly in line with the development of overseas agencies.

Key Priorities

23.  We continue to work on providing three water network concepts to support your growth cells and estimate the costs of providing these.

24.  We are now progressing the small area meter workstations across council networks. These together with real time monitoring and planned inspections of the network are designed to uncover the expected high number of underground leakage. For example, we have seen a 30% increase in night time consumption in UHCC. Finding where this is going without a well metered network is hard.

25.  Three of our four councils have approved the “roving crew” concept in their draft 20/21 Annual Plans. We are making plans to establish these early in 20/21 and start in the key catchments on the networks. We expect them to start in the known hotspots of Owhiro Bay, Karori, Titahi Bay and Wainuiomata. This is a fantastic new initiative which will make a fundamental difference to the water quality of the region.

26.  We expect to understand requirements for the pace for carbon reduction as part of the LTP processes with councils.

Company

27.  It has been a disruptive finish to the 19/20 financial year. Covid-19 stretched our resources and we did well to prioritise all our effort to support the frontline resources without any disruption to services. We are now planning for the 20/21 financial year. Our business plan flows out of the 20/21 SOI which you provided feedback on in early 2020.

28.  The 20/21 financial year looks very busy for the company:

 

i.      To complete all the works associated with the two asset failures in Wellington City Council;

ii.     To plan for the 5% increase in scope councils have funded for us in opex;

iii.    Address shovel ready projects; and

iv.   Get ready for drinking water regulation.

29.  The region has refined its “shovel ready” submission for water projects. We now have 15 projects in the mix for the first tranche of funding.

30.  The Taumata Arowai Bill has been delayed in Parliament but the organisation lead by Bill Bayfield has been formed. It is expected the new drinking water regulator will be in place by the middle of 2021. There will be significant extra demands on the company to meet the regulators requirements including:

i.      Becoming a licensed operator;

ii.     Meeting quality assurance requirements;

iii.    Lifting our monitoring and reporting requirements; and

iv.   Overseeing improvements in our worker safety plan.

31.  This is a hard-nosed regulator model with significant penalties associated with not meeting the required standards. We will need to assure you we have this well managed. We are estimating the impacts of regulation on the business by preparing a business case which will outline the impacts and the changes we will need to make to manage these. We will also need to estimate the costs of regulation to councils in terms of licence fees and whether or not the regulator will impose a levy on councils to fund its activities.

32.  The Water Services Bill will set out the detail of the new regulatory regime. It’s close to ready for introduction into the House and timing will depend on legislative priorities.

Miscellaneous

33.  The new Global Stormwater Consent lifts the levels of service for sanitary surveys if high E-coli readings are found in the streams, rivers, harbours and coastal waters. A sanitary survey involves the inspection of the pipe network to try and identify the source of the contamination. These are often mis-connections from private property into the network. The Global Stormwater Consent has both increased the extent of monitoring (it was previously primarily within Wellington City Council) and lowered the E-coli level at which the surveys are required. This has resulted in an increase in survey activity that has not been funded by council budgets. We are in discussion with the GWRC to establish an approach that will use the roving crews that are expected to be funded in 2020/21 Annual Plans, which they are open to. If we can’t agree on a workable solution we would expose ourselves to ongoing enforcement action.

34.  The WCC Mayoral taskforce continues. There have now been three meetings. The focus is shifting to the information the taskforce needs to inform council on its options for water investment in its 21/31 LTP.

35.  We are currently concluding the procurement process for the business case for universal metering. The business case will be focussed primarily on the value of metering for identifying customer and network leaks and influencing customer behaviour through providing consumption information. This is to enable us to draw a cleaner distinction between the role of meters for managing water demand and as means of cost recovery and cost allocation. We expect the case to be completed in late-July or August – in time to be part of councils’ LTP prioritisation discussions (in the event the business case is favourable). Further economic and technical analysis would be undertaken if there is a commitment to this investment.

 

 


                                                                                      49                                                            03 June 2020

Wellington Water Committee

21 May 2020

 

 

 

File: (20/435)

 

 

 

 

Report no: WWC2020/4/4

 

Update on 2020/21 Annual Plans and 2021/31 LTPs

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Appendix 1 Update on 2020/21 Annual Plans and 2021/31 LTPs and Appendix 2 Typical Asset Criticalities

50

    

 

 

 

 

 


Attachment 1

Appendix 1 Update on 2020/21 Annual Plans and 2021/31 LTPs and Appendix 2 Typical Asset Criticalities

 

Update on Annual Plan and Long Term Plan development

Purpose

1.    To provide the Water Committee with an update on how Wellington Water’s (WWL’s) client councils have provided for water services in their proposed 2020/21 Annual Plans and the resulting impacts on WWL’s activities, and progress towards the development of the councils’ 2021/31 Long Term Plans (LTPs).

Summary

2.    All of WWLs client councils have revised down the spending proposed for their 2020/21 Annual Plans as a consequence of the economic impact of the covid-19 pandemic.

3.    To-date, all of the councils have maintained the 2020/21 budgets originally allocated for three waters services. If this funding is ultimately confirmed, this will see WWL’s opex activities increase by more than $3million. In some cases proposed budgets remain subject to public consultation and they are also subject to final confirmation as review processes are completed.

4.    If confirmed, the additional funding will see the widespread deployment of ‘roving crews’ for the inspection of public wastewater laterals (proposed for all four cities but still subject to final confirmation), an increase in leak detection and repair activities, and the inspection of the highest criticality assets[1] in WCC and HCC. WWL is also now investigating reallocating existing asset condition funding primarily towards these assets across all budgets.

5.    The baseline 2020/21 capital programme has also now been set and provided to each council. The programmes include carryovers from the 2019/20 programme resulting from delays through the covid-19 lockdown period, but are subject to further review as final funding is confirmed, and the impact of any successful applications for central government funding for ‘shovel ready’ projects is considered.

6.    The ‘2021/31 LTP early investment signals’ presentation for GWRC is scheduled for 28 May. We are now discussing the next phase of our engagement with the councils, which is expected to include the development of investment options to help councils consider overall budget allocations and the implications of prioritisation decisions. WWL is anticipating that council budgets for 2021/22 and potentially beyond we will be constrained by the ongoing impacts of the covid-19 pandemic.

7.    Our engagement with councils on their 2020/21 LTPs also includes discussions on the associated documentation (i.e. 30-year infrastructure strategies, etc.) and performance measures. In relation to these, we are seeking the following commitments from our client councils:

·    That they rely on our Regional Service Plan, including the council-specific investment programmes in Part Three of that Plan, to meet any requirements in relation to the development of asset management plans. Developing these on a council-by-council basis adds costs and undermines the objective of taking a regional approach to water services provision.

·    That they seek to establish a regionally consistent set of LTP performance measures and targets that are aligned to our overall customer outcomes. Variations in measures and targets add costs through requiring different sets of operating and reporting procedures and, where unaligned with customer outcomes, add reporting costs while not supporting performance improvement.


 

Recommendation

8.    It is recommended that the Water Committee notes this report, endorses the use of the Regional Service Plan as part of councils’ LTP documentation, and discusses a process for establishing consistent LTP performance measures.

Attachment

9.    There is one attachment:

·    Appendix 2: Typical Asset Criticalities.


 

Proposed 2020/21 Annual Plans include an overall increase in three waters activities

10. The covid-19 pandemic and the country’s response to it has had a significant impact on our client councils’ revenue streams, and is also expected to have a material impact on the ability of many ratepayers to meet their rates bills. In response, the councils have all chosen to review and reduce the budgets and activities proposed in their 2020/21 Annual Plans.

11. Our discussions with our councils has indicated that, at this stage, investment in three waters services remains as a priority and all proposed funding has been maintained. This includes new and additional funding for a range of new or expanded activities.

12. In some instances the proposed budgets remain subject to confirmation through formal public consultation processes. In all cases, 2020/21 budgets remain under review, and it is not expected that they will be confirmed until well into June.

13. If confirmed, the proposed funding will result in a material increase in our operating budgets, and the establishment of some new activities. In all cases, these new activities are the pre-cursor to further increases intended to address regional priorities such as condition assessments for critical assets, demand reductions to support a sustainable water supply and avoid investment in significant new water supply infrastructure, and improving the health or our urban waterways and harbours.

14. The table below sets out the status of each council’s 2020/21 Annual Plan and the anticipated three waters budgets (as understood by WWL as at 15 May 2020).

 


Table 1. Status of 2020/21 Annual Plans and Budgets (as at 15 May 2020)

Council

GWRC

HCC

PCC

SWDC

UHCC

WCC

Proposed 2020/21 rates increase

3.0%

3.8%

4.9%

2.5%

1.5%

5.1%

Pre-covid proposal

3.0%

7.9%

6.5%

11.3%

4.68%

9.2%

Current status

Pending Confirmation

Consultation

Pending approval

Consultation

Feedback

Consultation

Proposed Three Waters capex

$27,510k

$27,415k

$10,763k

$5,236k

$15,287k

$50,385k

Proposed Three Waters opex

$14,793k

$16,289k

$7,102k

$1,725k

$6,883k

$32,718k

Opex increase on 19/20 budget[2]

$380k

$884k

$1,107k

$380k

$407k

$2,802k

New or increased activities

Critical asset condition assessment

-

$200k

-

-

-

$500k

Private wastewater roving crews

-

$250k

$150k

-

$250k

$350k

Increased leak detection and repair

-

$200k

$100k

-

$150k

$250k

Growth catchment studies

-

$200k

-

-

$120k

-

Other

-

$70k

$15k

$243k

$15k

$205k


15.  At this stage, all of the cities except UHCC have chosen to deploy the proposed ‘roving crews’ to identify leaks and defects in private wastewater laterals. There may be some delays in deployment while the cities look to ensure that their internal policies for requiring repairs are aligned to the new service.

16.  WCC and HCC are both providing additional funding to support condition assessment for critical assets. We will prioritise this towards the assets considered to be ‘very high’ criticality under our criticality framework, such as wastewater gravity trunk mains and the wastewater interceptor. A table showing typical asset criticalities for different asset classes is provided as Appendix 2.

17.  We are also considering our overall asset condition monitoring programme across all budgets and expect to prioritise the allocation of existing funding towards high and very high criticality assets rather than to routine activities. There is a significant number of ‘high’ criticality assets in addition to the ‘very high’ criticality assets that we are prioritising for 2020/21. ‘High’ criticality assets include most reservoirs and pump stations. A significant funding increase for the full range of condition monitoring activities is also being proposed for all 2021/31 LTPs.

18.  The baseline 2020/21 capital programme has been set and provided to each council. The programmes include carryovers from the 2019/20 programme resulting from delays through the covid-19 lockdown period, but are subject to further review as final funding is confirmed, and the impact of any successful applications for central government funding for ‘shovel ready’ projects is considered.

Engagement on 2021/31 LTPs continues

19.  The ‘early LTP investment signals’ presentation for GWRC councillors is scheduled for 28 May. We have not completed these presentations with WCC and UHCC councillors, but envisage working through the material as we start exploring investment options in the next phase of our engagement with them[3].

20.  Completion of the discussions with GWRC is required before we can move into the next phase of our engagement. GWRC’s activities determine the size of the bulk water levy for the four city councils, and it is important that we be able to present all four components of their water services costs to them (i.e. capex, opex, bulk water levy and WWL management fee) so that they consider the total impact on ratepayers.

21.  Our next phase of engagement is expected to be a discussion about how the councils want to prioritise their funding across all of the strategic challenges, and the total level of funding likely to be available.

22.  We can see that the ongoing economic impacts of the covid-19 pandemic response, on top of the decisions made to hold down rates rises for 2020/21, will make it challenging to lift the level of funding in the manner outlined in the early signals presentations (including our proposals to progressively ramp up this funding over several years). The impacts of the pandemic may also cause our councils to review or reconsider their growth projections, with consequential impacts on three waters investment requirements.

23.  We are re-engaging with council officers as working conditions return closer to ‘normal’ and as their and our work on revising 2020/21 Annual Plans concludes. Engagement plans and timelines will be established for each council. Responding to the individual requirements of six councils who are working to very similar timeframes will put significant pressure on our internal resources, and we will work with them to try and identify opportunities to take a common approach.

24.  Some engagement across councils will also be required where there is significant investment required across shared assets, i.e. wastewater in the Hutt Valley and for Porirua-Northern Wellington. We encourage the relevant councils to commence this engagement as soon as practical.

A common approach to LTP documentation and performance measurement

25.  Our engagement with councils on their 2020/21 LTPs also includes discussions on the associated documentation (i.e. 30-year infrastructure strategies, etc.) and performance measures.

26.  Recent changes to the Local Government Act now enable councils to request asset management plans from their Council Controlled Organisations. We have started to field enquiries from council officers about this option, seeking council-specific plans.

27.  A fundamental component of delivery of the three waters services is that we take a regionally consistent approach, including in relation to asset management. This is essential to our creating the desired efficiency and effectiveness improvements, and we are also funded on this basis. Our approach to asset management is encompassed within our Regional Service Plan.

28.  Developing asset management plans on a council-by-council basis adds costs and undermines the objective of taking a regional approach to water services provision. Referencing our Regional Service Plan should be sufficient to meet the requirement for an asset management plan for each council’s water assets. We encourage you to endorse this approach, rather than a council-specific approach, should the discussion take place within your council.

29.  Another component of LTP-related documentation are the suite of service performance measures. Ideally, we would like to establish a regionally consistent set of LTP performance measures and targets that are aligned to our overall customer outcomes. Variations in measures and targets add costs through requiring different sets of operating and reporting procedures and, where unaligned with customer outcomes, add reporting costs while not supporting performance improvement. We would like to discuss with the Committee whether alignment is possible, and what a suitable process for achieving alignment might look like.

 


Appendix 2 Typical Asset Criticalities

Appendix 2: TYPICAL ASSET CRITICALITIES

Very Low

Low

Medium

High

Very High

Treatment plants

 

 

 

 

 

 

although plant is  very high most components have standby

Pump Stations

 

 

 

 

 

 

some components have standby

local area

into bulk main

Reservoirs

 

 

 

 

 

 

duplicate storage in zone

single storage to zone

Stormwater pipes

 

 

 

 

 

 

sump lateral

large culvert under highway

Wastewater pipes

 

 

 

 

 

 

house lateral

interceptor

Water supply pipes

 

 

 

 

 

 

service

bulk main

 


                                                                                      59                                                            03 June 2020

Wellington Water Committee

22 May 2020

 

 

 

File: (20/444)

 

 

 

 

Report no: WWC2020/4/5

 

A Value for Money Framework for Wellington Water Ltd

 

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Appendix 1  Report Wellington Water Value for Money

60

2

Appendix 2 Deloitte Report - Executive Summary

67

    

 

 

 

 

 

  


Attachment 1

Appendix 1  Report Wellington Water Value for Money

 

A Value for Money Framework for Wellington Water

Recommendations

It is recommended that the Committee:

Notes the strategic context within which Wellington Water is operating and the need for the company to continue to grow its capability to respond to changing demands.

Notes the company is interested in receiving feedback from the Committee on the draft value for money framework.

Purpose

To seek feedback from the Committee on developing a value for money framework for Wellington Water.

Summary

Wellington Water aims to be both effective and efficient for its owner councils. The trusted advice it provides on councils Long Term Plans (LTP) is the primary area by which the company can demonstrate effectiveness and provide long run value for money.

Day to day, the aim is for the company to operate as efficiently as possible, however, it can be challenging to demonstrate gains, especially in the short term.

Wellington Water’s Board considers the business to be in a growth phase as it responds to increasing demands from the external environment, such as the proposed drinking water regulator and increased demands in the water quality and carbon reduction areas. Additionally, there are greater service expectations from its councils as reflected in increased operational expenditure for 2020/21.

Over the past five years, the company has been steadily lifting the capability of the organisation and re-organising the way it delivers its three waters services. These new delivery models have now been implemented and have begun to add value. This value needs to be captured and reported in a systematic way and the outlined framework will assist with the telling of a better value for money story. The company intends to report quarterly on its progress.

During the year the company will also look to benchmark its activities against other water entities.

Background

As a council controlled organisation, Wellington Water (the company) aims to deliver value for money to its owner councils.

“Value for money” comprises two key principles of effectiveness and efficiency which can be defined as follows:

Effectiveness is about doing the right activity, at the right time, in the right order, to achieve the set strategy.

Efficiency is about doing things so the company achieves the same level of service for less cost.

Wellington Water aims to be both effective and efficient for its client councils and the community.

Developing trusted advice to councils on their Long Term Plans (LTP) is the primary way the company provides long run value for money for its owners. By thinking ahead and providing advice on what programmes of work and projects to do, at what time, the right amount of investment by councils is made.

While the LTP advice to councils is a primary focus, the company also aims is to be as efficient as possible across the company as part of its day to day operations.

The company is aware it needs to get better at demonstrating its value for money story. In the short term this is not easy because, being a relatively young company, the initial focus has to be on putting in place operating models which will deliver value over the long run.

Wellington Water has been in operation for nearly six years. As the company continues to mature, a body of data is being collected that helps illustrate the gains that have been made over time.

A key part of ensuring we are successfully adopting a value for money approach is working out what it means to be an effective and efficient organisation in practice so that we can track how we are doing. The first step is to start a conversation with the Committee around further defining value for money and seek feedback on what it would look like for Wellington Water Our goal is to develop a value for money framework that will drive the conversation forward and feed effectiveness and efficiency measures into the company’s performance framework.

Wellington Water is in a growth phase

The Wellington Water Board considers the business to be growing as it responds to changing demands in the broader environment. These demands include but are not limited to the introduction of the proposed drinking water regulator, increased receiving environment water quality standards and responding to climate change.

The  time is right for the company to develop its value for approach as the councils are in the process of considering increasing levels of services as part of their 2020/21 annual plans and the 2021-31 LTPs around water quality and network leakage. This is likely to result in a 5% increase in operational expenditure for the company. This additional expenditure will be allocated to new programmes of work including the introduction of “roving crews” to track cross connection issues and leak detection.

In addition, 15 projects have been submitted to central government as “shovel-ready”. The company will fast track these projects if approved, as well as undertake a programme of work to address asset condition assessments. There will also be a significant increase in the number of renewals that will need completing over the next 30 years.

In growth mode, the company’s demonstration of value is underpinned by the increase of capability within the organisation. This means investing in people, processes and systems so it can remain effective and responsive to the increased demands. At the same time, it is important that the company is held to account by its Board through the review of its annual business plans to ensure the company continues to find efficiencies and are operating within a cost conscious environment.

Wellington Water’s value for money story to date

Over the last six years, the company has been steadily lifting the capability of the organisation and re-organising the way it deliver three waters services.

The effectiveness of the company is largely centered on the advisory service that is provided to councils on their LTPs. Planning activities in the right combination and mix, at the right time, to meet each councils’ priorities and funding levels, is the company’s promise.

There are many challenges in providing this advice including ensuring funding is explicitly tied to the levels of service that is being offered to the community.

The 2021-2031 LTP advice will be significantly improved from previous years due to the company’s increased capability to undertake long term investment planning. This function has taken a number of years to mature and further improvements will be made this cycle by ensuring our advice is independently reviewed by the Water Industry Commission for Scotland.

The opportunity to improve efficiencies as a company is largely through its role as councils’ trusted operator. 

Over the past year, the company made significant improvements in the way it delivers the three waters services. This has included:

·    Committing to delivering drinking water treatment in-house. The next step will be increasing the company’s capability to meet the requirements of the new drinking water regulator including technical capability, systems and reporting.

·    Setting up an integrated customer operations group with our alliance partner Fulton Hogan to streamline the way the company works and increase productivity. A limitation around the current system is that it does not explicitly link the cost of the service with the achievement of councils’ levels of service. The company has been working on this and the implementation of new software will assist, but the system is particularly under pressure because of a period of increasing leaks, customer expectations and costs of doing business. This has meant the efficiency gains expected from the implementation of the new model have been offset. In 2020-21 an efficiency measure will be developed for the customer services group. 

·    Consolidating the consultancy and contractor panels for the provision of capital works. The company has adopted a programme approach to this work which means three year plans can be developed which encourages the supply chain to invest in their businesses with confidence.  One of the benefits of the model is it allows for the retention of skills within the Wellington region. It also adds value to every job by engaging the contractor early in the lifecycle which results in better, collaborative decision-making and innovation. To measure performance in these areas, the company has developed new measures to be included the Statement of Intent to track value creation. It is more challenging to demonstrate the value that has been added under the consultancy/contactor panel model in comparison to a standard open tender approach (where a cost minimisation approach is taken) but the company believes this model provides greater value to the councils.

Getting better at demonstrating value for money

Last year Deloitte was commissioned to undertake an independent review to look at the company’s current capacity and capability to ensure it can deliver in a changing operating environment over the next 1-2 years. It covered off a number of the company’s key operational challenges and provided a set of recommendations for improvement.

The report (attached) included finding that establishing the right performance framework is a key mechanism for bringing together the priority improvement areas of the company and providing a basis for further capability investment from its owners.

Developing a framework and having value for money conversations should be able to assist the company’s ability to better demonstrate value for money to its councils and provide assurance that it is building the capability and capacity necessary to respond to current and future challenges.

The company’s board received the report and has asked for the key recommendations to be implemented.

Over the next year the company will look to demonstrate the value that has been added through the models of service delivery that have been implemented so far. The company has already started to improve its set of performance measures as part of the Statement of Intent. Now it intends focusing on capturing value creation and developing a framework that will guide the conversation. The next section discusses a possible approach.

Elements of a value for money framework

A framework can be a useful way to provide a common language for discussions and capture progress. 

The company is interested in seeking feedback from the Committee on whether it is a useful approach and what you would like to see as part of the framework.

The different elements (systems, activities and measures) that could be included in a value for money framework are set out below. Some of these elements are well developed and have already been implemented within the company, while others will be looked at as part of the company’s maturity path.

The measures outlined inform the company’s performance framework. The most important ones are included in the Statement of Intent.

In developing measures, the Committee is encouraged to focus on capturing added value to the councils and the community rather than pure efficiency targets that could result in a reduction of overall value.

Statement of Intent (SOI):

The letter of expectation that guides the Statement of Intent ensures the company is focusing on the right strategic priorities.

The SOI is scrutinised by an independent Board of Directors; the Water Committee receives it and provides recommendations to their councils; and it is independently audited. 

The SOI contains metrics that measure the effectiveness and efficiency of the company’s performance. The company has recently reviewed its set of metrics and will continually seek better metrics as better data collection is possible. The company intends to align its measures with economic regulation best practice to future proof this work and generate trend data over the long term. This is an area we will look at over the medium term.

Demonstrating effectiveness as a company

The company focuses on growing the capability of the company: people, processes and systems.

The company hires and retains the right skilled people to make the right calls.

The capacity and capability of the company is periodically reviewed – see the attached Deloittes report.

Demonstrating efficiency as a company

The Board approves the annual budget: scrutinises the capital and operational expenditure and appropriate use of funds.

Demonstrating effective long term planning

The 10 year forecasts for councils are optimised every three years to ensure all activities are aligned to the councils’ priorities – the Water Industry Commission for Scotland will provide independent advice to the councils on the advice.

The company describes the risk profile of the networks

The company links councils’ levels of service to the operational budgets and performance metrics – this is challenging but the company expects to make considerable progress over the next two LTP cycles

The company ensures the capital works programme is planned to meet industry capacity.

Demonstrating effectiveness of the annual planning and investigation activities

Investigating future problems at the right time so plans are completed to achieve the required result

Ensuring all inspections and condition assessments are completed (very high criticality within one year and the balance within three years).

Demonstrating the water treatment plants are run efficiently

100% compliance for least cost

Building resilience of the internal workforce

Demonstrating the networks are run efficiently

Reporting planned work/reactive work ratio

Reporting number of asset failures

Developing additional efficiency measures for the Statement of Intent

Demonstrating the wastewater treatment plants are run efficiently

Consents compliance for least cost (which we have achieved through a tendering process to Veolia)

Demonstrating efficient capital expenditure

Reporting consultancy cost/total cost (trending down)

Reporting price per unit of completed pipeline (trending down)

Peer reviews of projects show outcomes achieved.

Demonstrating effective innovation

Reporting on the implementation of new ideas that enhance provision of services.

Benchmarking

During the next the company will consider how best to benchmark its performance to compare costs against other water entities.

The company will look to benchmark against Watercare Ltd and possibly participate in the wider Water Services Association of Australia (WSAA) benchmarking programme.

While there are considerable limitations to the usefulness of benchmarking due to the different configuration of water services and networks, the analytics will hopefully improve over time to the point where useful information can be gained. 

Value for Money going forward

Following feedback from the Water Committee on what elements they think is important to include in the framework, the company will do further work to develop the model and bring it back to the Water Committee.

The company intends using the framework as a basis for developing a value for money report which will enable quarterly reporting to councils.

 


Attachment 2

Appendix 2 Deloitte Report - Executive Summary

 


 


 


 


 


 


 


 


 


 


 


 


 


 


MEMORANDUM                                                  81                                                            03 June 2020

Our Reference          20/469

TO:                      Chair and Members

Wellington Water Committee

FROM:                Kathryn Stannard

DATE:                27 May 2020

SUBJECT:           National Council of LGNZ Policy Position on Three Waters Service Delivery

 

 

Recommendation

That the Committee receives and notes the information.

 

On 18 May 2020 Local Government New Zealand sent out a message to the Mayors, Chairs and Chief Executives:

“On Friday the National Council of LGNZ met and reviewed its policy position on three waters service delivery and agreed a definitive and clear statement of its position on the matter.  This position was communicated to the Prime Minister, other senior ministers, and to the local government spokespersons of NZ First and the Green Party later that day.  Additionally, I have briefed today the local government spokesperson for the National Party.

LGNZ Three Waters Policy Position:

1.       Owners of drinking water assets must achieve required public health outcomes.  There may be legitimate debate on what those outcomes/standards should be, but once set they must be achieved within required timeframes.  It is not tenable to argue that citizens should be drinking water that does not meet the required public health standards (this is distinct from the different means of meeting those standards);

 

2.       To ensure a real compliance incentive exists to galvanise action on the part of asset owners, an independent drinking water regulator with very real enforcement authority must exist.  Asset owners must understand that there will be consequences for non-compliance.  This creates a real incentive to comply.  This has not been the case in the past;

3.       We as a sector acknowledge the historic underinvestment in three waters infrastructure, and regardless of the reasons for underinvestment, recognise this must be addressed.  We look forward to working with the regulator to ensure councils comply with the relevant standards;

4.       We do not support mandatory aggregation.  The economic literature on water aggregation is explicit on the need to assess each proposal on a case-by-case basis, and a one-size-fits restructure of New Zealand’s three waters sector is unlikely to achieve the efficiency outcomes hoped for.  To be clear, we do not oppose situations where the Crown would require asset owners to restructure their operations under a specified delivery and operating model in exchange for funding as this maintains choice.  However, we oppose measures that would force asset owners into a specific delivery and ownership model against their will and in circumstances where the asset owner has not sought financial assistance from the Crown;

 

5.       The choice of delivery mechanism should be left to asset owners.  If particular asset owners wish to aggregate, then they should be allowed to do so.  If others choose to stay separate, then they should be allowed to do so.  This is a form of democratic expression where community choices are supported, but asset owners must meet the relevant standards and are accountable for the structural choices they make;

6.       Such an approach is both more likely to promote innovation in delivery mode and to promote least cost delivery on a whole of life basis; and

7.       The position is similar in the environmental (wastewater and stormwater) space.  The standards setting process is the more acute issue here because of the large implementation costs associated with such standards (both to asset owners and to the economy).  But once the standards are set then the principles that apply to drinking water apply to wastewater and stormwater.


Beyond our position stated above, we advised the Government that we feel it is important to focus our collective efforts on where there are genuine problems in the system.  In relation to drinking water, by and large, it is the private (non-council) drinking water networks that are failing to meet minimum standards, and where the health risks are most acute.  Addressing the quality of these assets and the regulatory system that allowed that position to develop in the first place should be the real focus of efforts in the drinking water space.

LGNZ does acknowledge the challenge with consents in the wastewater space as it relates to council assets.  However, these need to be viewed within the context of increasingly complex RMA processes, where the duration of consents is shrinking while the cost and time to acquire a consent is growing – often for little net benefit to the receiving environment.

On behalf of Malcolm Alexander
Chief Executive
Local Government New Zealand”

 

Appendices

There are no appendices for this report.   

 

 

 

 

 

Author: Kathryn Stannard

Head of Democratic Services

Hutt City Council



[1]    These are the ‘very high’ and ‘high’ criticality assets as defined using our asset criticality framework. See paragraph 0 for more information.

[2]    Including WWL management fee

[3]    Our discussions with SWDC have not followed the ‘early investment signals’ framework, as we have not been working with them and their assets for long enough to be able to present this level of information to them. There has however been discussions on priorities and expected levels of investment.