Extraordinary Wellington Water COMMITTEE Meeting

 

21 July 2020

 

 

Pursuant to a requisition by the Chair dated 16 July 2020
an extraordinary meeting will be held in the

Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

 

 

Friday 24 July 2020 commencing at 9.30am

 

 

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

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.

 

 

    


HUTT CITY COUNCIL

 

Wellington Water Committee

 

Extraordinary meeting to be held in the Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt on

 Friday 24 July 2020 commencing at 9.30am.

 

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.       Wellington Water Limited Final Statement of Intent 2020-23 (20/763)

Report No. WWC2020/4/16 by Wellington Water Limited                                 8

5.       Company Update (20/762)

Report No. WWC2020/4/15 by Wellington Water Limited                               52

6.       Update on Central Government's Water Reforms (20/760)

Report No. WWC2020/4/14 by the Chief Executive, Porirua City Council     70

7.       General Business (20/761)

         

 

Kate Glanville

SENIOR DEMOCRACY ADVISOR

              


                                                                                       8                                                              24 July 2020

Extraordinary Wellington Water Meeting

21 July 2020

 

 

 

File: (20/763)

 

 

 

 

Report no: WWC2020/4/16

 

Wellington Water Limited Final Statement of Intent 2020-23

 

 

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Wellington Water Limited Final Statement of Intent 2020-23

9

2

Statement of Intent  Shareholder comments and proposed changes

12

3

Wellington Water Limited SOI Layout 2020

15

     

 

 

 

 

 

 

 


Attachment 1

Wellington Water Limited Final Statement of Intent 2020-23

 

 

Final Statement of Intent 2020-23 Our Water,

Our Future

 

Purpose of Report

1.      To present Wellington Water Ltd’s (the Company’s) final Statement of Intent 2020-23 (SOI).

Recommendations

It is recommended that the Committee receives and considers Wellington Water Ltd’s final Statement of Intent. 

Summary

 

2.    As a Council Controlled Organisation (CCO), Wellington Water is required to produce an annual SOI that aligns with councils’ Long Term Plans (LTPs) and annual plans. The SOI 2020-23 essentially reflects year three of the councils’ 2018-2028 LTPs. The final SOI is attached.

3.    The SOI reflects the priorities the councils have set through their Letter of Expectations. These priorities are:

a      Looking after existing three waters assets

b      Supporting growth without adverse environmental impacts

c      Reducing water consumption

d      Improving water quality

e      Reducing the impact of climate change.

4.    A new set of impact statements and performance measures have been developed which will enable the Company to tell a better performance story.

Context

5.    The purpose of an SOI is to-

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

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

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

6.    The Board of a CCO must consider any comments on the draft SOI that are made to it by the shareholders, and deliver the completed SOI to the shareholders by 30 June each year. The Local Government Act 2002 (LGA) allows the shareholders to agree to extend the time period for delivery of the SOI.

7.    The Our Water, Our Future SOI was developed two years ago to align with our councils’ 2018-2021 Long Term Plans (LTP). This year’s SOI essentially reflects the third year of the councils’ 10 year LTPs. New funding for investment in water assets and services will not be decided until the councils’ LTPs are adopted in 2021, following public consultation. It is important to note therefore, while there is a statutory requirement for CCOs to set out financial projections for the next three years, most of the figures contained in the SOI stem from the 2018 LTPs (ie. Years 3, 4 & 5).

8.    The draft SOI took into account councils’ priorities as set out in the Water Committee’s 2020-21 Letter of Expectations. These five priorities are:

a      Looking after existing three waters assets

b      Supporting growth without adverse environmental impacts

c      Reducing water consumption

d      Improving water quality

e      Reducing the impact of climate change.

9.    The draft SOI was presented to the Water Committee meeting on 28 February 2020. Councils were asked to forward any comments they had to the Chief Executive, Porirua City Council (the company’s case manager) by 12 April 2020. Some commentary was received from individual councils and these comments have been collated and responded to in a table (see Appendix 1).

10.  Due to the impact of Covid-19 on the councils’ timeframes for completing their planning, a one month extension was sought from each owner council.

11.  The Company’s Board approved the SOI at its meeting on 17 June 2020 and the final version is attached as Appendix 2.

Amendments to the draft statement of intent

6.    This year’s SOI aims to be clear about the Company’s priorities and intentions at a strategic level, while also explaining the relationship between councils’ investment levels and achievement of long-run outcomes and the Company’s everyday activities.

7.    No significant changes have been made to the SOI since the Water Committee last reviewed the draft. Due to the impact of Covid-19 and subsequent conversations with the Water Committee on the topic of value for money, the SOI has been amended to provide context and clarification. 

8.    The financials have also been updated to reflect the agreed capital and operational expenditure programme for the 2020/21 financial year.

9.    Work has also continued to develop the impact statements and measures that will capture the most important aspects of the Company’s performance and so the Water Committee will be seeing some of these for the first time. The mandatory performance measures that are issued by the Department of Internal Affairs are included and remain the same.

10.  The new set of impact statements and performance measures will assist the Company in telling a better performance story although it is intended that the overall framework is developed further for 2021-2024.

Next steps

12. The SOI will be published on the company’s website by 31 July 2020 and hardcopies will be distributed to elected members and officers.

 

 

 

 

 

 

Author: External Author (Wellington Water Ltd)

 


Attachment 2

Statement of Intent  Shareholder comments and proposed changes

 

Appendix 1

Council

Feedback

Comments

SWDC

SWDC didn’t take the SOI to a Council meeting but did circulate it for comment. General support for the document, particular feedback was

-      Appears to be no focus on innovation or technology adoption (identified by a few people)

-      Needs to include further supply chain integration opportunities (equipment, hardware, across suppliers etc.)

-      Efficient capex programme delivery in SWDC – no local capability in contractor pool unlikely to achieve this or give Council confidence in programme completion.

We have included additional information to highlight our approach to Innovation. (Pages 18/19)

 

We also have a measure focussed on Smart Services. (SOI measure 27).

 

The SOI includes measures related to capital project delivery and our service delivery model (SOI measure 22, 23, 24, 25, 26).

 

Daran Ponter (GWRC) Letter to Wendy Walker

Water consumption and sustainability is a significant issue for the region. We would like to see a tangible target for a reduction in household consumption and overall water usage on an annual basis. This target should be expressed in terms of a litre reduction rather than a planning aspiration.

 

As a short term target for 2025 we would like Wellington Water to achieve a reduction of 10% per capita or 40 litres per person per day to achieve a daily demand at 150 ML/p/d. We would like to see a longer term reduction to 100 litres per person by 2050.

The SOI should reflect a greater integration of the tools for the reduction of water consumption such as fixing all leaks and the implementation of network and household water meters.

 

There should be a headline performance measure related to the sustainable water policy.

Investment in the water infrastructure is critical for the region and we would like to see stronger targets for both the delivery of capital projects and also a defined link between investment and environmental outcomes including water quality and carbon neutrality.

 

We support the prioritisation of customer satisfaction as the number one performance measure and the focus on safe reliable drinking water. Wellington Water are to be congratulated on the integration of South Wairarapa District Council’s infrastructure into the portfolio and also the engagement of mana whenua across the organisation.

While we would also like to pursue reductions in overall water usage, the activities necessary to make material progress towards a 10 per cent reduction target have not been funded for 2020/21. We will continue to engage with our client councils about our recommended 10 per cent reduction target and funding these activities in their 2021/31 Long Term Plans.

 

The proposed target is expressed as litres per person per day, rather than litres, as this enables us to factor in the impacts of growth. These are the litres of water leaving the treatment plants, so includes all water consumed (domestic, commercial and leakage).

 

It is not possible for us to set a target specifically for household usage as we do not have sufficient metering in the system to enable this to be accurately measured. We are undertaking a business case for the installation of household water meters for the metropolitan Wellington region (these are already in place for SWDC) and we have included commentary regarding this in the SOI. Our policy for achieving a sustainable water supply includes an objective of reducing household use in line with recognised global good practice in the longer term.

 

The SOI includes measures related to capital project delivery (SOI measure 22, 23, 24, 25, 26) and environmental performance (Impact statement 5, SOI measure 11). We expect to engage with councils on carbon emissions reduction targets as part of the 2021/31 Long-term Planning process. We are also investigating approaches for measuring the emissions from our capital projects, and expect to undertake pilot studies in 2020/21 with a view to setting targets within the 2021/24 SOI (Impact statement 6, SOI measure 14).

 

 

 

Changes to the document

 

Page

Detail of change

2

Inclusion of text to highlight effect of Covid-19

6

Inclusion of high level text to address value for money

8

How we demonstrate value for money through our trusted advisor model

9/10

Inclusion of text that highlights our role in councils long-team planning process

10

Condition assessment and the importance of having a high standard of knowledge about asset condition.

Impact statement 2 

Now focussed on condition assessment programme

Impact statement 3 

Clarification of wording

11

Inclusion of wording regarding household water metering

Impact statement 5 

Clarification of wording

Impact statement 6 

Clarification of wording

14

Inclusion of text that highlights the effects of the Global Stormwater Consent, backlog of work, and target response times.

15

Clarification of wording regarding pipe renewals

15

Inclusion of text to highlight effect of Covid-19 and critical asset failures on our 2002/21 work programme

15

Inclusion of test highlighting role of Network Controller

SOI measure 3

Long-term plan measure included

SOI measure 4

Condition assessment measure strengthened

SOI measure 15

Future growth measure strengthened

19/20

Inclusion of text that highlights our approach to creating value for money ( innovation and benchmarking)

SOI measure 18

Engagement measure strengthened

SOI measure 25

Base line per km of pipeline measure strengthened

 


Attachment 3

Wellington Water Limited SOI Layout 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


                                                                                      52                                                             24 July 2020

Extraordinary Wellington Water Meeting

21 July 2020

 

 

 

File: (20/762)

 

 

 

 

Report no: WWC2020/4/15

 

Company Update

 

 

 

 

 

 

 

Appendices

No.

Title

Page

1

Company Update

53

2

Quarter 4 Performance Story - operations

55

    

 

 

 

 

 


Attachment 1

Company Update

 

Company Update Report  

 

Purpose of Report

To engage the Wellington Water Committee in current issues surrounding three waters and report on the company’s performance.

Recommendations

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

Background

This is a brief update due to the meeting being an Extraordinary Meeting.

Quarter 4 and 2019/20 year end reporting

We will be sharing our performance against the DIA and council targets for the year with each council.

Despite some significant operational challenges (collapsed tunnel at Dixon Street and high pressure sludge pipe failures at Mt Albert) and the impact of Covid-19 on the Company, results show steady performance across the year, and across all six councils.

A year ago we were re-structuring our service delivery model from an outsourced arrangement to an alliance delivery model for customer-facing service with the establishment of new service depots. We’re pleased that we achieved an overall customer satisfaction rating of 86% for the year and have also reduced the leak job backlog by approximately 80% across four cities (although this did generate extra cost during the Covid-19 period).

Due to ageing and under-investment in renewals, we have seen an increase in service request numbers of 12% across the region, and expect a similar increase this year. Not all response time targets were met; however our responses are in line with current levels of investment and efficient service delivery and are meeting customer expectations.

We delivered 100% safe drinking water to the metropolitan Wellington region and are on track to deliver high quality drinking water in South Wairarapa by December 2020.

We continue to manage high community expectations around water quality of rivers, streams and coasts at Owhiro Bay; Karori and Titahi Bay. This is challenging when the new global stormwater consent requires higher levels of service such as water quality testing and investigations that we are not funded to meet. We are however, continuing to improve how we engage with local communities and educating them around what they can do to assist with pollution issues such as checking private laterals for cross connections and leakage.

We are looking at an estimated 19% water loss across the networks which we want to address through the sustainable water priority through our LTP advice.

The attached slide deck takes you through the Company’s performance for the year.

2021/31 Long Term Planning (LTP)

We are now at Step 2 of our intended regionally-consistent 3 step engagement process with our client councils on the water investments for their 2021/31 Long Term Plans (LTPs):

•          Step 1: Early Signals

•          Step 2: Investment options

•          Step 3: Economically-optimised plan.

The last of the scheduled Early Signals presentations was completed with Greater Wellington Regional Council on 28 May. The presentations for Upper Hutt City Council and Wellington City Council were only completed to senior leadership team level, and not to councillors.

In Step 2 we will be presenting our recommended investment approach and indicative investment levels for the next LTP. These have been developed using an approach consistent with the methodology used by economic regulators. This approach prioritises the opex and capex required to achieve the required level of service through looking after existing infrastructure (“service quality”, in the language of economic regulation) before adding the additional investment to meet the council’s growth expectations and to meet desired level of service increases (i.e. the regional strategic objectives – sustainable water supply, healthy urban waters, and climate change response).

As signalled via the Early Signals presentation, the total level of investment required to meet all of these objectives will be significantly higher than existing funding levels from both an opex and capex perspective. The financial implications of our councils’ covid-19 response have also now increased the challenges in lifting funding levels. To support the councils with their decision making, in Step 2 we will be presenting our recommendations in the context of the risks associated with the recommended (and alternative) levels of investment. Based on council feedback we will then further refine our advice in Step 3.

We are working closely with council officers to ensure that our schedule fits within their overall LTP work plans. The first of our Step 2 discussions with councils are expected to be completed in early August, with the intention that these are completed in September. We should then be able to move relatively quickly into Step 3. The advice at Step 3 is also expected to include an independent assessment of our proposal from Alan Sutherland of the Water Industry Commission of Scotland.

 

Author: External Author (Wellington Water Ltd)


Attachment 2

Quarter 4 Performance Story - operations

 


                                                                                      71                                                             24 July 2020

Extraordinary Wellington Water Meeting

20 July 2020

 

 

 

File: (20/760)

 

 

 

 

Report no: WWC2020/4/14

 

Update on Central Government's Water Reforms

 

 

 

 

Purpose of Report

1.    To invite discussion on the Central Government’s water reform proposals.

 

Recommendations

That the Committee receives and notes the report.

 

Background

2.    In July 2020, Central Government announced a funding package of $761 million to provide immediate post Covid-19 stimulus to local authorities to maintain and improve their three waters infrastructure, and to support a three-year programme of reform of local government water services delivery arrangements.

3.    The Government has indicated that its starting intention is public multi-regional models for water service delivery to realise the benefits of scale for communities and reflect neighbouring catchments and communities of interest. There is a preference that entities will be in shared ownership of local authorities although final decisions on a service delivery model will be informed by discussion with the local government sector and the work of the Three Waters Steering Committee (which consists of central and local government members, independent members and iwi).

4.    Initial funding will be made available to those councils that sign up to the Memorandum of Understanding (MoU) and associated Funding Agreement and Delivery Plan for the first stage of the Three Waters Services Reform Programme. 

5.    Initial engagement will begin in July 2020 with local government and iwi/Māori partners to discuss the MoU and associated Funding Agreement and Delivery Plan.  A workshop will be held in Wellington on the 23rd July.

6.    Signing the MoU commits councils to engage with the reform programme and share information but does not require them to continue with future stages of the reform. The funding will be released as soon as the MoUs are signed. The bulk of the funds are expected to be spent by the end of the 2020/21 financial year, with some flexibility.

7.    Further DIA information about the proposals, including the MoU can be found here:

DIA Water reform FAQs

Draft MoU

8.    The Government’s expectation is that the Delivery Plans will be forwarded to Crown Infrastructure Partners by the end of August so the timeframes are tight. Wellington Water has started to coordinate a plan on behalf of its owner councils for feedback in early August.

9.    Wellington Water Committee members are invited to discuss the proposals at the meeting.

 

Appendices

There are no appendices for this report.   

 

 

 

 

 

 

 

Author: Wendy Walker

Chief Executive, Porirua City Council