Agenda of Wellington Water Committee | Komiti Ngā Wai Hangarua

2 17 May 2021

Komiti Ngā Wai Hangarua Wellington Water Committee

12 May 2021

Order Paper for the meeting to be held in the

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

on:

Monday 17 May 2021 commencing at 1.00pm

Membership


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

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

Wellington Water Committee

Terms of Reference

Purpose

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

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

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

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

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

Status

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

Specific responsibilities

The Committee's responsibilities are:

Governance oversight responsibilities

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

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

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

§ Undertaking performance and other monitoring of Wellington Water Limited;

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

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

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

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

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

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

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

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

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

§ Recommending the remuneration of directors of Wellington Water Limited;

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

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

Membership

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

Chairperson

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

Quorum

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

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

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

Alternates

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

Other Shareholder attendee

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

Decision-making

The Committee will strive to make all decisions by consensus.

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

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

Secretariat services

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

Standing Orders

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

Remuneration

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

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

Administration

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

Duration of the Committee

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

Appendix

Common delegations by Shareholders

Governance oversight responsibilities

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

Shareholders' responsibilities

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

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

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

Komiti Ngā Wai Hangarua | Wellington Water Committee

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

Monday 17 May 2021 commencing at 1.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

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

3. CONFLICT OF INTEREST DECLARATIONS

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

4. Minutes

5 March 2021 8

5. Process for the Appointment of the Wellington Water Committee Chair (21/684)

Report No. WWC2021/2/112 by the Head of Democratic Services, Hutt City Council 19

6. Chair's Statement (21/749)

Verbal statement by the Chair.

7. Verbal Update on Water Reform (21/681)

8. Wellington Water Limited Company Update for Quarter Three (21/683)

Report No. WWC2021/2/114 by Wellington Water Limited 22

9. Wellington Water Limited Annual Governance Statement (21/731)

Report No. WWC2021/2/115 by Wellington Water Limited 46

10. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

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

11. Appointment of Directors to Wellington Water Limited (21/680)

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

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.

Appointment of Directors to Wellington Water Limited.	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding 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

Komiti Ngā Wai Hangarua ] Wellington Water Committee

Minutes of a meeting held in the Council Chambers, Upper Hutt City Council,
838-842 Fergusson Drive, Upper Hutt on

Friday 5 March 2021 commencing at 1.00pm

PRESENT:

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

Mayor A Baker (PCC) Mayor A Beijen (SWDC)

Cr J Brash (GWRC) Cr S Rush (WCC)

APOLOGIES: Mr T Parai (Te Runanga o Toa Rangatira)

IN ATTENDANCE: Deputy Mayor T Lewis (Alternate HCC)

Cr R Leggett (Alternate PCC)

Deputy Mayor G Emms (Alternate SWDC)

Deputy Mayor H Swales (Alternate UHCC)

Mr P Barry, Acting Board Chair, Wellington Water Ltd

Ms W Walker, Chief Executive, PCC

Ms J Miller, Chief Executive, HCC (part meeting)

Mayor C Barry, HCC (part meeting)

Mr P Kelly, Chief Executive, UHCC
Mr T Williams, Chief Infrastructure Officer, WCC (part meeting)

Mr B Patchett Project Director – Regional Water Reform Director (part meeting)

Mr C Crampton, Chief Executive, Wellington Water Limited
Mr M Ford, General Manager Business Services, Wellington Water Limited

Ms S Cuthbert, Principal Advisor, Wellington Water Limited

Mr F Clark, Principal Advisor, Strategy Wellington Water Limited
Ms K Stannard, Head of Democratic Services, HCC (part meeting)
Ms H Clegg, Minute Taker, HCC

PUBLIC BUSINESS

1. APOLOGIES

Resolved: (Cr Bassett/Mayor Guppy) Minute No. WWC 21101

“That the apology received from Mr T Parai be accepted and leave of absence be granted.”

2. PUBLIC COMMENT

There was no public comment.

3. CONFLICT OF INTEREST DECLARATIONS

There were no conflict of interest declarations.

4. Minutes

Mayor Guppy requested a response to his letter tabled at the last meeting. The Chair agreed to follow up Mayor Guppy’s request.

Resolved: (Cr Bassett/Cr Brash) Minute No. WWC 21102

“That the minutes of the meeting of the Komiti Ngā Wai Hangarua ] Wellington Water Committee held on Wednesday, 25 November 2020, be confirmed as a true and correct record.”

Update on Water Reform

The Project Director Regional Water Reform explained that a collaborative effort between the shareholder Councils and Wellington Water Ltd (the company) to respond to requests for information was nearing completion. He advised the Water Industry Commission for Scotland (WICS) estimated an additional $26B would be required to be invested in Three Waters infrastructure due to growth. He noted that this was in addition to the billions they estimated were required to bring the existing networks up to standard.

The Project Director Regional Water Reform advised that he was currently running briefings with Councils. He noted there were common themes emerging including investment prioritisation, how local priorities would be recognised, how the voice of Councils and communities would be heard and cross subsidisation. He added that concerns with governance and control were varied with some Councils wanting high levels of influence and others wanting only shareholder abilities. He advised that concerns regarding the future of local government, liabilities and privatisation had also been raised. He added the transition process and equity in the system were also of concern especially regarding debt transfer methodology. He noted that little comment had been received regarding the scale and boundaries of aggregation and there was limited outright opposition to the reforms. He advised that over the past three months, the Chief Executives from local athorities in the lower North Island and upper South Island had met, sharing intelligence and views on the reforms. He added the Chief Executive meetings were set to continue.

The Project Director Regional Water Reform outlined the next steps in the process. He noted the Chief Executives of the Wellington area were meeting next week to discuss next steps. He asked members what kind of advocacy the region should be undertaking bearing in mind the Chief Executives already liaised with the Department of Internal Affairs (DIA) and advisory groups. He highlighted the company and Wellington Water Committee (the Committee) would have the opportunity to comment at the upcoming meeting. He acknowledged the differing views of Councils. He suggested the Mayoral Forum could be an avenue for advocacy. He suggested that as the parameters of the reform emerged, questions regarding the transition period would become clearer. He stressed the importance of understanding debt valuation and transfer methodology, timeframes and the ability to provide input into the process.

With regard to the Three Waters vs Two Waters conversation, the Project Director Regional Water Reform advised the Ministers responsible for this area had recently established an Advisory Group which would investigate the topic over the next six weeks. He further advised that the DIA was increasing conversations regarding the future of local government and were looking to establish a formal steering group to formally investigate this. He then outlined the approach other regions in New Zealand were taking regarding Three Waters reform.

In response to questions from members, the Chief Executive PCC confirmed central government’s ambitious timetable was currently on-track with a Cabinet paper due in May 2021. She agreed that the absence of a representative from the Committee on the DIA’s steering group could be an issue.

In response to a question from a member regarding the level of engagement with local iwi, the Project Director Regional Water Reform advised that the DIA had an Iwi Engagement Programme underway and that consultation was the responsibility of central government.

The Chief Executive, PCC advised that it was not appropriate for local authorities to attempt to present central government’s view of the reforms. She advised that the best approach would be for the Committee to continue to converse with its iwi members.

Members noted that Local Government New Zealand had an iwi component. They also noted iwi throughout New Zealand had concerns with the level of engagement they had in the Three Waters reform.

In response to a question from a member regarding flood protection and stormwater, the Project Director Regional Water Reform acknowledged the impact each one had on the other.

Resolved: (Cr Rush/Cr Brash) Minute No. WWC 21103

"That the Committee makes application to the Department of Internal Affairs to be invited to join the Three Waters Reform Steering Committee.”

Mayor Guppy asked that his dissenting vote be recorded against the above matter.

The meeting adjourned at 1.34pm and resumed at 1.40pm.

6.	2019/20 Wellington Water Limited Annual Report (21/308) Report No. WWC2021/1/54 by Wellington Water Limited
	Ms Karen Young, Audit Director from Audit New Zealand was in attendance for the item. The Acting Board Chair, Wellington Water Limited (the company) explained that plans had been put in place to address the issues that had resulted in the qualified opinion contained in Auditor’s report for last year’s Annual Report. The General Manager, Business Services of the company explained the company had taken a pragmatic approach to the Auditor’s report. He noted that two of Audit New Zealand’s concerns could not be met in the coming financial year. He advised that accurate water loss could not be ascertained due to the lack of sufficient numbers of water meters throughout the network. He highlighted that Deloitte New Zealand had peer reviewed the company’s approach and had concluded it was sound. The Chief Executive of the company advised the customer survey component of the measures had been retrospectively updated. He noted the company distinguished between service requests and complaints whereas Audit New Zealand treated all customer inquiries as complaints. Ms Young explained that Audit New Zealand assessed companies based on the legal requirements set by the Department of Internal Affairs (DIA). In response to a question from a member regarding the ability of staff to follow procedure in the field, the Chief Executive of the company explained the standard the company aspired to was accurately written down including recording of attendance and response times, verification by a third party and spot checks by the Depot Manager each day. He was confident staff followed all safety procedures and that the MAXIMO system would improve the recording of response times. He noted point 7b) contained in the report had been updated to reflect the correct information, attached as page 11 to the minutes. In response to a question from a member, the Acting Board Chair of the company confirmed the Board was confident with the operational systems in place at the company. In particular those plans implemented as a result of the recent Audit New Zealand qualified opinion. He said there remained a risk of another qualified opinion being given at the end of the current financial year. In response to a question from a member regarding the installation of sectional water meters, Ms Young advised that the limited numbers proposed for these meters would likely not meet the water loss measurement standards. She acknowledged the installation of meters was outside of the company’s control. She stressed that the issue was not leaking pipes rather it was how much the company knew about the loss of water.
	Resolved: (Cr Bassett/Cr Rush) Minute No. WWC 21104 “That the Committee receives the Wellington Water Limited 2019/20 Annual Report attached as Appendix 1 to the report.”
7.	Wellington Water Limited's Draft Statement of Intent 2021-24 (21/309) Report No. WWC2021/1/55 by the Wellington Water Limited
	The Acting Board Chair, Wellington Water Ltd (the company) elaborated on the report. In response to a question from a member, the Chief Executive from the company acknowledged the short turnaround time which had been allowed for several Councils to provide feedback on acceptable performance measures. In response to a question from a member, the Chief Executive of the company elaborated on the water meter installation issue as detailed in the draft Statement of Intent. In response to amendments required as identified by members, the Chief Executive of the company acknowledged paragraph 12 contained in the report should refer to 30 July 2021 and that page 13 of the Draft Statement of Intent should read ‘the system approach had not been completed’.
	Resolved: (Cr Bassett/Mayor Guppy) Minute No. WWC 21105 “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.”
8.	Submission to Health Committee on Water Services Bill (21/311) Report No. WWC2021/1/56 by the Chief Executive, Porirua City Council
	The Principal Advisor, Wellington Water Limited elaborated on the report.
	Resolved: (Cr Bassett/Cr Rush) Minute No. WWC 21106 “That the Committee: (1) approves the draft submission on the Water Services Bill attached as Appendix 1 to the report; and (2) agrees that a Wellington Water Limited representative and a Wellington Water Committee member will appear before the Health Committee to present the submission.”
9.	Wellington Water Limited Company Report (21/312) Report No. WWC2021/1/57 by Wellington Water Limited
	The Chief Executive, Wellington Water Limited (the company) elaborated on the report. In response to a question from a member, the Chief Executive of the company explained the delay in estimating a cost per kilometre of pipe was due to differences in the design and state of the network within each local authority. He noted that information would be reported to members in due course. In response to a question from a member regarding the failure of the company to meet the water leakage targets, the Chief Executive from the company explained the small area meters were now providing useful data regarding overnight leakages. He noted that the data would be sent to members prior to each Wellington Water Committee meeting. He also added that additional leakage crews had been established with regular reporting being initiated. In response to a question from a committee member regarding the reason for the reprioritisation of the Stimulus Funding, the Chief Executive of the company explained that priority was being given to the High Critical Assessment Programme as it became apparent the state of the network was not as good as first thought.
	Resolved: (Cr Bassett/Mayor Guppy) Minute No. WWC 21107 “That the Committee receives and notes Wellington Water Limited’s Company Report attached as Appendix 1 to the report.”
10.	Wellington Water Limited - Half Yearly Report to 31 December 2020 (21/295) Report No. WWC2021/1/58 by Wellington Water Limited
	The Acting Board Chair, Wellington Water Limited (the company) elaborated on the report. In response to a question from a committee member, the Acting Board Chair of the company explained the company was currently reprioritising operations to ensure there was no requirement for Councils to alter their Long Term Plan budgets. In response to a question from a member regarding Priority 3, the Chief Executive of the company advised the economic case for water meters had been completed. He added that the next stage of investigations would be reported in due course including cost estimates for hardware, software and other technical components. In response to a question from a member regarding Priority 5, the Chief Executive of the company agreed the word “adaption” could be used.
	Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 21108 “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.”
11.	2021/31 Long Term Planning Update (21/303) Report No. WWC2021/1/59 by Wellington Water Limited
	The Chief Executive, Wellington Water Limited (the company) elaborated on the report. He highlighted that the figure for Upper Hutt City contained in the Appendix 1 table attached to the report should be $36 rather than $61. The Principal Advisor, Strategy of the company advised the company worked closely with Council officers when developing work programmes. In response to a question from a member, the Principal Advisor, Strategy of the company agreed to work with officers to organise a Council workshop regarding changes to performance measures. Mayor Beijen requested the motion be taken in parts. Parts (1)-(6) were CARRIED by the voices.
	Resolved: (Cr Bassett/Mayor Baker) Minute No. WWC 21109 “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 follow Wellington Water Limited’s 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 Department of Internal Affairs (DIA) performance measures^{^[1]} have been developed with Council officers in line with its agreement from 3 November 2020; Mayor Beijen asked that his dissenting vote be recorded against (3) above.
	(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.”
12.	A System Approach – Looking After Existing Infrastructure (21/302) Report No. WWC2021/1/60 by Wellington Water Limited
	The Principal Advisor, Strategy, Wellington Water Limited (the company) elaborated on the report. In response to a question from a member, the Principal Advisor, Strategy of the company agreed the company needed to improve bringing the environment focus to the forefront of all decision making. He believed that Councils’ District Plans would include water sensitive design requirements and would be required to implement the Whaitua recommendations. In response to questions raised by a member regarding the Maintenance and Condition Assessment Programme, the Principal Advisor, Strategy of the company advised critical assets were being assessed as a priority with less critical ones programmed accordingly. He confirmed the company had been working with Council officers to inform their Infrastructure Plans. In response to a question from a member regarding the likelihood of another qualified opinion being received, the Chief Executive, PCC advised she and the Chief Executive of the company would be meeting with the Auditor-General and would report back to the next meeting.
	Resolved: (Cr Bassett/Mayor Beijen) Minute No. WWC 21110 “That the Committee receives and notes the report.”

13. CHAIR’S STATEMENT

The Chair advised that this was the last meeting for Cr Brash. He acknowledged and thanked Cr Brash for her commitment to the Wellington Water Committee (the Committee).

Cr Brash explained she was moving into a regulatory governance role and that
Cr van Lier would replace her. She thanked the Chair for his leadership and acknowledged the Board, the Chief Executive of Wellington Water Limited (the company) and his team. She urged members to strongly lobby central government for additional investment funding.

The Chair announced his resignation from the Committee. He outlined his highlights as Chair and stated his satisfaction with the development of the company and the regional efficiencies in Three Waters that had eventuated. He added that this included the establishment of the regional emergency stations. He said the current Three Waters reform programme was presenting to be a challenge and the Wellington region was well placed to meet the challenge. He highlighted the company model enabled co-ordinated responses to emergencies such as the Kaikoura earthquake. He acknowledged past and present members and Deputy Chair Mayor Guppy. He acknowledged past and present Chief Executives administrative liaisons and support services. He thanked the past and present Board members and senior management of the company. He asked that all staff be cared for and well supported during the Three Waters reform.

Mayor Guppy thanked both Cr Brash and the Chair for their contributions to the Committee.

14. EXCLUSION OF THE PUBLIC

Resolved: (Cr Bassett/Mayor Beijen) Minute No. WWC 21111

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

15. Minutes - 25 November 2020

(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.

There being no further business the Chair declared the meeting closed at 3.42pm and the non-public portion of the meeting closed at 3.45pm.

Cr D Bassett

CHAIR

CONFIRMED as a true and correct record
Dated this 17^th day of May 2021

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

22 17 May 2021

Komiti Ngā Wai Hangarua ]

Wellington Water Committee

30 April 2021

File: (21/683)

Report no: WWC2021/2/114

Wellington Water Limited Company Update for Quarter Three

Purpose of Report

1. The purpose of this paper is to provide the Wellington Water Committee an overview of Wellington Water Limited’s (the company’s) performance for Quarter 3 of 2020/2021.

Recommendation

That the Committee receives Wellington Water Limited’s Quarter 3 Performance report attached as Appendix 1 to the report.

Statement of Intent

2. The Quarter 3 Performance Report (Appendix 1) focuses on the company’s SOI performance to date. Overall, the company is tracking well and is forecast to fully deliver against a reasonable portion of the targets at year-end.

3. Dry-weather and wet-weather overflows both exceeded the targets in this quarter, but we acknowledge we were ambitious in what we set ourselves for the year. On 16 November 2020, Greater Wellington Regional Council investigated a report of sediment laden water discharging from a stormwater outlet in Titahi Bay. On 5 February 2021 we received an infringement notice for the incident that has impacted our results across a number of measures.

4. You will recall there was a power cut at the Waterloo Treatment Plant which shut down the UV plant. The Drinking Water Assessor, after investigating this event, has now advised us the system will be judged compliant across this event. This reinforces our response and corrective actions were appropriate.

5. Other key areas of focus for the company are supporting councils finalise their Long Term Plans (LTPs) and to ensure Wellington Water is ready for the start of Taumata Arowai later in the year. More detail on these two elements follow.

Long Term Plan Updates

6. Owner councils are currently consulting communities on their respective LTPs. The draft consultation documents were audited by Audit NZ. Audit NZ took a particular focus on the levels of three waters renewals investment. Across the three waters networks we do not have comprehensive condition data due to historical under investment. However, age profiles and the linkage to known parameters of asset performance are an acceptable proxy for renewals investment and the information provided to Audit was acceptable. Audit NZ’s final opinion was based on whether the level of investment in renewals would reduce the current backlog and therefore risk of service failures. Our owner councils received 5 matters of emphasis and one was qualified on this point.

7. We are now assisting councils to close out the LTP final audit and Wellington Water will provide its full asset management suite including the regional Strategic Asset Management Plan (all councils) and the individual investment plans per council. All outputs will be independently peer reviewed.

8. As a consequence of all the strategic asset management advice we have given councils over the last three years, we will be able to develop the first ever Regional Investment Plan for water across the metropolitan area of Wellington (not including SWDC). This document will lay out the issues the region is experiencing and what the collective efforts of councils will achieve through their LTPs. We think this Regional Investment Plan will provide a strong basis for the Wellington Water Committee to lead the strategic regional discussion on water services, quality and investment. You will receive this at your next meeting.

Taumata Arowai

9. The company continues to make good progress getting ready for the start of the new regulatory regime under Taumata Arowai. A regulatory management model has been developed to address all the disclosures expected to be required. There are several gaps in the Wellington Water ‘system’ which need to be closed before it is fully fit for purpose. Initially, the focus is on closing the high impact, high risk gaps. An example of these gaps is the need to fully document the structured responsibilities or authorisations and qualifications under the draft Water Services Bill. Another is the need to detail the explicit connections between Wellington Water policies and the processes and records of Wellington Water operational activities.

10. A key part of meeting the requirements of Taumata Arowai is having a local understanding of te Mana o te Wai. The first disclosure to Taumata Arowai will include a te Mana o te Wai statement. We propose to engage you in this at your next meeting.

11. Also, at the next Wellington Water Committee meeting we want to test with you the disclosures most likely required by Taumata Arowai. This will be a good test run of our understanding and systems and a learning opportunity for all. Bill Bayfield from Taumata Arowai will join you for the discussion.

Financial and Non-Financial Performance

Financial - Opex

12. Council opex budgets (except UHCC and GWRC) continue to be forecast over budget due to the ageing network which has resulted in increased service requests including an increasing number of significant and complex incidents (defined as affecting the three water outcomes or impacting on multiple customers). The company has carried out a comprehensive review of our opex operations and completed a reforecast of opex costs to both the end of 2020/21 and 2021/22. With the exception of GWRC, councils have been given forecasts in excess of current LTP budgets for the 21/22 financial year.

13. A requirement on the company is that it cannot exceed opex budgets. Accordingly, we provided the following options to councils:

a. Reduce levels of service; or

b. Use the fiscal stimulus funding to meet the forecast increase in opex by reprioritisation of the Delivery Plan.

14. All councils unanimously agreed that reducing service levels was not an acceptable option, so Wellington Water has completed an optioneering exercise to manage the forecast over budget. This work is now complete for councils as follows:

a. PCC – has agreed to reprioritise its Delivery Plan;

b. GWRC – no action required as they are funded differently;

c. WCC – has approved Wellington Water overspending the budget therefore there is no need to reprioritise the Delivery Plan;

d. HCC – has agreed to reprioritise the Delivery Plan;

e. UHCC – has agreed to reprioritise its Delivery Plan (due to future forecast increases in 21/22).

f. SWDC – has approved Wellington Water overspending the budget therefore no need to reprioritise the Delivery Plan.

15. With the opex review completed and council position approved, the reprioiritised Delivery Plan has been sent to Crown Infrastructure Partners for approval on route to the Department of Internal Affairs. Discussions to date indicate no issue in getting approval for the proposed changes.

Financial - Capex

16. As at the end of quarter three, we are forecasting to deliver between $133m and $140m of capital projects for the year. While short of the $160m target, delivery is substantially ahead of the previous year having scaled up $40m from the 2019/20 financial year.

17. For a number of years, we have been working with our suppliers to progressively grow our capacity. The 2021/22 capital programme for the region as outlined in our client councils’ draft LTPs is $208m so it is important we continue this growth.

18. We recently commissioned Deloitte to undertake an assessment of our resources against the scale of the programme. The draft findings of this indicate that there is a significant FTE gap across Wellington Water and all suppliers.

19. We are now working collectively with our consultant and contractor panels to develop delivery plans to address this. This requires a combination of increased resources and improved efficiency through a growth and recruitment strategy and enhanced procurement and delivery models.

20. We are currently screening the 21/22 renewals programme to identify projects with a high delivery risk and low network risk and will replace these projects with fast track catchment renewals that have a high delivery confidence.

21. We are also working with our client councils to smooth the first three years of the LTP, so that there is a steady ramping up of the work (currently year 3 drops below year 2 in the aggregate across all councils).

22. One of the key success factors for our suppliers is the level of certainty in the work. To assist with this, we have provided the panels with the 2021/2022 draft programme, to enable the teams to plan for the work in place for next year. This is a major milestone and allows us to start the coming year on the front foot.

23. It is worth noting, even with all these measures in place delivery risk will remain. There are factors outside Wellington Water’s control that may impact delivery next year. These include ongoing disruptions to the supply of materials and equipment, deployment of Wellington Water and panel resources to fix critical breakages, resource consenting and other infrastructure programmes getting underway in the region. We will monitor the impact of these and mitigate as best we can.

Non-Financial (DIA Measures)

24. The overall demand for reactive repairs across the region continued to increase over this summer quarter. With the increased workload the company was still pleased to report that response time results for urgent call-outs are generally stable.

Value for Money Update

Opex Value for Money

25. Following the completion of the 20/21 Financial Year, we propose to compile our first Value for Money report. This report will outline the value we have created for owners, mana whenua and customers over the last few years and outline how we will continue to monitor the value we create going forward.

26. Demonstrating value for money, when you are in a monopoly situation, is difficult if you are not regulated or have effective benchmarking regimes to participate in. Our framework for value for money has been reported to you before, and consists of:

a. Participating in benchmarking surveys including the Water NZ and WSAA benchmarking surveys;

b. Developing a strategic framework and asset management approach which delivers optimal council long term investment plans and having those peer reviewed; and

c. Monitoring annual metrics to demonstrate a trend of providing the services we provide more efficiently.

27. In this report, we want to give you an insight into the work we have done to demonstrate the value we are creating through our Customer Operations Group (COG) which provides services to customers on a day to day basis. Our promise to owners was to increase value by improving customer service and providing efficiency in the way we have executed our work. Demonstrating value has been harder than anticipated because:

a. We have progressively become more reactive in our work as the number of service requests has increased due to an ageing network; and

b. We undertook the business in a completely different way during COVID-19 as an essential service provider.

28. Below you will find an update on the metrics we have been working on to date. The first measures the size of the work we do. While the second provides an assessment of performance in completing service requests and the unit cost trends of the services themselves. Customer satisfaction is ultimately judged by a monthly customer satisfaction survey (reported quarterly by the company).

Scope of the Work (Volume)

Total number of Service Requests

Figure 1

29. To illustrate the increasing scope of this work across the region, the total service requests that we received from our Client Councils increased significantly during the quarter with a total of 9504 received. While we would expect an increase in requests from reported water leaks from customers during summer, this quarter has been one of the busiest on record. In March alone, our Customer Hub received 3417 services requests of all types which is the highest recorded for a single month. This is shown in figure 1 above.

Customer Call Volumes

Customer Email Volumes

Figure 3

30. In addition, overall call volumes serviced by the Customer Hub increased due to a sharp increase in the number of inbound calls received. This spike reflects the increase in service requests, complaints, and escalations received during the quarter. This is shown in figures 2 and 3 above.

Figure 4

31. There was also a large number of significant outages and incidents recorded for this quarter which continues the trend experienced during Q2. This correlates to a spike in number of complaints/escalations received from customers through the Customer Hub. There was a total of 47 across the quarter. This is shown in figure 4 above.

Note: Current average incident rate is 3.6/week.

Performance Metrics (Resolution times and unit costs)

32. There are two ways we measure the performance or efficiency of the system. One is the fault response times for completing urgent service requests and then unit cost measures to demonstrate efficiencies.

33. The following data shows that response times are starting to settle albeit the PCC and SWDC have gone through significant change between quarters. For non-urgent resolution we are seeing an ongoing slow deterioration in service which, now summer is over, we hope to reverse in the next quarter. The unit cost information (shown in figures 5, 6 and 7) shows a downward trend on two of our measures and a slight upward trend on the third. We will continue to develop this system.

Table 1 WATER SUPPLY RESOLUTION TIMES
	Median Response Times for Resolution of Urgent Call-Outs (hours)		Median Response Times for Resolution of Non-Urgent Call-Outs (days)
	Q2	Q3	Q2	Q3
WCC	17.8	16.2	7.2	11.3
HCC	4.1	4.1	6.3	9.3
UHCC	17.8	16.2	7.2	11.3
PCC	9.5	18.8	8.0	12.1
SWDC	25.0	5.0	7.2	7.9

Figure 5

Figure 6

Figure 7

Value for Money Risks

34. There are two significant risks to manage in a value for money sense:

a. Ensuring our workforce is the right size for the work

Because the scope of what we do is changing regularly, we have to continually ensure the number of front-line staff is right sized to meet the demands. Currently we are working through a change proposal to re-set the structure of the COG for the scope of works envisaged to June 2022. This has been enabled by all councils agreeing to the opex review; and

b. Ensuring we continue to have access to capable front-line staff

It is our belief that we have exhausted all available water personnel from across the region. It is almost impossible now to find trained staff, so we have turned our attention to establishing a more robust training pathway. Starting with school leavers; working through on-the-job training/occupation learning and then deployed into the workforce. This is a smaller version of the training proposal Wellington Water promoted to central government as part of the shovel ready project proposals.

35. We will watch these risks carefully and adjust our controls if we need to.

General updates

Very High Criticality Assessments

36. This programme is now fully mobilised. The overall intent of the work is to complete health assessments for 100% of all of the very high criticality assets. The progress of our health assessments to date can be summarised in the table below:

*All Councils Very High Criticality Assets Assessment progress report 30/04/2021*
*Asset type*	*Total Number*	*Assessed to date*	*Any urgent issues*
Wastewater Pipes	229 km	8 km	None
Stormwater Pipes	165 km	20 km	None
Drinking Water Pipes	77 km	0 km
Reservoirs	139	5	None
Pump Stations	79	20	None
Water Treatment Plant Assets	534	0

37. Of the health assessments completed, only 0.2km are considered to be in “very poor” condition, which will require some form of intervention – this is still to be confirmed. More positively, 80% of the other assets inspected to date have been in “good” or “very good” condition. Given that the age of the assets inspected is over 100 years old in some cases, this is a significant positive trend which we will be keeping an eye on throughout the project.

Water NZ Benchmarking Result

38. Every year Water NZ provides benchmarking information across the water sector. Wellington Water contribute on behalf of all councils. The survey itself has been published on our website.

39. In essence, the report reinforces what we know about our networks. The networks are ageing and failing more often and therefore costs are increasing. There were some interesting other results as follows:

A. Dry weather wastewater overflows were relatively high in Wellington. This change largely relates to a tighter interpretation we have applied to record all wastewater spilled from our system to land, not just the overflows that reached waterways.

B. We are close to the national median for capital expenditure but about 30% over national median for operational expenditure, likely reflecting the older assets we operate and maintain and the costs of working in a more densely populated urban area; and

C. Our drinking water use and leakage is around the national median, not the worst but within a range that has significant room for improvement.

WSAA Reform

40. We have received our benchmarking report and are currently analysing it. Regrettably Water Care did not participate this year so we cannot draw comparisons against our nearest water entity. We will report the results to you at the next Wellington Water Committee meeting.

Water Reform

41. Water reform continues to build momentum as the next big milestone of major policy announcements is expected by the Government in June 2021. The company continues to support our council owners as they participate in the water reform agenda.

42. Water reform does pose a number of risks to the company, our council owners and the customers. The company has taken the position of being open and transparent to staff about water reform and its possible consequences. Most staff now appreciate, if water reform goes ahead, that Wellington Water will end in its current form and be part of a bigger entity delivering services.

43. We stress to staff that, if water reform occurs, there will still be jobs and we still have a very important function to do in the meantime, providing services to customers. Ensuring we keep staff positive and engaged over this period will be critical and we will need our councils support to assist with this.

44. As transitioning planning gets more developed, we will provide support where we are asked. This will be an additional task on Wellington Water, and we will need to be careful to get the right balance between aiding transition versus delivery on day to day services.

Wastewater Treatment Plants

45. There have been a series of performance issues at the wastewater treatment plants which we have been working with Veolia to resolve. Some of these have been issues with ageing plant and some have been biological treatment plant process upsets. Monitoring of public health indicators near the outfalls has not shown any significant issues in the receiving environment to date and remedial work at the plant should see these issues resolved. We have been liaising with GWRC and RPH on each of these, but it is not clear at this stage whether GWRC intend to undertake any enforcement action.

Delivery Plan

46. As at the end of April 2021 we have expensed $8.95M against an overall $47.3M of fiscal stimulus. This is understated because we have not fully accounted for the reprioiritisation of the Delivery Plan as a consequence of the opex review. Notwithstanding this, progress is now ramping up and increased outputs will occur in the next quarter.

Appendices

No.	Title	Page
1 ⇩	Q3 Statement of Intent Performance Report	36

Author: External Author (Wellington Water Ltd)

[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.