Extraordinary Wellington Water Meeting

 

 

29 October 2020

 

 

Pursuant to a requisition by the Chair dated 27 October 2020
an extraordinary meeting will be held in the

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

on:

 

 

Tuesday 3 November 2020 commencing at 10.30am

 

 

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 

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

 Tuesday 3 November 2020 commencing at 10.30am.

 

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.       MINUTES (20/1333)

29 June 2020                                                                                                             8

24 July 2020                                                                                                            10

5.       Wellington Water Limited Company Update (20/1324)

Report No. WWC2020/6/252 by Wellington Water Limited                             16

6.       2020/31 Long Term Planning Update (20/1328)

Report No. WWC2020/6/253 by the Wellington Water Limited                       21

7.       Future Management of the Waters (20/1330)

Verbal report by the Chair of Wellington Water Committee

8.       Wellington Water Limited Proposed Review (20/1338)

Letter from Mayor W Guppy, Upper Hutt City Council                                     28

 

9.       Annual General Meeting of Wellington Water Limited - Wednesday, 25 November 2020 (20/1331)

Verbal report by the Board Chair of Wellington Water Limited and the Chair of Wellington Water Committee

10.     General Business (20/1332)

11.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

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

12.     MINUTES – 29 June 2020 (20/1336)

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.

 

 

 

 

 

 

Minutes of the Wellington Water Committee on 29 June 2020 - Appointment of Directors to Wellington Water Limited

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

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

 

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

 

 

Kathryn Stanndard

HEAD OF DEMOCRATIC SERVICES

HUTT CITY COUNCIL           


Attachment 1

Wellington Water Committee minutes - 29 June 2020

 

Wellington Water Committee

 

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

 Monday 29 June 2020 commencing at 10.00am

 

 

 PRESENT:

Cr D Bassett (HCC) (Chair)
Mayor W Guppy (UHCC) (Deputy Chair)
Mayor A Baker (PCC)
Cr J Brash (GWRC)
Deputy Mayor G Emms (Alternate SWDC)
Mr T Parai (
Te Runanga o Toa Rangatira) (part meeting via audio)
Cr S Rush (WCC)

 

APOLOGIES:                  Mayor A Beijen (SWDC)

 

IN ATTENDANCE:       Cr R Leggett (Alternate PCC)

Ms W Walker, Chief Executive, Porirua City Council

Ms H Clegg, Minute Taker

 

 

PUBLIC BUSINESS

 

 

1.       APOLOGIES 

Resolved(Cr Bassett/Mayor Guppy)                               Minute No. WWC 20401(2)

“That the apology received from Mayor Beijen be accepted and leave of absence be granted.”

2.       PUBLIC COMMENT

There was no public comment.     

3.       CONFLICT OF INTEREST DECLARATIONS             

          There were no conflict of interest declarations.

4.       EXCLUSION OF THE PUBLIC

Resolved(Cr Bassett/Mayor Guppy)                            Minute No. WWC 20402(2)

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

5.       Appointment of Directors to Wellington Water Limited (20/651)

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.

 

 

 

Appointment of Directors to Wellington Water Limited

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

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

 

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.”

 

 

There being no further business the Chair declared the meeting closed at 10.06am and the non-public portion closed at 10.51am.

 

 

 

 

 

 

                                                                                                                            Cr D Bassett

CHAIR

 

 

 

 

 

 

 

CONFIRMED as a true and correct record

Dated this  3rd day of November 2020

 

 


Attachment 2

Wellington Water Committee minutes - 24 July 2020

 

HUTT CITY COUNCIL

 

Wellington Water Committee

 

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

 Friday 24 July 2020 commencing at 9.30am

 

 

 PRESENT:

Cr D Bassett (HCC) (Chair)

Mayor W Guppy (Deputy Chair) (UHCC)

Cr J Brash (GWRC)

Mayor A Baker (PCC)

Mayor A Beijen (SWDC)

Cr S Rush (WCC)

Mr T Parai (Te Runanga o Toa Rangatira) (from 10.22am)

 

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

 

IN ATTENDANCE:       Deputy Mayor T Lewis (Alternate HCC) (part meeting)

                                          Deputy Mayor G Emms (Alternate SWDC)

                                          Ms W Walker, Chief Executive, PCC (part meeting)
Mr D Wright, Board Chair, Wellington Water Limited

Mr S Mahoney, Company Portfolio Manager, GWRC) (part meeting)

Mr P Kelly, Chief Executive (UHCC) (part meeting)

Mr C Crampton, Chief Executive, Wellington Water Limited

Ms S Cuthbert, Principal Advisor, Wellington Water Limited

Julie, Planning and Infrastructure Manager Wellington Water Ltd

Mr M Mendonca, Acting Chief Infrastructure Officer, WCC

Mr B Hodgins, Strategic Advisor, HCC 

Ms H Clegg, Minute Taker, HCC

 

 

PUBLIC BUSINESS

 

1.       APOLOGIES 

Resolved(Cr Bassett/Mayor Baker)                                 Minute No. WWC 20401(3)

“That the apology received from Ms K Skelton be accepted and leave of absence be granted.”

2.       PUBLIC COMMENT

There was no public comment.   

3.       CONFLICT OF INTEREST DECLARATIONS       

          There were no conflict of interest declarations.

4.

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

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

 

The Board Chair, Mr David Wright from Wellington Water Ltd (WWL) elaborated on the report

In response to a question from a member, the Board Chair WWL agreed to recheck the grammar of the document and to add the word “safely” into the beach performance measure – enjoyment of beaches.

Members agreed the Statement of Intent (SOI) was a well presented and community focussed doument.  Members congratulated WWL on its performance over the past six months.

The Chief Executive, WWL added that the funding, as reflected in the SOI, was set but a residual issue needed to be resolved of how to outline how the budget would be spent over the next year with risks and issues highlighted.  He further added that each Council would receive a printout of the WWL annual budget within 10 days.  He explained the budget for the SOI was tight and that a number of issues would result in a challenging year.  He advised the challenges would be managed by finding efficiencies within the operational models.  He highlighted it would result in no contingencies being carried forward and some preventative maintenance may have to be deferred.  He confirmed quarterly reports would be presented to each Council and that WWL was getting better at predicting issues and conversing with each Council. 

In response to a question from a member, the Chief Executive, WWL clarified that the SWDC situation was different to the other authorities.  He further clarified that the figures on page 34 of the report attributed to SWDC were actually for PCC.

 

Resolved:   (Cr Bassett/Mayor Baker)                             Minute No. WWC 20402(3)

“That the Committee receives and considers Wellington Water Ltd’s final Statement of Intent.”

 

5.

Company Update (20/762)

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

 

The Chief Executive, WWL elaborated on the report.  He explained MAXIMO was in full operation in the field, greatly adding to the confidence of all reporting.  He acknowledged that the latest post-Covid-19 response figures of 86% would drop back to approximately 80% once normal operations were recorded.  He further explained that target response times were now better understood and that with the increasing complexity of callout repairs, more realistic response times should be put in place.  He added there were also increasing compliance costs from each Council, primarily concerning traffic management requirements. 

Members agreed re-evaluation of the standardised traffic management plans required could occur.  The Chief Executive, WWL explained WWL currently tried to schedule together all non-urgent repairs in a similar area, in order to make savings on traffic management costs.

In response to a question from a member, the Chief Executive, WWL confirmed full data was available for the proposed changes in response times and that this would be supplied to all Councils to be reflected in their Long Term Plans. 

In response to questions from members, the Chief Executive, WWL confirmed WWL was working towards having a consistent framework for response times for the entire region, rather than the current situation of Council specific ones.  He confirmed improved reporting to Councils was beginning to occur.

In response to a question from a member, the Chief Executive, WWL acknowledged that currently the push to reduce response times could be the trading-off of works required to better understand the network.  He added that having a case manager to oversee all works required for more complex repair incidents was an option.

In response to a question from a member, the Chief Executive, WWL confirmed difficulties in compliance with the new GWRC policy concerning water quality levels of waterways as no new funding had been given to ensure compliance with the new policy.  He suggested having target areas rather than a blanket region-wide requirement.
Cr Brash agreed to talk with GWRC officers.

In response to a question from a member regarding reduction in water consumption across the region, the Chair advised WWL was currently undertaking studies relating to water metering and that a report would be presented to a Committee meeting.  The Chief Executive, WWL added that discussion between WWL and Council officers on the issue were occurring.  The Chief Executive, UHCC added that two Councillor water workshops was scheduled in the near future.

 

Resolved(Cr Bassett/Mayor Baker)                              Minute No. WWC 20403(3)

“That the Committee receives the Company Update Report.”

 

6.

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

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

 

The Chair explained that it would be advantageous to work collectively and present a united front to central government.  He added it would show that the Wellington region would participate in the reforms and jointly sign off the Memorandum of Understanding (MoU).

Mayor Baker left the meeting at 10.20am.

The Chief Executive, PCC advised that there would probably be three stages to the reforms:  sign off of the MoU (at beginning of August); the establishment of multi regional water entities; everything fully operational by 2023.

Mr Parai joined the meeting at 10.22am.

The Chief Executive, PCC advised Councils may be able to opt into the scheme at a later date, but in order to receive any monies, signing the current MoU with the attached service delivery model as presented by WWL needed to occur shortly.  She added it was the Councils’ Chief Executives recommendation that all Councils sign the MoU.

Mayor Baker rejoined the meeting at 10.23am.

In response to a question from a member, the Chief Executive, PCC advised that signing the MoU could be executed by individual Councils.  She clarified that the Chief Executives had requested WWL prepare a service delivery plan.  She added that it would appear that central government would announce details of the monetary aspects of the reforms in the coming weeks with a possible formula being developed.  She added that central government was trying to incentivise Councils to work together.  She further added that the timeframe for the whole process was very tight with one month being available to get Councils to approve.  She suggested she provide a report template for Councils to use.  She reminded members that the monies had to be spent on projects which could be completed in the financial year.

Members discussed whether it was prudent to sign a document with very few details.  The Chief Executive, PCC advised signing the MoU was not committing a Council to anything and each Council could opt out at a later date if it saw fit.

Cr Rush advised that the situation should be viewed as an opportunity to have a powerful role in shaping central government plans.  Mayor Beijen agreed, adding that the fund may be of limited value to the WWL community, but could assist smaller local authorities who were waivering.  He suggested WWL investigate expansion and warned that Watercare could soon become a monopoly within New Zealand, making WWL operating as a minority entity.  He believed a cohesive and forward thinking approach was required.

Members discussed the performance of WWL and whether now would be an opportune time to assess if WWL was the best model for delivery of 3 Waters in the Wellington region.

In response to a question from an alternate member, the Chief Executive, PCC advised that WWL would report back next Friday as to capacity to deliver all works that had already been agreed in each Council’s Annual Plans.  She clarified that the service delivery plan may identify works in an individual Council’s Long Term Plan which could be brought forward.

The Chief Executive, WWL advised priorities would be listed in the report with existing year’s financial commitments already locked in.

The Chair and Deputy Mayor Lewis advised that HCC was determined to be part of MoU and of WWL being a leader in the reform process.

In response to concerns regarding the tight timeframe, the Chief Executive, PCC advised she had held discussions with officers from the Department of Internal Affairs.  She noted that the officers had indicated the timeframe may be extended slightly, if reasoning was that co-operation and leadership were the main goals of gaining extra time for discussions.

There was general (but not unanimous) agreement from members that signing the MoU without detailed information was providing central government with a show of faith.

The Chief Executive, PCC agreed to organise another meeting of the Committee to discuss the service delivery plan as proposed by WWL including any additional information released by central government and to jointly sign the MoU.

 

Resolved(Cr Bassett/Cr Rush)                                      Minute No. WWC 20404(3)

“That the Committee receives and notes the report.”

7.

General Business (20/761)

The Chair advised the process of selecting possible Directors for the Board was progressing with recommendations from the recruitment agency due in 10 days.  He reminded members that decisions regarding the appointment of Directors were required to be unanimous and that information regarding the recruitment agency’s recommendations would be circulated to members prior to any meeting.

The Chair acknowledged the contribution Mr David Wright had made to WWL during his time as a Director and Chair of the WWL Board.  He cited the Emergency Management System implementation and the Waterloo UV plant installation as highlights of Mr Wright’s tenure as Chair.  He thanked Mr Wright for his thoughtful and respectful advice during the time of WWL restructuring and wished him well in his future.

Mr Wright thanked members for their confidence in him.  He added he was proud of what WWL had achieved with regard to delivering value for money and performance.  He wished the company well for the challenging future ahead.

 

 

There being no further business the Chair declared the meeting closed at 11.10am.

 

 

 

 

 

                                                                                                                             Cr D Bassett

CHAIR

 

 

 

 

 

 

 

 

CONFIRMED as a true and correct record
Dated this 3rd day of November 2020
 

 

  


                                                                                      20                                                03 November 2020

Extraordinary Wellington Water Meeting

29 October 2020

 

 

 

File: (20/1324)

 

 

 

 

Report no: WWC2020/6/252

 

Wellington Water Limited Company Update

 

Purpose of Report

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

Recommendations

That the Committee notes and receives the report.

 

The Company

The 19/20 Financial Year

2.    The last 12 months have been a very busy time for the company. We started the year with a backlog of service requests, leaks were increasing and we had difficulty in reporting the Quarter 1 performance results to Councils due to the transition to our new service delivery model.

3.    Then over the summer of 19/20 we had two high profile failures in the Wellington City Council Wastewater network which drew significant attention and led to a Mayoral Taskforce.

4.    And then in March 2020 the country went into lockdown as the nation endeavoured to eliminate community transmission of the Covid-19 virus. While concern continues with Covid-19 the water business has largely returned to normal. We are now well rehearsed at working across the different levels of lockdown. The one upside of Covid-19 was that we were able to reduce the backlog of service requests by 80% over lockdown.

5.    In summary, the 19/20 financial year was a year of high reactivity by the company. When you are in reactive mode it is hard to focus on your strategy and planning. After a period of 3 or 4 months resetting the company post Covid-19, we are now fully back into our planning work and well set up for the 20/21 financial year albeit slightly later than normal.

 

6.    During Covid-19 the company focused all its efforts on supporting the frontline staff to ensure we could continue to provide services even if there was community transmission of the virus. To do this we needed to stop a number of activities outlined in our Annual Report. We documented the activities we would stop and those we could continue with you in April and these have now flowed through to the Annual Report.

7.    On 25 November 2020 we propose to hold an Annual General Meeting (AGM) of the company just before the next Wellington Water Committee meeting. The objectives of the AGM are to:

a)      Present the Annual Report;

b)      Appoint the Auditor for 20/21; and

c)       Discuss key future risks the company anticipates.

8.    There will be a Wellington Water Committee meeting directly after the AGM.

9.    We have yet to be clear of the 19/20 annual audit being carried out by Audit NZ. You will recall the company had difficulty reporting the Quarter 1 results in 19/20 so we had to retrospectively go back and complete reporting at the end of the year. Audit NZ has indicated a lack of confidence in this approach as, in their minds, there is not a sufficient audit trail to confirm confidence in the results. We have disputed Audit NZ’s position. To try and resolve this issue we engaged a third party to review all the material associated with this risk and see if we could agree a way forward. At a meeting on 19 October 2020 we agreed a revised audit plan with Audit NZ and the OAG to complete the audit. Their work is now under way.

Quarter 1 20/21 Performance

10.  Our Quarter 1 performance is in line with expectations. Due to the aging network, we continue to forecast an increasing number of service requests and ongoing increases in the number of complex faults. This has led to a forecast in opex which we recommend councils fund from the fiscal stimulus funding

 

11.  We continue to make excellent progress with the planning for the very high criticality asset condition assessments. We expect work to begin on a number of assets over Quarter 2. All up we will assess the condition of 63 km of water mains, 226 km of wastewater pipes and 264 km of stormwater pipes.

 

12.  The highlight of the quarter was the presentation of the preferred sludge minimisation methodology to WCC. Consisting of lysis-digestion followed by thermal drying, this option if adopted by WCC will result in an 80% reduction in sludge solids at the landfill and a 60% reduction in greenhouse gases produced through the sludge life cycle.

Stage 2 Long Term Plan presentations complete

13.  We provide a detailed update on our long term planning work later in the agenda. All stage 2 presentations are complete. We are now expecting Councils to outline their final 21/31 financial envelopes within which we will provide our final optimised advice.

 

14.  For all Councils our key recommendation is to significantly increase expenditure in renewals. The only way to abate the increasing opex costs is to implement a strong renewals programme over the next 10 years. While renewals will address the aging network, they will also be resilient and reduce water tightness and other issues with our three waters network.

Water Reform Delivery Plan

15.  The approval of the delivery plan has been slower than expected. It looks likely funding agreements will be signed in late October and the first tranche of funds allocated to Councils on 1 November 2020. Everything is planned and we are looking forward to making a start on this work.

Water Consumption

16.  Our water consumption rates per capita continue to increase which is very concerning. Most of this increase is attributable to an increase in leaks across the network. It is important to distinguish between customer service requests relating to leaks (visible on the surface) versus leaks which are occurring underground and are not visible on the surface. Our focus is on finding and fixing underground leaks as a priority. Our tools for doing this have been supplemented by the installation of small area meters across the Wellington metropolitan cities which will provide useful information to help us narrow down where the big leaks are occurring.

 

17.  It is very important to minimise underground leaks prior to our traditional dry summer months of January, February and March. If we were to have severe drought levels in association with high ongoing consumption we could experience water shortages across these dry months requiring punitive water restrictions for our customers. Significant relief to the situation will be available in two years’ time when the Te Marua treatment plant is upgraded meaning up to 20M/L/day will be added to the supply side.

 

18.  There are many tools available to reduce demand by customers and communities across our networks including residential water meters. The business case looking into residential water meters is nearly complete and will be reported to you at your late November meeting.

Healthy Urban Waters

19.  We are fast approaching the recognised summer bathing season where communities focus on the water quality of our streams, rivers, harbours and oceans. During the 20/21 financial year, we will start the long process of reducing the amount of wastewater leaking out of our pipe networks. It is expected E.coli contributions to freshwater are 50% private laterals and 50% council networks. To begin the process of addressing this issue we will launch three roving crews of the HCC, PCC and WCC networks. These crews will systematically work through catchments working out how wastewater is leaking into the environment, allowing us to develop a thematic model which can be used to populate scenarios for working toward “swimmable” water quality in pilot catchments.

 

20.  This is exciting work and will begin to provide results by the end of 20/21.

Net Carbon Zero by 2050

21.  Our LTP proposals recommend additional opex is set aside to study how we can reduce the amount of greenhouse conditions emitted by the water business through our company operations, the operation of our networks and through our capital programmes.

 

22.  The key initiative is to complete the baseline for all our operations so we can identify the key areas where changes in practice will result in a reduction in greenhouse gases.

 

23.  We are using the delivery plan to try a new delivery model for renewals. This involves carrying out renewals across catchment areas rather than project-by-project. Our suppliers have been encouraged to trial trenchless technologies wherever possible as overseas experience suggests trenchless operations, in the long run, reduce greenhouse gases and save costs.

 

Creating Value for our Shareholders

24.  The company is in good heart after a tough 19/20 financial year. We are privileged to work for our owner councils and are focused on continuing to deliver good services. For us to provide value to our owners we need to ensure we take a system wide approach to our key council priorities, deliver optimal LTP advice and keep delivering value across our annual opex and capex activities.

 

25.  Value was added through the rapid development and submission of the delivery plan to secure three waters reform stimulus funding. The programme of work within this plan will deliver value to clients and communities through alignment with councils’ long term planning priorities, and specific programmes of proactive asset condition assessment (including physical inspections of pipes) and proactive maintenance (such as valve inspections). It also addresses some historical constraints particularly in the area of data management.

 

26.  Other areas of value-add for our stakeholders have come through our commitment to transparent community engagement. Like water supply, urban water quality is a system outcome, meaning it’s a result of many moving parts often unique to a particular catchment. We need to work with local communities to acknowledge and bring their contributions into the journey towards improved outcomes. This dialogue will equally help local communities come to a fuller understanding of the private network contribution to the outcome, and what they can do to help bring about change.

 

27.  And finally one cool piece of technology we’ve acquired has meant we’re able to assess the condition and state of reservoir tanks without having to empty them, as we did in the past. Apart from the risk to supply this introduces, it also doesn’t align with our caring for water approach, as basically the water in the tank has to be wasted. An underwater drone is now a relatively affordable and easy-to-operate machine that means we are able to bring this process in-house. On top of the benefits above, this will save us money over time.

 

Appendices

There are no appendices for this report.   

 

 

 

 

 

Author: External Author (Wellington Water Ltd)

 

 

  


                                                                                      27                                                03 November 2020

Extraordinary Wellington Water Meeting

29 October 2020

 

 

 

File: (20/1328)

 

 

 

 

Report no: WWC2020/6/253

 

2020/31 Long Term Planning Update

 

Purpose of Report

1.    To provide an update on our 2021/31 long term plan (LTP) investment advice to our Councils, including insights from our engagement to date, risks associated with achieving regional priorities and linkages to the stimulus delivery plan.

 

2.    To seek agreement on the approach to improving performance measures for long term planning.

 

Recommendations

That the Committee:

(i)        notes that stimulus funding and reform activities are influencing Councils consideration of future investment for three waters;

(ii)       notes the interdependency between the current state of the network, the investment levels, and targets for performance measures;

(iii)      notes that advice on what performance targets are practically achievable will be updated in line with ‘stage 3’, budget-optimised investment plans (ie the targets will need to reflect the level of investment);

(iv)      agrees to the principle of adopting regionally consistent performance measures and targets from the 2021/31 Long Term Plan onwards;

(v)       endorses continued engagement with Council officers on how we can improve the consistency and meaningfulness of performance measures for the 2021/31 LTP; and

(vi)      notes that inconsistent regional investment in the Reducing Water Consumption priority may result in the need for investment in a new water source inside the 2021/31 LTP and that this has not been included into the proposed investment plan for bulk water.

 

 

Summary

3.    We have taken a different approach to providing advice for the 2021-31 LTP which is leading to greater understanding of the three waters services and investment needs but is also proving to be highly iterative through a time of significant change.

4.    A number of themes are emerging from our engagement with Councils, including;

a.       Affordability, in the context of the size of the investment needed and the challenging economic environment resulting from the covid-19 pandemic.

b.       Uncertainty from three waters sector reform and the strong connection with accessing central government funding.

c.       The need to make difficult trade off decisions between funding growth versus renewals.

d.      The approach to regional priorities is varying from Council to Council.

5.    The decisions made by individual Councils on their investment in the regional priorities may limit our ability to mitigate risks and achieve outcomes at the regional level. This is particularly the case for the Reducing Water Consumption priority, which requires action within the next three-year funding period if investment in a new water source is to be deferred.

6.    Performance measure targets should be closely linked to the levels of investment, but there is some further work required with Councils to improve the consistency and relevance of these targets in parallel to the development of the optimised investment plans. Improvements in this area will in turn improve our ability to report on value for money.

7.    The government stimulus funding is enabling us to bring forward investment proposed for the LTP. The total funding allocated to Wellington Water is $47 million. Approval for the release of the first tranche of this funding has taken longer than anticipated and is now expected to be confirmed by the end of October 2020. Wellington Water continues to develop internal plans and delivery approaches for Water Reform and remains confident these plans can be met within the required timeframes and will deliver significant outcomes for key objectives and priority areas. Delivery has commenced for the Capital Renewals, Asset Condition Assessment, Leakage Management, Water Safety Priorities and Data and Technology Workstreams, with Wellington Water funding activities delivered in October 2020 prior to funding release. The forecast expenditure over October is $737,500.

8.    Wellington Water has been working closely with councils to provide three waters investment advice for the 2021-31 LTP in 3 stages - early signals; options; and an optimised investment plan to an agreed funding envelope. Our approach is designed to increase transparency from the previous 2018-21 LTP advice and represents a move away from the previous process where activities needed to be fitted within existing budgets.

9.    We recognise that for many of the current Councillors, this is the first time that they have really had the opportunity to understand the three waters networks, how they work, their current state, the extent of the investment that is needed and the risks that need to be accepted where investment is unable to be progressed. 

10.  Equally we would like to work closely with Councils to support their community engagement and help rate payers to also fully understand the three waters investment challenges, ideally without any descoping of priorities based on affordability. This way Councils will receive robust, balanced feedback to consider in their decision making for three waters.

11.  We acknowledge that Councils have some very difficult decisions to make in the current economic environment, not just across three waters needs but across all their portfolios. Since our options advice, the process to identify an indicative envelope to develop an optimised investment plan has been very iterative and is still ongoing for many Councils.

12.  Through this iterative engagement process we have been learning more about the balancing that Councils are having to undertake and what investment is possible for Councils to consider for three waters. Further discussions are still required, for example between GWRC and City Councils on bulk water investment in order to find the right balance between the bulk water levy and Councils other operational cost pressures.

13.  Given this shifting context, we consider that our stage 3 advice is now best positioned post Council community consultation in the New Year. We would in turn focus on supporting Councils with their community consultation and improving the alignment of performance measure targets. Moving this timeframe would also provide Councils with ongoing opportunities to increase their understanding of the risks and challenges associated with the investment advice to support their decision making.

Long Term Plan Insights and Themes

14.  We have experienced a high level of engagement with our investment advice against the five core investment priorities that we have presented; looking after existing infrastructure; planning for growth, and the three regional priorities, with the first focus on reducing water consumption. The following themes have emerged from our engagement to date:

Reforms

15.  The discussion on funding now has a strong interconnection with the government’s water sector reform agenda, the associated stimulus funding and potential future funding support. The stimulus funding (discussed further below) will make it easier for Councils to afford the additional activities we are proposing, but the uncertainty about the timing, availability of funding, and consequences that the reform may have continues to influence the way the Councils are considering three waters investment.

16.  Consideration is being given to the investment being made to ensure that it is able to be either transferred or scaled so that the value of the investment is not lost for communities regardless of the direction that reform discussions take.

Growth versus Renewals

17.  Councils are supportive of the need to increase asset renewals, but further consideration is needed on how to balance this against other three water investment priorities, particularly for enabling anticipated growth. Some Councils are proposing to increase their borrowing to support the inclusion of higher levels of renewals, but this is still not likely to reach the level needed to address the backlog over the next 30 years.

18.  There are some significant renewals required by Councils which are managed through their Joint Ventures. It is more challenging to smooth the costs profile of these due to the size of the assets in question and growth is adding to the investment drivers for these assets as with other parts of the network.

Affordability

19.  From the early signals stage, it has been apparent that the state of the networks and size of the investment needed is well beyond what Councils can afford.

20.  There is acknowledgment that the level of opex for looking after existing infrastructure should increase to allow us to do more in planned maintenance, condition assessment and asset management, but this is only part of the additional opex that is needed. Subsequent to councillor engagement, there has been some push back from Council officers on the level of uplift in annual opex investment identified under the regional priorities, which is in addition to what is required to look after existing infrastructure.

Regional Priorities

21   Given the affordability challenges and associated trade-offs needed, the focus on each of the regional priorities is varying from Council to Council.

22.  Reducing Water Consumption is a regional challenge that requires all Councils to take collective action to address. Not all Councils are signalling that they will invest to the levels recommended and indication to date is that the collective investments are unlikely to be at a level that would enable regional targets to be met.

23.  The Wellington region normally faces summer water shortages, but increasing demand is increasing the risk that the associated restrictions will be more severe and last longer. There is investment underway in the Te Marua treatment plant to increase the capacity but this will not meet the timelines for this summer nor will it address the full extent of the risks with water demand for the region.

24.  The impact of not achieving the required reductions in water consumption is that a new water source would need to be funded in the 2024/34 LTP, at significant cost to the region. This investment is not currently included in the forecasts for the 2021/31 LTP investment plan.

Long Term Plan Performance Measures and Targets

25.  There is still work to be completed in order to improve the performance measures and targets that are included in the LTP, including improving consistency from Council to Council as well as aligning measures where possible to the regional service goals and targets to the agreed levels of investment. This work will continue in parallel to our stage 3 engagement with Councils - once funding envelopes are known we can advise on and adjust corresponding levels of service.

26.  An example of a misaligned performance measure which increases the complexity and cost of delivering three waters services is the response times for unplanned incidents. A depot that supports two Councils has multiple teams that work across city boundaries. As each team’s capacity is always fully scheduled, the response to a priority 1 call-out in one location will be responded to by a team already undertaking a job, which may be in another Council's area. It may not be possible to finish the work that is underway, but that job may have additional activities to make it safe so that they can respond and then recommence the planned works later. In either case there will be consequences for the response times for both the existing and the new incident.

27.  We recommend that the Water Committee agrees to the principle of adopting regionally consistent measures and targets for their LTPs in order to enable efficient and effective operations. This will support continued work with Council officers for the 2021/31 LTP, although we anticipate that the degree of change may be limited to aligning performance targets. Reviewing the performance measures themselves so they are aligned with regional service goals will need to be progressed over a longer period in preparation for the 2024/34 LTP.

 

Stimulus Funding is Supporting Strategic Priorities

28.  We have agreed with our client Councils that the government’s water reform stimulus funding will be allocated to support the strategic priorities identified in our Statement of Intent and in our LTP investment advice. The funding enables us to bring forward some activities that were otherwise proposed for the coming LTP and, in the case of planned and reactive maintenance, to undertake risk-reducing activities that were unable to be funded within our constrained 2019/20 budgets.

29.  The total funding made available is $47.3m and has the flexibility to be used as either operating (opex) or capital (capex) expenditure, and we have sought a balance between addressing both short term and longer-term risk, as well as developing systems and processes that support more effective operations and investment into the future.

30. The funding allocations, impact of the funding and our associated delivery plan is set out in the table below. The table only includes the physical delivery programme and not the programme delivery support (see below, $1.4m of opex), data and technology systems delivery ($4m), management systems review and update ($1.4m) and the funding allocated to the Councils to support preparations for the next phase of the reform process ($0.7m)

 

Strategic priority and work programme

 

Description

Contribution to strategic priorities

Looking after existing infrastructure

Reduce the known renewals backlog

$15.7m
(capex)

Asset renewal programmes, grouped by work type for efficiency, and packaged to focus on known issues within each Council area

Renewals address the service level risk
associated with aged and deteriorated
assets and reduce the opex required
to sustain performance.

The delivery programme is designed
to establish processes and methods
that will enable increased efficiency for
both the programme and future renewals
and deliver ongoing benefits through
reduced health and safety risks and
carbon emissions that will deliver
ongoing benefits.

Asset condition assessment, data and decision-making

$10.4m (capex/opex)

Expanding our programme of condition assessments for very high criticality assets.



Improved understanding of very high
criticality asset condition, enabling
more effective asset management
and interventions that reduce service
level risks.

More complete and accurate asset
information, to enable more effective
risk management, investment and
decision-making.

Maintenance – planned and reactive

$7.9m (capex/opex)

Targeted maintenance activities that reduce the risk of asset failures and increase asset life.

Reactive maintenance volumes have increased by ca. 10% in recent years as the assets have aged.

Reduced risk of level of service failure
and future reactive maintenance costs.
Increased information to assist in
decision-making.

Water leakage management

$3.6m
(opex)

Additional funding for proactive leak detection and repair and projects to establish processes for more effective, data-based ongoing operational leakage management.

Reduced water leakage results in
lower water demand, helping to
defer the need for investment in
new sources, reduces operating costs
and carbon emissions, and leaves more
water in the rivers.

Continue to improve the safety of our water supplies

Water safety plan initiatives

$2m (capex/opex)

Projects to improve drinking water quality and safety

Supports our customer outcome of
providing safe and healthy water and
responds to increasing regulatory
requirements

Prioritised capital projects used to absorb any surpluses (to ensure all funding utilised)

Te Marua water treatment plant upgrade

$0.2m (capex)

Capacity increase to increase drought resilience

Drought resilience is below the target
level of service, increasing the risk
of water use restrictions. Current
high levels of demand are also increasing
the risk of an acute loss of supply event

Boar Bush Reservoir (South Wairarapa)

$0.1m (capex)

Refurbish pipework and tank to reduce water quality and resilient supply risk

Supports our customer outcome of
providing safe and healthy water and
responds to increasing regulatory
requirements

 

31.  The government has engaged Crown Infrastructure Partners (CIP) to oversee the use of the stimulus funding. CIP have reviewed the proposed delivery plans for each Council, will control the release of the funding through regular progress and financial reporting against agreed milestones. We have allocated a (modest) portion of the funding to the overall programme and financial management and have grouped the activities into programmes to enable effective coordination, management and oversight.

32.  We have been drawing on support from Deloitte to develop the delivery plan and the more detailed programmes within it. Their expert, independent perspective provides additional assurance that the plan is deliverable, and that key risks and interdependencies have been identified. The quality of the work that has been undertaken has also been recognised through CIP using our proposal as the exemplar for the other Councils, who are still developing their plans. We have also now been approached by several other Councils, seeking a copy of our plan as a reference.

Next Steps

33.  There are several activities underway, including:

a.    Working with councils to support their LTP consultation and finalise investment advice for three waters.

b.    Engaging with the CCRs on performance measures and targets to improve the consistency and alignment with funding levels.

c.     Supporting GWRC to engage across Councils on bulk water investment to achieve the right balance for the levy.

d.      Commencing engagement on summer drought water restrictions.

Appendices

There are no appendices for this report.   

 

 

 

 

 

Author: External Author (Wellington Water Ltd)

  


                                                                                      28                                                03 November 2020

Extraordinary Wellington Water Meeting

29 October 2020

 

 

 

File: (20/1338)

 

 

 

 

Report no: WWC2020/6/114

 

Wellington Water Limited Proposed Review

 

 

 

 

Attached is a letter from Mayor Wayne Guppy, Upper Hutt City Council.

 

 

  


Attachment 1

Wellington Water Limited Proposed Review Request from Upper Hutt City Council