Agenda of Wellington Water Committee | Komiti Ngā Wai Hangarua

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 1

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 | Komiti Ngā Wai Hangarua

Meeting to be held in the Council Chambers, Upper Hutt City Council, 838-842 Fergusson Drive, Upper Hutt on

Friday 5 March 2021 commencing at 1.00pm.

ORDER PAPER

Public Business

Representatives from Audit New Zealand have been invited to attend the meeting.

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

25 November 2020 9

5. Update on Water Reform (21/304)

Verbal update by Ms W Walker, Chief Executive, Porirua City Council and
Mr Bryan Patchett, Project Director – Regional Water Reform.

6. 2019/20 Wellington Water Limited Annual Report (21/308)

Report No. WWC2021/1/54 by Wellington Water Limited 19

7. Wellington Water Limited's Draft Statement of Intent 2021-24 (21/309)

Report No. WWC2021/1/55 by Wellington Water Limited 95

8. Submission to Health Committee on Water Services Bill (21/311)

Report No. WWC2021/1/56 by the Chief Executive, Porirua City Council 144

9. Wellington Water Limited Company Report (21/312)

Report No. WWC2021/1/57 by Wellington Water Limited 151

10. Wellington Water Limited - Half Yearly Report to 31 December 2020 (21/295)

Report No. WWC2021/1/58 by Wellington Water Limited 165

11. 2021/31 Long Term Planning Update (21/303)

Report No. WWC2021/1/59 by Wellington Water Limited 202

12. A System Approach – Looking After Existing Infrastructure (21/302)

Report No. WWC2021/1/60 by Wellington Water Limited 215

13. CHAIR’S STATEMENT

Verbal statement by the Chair.

134. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

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

145. Minutes - 25 November 2020

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 \| Komiti Ngā Wai Hangarua held on 25 November 2020 - Appointment of a Director 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 Stannard

HEAD OF DEMOCRATIC SERVICES

HUTT CITY COUNCIL

Wellington Water Committee

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

Wednesday 25 November 2020 commencing at 3.30pm

PRESENT:

Cr D Bassett (HCC) (Chair)
Mayor W Guppy (UHCC) (Deputy Chair) (until 4.25pm)

Mayor A Baker (PCC), Mayor A Beijen (SWDC), Cr J Brash (GWRC), Mr T Parai (Te Runanga o Toa Rangatira) and
Cr S Rush (WCC)

APOLOGIES: There were no apologies.

IN ATTENDANCE: Cr J van Lier (Alternate GWRC)

Deputy Mayor T Lewis (Alternate HCC)

Cr R Leggett (Alternate PCC)

Ms W Walker, Chief Executive, (PCC)

Mr G Dangerfield, Board Chair, Wellington Water Limited

Mr M Underhill, Ms K Skelton, Ms C Brophy and Mr P Barry Board Members, Wellington Water

Ms S Gains (GWRC)

Mr S Mahoney (GWRC)

Ms N Wood (GWRC)

Mr C Crampton, Chief Executive, Wellington Water

Ms T Haskell, Wellington Water Ltd

Ms S Cuthbert, Principal Advisor Wellington Water

Mr F Clark, Principal Advisor, Strategy Wellington Water
Ms J Alexander, Wellington Water

Mr J McKibbin, Wellington Water

Mr A van Paassen, Wellington Water
Ms K Stannard, Head of Democratic Services, HCC
Ms H Clegg, Minute Taker, HCC

PUBLIC BUSINESS

Mr Parai opened the meeting with a Karakia

1. APOLOGIES

There were no apologies.

2. PUBLIC COMMENT

There was no public comment.

3. CONFLICT OF INTEREST DECLARATIONS

There were no conflict of interest declarations.

4. Minutes

Resolved: (Cr Bassett/Mayor Beijen) Minute No. WWC 20601

“That the minutes of the meeting of the Wellington Water Committee held on Wednesday,
2 September 2020, be confirmed as a true and correct record.”

Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 20602

“That the minutes of the meeting of the Extraordinary Wellington Water Meeting held on Tuesday, 3 November 2020, be confirmed as a true and correct record.”

Company Update (20/1568)

Report No. WWC2020/6/302 by Wellington Water Limited

The Chief Executive from Wellington Water Limited (WWL) elaborated on the report. He noted the increasing amount of drinking water being consumed across the region and also the increase in overnight water flows which suggested leaks were occurring. He advised WWL had directed extra resources to leak detection and that water restrictions would be required over the summer months.

Resolved: (Cr Bassett/Cr Brash) Minute No. WWC 20603

“That the Committee notes and receives the report.”

6.	Annual Report and Financial Statements (20/1571) Report No. WWC2020/6/303 by Wellington Water Limited
	The Chief Executive from Wellington Water Limited (WWL) elaborated on the report. He advised the final audit report had not yet been received but was expected on 10 December 2020. He added this would result in WWL being outside of the statutory deadline requirement for approval of its Annual Report. In response to a question from a member, the Chair advised that the Committee would hold an additional meeting when the Audit Report had been received.
	Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 20604 “That the Committee: (i) notes that Wellington Water Limited will not be able to publish its Annual Report by the statutory deadline of 30 November 2020 because the Audit Opinion has not been received; and (ii) notes that it will receive Wellington Water Limited’s Annual Report when the Audit Opinion has been issued.”
7.	Update on the New Water Services Regulatory Regime (20/1573) Report No. WWC2020/6/304 by Wellington Water Limited
	The Principal Advisor from Wellington Water Limited (WWL) elaborated on the report. She confirmed WWL had the resources required to co-ordinate a submission on behalf of the local authorities of the Wellington region. In response to questions from members, the Principal Advisor confirmed that until the Bill was operational as an Act, WWL would continue to operate under the existing regime. She reminded members that each local authority could make their own individual submission to the Bill.
	Resolved: (Cr Bassett/Cr Rush) Minute No. WWC 20605 “That the Committee: (i) agrees to work together to develop a select committee submission in response to the Water Services Bill; and (ii) asks the Chair to circulate a draft submission to members for their comment prior to finalising and submitting to the select committee.”

The Importance of Looking after Existing Three Waters Infrastructure (20/1567)

Report No. WWC2020/6/305 by Wellington Water Limited

The Principal Advisor, Strategy from Wellington Water Limited (WWL) gave a presentation on water infrastructure, growth in cities, sustainable water supply, environmental quality and the effects of climate change.

With regard to water supply, the Principal Advisor, Strategy WWL explained that maintaining a balance between looking after the environment, whilst responding to the challenges of growth, climate change and demand was crucial. He also explained access to water, including sources (rivers and the aquifer) and allocations. He stated that WWL was authorised by a series of resource consents, to draw water from the sources at a particular rate, but that increasingly water taken from Te Awakairangi was at levels over the prescribed amount due to demand issues. He stressed that this had negative effects on the environment and could not continue. He noted that WWL was working with the Whaitua and Greater Wellington Regional Council to ensure the water sources remained healthy and well managed. He noted that the aquifer was under threat from activities on the land eg pile driving. He further noted that water storage options were being investigated for the future.

With regard to bulk water, the Principal Advisor, Strategy WWL advised that rainfall in the region was not reliable. This was a crucial element to ensuring WWL could consistently deliver water to its customers, all year round] and during times of emergency. He noted reservoirs held one-two days of water and that in five to six years time, additional storage facilities would be required if the increasing rate of water usage continued. He warned there could be times this summer where WWL may not be able to meet the daily demand for water, if usage kept increasing and leaks were not fixed.

The Principal Advisor, Strategy WWL explained that the Te Marua Treatment Plant had capacity to treat more water and that the transport of water through the region was of concern due to the aging network being susceptible to failure and that the seismic resilience of the pipe across Te Awakairangi at the Silverstream Bridge was of concern.

The Principal Advisor, Strategy WWL noted that currently, on average, residents of the region used 200l of water per person, per day and that this was well in excess of the 160l per person in Auckland. He acknowledged some of the water usage could be attributed to leaks and that WWL had recently increased resourcing in this area to improve leak detection and to fix leaks. He added the pipe renewals programme aimed to replace the most susceptible pipes first.

The Principal Advisor, Strategy WWL elaborated on the private network and customer water use. He advised WWL would now prepare a business case for water meters to be installed across the region, noting that local authorities were advised to include provisions for water metering in the second three year period of their Long Term Plans. He stated the Committee would be updated in due course.

Mr Parai left the meeting at 4.00pm.

In response to questions from a member concerning the lack of action on the storage issue, given that GWRC had first alerted local authorities to the need for an additional lake 10 years ago, the Principal Advisor, Strategy, WWL advised work was continuing on the development of this. GWRC had secured ownership of the required land for a third storage lake, the construction of which could cost $250M. He noted that reducing water usage was also a priority.

In response to questions from members, the Principal Advisor, Strategy WWL advised that, although the quality of the asbestos lined piping was reducing, any asbestos infiltration was within recommended levels and that the pipe renewals programme was focussing on critical assets first.

Mr Parai rejoined the meeting at 4.04pm.

The Principal Advisor, Strategy, WWL confirmed that in terms of future water management, increasing the bulk water storage capacity would assist with both managing water during the dry season and coping with spikes in demand throughout the year. He also confirmed that if more water leaks were fixed and overall water consumption reduced, the requirement for additional bulk storage would be pushed out several years.

In response to a question from a member regarding alternative water conservation methods, the Principal Advisor, Strategy, WWL agreed there were a range of options to help conserve water. He added that WWL had submitted to MBiE concerning Climate Change proposals.

In response to a question from a member concerning the additional benefits water meters may provide, the Principal Advisor, Strategy WWL confirmed that the energy consumption on the Kapiti Coast region dropped once water meters had been installed, fewer carbon emissions were released and adverse environmental effects on the rivers in the area reduced. He added that advancing technology could provide an App with a meter, comparable to the electricity industry Apps, which provided real time information on the amount of electricity a premise was utilising. He acknowledged privacy issues would need to be overcome.

In response to a question from a member concerning alternative water sources, the Principal Advisor, Strategy WWL acknowledged improving technologies could lead to alternative water sources becoming available. He added that consultation with Mana Whenua was important.

Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 20606

“That the Committee:

(i) receives and notes the report; and

(ii) notes the importance of looking after existing infrastructure.”

9.	Water Supply System Story (20/1570) Report No. WWC2020/6/306 by Wellington Water Limited
	The Chair elaborated on the future of Wellington’s drinkable water supply. He stated the business case presented by Wellington Water Limited identified a number of challenges. He highlighted that planning new strategies for the future needed to commence to ensure the Committee was committed to the vision. He elaborated on four immediate challenges. The Chair confirmed that the business case for water meters would include assessment of other options and opportunities. Mayor Baker expressed support for the introduction of water meters. She believed that in the short term, more education of the public in ways to conserve water should be undertaken. Mayor Beijen advised that South Wairarapa had had water meters for the past 18 years. He urged the Wellington region to install water meters as soon as possible. He added they were a crucial tool in detecting leaks and were the only way for residents to really value water. Cr Brash expressed support for Mayor Baker’s comments. She added that measures to negate having to invest in a new storage lake were welcomed. She expressed support for using technology similar to that used by the electricity industry,to allow households to monitor their own water use. Mr Taku expressed concern that installing water meters in social housing dwellings could place an added financial burden on inhabitants. Mayor Beijen advised an allowance of water usage was provided, before charges were imposed if the limit was exceeded. Mayor Guppy advised public education was occuring now and Upper Hutt City Council frequently ran water conservation measure campaigns for its residents. Cr Rush advised that any item which allowed for real time analysis of networks was invaluable. He expressed support for the business case.
	Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 20607 That the Committee: (i) notes that Wellington Water Limited has evaluated the water supply system from source to customer and laid out the challenges the metropolitan councils of Wellington face; (ii) notes that Wellington Water Limited has yet to carry out a similar exercise for the South Wairarapa District Council; (iii) notes the previous decision of the Wellington Water Committee to conserve water first and then to look to build more storage second; (iv) notes one of the tools which could be used to conserve water could be residential meters and that an economic case investigating the merits of residential meters has been completed; (v) notes the Economic Case for Providing Residential Water Consumption Information prepared for Wellington Water Limited by Ernst Young concludes there is a case for residential meters due to a reduction in leaks and the influencing of customers’ use of water with timely information; (vi) agrees that Wellington Water Limited should now commission a detailed business case on behalf of its shareholder councils to further refine the case for residential meters; (vii) notes that Wellington Water Limited has advised its shareholder Councils to place the cost of residential meters in year five of their long term plans as part of the region’s approach to the conservation of water; and (viii) requests all members of the Committee to refer Wellington Water Limited’s Water Supply System report and the Economic Case for Providing Residential Water Consumption Information to their individual councils.”
	Mayor Guppy tabled a letter dated 20 November 2020 attached as page 9 to the minutes. The Chair tabled a response dated 23 November 2020 attached as page 10 to the minutes. Mayor Guppy left the meeting at 4.25pm.
10.	Wellington City Mayoral Water Taskforce Cr Rush advised that he was a member of the recently established Wellington City Mayoral Water Taskforce (the taskforce) looking at issues concerning Wellington’s water. He added a report from the taskforce would be released shortly.

11. EXCLUSION OF THE PUBLIC

Resolved: (Cr Bassett/Mayor Beijen) Minute No. WWC 20608

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

12. Minutes – 2 September and 3 November 2020

13. Appointment of a Director to Wellington Water Limited (20/1546)

(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 held on 2 September 2020 – Appointment of Directors to Wellington Water	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.

Minutes of the Wellington Water Committee held on 3 November 2020 – Appointment of Directors to Wellington Water Ltd	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.

Appointment of a Director 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.

There being no further business the Chair declared the meeting closed at 4.34pm and the non-public portion of the meeting closed at 4.49pm.

Cr D Bassett

CHAIR

CONFIRMED as a true and correct record

Dated this 5^th day of March 2021

File: 301/60-028

Private Bag 907, Upper Hutt Telephone (04) 527 21i 0

Fax (04) 527 2128

20 November 2020

Via email

Dear David

You may recall at the last Wellington Water Committee meeting I asked several questions and was asked to put it in writing. I would first like some clarification though, since I was asked at that meeting to put the questions I had in writing, is that now the procedure that Wellington Water Committee will follow that any questions that members have during that Committee needs to be in writing first. I would like some clarification please.

The questions are as follows:

1. The CIR project (the Community Infrastructure Resilience Project) that was conducted by Wellington Water sometime last year during that project I understand that Upper Hutt was guaranteed to have four community treatment plants. I have since learnt that Upper Hutt only has three and I have also since found out that there is one at Remutaka Prison which is behind the wire. My question is why Upper Hutt was only given three, and if there is a treatment plant at Remutaka Prison, who paid for it.

2. The CIR project has had an independent audit carried out by a company from Christchurch. Is that correct? If so, why was an independent audit needed to be carried out and if such an audit was needed, how much did it cost and who paid.

3. Finally has this project now been signed off and every city satisfied.

I look forward to your answers and I would expect this be tabled at the next Wellington Water Committee meeting on 25 November 2020.

Wayne Guppy

Koromatua \ Mayor

Cc: Colin Crampton, CE, Wellington Water

Civic Administration Building 838-842 Fergusson Drive Upper Hutt

From: David Bassett

Sent: Monday, 23 November 2020 3:49 PM

To: 'Wayne Guppy' <Wayne.Guppy@uhcc.govt.nz>

Cc: 'colin.crampton@wellingtonwater.co.nz' <colin.crampton@wellingtonwater.co.nz>

Subject: RE: Questions from Mayor Wayne Guppy following Wellington Water Committee meeting

Wayne

I refer to your letter dated 20 November 2020 seeking answers relating to a procedural matter around the Wellington Water Committee meetings and other issues concerning operational matters of Wellington Water Limited.

Dealing with the matter relating to the procedural issue around meetings of the Committee i.e. is it now the procedure that Wellington Water will require any questions that members have during meetings, to be given in writing first? There has been no change to the current procedure, neither has there ever been, as far as I am aware, any thought of changing the current approach where Committee members are free to ask questions during meetings without the need for such question(s) to be in writing.

In relation to your other three questions, as they are of an operation nature, I have asked Wellington Water Limited to respond to you.

As you have requested, I will arrange for your letter of 20 November 2020 and my response to you tabled at the next meeting of the Water Committee scheduled for Wednesday 25 November 2020.

Regards

David Bassett JP

Chair, Wellington Water Committee

Hutt City Council, , , , New Zealand

T 021 135 9391, W www.huttcity.govt.nz

22 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

01 March 2021

File: (21/308)

Report no: WWC2021/1/54

2019/20 Wellington Water Limited Annual Report

Purpose of Report

1. To present the Wellington Water Committee with the Wellington Water Limited 2019/20 Annual Report.

Recommendations

That the Committee receives the Wellington Water Limited 2019/20 Annual Report attached as Appendix 1 to the report.

Annual General Meeting

2. On 25 November 2020, Wellington Water Limited held an Annual General Meeting (AGM) of the company. At the AGM, Wellington Water presented its final Annual Report but without the final audit opinion from Audit NZ.

3. During the AGM, the company represented the then current audit opinion which took issue with one company measure and four Department of Internal Affairs (DIA) mandatory measures.

Final Audit Opinion

4. On 22 December 2020 the final audit opinion was received from Audit NZ. The final audit opinion is appended to the Annual Report. The audit opinion qualified two measures associated with council assets and three measures associated with the performance system of Wellington Water.

5. Since receiving the final audit opinion, Wellington Water has been working on an improvement plan following discussions with owner councils. This plan has been endorsed by the Wellington Water Board and is now with individual councils for agreement. We have also sought an independent review of our decisions.

6. The plan will not overcome all of Audit NZ’s concerns and, even if it did, it will only apply for four months of the year leaving eight months subject to further Audit NZ scrutiny. Irrespective of the progress made the water loss measures will not be sustainably addressed in the short term and therefore the 2020/21 year and the period 2021/24 will most likely still be qualified on this measure alone.

Improvement Plan for Measures “Qualified” by Audit NZ

Measures Controlled by Wellington Water

7. Fault Response and Resolution Times

Audit NZ position - The Company was unable to accurately report on fault response times for each of the three water services. The information produced by the system used to report on fault response times was not reliable because attendance and resolution times for service requests were not always recorded at the point in time they occurred.

Wellington Water response – we continue to improve our systems and the way we collect and report data, however these particular measures rely completely on our staff following procedures in the field. Audit NZ suggested a verification system would improve these measures considerably. Reporting response times should remain unchanged, but the reporting of resolution times can be improved.

(a) Fault response times –

Attendance times at an event offer limited value as a performance measure, as customers are more interested in when their issues are resolved (i.e. resolution times). Councils have made it clear to us that time to attend is not a key performance metric for their reporting requirements. The cost of applying a data verification process for attendance reporting is unlikely to provide net benefits to customers. On this basis, we recommend retaining the status quo approach to reporting attendance times.

b) Fault resolution times –

We will implement a formal notification process that includes depot managers verifying a baseline sample of 10% of service requests against a prescribed checklist. As results are collated and lessons learned, we will review the sample size to ensure it adequately represents the nature of the service requests being completed.

8. Dry weather wastewater overflows

Audit NZ position - The Company was unable to accurately report the number of dry weather sewerage overflows, which it also reports on in terms of its statement of intent measures. The system used for recording events included blockages in the wastewater network that did not necessarily result in an overflow.

Wellington Water response – we have refined our methodology for reporting.

The Wellington Water methodology to determine the number of overflow events didn’t adhere to the DIA methodology. The true intent

of the measure is to protect the public from harm in the event of wastewater spilling to the surface.

We have recently rolled out an information recording tool, Maximo, which allows field crews to record whether a surface spill has occurred. The updated field crew job instructions will include confirmation of this event by capturing a photograph of the surface spill. A 10% sample of these events will be validated by their Team Leader or Service Delivery Manager.

Then, on a monthly basis, a separate validation will occur to determine whether these spills occurred in dry or wet weather. This is done by verifying weather conditions at the time of the event by applying data from the Greater Wellington weather model.

9. Customer Satisfaction Measure

Audit NZ position - The Company was unable to report reliable customer satisfaction results because the methodology and underlying processes supporting the results were not sufficiently robust.

Wellington Water response - we have outsourced the survey

Audit NZ is critical of our conducting a customer survey internally without statistically robust controls and verification processes, raising concerns about results bias. The survey results are closely monitored, are regularly used in formal and informal performance discussions with our councils and are also reported in our SOI. We cannot verify the veracity of results using the current internal method and we have contracted Colmar Brunton to conduct this survey for us at a cost of $48,000 per annum.

Measures Controlled by Councils

10. Complaints

Audit NZ position - The Company was unable to accurately report the number of complaints for each of the three water services. Complete records of all complaints were not available, and the after-hour complaints system used also did not classify complaints between wastewater, water supply and stormwater.

Wellington Water response - continue our existing approach to reporting complaints and service requests

Councils record the first time a fault or unplanned service interruption is reported as a request for service. Additional calls, including complaints relating to the same fault are batched together and passed to Wellington Water. This means calls are recorded as one issue rather than the sum total of all complaints about the issue. Audit NZ considers this approach under-reports the true number of complaints.

Measuring “by complainant” is unlikely to result in any material change to the customer service experience.

The cost of adjusting council and Wellington Water systems to adopt “by complainant” measurement is also expected to exceed the benefits of making the changes.

11. Water losses

Audit NZ position - The Company was unable to report a reliable water loss percentage for each shareholding council due to the limited number of water meters across the reticulation network. Instead, the water loss percentage was reported at a regional level for the majority of the shareholding councils. However, the reliability of this regional water loss percentage was also affected by the limited number of water meters

Wellington Water response - continue the existing approach to reporting

There is insufficient water meters installed across the network to provide a statistically reliable result for each council except for SWDC.

There are no plans to significantly increase installation of network or individual water meters in the short term to address this issue. We are likely to receive a qualified audit for the foreseeable future.

Appendices

No.	Title	Page
1 ⇩	Annual Report 2019/2020	23

Author: External Author (Wellington Water Ltd)

Attachment 1

Annual Report 2019/2020

98 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

01 March 2021

File: (21/309)

Report no: WWC2021/1/55

Wellington Water Limited's Draft Statement of Intent 2021-24

Purpose of Report

1. The purpose of this report is to invite feedback on Wellington Water Ltd’s (the company’s) draft Statement of Intent 2021-24 and the intention to employ an approach that allows us to finalise the document in line with Councils’ long-term plans.

Recommendations

That the Committee:

(1) receives Wellington Water Limited’s draft Statement of Intent 2021-24 attached as Appendix 1 to the report;

(2) considers and provides feedback on Wellington Water Limited’s draft Statement of Intent by Monday, 24 May 2021;

(3) endorses the outlined approach to finalise Wellington Water Limited’s Statement of Intent 2021-24 to allow for alignment with Councils’ Long Term Plans; and

(4) agrees to provide Wellington Water Limited with a one month extension in accordance with Schedule 8, Part 1, Clause 4 of the Local Government Act 2002 to deliver the final Statement of Intent 2021-24 to the Committee by
30 July 2021.

Background

2. The purpose of a Statement of Intent (SOI) is to outline for the public the activities and intentions of a council-controlled organisation (CCO) for the year, and how these will contribute to the objectives or outcomes sought. The SOI provides shareholders the opportunity to influence the direction of the organisation and provides a basis for the accountability of the directors to their shareholders for the performance of the organisation.

3. Each year in December the Chair of the Wellington Water Board receives a Letter of Expectations from the Chair of the Wellington Water Committee (the Committee) on behalf of the shareholder councils. This letter sets out the council and mana whenua priorities for the coming year and is used to form the basis of the Statement of Intent.

4. The Board of a CCO must deliver to its shareholders a draft SOI by 1 March each year, consider any comments received and deliver the completed SOI to its shareholders on or before 30 June.

5. The shareholders of a CCO may extend the deadlines, through written notice, by up to one calendar month.

A shared vision for Water

6. The current SOI 2020-23 largely captures the strategic direction we are currently travelling – to create excellence in water services. For this 2021-24 SOI we have taken a similar approach but with a focus on refining this strategic direction through the introduction of the concept of the region’s journey from Ngā Wai Hangarua to Te Ika Rō Wai. This describes a journey from where the balance between people (tangata), water (wai) and the environment (taiao) is out of balance, to a state where balance is restored.

7. This SOI looks to describe an integrated view of restoring this balance with an individual ‘system approach’ for each of the five strategic priorities set out in the councils’ Letter of Expectations:

a. Looking after existing infrastructure;

b. Supporting Councils as they grow;

c. Ensuring a sustainable water supply, including using water wisely;

d. Improving the water quality of our streams, rivers and harbours; and

e. Reducing our carbon emissions and being resilient to climate change.

Note: the system approaches are still in development and will be finalised over the coming months.

Ensuring alignment with Councils’ Long Term Plans

8. The draft SOI is still a work in progress (around 60% complete) due to the councils’ LTP process being underway. Councils need to consult with their communities on the big issues before the final work programmes for three waters will be known.

9. Over the last 12-18 months we have worked alongside councils providing strategic asset management advice for their 2021-31 long-term plans (LTP). Councils have sought to prioritise funding for their draft LTPs based on our advice, and the agreed five strategic priorities. In most cases, our councils are proposing to significantly lift their funding levels over the next 10 years for the three waters. Investment in ‘Looking after existing infrastructure’ in particular has lifted as the network is ageing, is resulting in more frequent incidents – with some of these on high criticality assets.

10. The final SOI will set out what needs to be done from the company’s perspective (our advice) and the councils’ final LTP investment decisions at a regional level. The SOI will also include what won’t be funded in the long term plans and the consequent risks to the network to allow a basis for transparent discussions with the community about levels of service.

11. A one month extension is sought in accordance with Schedule 8, Part 1, Clause 4 of the Local Government Act 2002 to ensure the alignment of the final SOI with councils’ LTPs. This extension will also ensure the completion of the revised three waters strategy, system approaches and associated investment plans. The LTP investment decisions cascade down to programmes of work in the asset management plans and then into capex and opex projects in individual three-six year tactical plans. Wellington Water’s project management office then devise the annual work programme.

12. If the extension is granted, the final SOI would be delivered to the Wellington Water Committee by 30 July 2020.

Monitoring and Reporting Performance

Statement of Intent and Department of Internal Affairs

13. Over the past few years we have worked to improve our performance management framework, developing impact statements and measures that allow us to measure the progress we are making.

14. In the draft SOI we have redefined the impact statements while reducing the overall number of measures to align with best practice of having fewer, but better quality measures. Focusing on the measures that matter the most will also help ensure that we are able to focus our resources on capturing the requisite data that is needed to report on them to the satisfaction of the auditors.

15. Note it is important that the targets align with the set levels of investment and therefore, the targets in the draft SOI have not yet been confirmed via the Councils’ LTP process.

16. In 2020 the Committee agreed to the principle of all councils adopting regionally consistent performance measures and targets from the 2021-31 LTP onwards. The approach recognises the need to simplify and align in order to help councils and Wellington Water meet legislative requirements, improve efficiency and provide useful information to our customers.

17. The measures and targets set out in Appendix 1 of the draft SOI have been forwarded to the councils for inclusion in their draft LTPs and are based on our assessment of current levels of service, indicated investment levels and regional consistency. The measures and targets will be reviewed following consultation and final decisions on the LTPs, and we will work with councils to adjust any targets.

Next Steps

18. The Committee has a responsibility under its Terms of Reference to receive, consider and provide agreed feedback and recommendations to the Company on its draft SOI. Feedback is invited to be sent to Porirua City Council wendy.walker@poriruacity.govt.nz by Monday, 24 May 2021. We are available to attend each council’s meeting to present the draft SOI.

19. Following feedback from the Committee, we will further refine the content of the document and deliver a final draft version to you by 30 July 2021.

Appendices

No.	Title	Page
1 ⇩	DRAFT SOI 2021-24	99

Author: External Author (Wellington Water Ltd)

146 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

01 March 2021

File: (21/311)

Report no: WWC2021/1/56

Submission to Health Committee on Water Services Bill

Purpose of Report

1. To seek feeback on, and approval of the Committee’s draft submission to the Health Committee on the Water Services Bill (the Bill).

Recommendations

That the Committee:

(1) approves the draft submission on the Water Services Bill attached as Appendix 1 to the report subject to any required amendments; and

(2) decides whether a member wishes to appear before the Health Committee.

Summary

2. A draft submission on the Water Services Bill has been prepared on behalf of the Wellington Water Committee. The submission supports the intent of the Bill to set up a new regulatory system for drinking water as well as providing greater oversight of wastewater and stormwater network performance.

3. The draft submission has been drafted to represent the views of the Water Committee – as opposed to the individual councils, and has been circulated to council officers prior to the meeting.

4. Wellington Water Limited will be making a technical submission highlighting issues with the drafting of the Bill and how it relates to network operations.

5. The Wellington Water Committee is asked to review the draft submission and approve, subject to any changes the Committee wishes to make. The Health Committee has granted a short extension to the Committee to allow for finalisation and lodging.

Context

6. The Water Services Bill is part of a broader policy to implement the Government’s decision to comprehensively reform the drinking water regulatory system, with targeted reforms to improve the regulation and performance of wastewater and stormwater networks. The policy intent of the Bill is to ensure that drinking water suppliers provide safe drinking water to consumers.

7. The Bill comprises a significant part of the Government’s response to the principles of drinking water safety that were contained within the Havelock North inquiry report.

8. These include:

· A high standard of care must be embraced in relation to drinking water

· The protection of source water is of paramount importance;

· Multiple barriers against contamination of drinking water must be maintained;

· Water contamination is almost always preceded by some kind of change and these changes must never be ignored;

· Suppliers must guarantee the safety of drinking water; and

· A preventative risk management approach must be applied in relation to drinking water.

9. A draft submission on the Bill has been prepared on behalf of the Wellington Water Committee - attached. The comments have largely been kept at a high level and primarily focus on supporting the intent of the new regulatory system; making the Health Committee aware of how the Bill may interface with Wellington Water as a council controlled organisation; and, encouraging a fiscally prudent approach to setting up the new system where possible.

10. The draft submission has been drafted to represent the views of the Water Committee – as opposed to the individual councils. The draft submission has been circulated to council officers prior to the meeting.

11. Submissions close with the Health Committee on 2 March 2021 but a short extension has been granted to the Wellington Water Committee to enable the draft submission to be considered by the Committee.

12. Wellington Water Limited will also be making a technical submission highlighting issues with the drafting of the Bill and how it relates to operational matters.

13. Councils may, in addition, choose to make individual submissions.

Next Steps

14. The submission will be forwarded to the select committee once approved.

15. A Committee representative may wish to appear before the Health Committee.

Appendices

No.	Title	Page
1 ⇩	Wellington Water Committee Submission to Health Committee on Water Services Bill	147

Author: Wellington Water Limited

Attachment 1

Wellington Water Committee Submission to Health Committee on Water Services Bill

8 March 2021

Clerk of the Committee

Health Committee

Parliament Buildings

WELLINGTON

Submission on Water Services Bill

From: Wellington Water Committee

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

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

We would like to appear before the select committee.

Yours sincerely

David Bassett

Chair

Wellington Water Committee

Encl: Wellington Water Committee submission

Wellington Water Committee Submission on Water Services Bill

Introduction

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

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

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

Wellington Water has made its own submission on technical matters.

Submission

General comments

The Wellington Water Committee make the following general comments:

The Bill sets out a robust approach but workable implementation timeframes are important

1. The Committee is highly supportive of the intent of the Bill and the creation of a comprehensive regulatory system to improve the safety of drinking water as well as the regulation and performance of wastewater and stormwater networks. Enabling safe water for everyone is vital and serves the country’s broader interests and we believe this regulatory regime will able to serve the nation well into the future.

2. We previously noted how positive it was to see a Te Ao Māori focus within the Taumata Arowai – the Drinking Water Regulator Bill and the heralding of an integrated approach. We note Te Mana o te Wai has been given the meaning set out in the National Policy Statement for Freshwater Management (NPSFM). While a tension could arise between environmental interests under the NPSFM (water as a natural resource) and public health interests under the Bill (the duty to provide sufficient quantity of drinking water under clause 25), we are sure, along with the leadership and support of the Māori Advisory Group, broader sector and iwi that any issues will be able to be worked through. Clarification in the Bill on practical steps that could be taken to resolve this issue would be useful.

3. We have previously raised with the health committee our concerns about the major issue the sector is facing around building capability and capacity. It has taken a number of years to build the current capability within Wellington Water and this continues to be a challenge, despite the broader Wellington Water ‘family’ (including consultancy and contractor panels) reaching around 500 FTE. This challenge is largely around attracting people into the sector and it is likely to continue given the current state of the labour markets. While we believe the proposed regulatory system is a robust approach, we ask the Committee to be mindful of challenges the sector faces and to ensure expectations are implemented within manageable timeframes. It will be important to be able to provide feedback on the Water Services Regulator’s strategy for implementation and enforcement early on. For example, development of source water protection plans is a major endeavour for the sector and will require considerable co-ordinated resources across the sector.

The Wellington Water model is unique and requires special consideration

4. We appreciate how difficult it is to design a Bill during a time of reform, especially when major reform is also happening in other areas such as the Resource Management Act, and would like to bring to your attention the uniqueness of the Wellington Water model within the current setting. Under the Wellington Water model, the six owner councils retain ownership of their three waters assets, decide on levels of service and set rates (and therefore funding levels) in line with their long term plans. Wellington Water’s role is to provide advice to its owner councils and carry out work on the assets according to the funding provided. Under the Bill there is a risk that Wellington Water as a drinking water supplier could be held liable for not fulfilling regulatory requirements despite not having control over investment levels. While we appreciate clause 17 may appear to limit liability “to the extent to which the person has the ability to influence and control the matter, or would have had the ability but for an agreement or arrange to limit or remove that liability”, it is not clear how this would apply to the roles of owner and trusted advisor and operator under the Wellington Water model.

5. Another situation that does not fit the Wellington Water model is where the asset owner is responsible for the delivery of the drinking water safety plan. Wellington Water as operator is currently responsible for this under its Service Level Agreement and it makes sense given Wellington Water’s role as a trusted advisor and operator.

6. We also note the Bill does not contemplate a regional council being a drinking water supplier which is the case for Greater Wellington Regional Council as a bulk water supplier under the Wellington Regional Water Board Act 1972.

7. We would therefore seek provisions that directly cater for the Wellington Water model.

Reduce cost (and retain investment) wherever possible

8. Given the financial constraints local government is operating within, we encourage the reduction of costs and administrative burden upon the sector where possible.

9. In order to comply with the provisions within the Bill, drinking water suppliers will incur substantial cost investing in upgraded business systems and processes to allow for improvements such as increased reporting capability, training of staff and authorisation processes. This will result in substantial investment across the country.

10. If Wellington Water’s shareholder councils decided to participate in the second stage of the reforms there will be an interim period before a new water entity is formed. Our concern is that if new service delivery arrangements eventuate, some of the investment that is made in developing new systems and processes may be lost upon transfer to a new water entity. Given that reform discussions are underway, the ideal situation for implementing the new regulatory system would be for certain requirements not to take effect until the new water entities are formed. This would ensure maximum value from the investment is retained.

11. We understand the intent of the legislation is to require all parties within the system to work together and share responsibility. While we support the general tenet of this approach, we are aware that this is likely to result in increased costs due to the resource intensive nature of multi-agency collaboration and parties moving to take a risk avoidance approach. We therefore encourage clear role delineation wherever possible and realistic timeframes for implementation.

12. Clause 191 allows regulations to be made prescribing a levy for the purpose of recovering costs of Taumata Arowai. We believe a targeted, user pays approach to allocating Taumata Arowai’s operating costs should be taken. It is not fair that communities who have already invested in building capability through consolidated service models should be expected to pay for assistance that is not used to the same extent as other water services suppliers. Having built its own capability, it difficult to justify to the ratepayers of Auckland and Wellington why they should have to pay for a centralised approach that will need to focus on suppliers that pose the greatest risk.

13. The process for an operator to gain authorisation process is likely to be a lengthy and costly process. We encourage the simplification of this process wherever possible such as introducing an exceptions based disclosure regime that allows authorisation to continue for a significant period of time, unless there is a material change.

154 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

01 March 2021

File: (21/312)

Report no: WWC2021/1/57

Wellington Water Limited Company Report

Purpose of Report

1. To provide the Wellington Water Committee with an overview of the Wellington Water Limited’s company performance for Quarter 2 of 2020/21.

Recommendations

That the Committee receives and notes Wellington Water Limited’s company report attached as Appendix 1 to the report.

Performance Framework

2. Wellington Water accounts for its performance in terms of reporting against its Statement of Intent (SOI) and its financial and non-financial (DIA performance measures) results.

Statement of Intent Update

3. The Q2 Performance Report (Appendix 1 attached to the report) focuses on our SOI performance to date. Overall we are tracking satisfactory for the year. There are a number of measures which are at risk but we are confident we have agreed on actions to get them back on track by the end of the financial year. We will not achieve the “dry weather overflows” measure. We are currently tracking at 0.65 overflows per 1,000 connection against a target of zero.

4. The dry weather overflow measure is an example of a measure where the targets set by council are not achievable due to the state and current performance of the three waters networks. As part of our 2021-31 Long Term Plan (LTP) advice, we are suggesting more appropriate targets.

5. Our focus for Quarter 2 has been on getting ready for regulation and the establishment of Taumata Arowai from 1 July 2021. This is heavy regulation in comparison with the light regulation of the past. It is important councils and Wellington Water prepare for a good start with Taumata Arowai. In preparation for regulation we have carried out a minor reorganisation of Wellington Water to establish a Director of Regulatory Services. The position, reporting to the CE, will be responsible for establishing the management systems necessary for Wellington Water to meet the requirements of regulation. Included in this system will be the frequent disclosures we need to make to Taumata Arowai. In June we propose to undertake a trial run of completing a disclosures statement with the Board and then with The Water Committee. This should help us improve our systems before formal disclosures are necessary.

Financial and Non Financial Performance

Financial

6. The ageing network and ongoing increases in the number of faults and the complexity of faults continues to put pressure on opex budgets. When we have a lot of incidents in a row and these require 24/7 responses, we can’t keep up with day to day faults so a backlog starts to grow. This impacts on non-financial performance.

7. In addition, councils have asked Wellington Water to budget on the basis of the absolute minimum number of surprises in opex budgets until June 2022. This means we need to do a hard budget reset to ensure we have sufficient budget to cover the forecasted ongoing increase in the number and complexity of events.

8. To achieve this we have calculated we need an additional $24M of opex to the end of 2021/22.

9. We have addressed this by:

a) Looking for efficiencies within the company and other operational budgets; and

b) Reprioritisation of the fiscal stimulus funding.

10. While some modest internal efficiencies have been found the biggest contributor to balancing the budget need has been reprioritisation of the fiscal stimulus package. This has been done in draft form and circulated to all councils for approval. The CE of PCC and the CE of Wellington Water met with DIA to advise we would reprioritise the fiscal stimulus delivery plan. The DIA feedback was so long as we comply with the rules then reprioritisation was acceptable. The DIA mentioned other councils were also amending delivery plans.

11. We are on track to deliver between $133M and $152M worth of capex for 2020/21. We will deliver projects towards the lower end of the range due to deferrals of the cross-harbour pipeline and re-timing of Barber Grove and Pinehaven Stormwater. We received approval to progress with some scope of the Pinehaven proposal in mid February.

Non Financial

12. Non-financial performance remains unchanged from Quarter 1 and is expected to remain unchanged to the end of the year. Key targets notable in not being met are:

a) delivering safe drinking water across the SWDC (although we expect to start 21/22 with full compliance);

b) dry weather overflows (mentioned above);

c) wet weather overflows – unlikely to meet target at year end due to a very wet November.

13. Assuming we get approval for the reprioritisation of the fiscal stimulus funding, we expect to stabilise response times for the balance of 2020/21 and 2021/22. We continue to see a gradual lift in our customer service satisfaction measure.

General Updates

Summer demand

14. We are now in the driest part of the year. The Wainuiomata treatment plant is close to being decommissioned to maintain low flows and water restrictions are in force across Wellington and the SWDC.

15. We have been fortunate to have regular periods of rain which means we are forecasting the ability to manage demand to the end of summer. This is a positive result. Over the last three years there has been an increase in demand, largely due to leakage, which puts us close to our capacity limits and does not allow us to meet any further drought shortfall. By next year we expect to commission the upgrade to the Te Marua plant which will provide up to 40 megalitres a day of extra capacity. This will allow us to meet the 1:50 drought resilience.

WSAA Benchmarking

16. The Wellington Water committee will recall we committed to having our services benchmarked against WaterCare and other Australian water entities. We have completed all the forms and submitted them to WSAA. We expect to receive the results over the next 3 months. We will report these to the next water committee.

Very High Criticality Asset Assessment

17. Work begins in earnest on the 1^st of March to inspect and assess all our very high criticality assets. All the planning has been completed and now the field work begins. As each asset is inspected the results will be considered by an expert team who then complete an asset health status sheet. This health status will tell us the condition of the asset, when the next survey needs to be done, and most importantly, if any urgent corrective action is needed. If we find any seriously dilapidated asset, we are ready to carry out emergency works.

Renewals Continuous Improvement

18. The fiscal stimulus funding has enabled us to trial a programme approach to renewals using technologies. As a programme we aim to complete a number of renewals within a network area rather than one renewal at a time. We have specified that all the work in this programme consider trenchless methodologies first. Currently across our programme, we average 57% trenchless. For this programme we currently expect to deliver between 90-95% of our wastewater renewals and up to 60% of our water mains by trenchless methodologies.

19. Examples of trenchless methodologies being used for this work are:

· Lining of pipes;

· Directional drilling; and

· Pipe bursting.

Two Urgent Works Commissioned

20. As a result of the Plimmerton flooding event where 15 households were evacuated from their homes a fast track catchment analysis has been commissioned by PCC with the aim of improving the level of service.

21. We have also started a fast track programme to upgrade the pressure wastewater system in the Wellington CBD. This includes a new main being installed up Taranaki street to provide resilience. We are working with Wellington Electricity to see if we can gain efficiencies by digging once and laying two services at the same time.

Climate Change Commission

22. The Climate Change Commission has released its first set of proposals to central government. The proposal includes decarbonisation budgets of 5% be set for the first four years, and 17% for the following five years. All up this amounts to a 21% reduction over the LTP period.

Appendices

No.	Title	Page
1 ⇩	Q2 Performance Report 2020 21	155

Author: External Author (Wellington Water Ltd)

167 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

26 February 2021

File: (21/295)

Report no: WWC2021/1/58

Wellington Water Limited - Half Yearly Report to 31 December 2020

Purpose of Report

1. The purpose of this report is to present Wellington Water Ltd’s Half-yearly Report to 31 December 2020.

Recommendations

That the Committee notes and receives Wellington Water Limited’s Half-yearly report for the six months ended 31 December 2020 attached as Appendix 1 to the report.

Background

2. Under the Local Government Act 2002, Wellington Water Limited’s Board is required to deliver a Half-yearly Report to its shareholders within two months of the end of the first half of each financial year. The report must outline the organisation’s operations during the first half of the year, regarding both financial and non-financial performance information and supporting commentary.

3. The Half-yearly Report shows the financial and non-financial performance of Wellington Water Limited for the period 1 July 2020 to 31 December 2020. Unlike the Annual Report, the Half-yearly Report is not audited. It is a requirement for Councils to publish the Half-yearly Report on their website site within one month of receiving it.

Non-financial Performance

4. Wellington Water Limited has made good progress towards its goals and overall we have been tracking well against targets. Wellington Water Limited reports against 35 performance measures through its Statement of Intent 2020-23. After the first half of the financial year 27 (77%) were on track to be achieved or partially achieved, three (9%) will not be achieved, with a further five (14%) not measured for the first half of the year.

5. Some commentary has been included on progress made against the impact statements relating to the strategic priorities. The contract has been awarded and a supplier team established to undertake the assessments on high criticality assets. Wellington Water Limited’s Stage 2 strategic asset management advice has been received by Councils with consultation with communities to begin shortly. A growth programme has been completed for all Councils to inform Long Term Plans and we have delivered two growth studies for Hutt City Council. Other priorities are progressing at a slower rate.

6. Smart Services initiatives remain underway and on target for delivery. Two projects continue development (Reservoir Cleaning ROV, HV Trunk Sewer Optimiser) and the Proteus Water Quality Sensor trial is nearing completion with preliminary results looking promising and minimum of one unit to be purchased for the newly established roving crews.

7. There was a process failure at Waterloo Treatment Plant that has meant Wellington Water Limited did not fully comply with the Drinking Water Standards in Q2. Discussions are underway with RPH to understand if this will impact our end of year results, as the amount of partially treated water that left the Waterloo Treatment Plant was minimal. South Wairarapa District Council’s drinking water is not compliant with the national standard so this will result in an unachieved company result overall. Wellington Water Limited continues to work, in conjunction with the council, to address this issue.

8. The number of wet weather overflows for Q2 was 137. This was higher than Q1 at 88 – bringing the total for the year to 225. The number of wet weather overflows at the same time last year was 124, so the result to date for this year is significantly higher. This is due to an ageing network, and a very wet November. With a target of fewer than 250 per year, we forecast to not achieve this measure.

Financial Performance

9. The Financial Statements show a deficit before tax of $0.7 million compared to a budgeted deficit of $0.9 million for the period. The budgeted (and actual) deficit is due to timing differences in revenue recognition and expenses. This is forecast to balance out by the end of the year.

10. The year to date capex spend is $15.6 million (22%) below budget and is forecast to be $17.8 million (11%) below budget at year end. At the start of the year our capex forecast for the full year across all Councils is in the range of $133-$152 million, compared to a final budget of $160 million, and our current forecast sits near the middle of this range, there is however some risk within the programme which may lead to the year end result being closer to the bottom end of the range.

11. The year to date opex spend is $2.7 million (9%) over budget and is forecast to continue to decline until year end. This is mainly due to an ageing network resulting in increasing numbers of faults across the networks. We are preparing a plan for Councils to address this issue.

12. The year to date Stimulus Funding Programme is $2.8 million (56%) under budget, which is mainly due to an error in the financial as actual costs for Planned and Reactive Maintenance had not been brought to change. The value of maintenance activity to be charged to this programme is dependent on levels of work and this will be fully accounted for in the year-end financial statements.

Appendices

No.	Title	Page
1 ⇩	Half-year report to 31 December 2020	168

Author: External Author (Wellington Water Ltd)

206 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

28 February 2021

File: (21/303)

Report no: WWC2021/1/59

2021/31 Long Term Planning Update

Purpose of Report

1. To provide an update on the 2021-31 Long Term Planning (LTP) process including investment outcomes from our options advice and;

2. To provide an update on improving the regional consistency of LTP performance measures and targets.

Recommendations

That the Committee:

(1) notes the progress update and emerging themes with Councils Long Term Plan (LTP) engagement activities;

(2) notes that cost estimates for LTP investment follows our cost estimates manual and are subject to change as projects progress through the design stages;

(3) notes that regionally consistent performance measures and targets in line with mandatory DIA performance measures^{^[1]} have been developed with Council officers in line with its agreement from 3 November 2020;

(4) endorses only the inclusion of mandatory DIA performance measures¹ in Council LTPs to improve regional consistency of performance measures;

(5) notes that additional outcome focused measures could be included through the Statement of Intent process and;

(6) notes that targets have been proposed which reflect the indicated level of investment in the 2021-31 LTPs.

Summary

3. The fast pace of change in our external operating environment is influencing the draft investment plans that councils will shortly be consulting on with their draft LTPs.

4. We have been supporting councils with collating the three waters story component of their draft LTPs and draft 30 Year Investment Plans for public consultation. We have also been supporting council pre-audit checks.

5. We are seeing new themes emerging over the last few months including:

a. Localised incidents highlighting investment gaps

b. Ongoing opex constraints

c. Confidence in our delivery

6. We are progressing work to review and update our cost estimates in order to improve the confidence in costs and support optimisation of council three waters investment plans.

7. We have progressed work to increase the regional consistency of the DIA mandatory measures wording and targets for inclusion into LTPs. The other opportunity to include performance measures would be through the development of the Statement of Intent.

Key Insights

Local incidents are highlighting investment gaps

8. We consider that there is now a much higher base of understanding and more consistent articulation of the challenges and views on three waters investment which is aligned with the advice that we have been providing. Reflective of this many councils have increased commitment to investment and ‘do the right thing’, despite the uncertainties of impending Reform in terms of future asset ownership and debt transfer arrangements.

9. Over the past couple of months, recent events such as flooding within Porirua at Plimmerton, and the Victoria St rising main wastewater pipe failure in Wellington have resulted in a prioritisation of investment for Wellington City and an increase in investment to address localised risks in Porirua City.

10. It is encouraging that, in these instances, the response has been to increase investment levels above already the agreed investment plans.

11. There are however still many councils where the investment levels proposed for draft LTPs remains below recommended levels provided as part of our options advice. For example under the strategic priority of Looking after Existing Infrastructure, the percentage change in investment levels for renewals ranges widely from 342% to -50% against the 2020/21 budgets. See Appendix 1: Summary of Investment for Councils attached to the report.

Ongoing Opex Constraints

12. The three waters networks are aging, and it is starting to show. Our 2021-31 LTP advice stressed the importance of investing in the number one priority of Looking After Existing Infrastructure. Our 2020/21 Business Plan and Budget outlined that there was a risk of increased costs associated with the upward trend in the number of service requests, especially water leaks. We also indicated that a large amount of essential planned maintenance activities couldn't be completed within funding envelopes.

13. We have got to this point over a long period of time and correspondingly managing the problem and turning it around will also take many years. We need to act now to start to get ahead of these issues, this means investing in activities such as planned maintenance, renewals and building capability.

14. We advised councils late last year that there has been an increase in reactive maintenance costs which was forecast to become an overspend in the 2020/21 FY. The level of reactive work in the future is uncertain with respect to the number of incidents and costs trending up. This is difficult to predict but expected to continue and impact subsequent years as well.

15. We are actively investigating options, taking a “no stone left unturned” approach to manage the forecast overspend which includes use of Stimulus funding. Work is currently underway to tailor scenarios for each council to mitigate the impact.

16. It is important to note that some councils have requested that the first year LTP opex cost increases are off set against Stimulus funding, this is a constraint that we need to consider in our advice for councils as it will leave a capability gap in year 1 of the 2021-31 LTP, and a corresponding increase in the risk profile.

Confidence in our delivery

17. With the lift in investment signaled, councils are asking us to demonstrate our ability to scale up from current levels of capex to the increased funding levels contained in the first year of the 2021-31 LTP.

18. The capacity and capability of the local market is currently sized for the historical static level of funding. We will need to ramp up our resources and become more productive to meet this challenge. The long term arrangements we set up with our partners mean we are ahead of the game and well placed to respond collectively.

19. While we are ramping up, other large infrastructure projects within the region and nationally will also be competing for limited resources, this coupled with COVID uncertainty means if we are not well planned there is a risk that we fail to deliver our capital programme in future years.

20. To give us a better understanding of the scale of the issue we have commissioned an independent review of local sector capability and capacity. This will assess our current collective capability and test growth plans. The outputs of the review will provide visibility on where the gaps are and enable us to develop a plan to address these.

21. Delivery of this review is due at the end of March, this will provide visibility and assurance to our client councils and the board prior to final LTP funding decisions.

Confidence in our estimation

22. In developing the LTP, we include projects with varying levels of scope development. Our cost estimation manual is used to ensure we make suitable budget provision in the LTP for projects based on their level of scope development and knowledge of the risks.

23. As a project progresses through design stages, costs are subject to change. If we don’t get the estimation right, we would not be able to deliver our construction programme, this is especially sensitive for high value projects.

24. We have completed a high-level review of cost estimates for the 2021/22 programme. This process is continuing in more detail to address areas of risk in the plan.

Performance Measures and Targets

25. A number of inconsistencies and issues exist with the existing performance measures for three waters. This has increased the complexity and associated cost with compliance and reporting.

26. On 3 November 2020, the Wellington Water Committee agreed to the principle of adopting regionally consistent measures and targets for council long-term plans to enable efficient and effective operations.

27. As endorsed, we have been working with council officers on these and proposed including only the mandatory DIA performance measures^{^[2]} to reduce the reporting burden on councils. In order to provide a more outcome focused and fuller description of performance for the three waters assets we manage, these could be augmented by including 2-3 additional measures in the Statement of Intent.

28. Many councils were already proposing to reduce the number of performance measures in their LTPs, however it is possible that some councils may include a wider range of performance measures for their draft LTP.

29. On 3 November you noted that the targets will need to reflect the level of investment and in line with this, we have proposed regionally consistent targets which reflect the current level of service.

30. Changes to targets to improve the regional alignment and better reflect investment levels follow discussions with audit and impacts the following performance measures categories.

a. Response times

b. Dry weather overflows

c. Bulk water network

d. Recreational and environmental water quality reporting

31. A full list of recommended performance measures and target is available in Appendix 2: Performance measures and targets for 2021-31 LTP’s.

Next Steps

32. The next steps are to:

a. Continue to support councils with their community engagement for three waters to ensure that their consultation on three waters investment is meaningful across all aspects.

b. Continue the detailed review of costs estimates across council investment plans, and notify councils of any expected significant variances

c. Review independent assurance options and prepare for the preferred process.

Appendices

No.	Title	Page
1 ⇩	Summary of Investment for Council	207
2 ⇩	Performance measures and targets for 2021-31 LTPs	208

Author: External Author (Wellington Water Ltd)

Attachment 2

Performance measures and targets for 2021-31 LTPs

Appendix 2: Performance measures and targets for 2021-31 LTP’s

DIA Part/Sub Part	Performance Measures	Performance Targets
DIA Part/Sub Part	Performance Measures	GWRC		PCC	UHCC		SWDC	WCC	HCC
Part 2: Sub-part 1 - Water supply	(1) Performance measure 1 (safety of drinking water) The extent to which the local authority’s drinking water supply complies with: (a) part 4 of the drinking-water standards (bacteria compliance criteria),	Compliant		Compliant	Compliant		Compliant	Compliant	Compliant
Part 2: Sub-part 1 - Water supply	(1) Performance measure 1 (safety of drinking water) The extent to which the local authority’s drinking water supply complies with: (b) part 5 of the drinking-water standards (protozoal compliance criteria).	Compliant		Compliant	Compliant		Compliant	Compliant	Compliant
Part 2: Sub-part 1 - Water supply	(2) Performance measure 2 (maintenance of the reticulation network) The percentage of real water loss from the local authority’s networked reticulation system (including a description of the methodology used to calculate this). ¹ Calculated as a regional mean value	+/- 0.25%		<20%¹	<20%¹		<30%	<20%¹	<20%¹
Part 2: Sub-part 1 - Water supply	(3) Performance measure 3 (fault response times) Where the local authority attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times measured (a) attendance for urgent call-outs: from the time that the local authority receives notification to the time that service personnel reach the site,	≤ 90 min		≤ 90 min	≤ 90 min		≤ 90 min	≤ 90 min	≤ 90 min
Part 2: Sub-part 1 - Water supply	(3) Performance measure 3 (fault response times) Where the local authority attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times measured (b) resolution of urgent call-outs: from the time that the local authority receives notification to the time that service personnel confirm resolution of the fault or interruption.	8 hours		8 hours	8 hours		8 hours	8 hours	8 hours
Part 2: Sub-part 1 - Water supply	(3) Performance measure 3 (fault response times) Where the local authority attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times measured (c) attendance for non-urgent call-outs: from the time that the local authority receives notification to the time that service personnel reach the site	20 working days.		20 working days.	20 working days.		20 working days.	20 working days.	20 working days.
Part 2: Sub-part 1 - Water supply	(3) Performance measure 3 (fault response times) Where the local authority attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times measured (d) resolution of non-urgent call-outs: from the time that the local authority receives notification to the time that service personnel confirm resolution of the fault or interruption	20 working days.		20 working days.	20 working days.		20 working days.	20 working days.	20 working days.
Part 2: Sub-part 1 - Water supply	(4) Performance measure 4 (customer satisfaction) The total number of complaints received by the local authority about any of the following: (a) drinking water clarity (a) drinking water taste (b) drinking water odour (c) drinking water pressure or flow (d) continuity of supply, and (e) the local authority’s response to any of these issues expressed per 1000 connections to the local authority’s networked reticulation system	<20 complaints per 1000 connections		<20 complaints per 1000 connections	<20 complaints per 1000 connections		<20 complaints per 1000 connections	<20 complaints per 1000 connections	<20 complaints per 1000 connections
Part 2: Sub-part 1 - Water supply	(5) Performance measure 5 (demand management) The average consumption of drinking water per day per resident within the territorial authority district	375	320		415	560		365	385
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(1) Performance measure 1 (system and adequacy) The number of dry weather sewerage overflows from the territorial authority’s sewerage system expressed per 1000 sewerage connections to that sewerage system.	N/A.	20 per 1000 connections		20 per 1000 connections	20 per 1000 connections		20 per 1000 connections	20 per 1000 connections
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its sewerage system measured by the number of: (a) abatement notices received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its sewerage system measured by the number of: (b) infringement notices received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its sewerage system measured by the number of: (c) enforcement orders received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its sewerage system measured by the number of: (d) convictions received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(3) Performance measure 3 (fault response times) Where the territorial authority attends to sewerage overflows resulting from a blockage or other fault in the territorial authority’s sewerage system, the following median response times measured: (a) attendance time: from the time that the territorial authority receives notification to the time that service personnel reach the site	N/A		≤ 90 min	≤ 90 min		≤ 90 min	≤ 90 min	≤ 90 min
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(3) Performance measure 3 (fault response times) Where the territorial authority attends to sewerage overflows resulting from a blockage or other fault in the territorial authority’s sewerage system, the following median response times measured: (b) resolution time: from the time that the territorial authority receives notification to the time that service personnel confirm resolution of the blockage or other fault.	N/A		8 hours	8 hours		8 hours	8 hours	8 hours
Sub-part 2 – Sewerage and the treatment and disposal of sewage	(4) Performance measure 4 (customer satisfaction) The total number of complaints received by the territorial authority about any of the following: (a) sewage odour (b) sewerage system faults (c) sewerage system blockages, and (d) the territorial authority’s response to issues with its sewerage system, expressed per 1000 connections to the territorial authority’s sewerage system	N/A		<30 complaints per 1000 connections	<30 complaints per 1000 connections		<30 complaints per 1000 connections	<30 complaints per 1000 connections	<30 complaints per 1000 connections
Sub-part 3 – Stormwater drainage	(1) Performance measure 1 (system adequacy) (a) The number of flooding events that occur in a territorial authority district	N/A		2	2		2 *SWDC does not have a stormwater system as defined in the DIA Rules	2	2
Sub-part 3 – Stormwater drainage	(1) Performance measure 1 (system adequacy) (b)For each flooding event, the number of habitable floors affected. (Expressed per 1000 properties connected to the territorial authority’s stormwater system.)	N/A		10	10		10 *SWDC does not have a stormwater system as defined in the DIA Rules	10	10
Sub-part 3 – Stormwater drainage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its stormwater system, measured by the number of: (a) abatement notices received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 3 – Stormwater drainage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its stormwater system, measured by the number of: (b) infringement notices received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 3 – Stormwater drainage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its stormwater system, measured by the number of: (c) enforcement orders received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 3 – Stormwater drainage	(2) Performance measure 2 (discharge compliance) Compliance with the territorial authority’s resource consents for discharge from its stormwater system, measured by the number of (d) convictions received by the territorial authority in relation to those resource consents	N/A		Nil	Nil		Nil	Nil	Nil
Sub-part 3 – Stormwater drainage	(3) Performance measure 3 (response times) The median response time to attend a flooding event, measured from the time that the territorial authority receives notification to the time that service personnel reach the site.	Hours		8	8		8 * SWDC does not have a stormwater system as defined in the DIA Rules	8	8
Sub-part 3 – Stormwater drainage	(4) Performance measure 4 (customer satisfaction) The number of complaints received by a territorial authority about the performance of its stormwater system, expressed per 1000 properties connected to the territorial authority’s stormwater system.	N/A		20 per 1000 connections	20		20 per 1000 connections *SWDC does not have a stormwater system as defined in the DIA Rules	20 per 1000 connections	20 per 1000 connections

217 05 March 2021

Wellington Water Committee | Komiti Ngā Wai Hangarua

28 February 2021

File: (21/302)

Report no: WWC2021/1/60

A System Approach – Looking After Existing Infrastructure

Purpose of Report

1. To present the proposed framework for the end-to-end (create-to-decommission) system approach for the Looking After Existing Infrastructure strategic priority.

Recommendations

That the Committee receives and notes the report.

Summary

2. We are developing strategies for each of the five strategic investment priorities agreed by our client councils. Each strategy will be developed from a ‘system approach’ that shows the step-by-step, end-to-end system and identifies our performance at each step and where and how we need to improve. The system approach for the Looking After Existing Infrastructure strategic priority (attached as Appendix 1 to the report) is proposed to be based around the asset management lifecycle (ie how the assets are looked after) rather than the physical network and assets themselves.

Our strategies will be developed from system approaches

3. A strong strategy is important for creating alignment across all of Wellington Water’s stakeholders and providing a clear line of sight that enables the prioritisation of activities in our increasingly resource-constrained environment. A review of the existing Three Waters Strategy to become the long-term, over-arching strategy charting our pathway towards 'Te Ika Rō Wai'^{^[3]}, and the development of the strategies for achieving each of the investment priorities are the key activities required to complete this new strategy.

4. The starting point for each strategy is a system ‘approach’ that identifies the contribution of each part of the system and whether it is meeting the objectives for the overall system. The stories will also identify the areas where performance needs to be improved. The first of these stories, for the complete water supply system from our catchments to customers’ taps, was presented to the Wellington Water Committee at its 25 November 2020 meeting.

5. Having considered the whole system, its objectives and performance, the strategy will identify where the organisation’s focus must be to address the performance shortfalls. There will be lots of potential interventions, but which ones will develop the greatest benefits and have the greatest impact? A strategy must always involve making choices.

The ‘system’ for looking after existing infrastructure is the Asset Management System

6. A report presented to the Wellington Water Committee in November described how Wellington Water went about looking after its councils’ assets and infrastructure. The paper reflects on components of the typical asset ‘lifecycle’, the important role of data and information and on the overall asset management system in ensuring efficient and effective performance.

7. This approach of thinking about the ‘system’ for Looking After Existing Infrastructure from an asset management perspective provides a stronger basis for a strategy than using the physical system. It ensures physical performance issues are solved from a more strategic and holistic perspective and there is no need to try and prioritise amongst a vast number of specific performance issues, that are frequently being influenced by systemic issues.

8. The advice Wellington Water has been providing in its LTP engagement has been highlighting these systemic issues. The main challenge that has been talked to is that the ageing assets are becoming increasingly prone to failure, with consequential impacts for service performance and operating costs. The proposed investment responds to these issues, ie a significant uplift in operating expenditure, condition assessment (especially for critical assets with the greatest failure consequences) and renewals (also prioritising the most critical assets).

9. The draft system approach for Looking After Existing Infrastructure provided as Attachment A is intended to demonstrate how the asset management-based approach could be presented and explained. The next step in the development of the strategy is to develop the responses required to address the identified performance gaps. These will be aligned with the investment proposed for the councils’ LTPs, i.e. the LTP investment addresses a system performance gap and helps achieve the overall objectives of this strategic priority.

10. The draft is not presented as a complete assessment, with further work underway to ensure each element of the system is well defined and the desired and current performance can be clearly communicated. The final version of the approach and strategy will also be professionally formatted (with a common format applied across the suite of documents).

Appendices

No.	Title	Page
1 ⇩	Looking after existing infrastructure - draft system story	218

Author: External Author (Wellington Water Ltd)

221

Looking after existing infrastructure

Infrastructure is fundamental to the health, liveability and economic activity of our cities and towns. The region has more than $6 billion of three waters infrastructure that needs to be appropriately operated, maintained and renewed to ensure it meets the needs of current and future customers.

Why is looking after this infrastructure so important?

It is our customers’ top priority…

…but asset age is increasing…

…and its condition is deteriorating…

…impacting on cost and reliability…

…and our ability to meet our other strategic objectives

The top 4 issues our customers want us to focus on are:

· Providing safe drinking water (59%)

· Ensuring drinking water is always available (46%)

· Ensuring wastewater doesn’t cause any public health risks (44%)

· Ensuring wastewater services are always available (20%)

Image result for wellington's water woes

Leaks or opex over time

Assets in good condition:

Reduces leaks & losses

Improves water quality

Enables growth

Improves resilience

The availability of safe water services is highly valued by our customers

Asset age is increasing, with many past or approaching the end of their economic life.

This increasing age is the result of under-investment in asset renewals

The available information suggests asset condition is often worse than its age would indicate, a risk highlighted by recent critical asset failures

Aged, poor condition assets require more attention. This decreases levels of service, increases cost and diverts funding away from activities that support enduring service performance

Existing infrastructure underpins our other strategic objectives. Improving its performance supports the achievement of these goals.

What is the system for looking after existing infrastructure?

The end-to-end physical system for delivering the water services is extensive and complex, encompassing a wide range of assets, from ‘grey’ to ‘green’, from simple channels to sophisticated treatment plants, and handling water in a range of states from freshwater to wastewater.

Insert end-to-end physical system picture here

Each of these assets and processes contributes to the delivery of the services in its own way, and needs to be managed accordingly.

Rather than focus straight to these assets, each with its own range of operating and maintenance parameters and service risk, it is important that we think about their operation and maintenance in context of our services and service levels, i.e. what approach offers the greatest value?

· How do we consider future operations and maintenance during design and construction?

· How do we operate the infrastructure for optimum performance?

· How do we understand its condition and the implications of failure?

· How do we maintain the infrastructure, keeping its performance above the minimum level of service required?

· How do we respond when failures occur?

· What is the best time and approach for renewal?

· How do we safely dispose of the assets at the end of their life?

Thinking about it in this way, it becomes clear that the ‘system’ for looking after existing infrastructure is not the physical system, but the systems and processes we use to operate and manage the infrastructure, i.e. it is our asset management systems and processes.

What are our objectives for looking after existing infrastructure?

Our objective is create, operate, maintain and renew the infrastructure at the lowest cost, relative to the costs associated with a reduced or complete loss of service to our customers.

For example, this diagram conceptually compares the level of service experienced by a customer where there is a planned maintenance and renewal regime (1) and where there is no planned activity and only reactive repairs (2). The planned activities maintain the minimum level of service required. Below this level of service there are costs to the customer such as through a loss of supply (these costs also include cost to the environment where dropping below the minimum level has an adverse environmental impact).

Under scenario 2, there is a higher total cost to the customer (i.e. more time below the minimum level of service), a higher total cost to maintain the level of service, and a higher cost to renew the infrastructure (as it is more likely to be unplanned).

If we are managing the infrastructure in the correct way we should expect to see:

Increasing customer service through… Increasing service availability and reliability

Decreasing failures such as bursts, leaks and overflows

Increasing customer value through… Reducing cost per customer and cost per litre of water delivered

Reducing the carbon emissions created by our activities.

In managing the system we will be looking for other indicators, such as average asset age, the extent of infrastructure in poor condition (especially for the most critical assets) and performance benchmarked to water sector peers.

The Looking After Existing Infrastructure ‘System’

[1] Local Government Act 2002 requires the Secretary for Local Government to make measures specifying non financial performance measures for local authorities to use when reporting to their communities. These are a requirement in local government planning including council controlled organisations.

[2] Local Government Act 2002 requires the Secretary for Local Government to make measures specifying non financial performance measures for local authorities to use when reporting to their communities. These are a requirement in Local government planning including council controlled organisations.

[3] The name proposed by our mana whenua partners for achieving a balance between the health of people, water, and the environment, consistent with the principles of ‘Te mana o te wai’ that are now specified in national legislation.

	10 yr Renewal investment only ($M)			10 yr Total Capex Investment ($M)
Client council	2018 LTP	Draft 2021 LTP	Change	2018 LTP	Draft 2021 LTP	Change
Greater Wellington	$57	$167	192%	$206	$268	30%
Hutt City	$77	$339	342%	$210	$507	141%
Porirua City	$30	$85	189%	$96	$311	224%
South Wairarapa	$8	$34	312%	$12	$52	338%
Upper Hutt City	$61	$31	-50%	$84	$54	-36%
Wellington City	$221	$326	47%	$480	$707	47%
Total	$454	$981	116%	$1,088	$1,934	78%

Step	Create	Operate	Maintain		Renew	Dispose	Data, Information & Knowledge	Asset Management System
Step	Needs, Design, Build	Operate	Condition Assessment	Planned & Reactive Maintenance	Renew	Dispose	Data, Information & Knowledge	Asset Management System
Contribution to Level of Service	Sets	Achieves	Maintains		Restores*
Objectives	All service outcomes understood, including maintainability. Decisions based on Totex outcomes (with consideration of carbon and environment)	We understand service performance sufficiently to be able to make timely and effective interventions. We control the system within the required level of service while optimising inputs	We understand the health of critical assets and can predict the health of less critical assets	We understand and make intervention decisions to achieve the lowest operating cost and lowest ‘cost’ (through loss in service) to our customers and the environment.	Assets are replaced when it is no longer effective to try and maintain them. Observable in the near term through reducing overall asset age and renewal expenditure as a percentage of asset value.	Assets that are no longer in use are in a known, safe state.	We manage our data, information and knowledge consistent with good practice principles (accessibility, etc.) Our data and information supports evidence-based decision-making. We understand the costs of our interventions and a loss in service, and take a consistent approach to asset valuation.	Our asset management system and processes are independently verified as demonstrating recognised good practice.
Status
Status	We tend to define needs from an asset basis rather than a services basis. We default to ‘hard’ infrastructure solutions. We have traditional (high carbon) construction processes.	We have a relatively low level of network monitoring and control.	We do not fully understand the condition of our assets but a project is underway to assess the health of our most critical assets.	We are not undertaking the optimal level of planned maintenance activities. The extent of the reactive maintenance required has increased significantly.	We have a significant backlog of renewals, resulting in an ageing and deteriorating network.	There are numerous abandoned assets around the network that are not well understood.	Our asset data is incomplete and has quality issues.	Our system and processes are incomplete but a plan is in place to achieve ISO 55000 certification.

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)