Komiti Ngā Wai Hangarua

Wellington Water Committee

 

14 July 2021

 

 

 

Order Paper for the meeting to be held in the

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

on:

 

 

 

Monday 19 July 2021 commencing at 1.00pm

 

 

Membership

Mayor C Barry (Chair)

Hutt City Council

Mayor W Guppy (Deputy Chair)

Upper Hutt City Council

Mayor A Baker

Porirua City Council

Mayor A Beijen

South Wairarapa District Council

Cr S Rush

Wellington City Council

Cr J van Lier

Greater Wellington Regional Council

Ms L Rauhina-August

Taranaki Whānui ki Te Upoko o Te Ika

Vacancy

Te Runanga o Toa Rangatira

Deputy Mayor G Emms

South Wairarapa District Council (Alternate)

Cr C Kirk-Burnnand

Greater Wellington Regional Council (Alternate)

Cr R Leggett

Porirua City Council (Alternate)

Deputy Mayor T Lewis

Hutt City Council (Alternate)

Cr I Pannett

Wellington City Council (Alternate)

Ms N Solomon

Te Runanga o Toa Rangatira (Alternate)

Deputy Mayor H Swales

Upper Hutt City Council (Alternate)

Ms K Tamanui

Taranaki Whānui ki Te Upoko o Te Ika (Alternate)

 


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, South Wairarapa District 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 19 July 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

Komiti Ngā Wai Hangarua Wellington Water Committee 17 May 2021             8    

5.       Wellington Water Limited - Approach to Regulation (21/1096)

Report No. WWC2021/3/173 by Wellington Water Limited                             14

6.       Verbal Update on Water Reform (21/1085)

Verbal Update from Wendy Walker, Chief Executive, Porirua City Council and Dougal List, Project Director, Porirua City Council

7.       Wellington Water Limited - Final Statement of Intent (21/1093)

Report No. WWC2021/3/170 by Wellington Water Limited                             24

8.       Water Services Investment 2021-2024 (21/1104)

Report No. WWC2021/3/176 by Wellington Water Limited                             81

9.       Wellington Water Limited Update June 2021 (21/1105)

Report No. WWC2021/3/177 by Wellington Water Limited                             93

10.     Wellington Water Limited - Service Delivery Strategy Review - Findings and Recommendations (21/1107)

Report No. WWC2021/3/178 by Wellington Water Limited                           110

11.     Wellington Water Limited - Annual General Meeting and Audit Update (21/1095)

Report No. WWC2021/3/172 by Wellington Water Limited                           128

12.     Meeting Schedule for the remainder of 2021 (21/1082)

Memorandum dated 6 July 2021 by the Head of Democratic Services, Hutt City Council            137         

13.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

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

14.
          Minutes - 17 May 2021

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 Komiti Ngā Wai Hangarua Wellington Water Committee held on 17 May 2021 - 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.”

 

Annie Doornebosch, Democracy Advisor, Hutt City Council          


Komiti Ngā Wai Hangarua Wellington Water Committee

 

Minutes of a meeting held in the Hutt City Council Chambers on

Monday 17 May 2021 commencing at 1.00pm

 

 

PRESENT:

Mayor C Barry (HCC)

 

Mayor W Guppy (UHCC) (Deputy Chair)

 

Mayor A Baker (PCC)

 

Mayor A Beijen (SWDC)

 

Cr S Rush (WCC)

 

Cr J van Lier (GWRC)

 

APOLOGIES:                  Mr C Katene (Te Runanga o Toa Rangatira)

 

IN ATTENDANCE:        Ms N Hooper (SWDC) (Observer)

Ms L Ruahina-August (Observer) Taranaki Whānui ki Te Upoko o Te Ika)

                                           Cr R Leggett (Alternate PCC)

                                           Deputy Mayor G Emms (Alternate SWDC)

                                           Deputy Mayor H Swales (Alternate UHCC)
Mr G Dangerfield, Chair Wellington Water Ltd

                                           Mr P Barry, Board Member, Wellington Water Ltd

                                           Ms W Walker, Chief Executive, PCC
Ms J Miller, Chief Executive, HCC

                                           Mr P Kelly, Chief Executive, UHCC

Ms S Gains, General Manager, Corporate Services, GWRC

Ms H Oram, Director Environment and Sustainability, HCC (part meeting)

Mr B Hodgins, Strategic Advisor, HCC (part meeting)
Mr D List, Project Director, Regional Water Reform, PCC

                                           Mr C Crampton, Chief Executive, Wellington Water Limited
Ms S Cuthbert, Principal Advisor, Wellington Water Limited
Mr K Locke, General Manager Customer Operations, Wellington Water Ltd
Mr A van Paassen, Communications Engagement Manager, Wellington Water Ltd

Ms G Christison, Communications Officer, Wellington Water Ltd

                                           Ms K Stannard, Head of Democratic Services, HCC (part meeting)
Ms H Clegg, Minute Taker, HCC


 

 

 

 

PUBLIC BUSINESS

 

 

 

 

1.       APOLOGIES 

Resolved(Mayor Guppy/Mayor Baker)                           Minute No. WWC 21201

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

2.       PUBLIC COMMENT

There was no public comment.      

3.       CONFLICT OF INTEREST DECLARATIONS  

          There were no conflict of interest declarations.

4.       Minutes

Resolved(Mayor Guppy/Mayor Baker)                           Minute No. WWC 21202

“That the minutes of the meeting of the Komiti Ngā Wai Hangarua Wellington Water Committee held on Friday, 5 March 2021, be confirmed as a true and correct record.”

 

5.

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

Report No. WWC2021/2/112 by the Head of Democratic Services

 

Resolved(Mayor Guppy/Cr van Lier)                             Minute No. WWC 21203

“That the Committee:

(1)     receives the information;

(2)     adopts, pursuant to Schedule 7 of the Local Government Act 2002         appointment by statutory voting system A (paragraph 5 contained in the report);

(3)     agrees that any voting round that requires a resolution by ‘lot’ to exclude any person/s will use the procedure where the candidates’ names (with the same number of votes) are placed in a container and the name of the person drawn out by an independent person is deemed the winner (ie elected or not excluded from the next round); and

(4)     adopts the voting system and procedure outlined in recommendations 2 and 3 above for the appointment of the Chair for the term ending at the 2022 local body elections.”

Mayor Guppy called for nominations for Chair.  Mayor Guppy nominated Mayor Barry for the position of Chair and Mayor Baker seconded the motion.  He then called for any other nominations and as there were none, he put the motion.

 

Resolved(Mayor Guppy/Mayor Baker)                           Minute No. WWC 21204

“That Mayor Barry be elected as Chair of the Wellington Water Committee for the term ending at the 2022 local body elections.”

 

6.

Chair's Statement

Mayor Barry thanked members for their vote of confidence and said that he looked forward to working with them.  He stated it was a privilege to serve as Chair during a period of great change within the Three Waters sector and local government.  He advised that Lower Hutt had three important issues regarding the Three Waters:  ageing asset infrastructure, population growth and historic under investment.  He believed the committee had an important oversight function and now was the time for a re-evaluation of the role of the committee.

 

7.

Verbal Update on Water Reform (21/681)

Report No. WWC2021/2/67 by the Head of Democratic Services

 

The Chief Executive, PCC advised the Three Waters reform was at a period of uncertainty while waiting for a paper to be considered by Cabinet.  She introduced
Mr Dougal List, the new Project Director, Regional Water Reform.

The Chief Executive, PCC advised Mayor Barry was now a member of the Steering Group.  Members agreed this would be advantageous as Wellington Water Ltd (WWL) and the committee’s experiences could be feed into planning the new structure.

In response to a question from a member, Mayor Barry advised he had not been part of any discussions regarding the possibility of iwi owning a portion of water assets as a way of possibly preventing privatisation of such assets.

 

Resolved(Mayor Barry/Mayor Beijen)                            Minute No. WWC 21205

“That the Committee notes the verbal update on Water Reform.”

 

8.

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

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

 

The Chief Executive, Wellington Water Limited (WWL) elaborated on the report. 

In response to a question from a member, the Chief Executive, WWL expressed reasonable confidence that the proposed works for the coming year could be completed.  He added the Fast-Track Renewals Programme had been successful, consultants had signed contracts, management of projects was improving and regular meetings were occurring with each client council.

In response to a question from a member regarding the percentage of actual work that was included in the $40M of capital works, the Chief Executive, WWL agreed to report back on the information.

In response to a question from a member regarding the increased number of calls to the Customer Hub, the Chief Executive, WWL confirmed multiple calls from one person would be counted individually.  The General Manager Customer Operations, WWL added that currently there were between 90 to 100 ground staff.  He acknowledged the struggle WWL was experiencing attracting suitably qualified personnel.  He further acknowledged the median non-urgent response times were getting longer.  The Chief Executive, WWL added WWL was working hard to reverse the trend.  He highlighted that if increased funds were not received from each client council and the number of service requests increased, then response times would suffer.

In response to a question from a member regarding the process once a member of the public reported a leak, the General Manager Customer Operations, WWL agreed to report back with specific details.  He added that over the summer, the Customer Hub had been issued with information to pass onto customers including details concerning an SMS alert system and how to access the WWL website.

In response to a question from a member regarding qualified personnel, the General Manager Customer Operations, WWL explained WWL utilised external consultants adding that, from time to time, companies who constructed infrastructure were not skilled in repairing infrastructure.  The Chief Executive, WWL added that external consultants were used occasionally for resource and building consent work.

In response to a question from a member regarding the capability of WWL and the management of risk, the Chief Executive, WWL advised the Capex Workload Management Programme was based on a panel structure, sized to deliver a certain amount of work.  He added that now that the amount of work was increasing, investigations were currently underway into developing a new management system.  He confirmed certainty for the capex programme for the next three years which connected with the length of time of each client council’s Long Term Plan. 

In response to a question from a member regarding further requests for funding, the Chief Executive, WWL explained that the current and next years’ budgets had been set according to funds received from client councils and finalised capital works programmes.  He was confident no further funding requests would be made during this period.  He added the goal was to use central government’s fiscal stimulus package funding.

In response to a question from a member regarding the infringement notice issued to WWL concerning sediment discharge into Titahi Bay, the General Manager Customer Operations, WWL explained that whilst the work crew had installed temporary sediment control measures, these had not proven to be fully effective.  He added that a training programme for all ground staff had been implemented to ensure crews fully understood the control measures they were installing.

In response to a question from a member regarding the data base for the critical asset analysis, the Chief Executive, WWL advised an update on investment into the data management system would be reported to the next meeting.

In response to a question from a member regarding the risk involved in acquiring materials from overseas, the Chief Executive, WWl advised he would report back to the next meeting.

In response to a question from a member, the Chair, WWL confirmed Mr Barry and himself had met with the Head of Audit New Zealand to discuss the audit process for the current financial year.  He cautioned there may be one or two items that may not satisfy the Auditor.

The Chief Executive, WWL advised that despite the uncertainties associated with the Three Waters Reform Programme, WWL would continue to deliver its work programmes to each client council.  He added that he would continually update the committee as information on the reform was received.

 

Resolved(Mayor Barry/Mayor Beijen)                            Minute No. WWC 21206

“That the Committee receives the Quarter 3 Performance report attached as Appendix 1 to the report.”

9.

Wellington Water Limited Annual Governance Statement (21/731)

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

 

The Chair, Wellington Water Limited elaborated on the report.

 

Resolved(Mayor Barry/Cr Rush)                                     Minute No. WWC 21207

“That the Committee agrees to provide feedback on Wellington Water Limited’s Governance Statement included in its draft Statement of Intent.”

10.     EXCLUSION OF THE PUBLIC

Resolved(Mayor Barry/Mayor Beijen)                             Minute No. WWC 21208

“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.”

 

There being no further business the Chair declared the public portion of the meeting closed at 2.01pm, and the public excluded portion of the meeting closed at 2.06pm.

 

 

 

                                                                                                                                                                                                                                                                                                                                    C Barry

                                                                                                                           CHAIR

 

 

 

 

 

 

 

CONFIRMED as a true and correct record

Dated this 19th day of July 2021

   


Komiti Ngā Wai Hangarua Wellington Water Committee  

08 July 2021

 

 

 

File: (21/1096)

 

 

 

 

Report no: WWC2021/3/173

 

Wellington Water Limited - Approach to Regulation

 

Purpose of Report

1.    To brief members on Wellington Water Limited’s progress with preparations to meet Taumata Arowai regulatory requirements

 

Recommendations:

That the Committee:

(1)   notes that Wellington Water Limited has been proactive in preparation for regulation;

(2)   notes that Wellington Water Limited is building its regulatory maturity ahead of full compliance from 1 April 2022; and

(3)   notes that the Water Services Bill will carry risks for Wellington Water Limited and for Council asset owners who make decisions on investments in drinking water assets.

 

Background

2.    Wellington Water Limited has established a regulatory function to prepare the business to meet the performance requirements in the Water Services Bill, which is expected to be enacted early in 2022.

3.   The approach is to understand the gaps between current capability and what is needed for Wellington Water Limited to become a best practice water services provider. We now have a good sense of what is required and a workplan to realise our strategy is in play which is attached as Appendix 1 to the report.

Key messages

4.   Wellington Water Limited is on target to meet regulatory requirements from April 2022.

5.   A new duty of care regarding safe drinking water applies to Wellington Water Limited and other drinking water suppliers from 1 July 2021.

6.    Because councils are the owners of drinking water assets, the Water Services Bill is likely to carry risks for them that are independent from the regulatory risks on Wellington Water Limited, as operator.

 

Appendices

No.

Title

Page

1

Approach to Regulation

16

 

 

 

 

 

Author: Wellington Water Ltd

 

 


 


Wellington Water Committee Komiti Ngā Wai Hangarua

08 July 2021

 

 

 

File: (21/1093)

 

 

 

 

Report no: WWC2021/3/170

 

Wellington Water Limited - Final Statement of Intent

 

Purpose of Report

 

1.    To present Wellington Water Limited’s final Statement of Intent 2021-2024 attached as Appendix 1 to the report.

 

Recommendation:

That the Committee receives and considers Wellington Water Limited’s final Statement of Intent 2021-2024 attached as Appendix 1 to the report.

 

Background

 

2.    Wellington Water Limited (the Company), as a Council Controlled Organisation (CCO), is required to produce an annual Statement of Intent (SOI) that aligns with councils’ long-term plans (LTP’s) and annual plans.

3.   The purpose of the SOI is to outline for the public the activities and intentions of a CCO for the year, and how these will contribute to the objectives or outcomes sought.

4.   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. 

5.   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 Statement of Intent.

6.   The Wellington Water Committee received the draft SOI as its meeting on 5 March 2021 and agreed to extend the time period for delivery of the SOI by one month.

7.   Councils were asked to forward any comments they had to the Chief Executive, Porirua City Council, by 30 April 2021. No feedback was received, and the Company has finalised its SOI in parallel with and consideration of final decisions made through council long-term plans.

8.   The Company’s Board approved the SOI at its meeting on 6 July 2021 and the final version is attached as Appendix 1 to the report.

Our water, our future: final Statement of Intent 2021-24

9.   This year’s SOI aims to be clear about the priorities and intentions at a strategic level, while also educating readers about the Wellington Water model, the relationship between councils’ investment and achievement of outcomes and our everyday activities.

10. The SOI provides a regional view of the final decisions and investment adopted by councils through their long-term plans 2021-31.  The Company have aimed to be clear about what can be achieved in the next three financial years with the allocated level of funding, and the resulting risk profiles. 

11. The Company have moved away from impact statements and refined the number of outputs in order to capture the most important aspects of performance. These outputs have been clearly defined and robust controls are in place to monitor and report on progress throughout the year.

12. Under statute we are required to report on a series of Department of Internal Affairs (DIA) service measures (the Rules). Councils decide on targets for each of these as they work through their long-term plans. As the renewals backlog has begun to materialise in network failures, the consequential impact of increasing outages has meant we have been unable to meet the targets set by councils for a number of measures.  

13. As part of the long-term plan advice provided to councils, we recommended amended targets based on investment levels and current trends. A summary of these is included on pages 9-10 of the SOI.

14. The level of uptake across councils was limited and we will not achieve the majority of the targets as they stand. The adopted DIA measures and targets have been included as an appendix to the SOI as required by the Local Government Act 2002. Based on the investment levels and the targets adopted by the councils, the Company forecasts it will not meet a number of these this year.

15. The financials reflect the agreed capital and operational expenditure programmes for the 2021-2024 financial years.

Next steps

16.  The SOI will be published on the Company’s website by 31 July 2021 and hardcopies will be distributed to elected members and officers.

 

Appendices

No.

Title

Page

1

Wellington Water Limited Statement of Intent 2021-2024 FINAL

26

 

Author: Wellington Water Ltd

 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Komiti Ngā Wai Hangarua Wellington Water Committee

13 July 2021

 

 

 

File: (21/1104)

 

 

 

 

Report no: WWC2021/3/176

 

Water Services Investment 2021-2024

 

Purpose

1.      In their 2021-24 long term plans Wellington Water Limited’s (WWL) shareholding councils have approved a significant level of investment in three waters infrastructure. Yet some risks to service and key outcomes remain. This paper summarises the key characteristics of the three-year investment plan.

Recommendations

That the Committee:

(1)   notes the $300M operational and $585M capital investments Wellington Water Limited will make over the 2021-24 period, which represents a significant increase compared with the 2018-21 period;

(2)   notes even with the increased investment it will take years to address the backlog of renewals in the ageing pipe network, so bursts and leaks will continue, placing pressure on operational budgets and increased risk to delivery of water services;

(3)   notes the output range for the region’s capital programme is forecast to be $145M-$189M in year one and will progressively ramp over during years two and three to deliver the full capital programme;

(4)   notes there are additional emerging pressures that compound the budget risks, including meeting the new requirements of Taumata Arowai and increasing water use as a region; and

(5)   notes that Wellington Water Limited will continue to work closely with councils, be clear on the specific risks for their communities and how best to manage the impacts.

 

Background

2.    Councils’ 2021-24 three waters investment represents a step up towards rebuilding strong networks that can deliver the services and environmental outcomes communities have signalled they want. WWL is very grateful for the trust that councils and communities have placed on the company to carry out this work on behalf of the region. WWL believes it is important we are held to account for our performance in carrying out the agreed work.

3.    Councils and WWL have worked together to develop a Strategic Framework for 2021-24 investment planning that has resulted in the uplift to address the strategic priorities for three waters over the coming decades. The five strategic priorities are:

1) looking after existing infrastructure;

2) supporting sustainable growth;

3) having enough water;

4) improving environmental water quality, and

5) responding to  climate change.

4.    The investment planning process began with several investment scenarios, including an unconstrained view, to support council specific needs and key activities and projects to address strategic priorities. Investment options were filtered through the five strategic priorities that provide line of sight from advice to delivery with clarity for shareholders on the types of work and remaining risk based on the agreed investment. Finally, investment levels were proposed by councils working within their affordable fiscal envelopes to be agreed by councillors.

5.    Now that investment is confirmed, a detailed understanding of what can be achieved with the levels of funding agreed, the operational risks that remain resulting from historical funding levels, and the emerging factors arising since budgets were struck that may have cost impacts, is presented.

6.    It is important to note that despite an environment of unprecedented economic uncertainty, shareholding councils have remained willing to grapple with the size of the challenge, and how to address it over time without delaying the decisions that needed to be made. In this regard, councils have increased operational and capital budgets and our 2021-2024 total budget is substantially larger than it was in 2018.

7.    Equally important is that councils acknowledge that even with the increased investment for this period, the current situation will not change quickly. The aging pipe network and backlog of renewals means bursts and leaks will continue to cause unplanned work and disruption, placing pressure on operational budgets and resources. Unplanned work is often more expensive to carry out, is more disruptive, difficult to budget for, that subsequently results in less funding being available for the proactive maintenance (for example checking valves and testing fire hydrants) necessary to break this reactive situation.

8.    Three key activities are in place in this LTP cycle to help:

a.    increased funding for renewals;

b.    increased operational funding, supplemented by central government through the stimulus package announced in 2020; and

c.     a programme focused on investigating the condition of the most critical assets. 

9.    Stimulus funding from central Government is effectively helping to subsidise operational expenditure in the short term. It should be noted that this funding is programmed to be fully applied by the end of March 2022 as required under the terms of the funding. Councils have adopted a ‘wait-and-see’ approach to further stimulus funding support.

10.  WWL expects unplanned maintenance costs to continue at current levels or increase. So, from April 2022 when stimulus funding is set to finish, available maintenance funding will reduce, without an additional funding source. The reduced operational budgets put at risk the ability to:

a.    meet minimum levels of planned maintenance to effectively manage some personnel health and safety risks;

b.    provide the planned maintenance required to comprehensively mitigate water quality risks;

c.     carry out adequate investigations to effectively inform future work and respond to all reactive situations; and

d.    provide effective input into the policies that will enable the region to move forward in the most effective way to the future it seeks for water security, water quality and ability to respond to climate change.

11.  The $585M capital programme for 2021-2024 is an overall $165M lift in investment over the 2018-2021 period. WWL’s job is to deliver this over three years, and our model is to grow capability over time. Building delivery capacity is a focus and forecast an output of $145M-$189M in the first year, with ongoing increases in the following two years.

12.  The range reflects the risk profile of some projects, including possible delays in gaining resource consents; stakeholder engagement and/or specialist resource requirements. Projects affected in this way can be completed over the second and third years. This approach will also provide a smoother path to build capacity in a market that is widely recognised as under strain.

13.  Even when complete, the 2021-2024 asset renewal programme will not yet change the risks and impacts of the aging networks. Therefore, it is reasonable to expect continued unplanned service disruptions and their associated impacts on customer service, customer experience, and operational budgets.

Summary of Operational Expenditure

14.  Operational investment levels increase from a regional investment of $79M in 2020/2021 to an average of $93M per year in the 2021-2024 investment period (excluding stimulus funding). This is allocated across WWL’s core services of planning, advice and delivery (22%), looking after existing infrastructure (72%) and the balance across the remaining priorities (supporting growth, sustainable water supply, improving environmental water quality and responding to climate change):

a.    72% looking after existing infrastructure;

b.    22% Wellington Water OPEX including planning and advisory, land development services;

c.     programme and operational delivery support; and

d.    6% is the balance across the remaining strategic priorities.

 

15.  When we look at the investment split by core function, it is allocated as follows:

a.    80% on operations and unplanned maintenance;

b.    4% monitoring;

c.     3% to planned maintenance (lower than minimal levels required to effectively mitigate risks); and

d.    13% investigations[1] (including stimulus funding)

 

Summary of Capital Expenditure

16.  A total of $585M of capital investment over the next three years is made up of:

a.    47% directed to looking after existing assets

b.    21% for growth

c.     19% for local issues (i.e. those prioritised by communities that do not necessarily fit within the strategic priority framework)

d.    13% across the balance of strategic priorities.

 

Investment risk insights

Levels of investment in renewal of existing assets still mean aging pipes continue to fail more, increasing operational costs

17.  Councils have responded well to increase the level of investment in renewals across the region. However, the increase will not yet reduce the impacts of the aging network, nor is it sufficient to begin to noticeably reduce the backlog of renewals that are identified. Ongoing and possible increases in frequency of bursts and breaks should be expected.

18.  The delivery of the capital programme will be achieved over the three year period. The 2021-2024 capital programme is the largest in WWL’s history. It will be necessary to increase delivery capacity and the Wellington Water Board and the Committee have been advised separately on the plans to manage this issue. The approach includes managing this as a three-year plan of sustainable capability and capacity development amongst suppliers, rather than aiming for annual targets that rise and fall significantly.

19.  The programme contains several large projects that make up nearly 50% of the programme over the next three years. This proportion does reduce in the out years of the 2021-2031 planning period.

20.  Large projects create challenges on several fronts. They add to the need for construction capacity, but not necessarily on a lasting basis. This means WWL competes in the market with others, rather than necessarily being able to rely on our existing procurement model. They also create a delivery risk with respect to budget forecasts, as a delay on one or two large projects can have a big impact on the timing of planned work.

21.  For these reasons we have forecasted a delivery range of $145M-$189M for 2021-2022, largely due to the risk profile of complex major projects.

22.  The WWL contractor panel has been engaged early in the development of a capital programme and projects have been identified to smooth out delivery shortfalls and mitigate risk that the full capital programme won’t be delivered. The plan supports progressive delivery increases over three years and total investment is proposed to be completed by the third year.

High level of unplanned maintenance increases the operational risks from year two onwards

23.  Even with increased funding, the highly reactive environment resulting from historical funding levels in infrastructure will continue to consume much of the available operational expenditure. The priority for operational investment in this environment will be managing and operating critical services: treatment and delivery of safe drinking water; collection and treatment of wastewater and compliance monitoring. The next priority is the unplanned maintenance necessary to ensure the continuity of these and other core services.

24.  Councils have utilised the Government’s stimulus funding to address the unplanned maintenance shortfall to varying degrees. Without further stimulus funding offsets, continued higher unplanned maintenance from April 2022 to June 2024 means WWL will have limited ability to do much outside of core operational service provision and unplanned maintenance.

25.  The drop-off in planned maintenance investment levels from year two will increase the likelihood and impact of unplanned service disruptions. The cost of attending to these will further compound the operational investment shortfall. Additionally, the reduced levels of planned maintenance such as hydrant flushing, proactive leak detection and repair, reservoir cleaning and facilities maintenance increases human health and safety risks and the possibility that water quality is compromised.

Other emerging challenges

26.  Recent population projections are indicating we are tracking at higher growth levels. This combined with few councils investing in the sustainable water strategic priority means water demand growing and little ability to proactively detect and address leaks, especially from year two. Without appropriate intervention in the next three years, leakage and more people using water will contribute to the risk of more frequent and severe restrictions in summer. In doing so increasing the pressure to develop new source capacity (such as an extra storage lake).

27.  During the 2021-2024 period, there are changes in the operating environment that will affect risk and costs. Some general examples are the increased regulatory requirements likely under Taumata Arowai, the effect of disruptions to international supply chains caused by the global pandemic, and a heated construction market as local and centrally funded infrastructure work is stepped up to help stimulate the economy and meet historic levels of demand for housing.

28.  Additionally, councils have recognised the need to urgently carry out an assessment of the state of the most critical assets. It is likely these assessments will identify urgent unplanned work that will have to be done quickly and accommodated within the existing budgets. There is also the risk that this work would be complex and costly.

19% of capital investment being spent on acute local issues

29.  Of the $585M total capital investment in the next three years, 19% is being spent to address acute and local issues such as flooding and seismic resilience. This reflects the importance of these issues to communities. Investing in these activities means that less progress can be made at a regional level on the strategic priorities of having enough water, improving environmental water quality, and responding to climate change.

Next steps

30.  Over the next few months, WWL will be working closely with councils to provide a fuller briefing on the issues outlined in this paper. The aim will be to develop a plan to manage the specific risks associated with respective investment levels.

Appendices

No.

Title

Page

1

Wellington Water 2021-2024 Investment Summary

87

    

 

 

 

 

 

Author: Wellington Water Ltd

 

 

  


24 Investment Summary

 Summary of Operational Investment

Strategic Priority

2021/22

2022/23

2023/24

3 Year Total

Wellington Water Opex

$18.5M

$20.4M

$21.9M

$60.7M

Looking after existing infrastructure

$65.6M

$66.8M

$68.2M

$200.6M

Supporting growth

$1.3M

$1.9M

$0.8M

$4.1M

Enough water, from catchment to tap

$0.9M

$1.6M

$1.4M

$3.9M

Return to source - Improving environmental water quality

$1.6M

$2.0M

$2.0M

$5.5M

Climate resilience

$0.4M

$0.1M

$1.6M

$2.1M

Localised issues

$0.9M

$0.9M

$0.5M

$2.3M

LTP funding

$89.2M

$93.6M

$96.5M

$279.3M

Wellington Water Opex

$3.5M

 

 

$3.5M

Maintenance

$7.5M

 

 

$7.5M

Investigations (condition assessment)

$7.6M

 

 

$7.6M

Investigations (leak detection)

$2.4M

 

 

$2.4M

Stimulus Funding

$20.9M

$0.0M

$0.0M

$20.9M

Total funding

$110.1M

$93.6M

$96.5M

$300.2M

 


 

Operational investment by investment categories

1.    The investment by core functions management, operations and unplanned maintenance make up over 80% of the operational expenditure for Wellington Water with the balance allocated 13% to investigations, 4% monitoring, 3% to planned maintenance.

2.    The proportion of reactive to planned maintenance over the first three years of this plan is 91% reactive to 7% planned. In the first year of the plan this is masked by an additional $7.5 million of stimulus funding bringing the balance to 86% to 14%. In years two and three, once the stimulus funding is finished, this moves to 96% reactive to 4% planned based on forecasted operational reactive costs. This balance of maintenance introduces severe risks.

Investment Category

2021/22

2022/23

2023/24

Total

Wellington Water operational expenditure

$18.5M

$20.4M

$21.9M

$60.7M

Operations

$30.3M

$30.2M

$31.4M

$91.9M

Reactive Maintenance

$22.8M

$27.5M

$28.2M

$78.5M

Monitoring

$3.7M

$3.8M

$3.9M

$11.5M

Planned Maintenance 

$5.2M

$1.2M

$1.7M

$8.1M

Investigations

$8.7M

$10.5M

$9.3M

$28.5M

LTP funding

$89.2M

$93.6M

$96.5M

$279.3M

Wellington Water operational expenditure

$3.5M

 

 

$3.5M

Maintenance

$7.5M

 

 

$7.5M

Investigations (condition assessment)

$7.6M

 

 

$7.6M

Investigations (leak detection)

$2.4M

 

 

$2.4M

Stimulus funding

$20.9M

$0.0M

$0.0M

$20.9M

Total funding

$110.1M

$93.6M

$96.5M

$300.2M

 


 

Operational investment outcomes

Strategic Priority 

Investment category 

What you get from this investment 

 

3y investment 

$ (,000) 

Opex including

stimulus 

Looking After Existing Infrastructure 

Wellington Water operational expenditure

Continue to run Wellington Water’s planning and advisory, land development services; programme and operational delivery and operational and company management support functions.

Support asset management system and data and technology improvements. 

64,273

Operations  

Continue to safely operate network and treatment plants to meet existing levels of service. 

90,941

Reactive Maintenance 

Respond to unplanned service disruptions to restore current levels of service. 

85,740

Monitoring 

Provide information on network performance to report on compliance and inform future solutions in response to incidents.  

10,736

Planned 

Maintenance 

Maintain ongoing levels of service from assets for high criticality assets. 

6,586

Investigations 

Increased understanding of the health of assets through condition assessments and inspections. 

Respond to environmental and drinking water quality incidents to identify the root cause and options to inform future solutions. 

20,244

Strategy, policy, systems, procedures and standards 

Provide policy advice into local, regional and national processes for PNRP and district plan. 

Capability building for operational activities 

 

1,444

Growth without adverse environmental impact 

Investigations 

Support councils with three waters growth advice for their priority areas 

4,080

Reducing Water Consumption   

Investigations 

Proactively detect leaks to reduce drinking water loss.

6,237 

Improving Environmental Water Quality 

Investigations 

Proactively identify water quality issues on private property

to support a catchment human health mitigation plan. 

Pilot studies to understand wastewater issues. 

5,534 

Resilient to climate change 

Operations 

 

Fund net increase for sludge minimisation opex costs (from year 3) 

1,000 

Investigations 

Carbon efficiency assessments

 

1,075 

Localised issues   

Investigations 

Stormwater catchment investigations and seismic resilience assessments in Hutt City

2,314

* $$$ predominantly stimulus funding in year 1 only 

 

3.      The proportion of these strategic priority investment is shown in the following chart.

Summary of Capital Investment

Strategic priority

2021/22

2022/23

2023/24

3 Year Total

Looking After Existing Infrastructure

$87,953,968

$96,109,088

$89,292,483

$273,355,540

Growth

$28,751,430

$47,585,251

$45,634,752

$121,971,432

Reducing Water Consumption

$9,992,791

$17,872,800

$23,146,400

$51,011,991

Improving Environmental Water Quality

$14,990,079

$11,264,140

$853,740

$27,107,959

Reducing Carbon Emissions

0

0

0

0

Localised issues

$57,998,867

$36,861,322

$17,177,336

$112,037,525

Total Capital

$199,687,135

$209,692,601

$176,104,711

$585,484,447

 

4.    The capital investment ramps up to around $190-210 million per year in the first two years, dropping to $176 million in year three. Around $100 million of the annual expenditure is made up of a “baseload” of core investment while the overlay of large named projects provides the lift of investment closer to $200 million. From year four the pipeline of capital investment settles to core uplifted investment levels that are around $160-170 Million as the near-term large projects are delivered in years 1-3 as shown in the graph below.

 


 

Capital investment outcomes

Strategic Priority 

Investment category 

Investment Outcomes 

3y investment  

$ (,000) capex 

Looking After Existing Infrastructure 

Renewals 

Renew specified very high criticality assets to support growth and improve environmental water quality  

Maintain wastewater treatment plant operations. 

Renew some known failing infrastructure, but not to levels that will begin to address the backlog. 

227,000 

 

Levels of Service 

Enable the global storm water consent to be renewed.  

Mitigate health and safety risks 

46,000 

Growth without adverse environmental impact 

Growth & Levels of service 

Support councils specified areas of growth through modelling, growth studies

121,000 

Reducing Water Consumption   

Level of Service 

Maintain existing knowledge of commercial and network water usage through meter renewals. 

Reduce possible water loss by managing network pressure. 

Increase the water treatment plant capacity to increase the volume of available drinking water from Te Marua 

Secure future water source by commencing new water treatment plant development for SWDC. 

51,000 

Improving Environmental Water Quality 

Renewal & Level of Service 

Improve water quality in three catchments across the region through wastewater pipe upgrades. 

27,000 

Resilient to climate change 

 

 

0* 

Localised issues   

Renewal, Level of Service & Growth 

Securing continuity of water supply and supporting growth through new or reservoir resilience upgrades as well as network upgrades. 

Flood modelling and mitigation through stormwater upgrades. 

112,000 

* Note Sludge Improvements are funded elsewhere and not yet included in this investment. 

 

 

 


Komiti Ngā Wai Hangarua Wellington Water Committee  

13 July 2021

 

 

 

File: (21/1105)

 

 

 

 

Report no: WWC2021/3/177

 

Wellington Water Limited Update June 2021

 

Purpose of Report

1.      The purpose of the report is to provide an early indication and insights into the company’s Q4 performance against the SOI 2020-23; report on the priorities of the Wellington Water Committee (the Committee) and discuss key operational issues.

Recommendations

That the Committee receives and notes the report.

 

2020/21 Statement of Intent

2.    The timing for this meeting has been agreed to consider the Company’s 2021/24 Statement of Intent. This timing is too early for the Company to complete its normal Q4 2020/21 performance report, so we have provided insight into our performance in the meantime, as follows:

a)    The long-term planning process is nearly complete for all Councils.  The 2021/22 Investment Plan is presented in this agenda.  All up, Client Councils aim to deliver some $340M of services to customers over the 2021/22 financial year.

b)    The Company has made good progress in developing a regulatory performance model to meet the requirements of Taumata Arowai.  While the legislation enabling drinking water regulations is later than expected, Wellington Water will begin measuring its performance from 1 July 2021.  Later in the agenda, the Committee receives a paper that demonstrates the set of disclosures the Company will need to provide on behalf of the Councils.  Taumata Arowai requirements supersede the requirements of the drinking water standards administered by Public Health.

c)    All Councils have agreed with Wellington Water Limited on how Opex budgets will be treated in 2020/21 and 2021/22.  Opex budgets are forecast to be underspent by approximately $5m (including fixed stimulus) by year-end.  This is a pleasing result as the overall aim was to come on or below Opex budgets.  The underspend can be cash flowed into 2021/22 via the fiscal stimulus funding (there are no impacts on long-term plan budgets).

d)    Expenditure across the fiscal stimulus fund to the end of 2020/21 will be about $14.4M meaning some $32.9M will need to be expended in 2021/22.

e)    The Company delivered $131.4M of Capex projects against a targeted range of $130M to $169M. (Please note, the end of year numbers are yet to be finalised).

f)     The performance across all services can be summarised, as follows:

i.     We reviewed two critical health and safety risks and have implemented change programmes for both Traffic Management and Mobile Plant. Regarding serious near-miss incidents, there were a total of 15 for the year, down from 22 in 2019/20.

ii.    The customer satisfaction results for the final quarter are still pending, but we have observed a steady upward trend in satisfaction from customers throughout the year.

iii.   We were compliant with Drinking Water Standards Part 4 (Bacterial) for all Metropolitan councils. For South Wairarapa we steadily improved quarter on quarter and Featherston, Greytown and Martinborough were all compliant by year end. Only Pirinoa remains non-compliant.

iv.   Similarly, we were compliant with Drinking Water Standards Part 5 for Metropolitan councils, and Featherston and Martinborough were compliant by year end. Only Pirinoa and Greytown remain non-compliant. South Wairarapa networks comply with all standards, but the water treatment plants do not. Capital upgrades are still underway in order to achieve this.

v.    A significant increase in dry weather overflows was recorded across the region this year with a total of 1,470 compared to 802 in 2019/20. This impacted our ability to respond to these incidents within agreed timeframes across councils.

Our Customer Promise

3.    At the last Committee meeting, we had a conversation about ensuring that the level of service that we aim to provide is clear to our customers.  We have since articulated this in a draft “Customer Promise” which is attached as Appendix 1 to the report.   We would welcome your feedback on this approach and content.

Value for Money

4.    Work has begun on the 2020/21 Value for Money report.  This will be presented at the October meeting of the Water Committee.  Last month we outlined the trends in unit cost measures across our customer operations group.  This month the Company has provided some recent value for money stories arising from the business (attached as Appendix 2 to the report).

Wellington Water Committee (the Committee) Priorities

5.    The Chair of the Committee has described to Wellington Water Limited three priorities the Committee would like to be regularly briefed on.  These are:

a)    Capex delivery;

b)    workforce capability; and

c)    water reform (as it affects the Company).

Capex Delivery

6.    The total sum of all Council budgets for Capex in the 2021/22 financial year is $199M (of which $68M is for renewals).  All Council Capex budgets include some delivery risks due to timing of approvals, scope complexities, resource consents etc.  Wellington Water Limited analyses the entire Capex programme for the likely consequences of these delivery risks and presents the outcome at an aggregated regional level. The work programmed to smooth the uplift with the target of achieving the three years’ worth of LTP spend by the end of the period (2023/24).

7.    This year Wellington Water Limited forecasts Capex delivery will be between $145 - $189M.

8.    The median of this range, or $169M is approximately $40M more Capex volume than was achieved in 2020/21.  Over 2020/21 Wellington Water delivered $131.4M of Capex which was $35M more than 2019/20.  At a global level, the company is comfortable that this sort of organic growth in Capex increase year on year is achievable. 

9.    To ensure Wellington Water Limited can lift the overall delivery of the Capex programme, we are doing a review of all our delivery models.  In this agenda, the Committee received a report that outlines our current delivery models, an assessment over how well they performed and outlines ways to improve the model.  At the next Committee meeting, the Committee will receive a revised service delivery strategy which will contain all the improvements we have made to enhance Capex delivery through the 2021/22 financial year.

Workforce Skills

10.  Across New Zealand, the water sector is now under considerable stress as councils increase investment levels across a sector that has been underinvested and undervalued from an occupational/vocational career point of view.

11.  In the Wellington region, Wellington Water Limited’s early signals work suggested long run Capex of some $300 - $350 million would be needed to ensure services could continue to be delivered and for the region to meet its climate change and freshwater quality obligations.  Councils have lifted investment to $200M in 2021/22 up from $130M in 2020/21.  In the operations area, the number of customer service requests has increased by 50% over the last two years and Councils have responded with increased Opex funding.

12.  This strong lift in activity settles on a limited number of personnel to do the work.  In Wellington Water Limited, this is most evidenced by a lack of water professionals.  In our consulting panels, the work has been allocated beyond Wellington, however, as the rest of the country increased demand for services (eg from the fiscal stimulus fund) this market is also tight.  However, the chronic problems are in our front-line service men and women.  Wellington Water Limited currently has 30 vacancies across its operations.  This means more work has to be subcontracted out to other firms but they themselves have limited resources.  It is now a problem affecting the execution of services to customers with backlogs of work increasing.

13.  12 months ago, the region recognised this problem and put forward a proposal to fast track the training of 100 front line staff using the shovel ready funding, and more recently fiscal stimulus.  The proposal did not meet the Government’s criteria.  Since then, Wellington Water has been investigating other ways of addressing this chronic skills problem.  We have settled on a plan, as follows:

a)   We propose to recruit 20 young school leavers or young unemployed people into jobs across the water sector i.e.  Wellington Water Limited and our suppliers;

b)   we propose to run them through a six-week pilot programme that Fulton Hogan has developed on behalf of the sector - a “start-up” basic training infrastructure programme; and then

c)   settle them back with their employer and oversee them getting the necessary training and qualifications to be front line servicemen and women or generalist water technicians. 

14.     Ideally, Wellington Water Limited would like to support these individuals and other water sector personnel with specialised training but to date, the company has not been able to find a way to establish a training facility.  We have identified the land behind the Silverstream Wastewater Storage tank as a good place for such a facility but until we can find some capital to establish the training facility (subject to the necessary approvals being obtained) it will remain undeveloped.

Water Reform

15.  Water Reform affects us all.  For Wellington Water Limited, it is about ensuring our staff remain engaged and excited about what we do every day.  Our value, Tangata Tiaki, helps ground our people because looking after the precious water resource is needed irrespective of the structure we work within.

16.  The overall aim is to keep our people focused on the services we need to deliver before 1 July 2024 when a new water entity is expected to be commissioned.  Any announcement regarding change affects people differently so the company will get our staff together regularly and discuss these changes and how there will continue to be uncertainty for some time yet.  In the meantime, we will keep our people focussed on the delivery of the council LTP’s which together add up to the biggest investment in Wellington Water Limited’s history. 

Operational Matters

17.  In this section, the company aims to update the Wellington Water Committee on the most important risks we are experiencing, as well as providing an update on the leakage situation, our work to install Small Area Monitor meters (SAMs), and our Draft Customer Promise.  We will report on the risks regularly so the order might change from quarter to quarter, but they will always be in highest to lowest risk order.  The order is as follows:

a)  The inability to recruit skilled service people means that service requests are not responded to in a timely manner leading to dissatisfied customers.

     Our response is to continue to recruit across NZ and the region and initiate the first cohort of young people to enter the proposed infrastructure basic training module.

b)  The inability of our Capex sector to organically grow and deliver new ways of working leading to underachievement of the Capex programme.

     Our response has been to ensure the 2021/22 Capex programme has been released earlier than ever to our suppliers and that we propose to allow new entrants to the market, provide certainty of the pipeline of works to our suppliers and introduce new ways of working that expedites delivery, particularly renewals.

c)   That the performance of the treatment plants does not improve, leading to further breaches of our resource consents.

Our response has been to seek a full improvement plan from Veolia by the end of June and then track performance from there.  Veolia are reviewing their performance plan using experts from France.

d)   That ongoing population growth and, therefore, increased water consumption increase the likelihood of severe water restrictions during the dry summer months. This risk is accentuated by ongoing climate change.

Our response has been to focus funds from the fiscal stimulus on water leak detection and repair and to deliver the Te Mārua plant upgrade as soon as possible.  The risk spans the 2021/25 financial years.

e)   That the announcements of water reforms distract the company from its core delivery expectations over the 2021/22 financial year.  Or the requirements of the new entity on the resources of Wellington Water impact on Wellington Water’s core service provision.

Our response has been to set up leadership forums directly following announcements so leaders can communicate what each announcement means and so that our people have confidence in the ongoing work for the 2021/24 period.

f)    That the Company overextends itself in delivering the Sludge Minimisation Facility if WCC decide to proceed with it and the Capital Delivery Programme underachieves.

Our response has been to set up separate governance, steering group and an entirely new project team reporting into Wellington Water to deliver this project.

g)   That the Company’s provision of water services is stopped, delayed, or interfered with by a cyber security attack.

Our response has been to continually work on improving our ability to protect ourselves against a successful cyber-attack. However, we need to plan for one on the assumption it will happen and therefore, we are focussed on our incident response and business continuity plan should an attack occur.  We are also seeking, this is difficult as many insurers are unwilling to provide this type of insurance for critical national infrastructure and also due to our current state of cyber risk.   Our insurance broker indicated specific risk items that we need to address, these are on our plan of work to improve our cyber posture, and we are proactively working with via the broker to establish at what point cover will be possible.

18.  It might be useful for the Wellington Water Committee to discuss any of these risks with our experts who will all be attending the meeting.

Leakage Update

19.  We continue to work hard to drive leakage down.  Network leakage is a high-profile issue for us as the prevalence of bursts and leaks generates public concern and significant media interest and dampens our efforts to promote water conservation.  It also places significant strain on our supply capacity. 

20.  Regional night flows (Appendix 3 attached to the report) continue to be high - indicating that combined public and private side leakage remains high.  We continue to find more leaks through proactive detection, and our leak repair backlog has increased despite us increasing resources for repairs.

21.  However, a lag period between increasing repairs and a corresponding reduction in night flows is normal, and as expected new (visible) leakage jobs are beginning to subside over winter (attachment C), providing an opportunity to bring down the backlog and make further proactive (non-visible) leak repairs.  We are also using our capex contractor panel to free up crews from other business as usual work to focus on leak repairs.

Small Area Monitors

22.  Quantifying how much water is leaking from our networks is challenging due to the very low number of representative residential meters in place, causing low confidence in the overall system water balance that our leakage estimates rely upon. To improve this, we have been installing small area monitor meters (SAMs) across the region at fixed locations that have a well understood demographic that can then be extrapolated out to the rest of the region.  The SAMs and resulting data analysis work is progressing well, with fifteen meters now installed and a further meter to be installed soon. 

23.  We have been collecting and analysing data from these new meters since November last year as each SAM progressively comes online, providing near continuous monitoring within the targeted areas. 

24.  It is still too early to make conclusive results from the data given that flow monitoring has only been underway for a portion of the year and so can’t be considered representative of seasonal variations, however early indications suggest that ‘genuine’ residential consumption is less than assessed using the current approach.

25.   This suggests the total amount of leakage occurring across the whole network (ie both private side and public side) is greater than the median values reported to councils via the non-financial performance measures from our water balance calculations, and supports the approach we have adopted to report confidence bounds together with the median result for the water loss measures.  It also supports a continued focus on driving down leakage on both public and private side of the point of supply as a priority.

Appendices

No.

Title

Page

1

Appendix 1 - Customer Promise DRAFT

100

2

Appendix 2 - Value for Money Stories 2021 Q3  Q4

103

3

Appendix 3 - Regional Night flows and leak repairs

109

    

 

 

 

 

 

Author:   Wellington Water Ltd

 

 

  



 


 



 


 


 


 


 



Komiti Ngā Wai Hangarua Wellington Water Committee

14 July 2021

 

 

 

File: (21/1107)

 

 

 

 

Report no: WWC2021/3/178

 

Wellington Water Limited - Service Delivery Strategy Review - Findings and Recommendations

 

Purpose of Report

1.      The purpose of this report is to provide the Wellington Water Committee with a high-level overview of the findings from a recent independent review of the Service Delivery Strategy. 

Recommendations

That the Committee:

(1)   notes that this reporting is provided as part of the Value for Money reporting to the Committee;

(2)   notes the overall performance of the Service Delivery Strategy attached as Appendix 1 to the report;

(3)   notes the multiple changes in the operating environment since the Service Delivery was implemented and that if Wellington Water Limited had not implemented these changes, it could not have provided the level of service and value for money it current does; and

(4)   endorses the recommendations contained in the Service Delivery Strategy review as Appendix 1 attached to the report for inclusion into the next version of the Service Delivery Strategy.

 

Background

How did Service Delivery work before the Service Delivery Strategy?

2.    Previously Wellington Water operated a number of different models to provide services.  These included a range of insourcing and outsourcing arrangements, often with multiple operators for the same asset or service across client councils, resulting in different levels of service for customers and Wellington Water having to compete on the open market with others for resources.

3.    In 2017 a Service Delivery Strategy was endorsed by the Wellington Water Board to drive change in areas such as a single regional approach to services, improved delivery, increased value for money, improved management of risk, economies of scale, increased levels of innovation and improved customer service.

A review of the Service Delivery Strategy as part of the Value for Money reporting

4.    A high level, external review of the Service Delivery Strategy been undertaken to review progress to date and provide recommendations. This review has been undertaken following issues raised by Wellington Water Committee members at a previous meeting regarding value for money. The scope of the review was to look at the current arrangements against the original intention of the strategy and consider improvements that could be made.

5.    The overall results show a range of performance with some aspects performing well from both a model (i.e. was it a good model) and operations point of view (ie how was the performance?) and others performing poorly on both aspects.

6.    In examining the results the Wellington Water Committee should take into account the time these changes have been in place ie five years for the consultancy panel to just over one year for one of the Waste Water Treatment Plants. It would not be expected that all elements would be achieving the same level of results.

7.    Recommendations to improve the model and/or performance are provided in the attached report and will be incorporated into the next version of the Service Delivery Strategy.

8.    A report on the findings is attached as Appendix 1 to the report.

Changes in the operating environment have been significant

9.    Since the Service Delivery Model was introduced there have been a number of changes in the operating model and these continue to evolve. 

10.  It is clear from the review that if Wellington Water Limited had not introduced the changes in the current Service Delivery Strategy, it would not have been able to provide the level of service and value for money to client councils that it currently does and would be even less likely to do this with the growth in spend going forward.

11.  Examples of changes to the operating environment that have impacted on the business are doubling of funding from councils; COVID and its impact on workloads and the supply chain; tightening of the labour market and the more obvious nature of the aging water networks. Further commentary on this can be found in the attached report.

 

 

Next steps

12.   An update of the Service Delivery Strategy will be developed based on the findings and recommendations of the review.

Appendices

No.

Title

Page

1

Service Delivery Strategy Review July 2021

113

    

 

 

 

 

 

Author: Wellington Water Ltd

 

 

  



 


 


 


 


 


 


 


 


 


 


 


 


 


 


Komiti Ngā Wai Hangarua Wellington Water Committee

08 July 2021

 

 

 

File: (21/1095)

 

 

 

 

Report no: WWC2021/3/172

 

Wellington Water Limited - Annual General Meeting and Audit Update

 

 

That the Committee;

(1)     notes and receives the report

(2)     notes an audit improvement plan has been implemented;

(3)     notes that the draft interim audit report to the Wellington Water Limited Board for the 2020/21 year has not been received to date;

(4)     notes that the 2020/21 audit opinion will likely be non-standard; and

(5)     notes an Annual General Meeting will be held in later in 2021.

 

Purpose of Report

1.   Wellington Water Limited will hold its Annual General Meeting (AGM) later in 2021. The AGM will provide the company with an opportunity to be transparent around its performance in 2020/21 and discuss the challenges ahead.

2.    The 2020/21 Annual Report including this year’s annual audit results will be presented at the meeting.

 

Summary

3.    In preparation for the AGM this report provides an update on the status of improvements to performance reporting of five non-financial measures that were of concern to Audit NZ during the 2019/20 audit and outlines the 2020/21 annual audit plan.

 

4.    The audit improvement plan has been completed.  However as this has not been in place for the full year it is expected that some the measures will continue to receive a non-standard audit opinion.

5.    A more detailed summary of the issues and planned improvement activities for these measures is attached as Appendix 1 to the report.

 

Annual General Meeting (AGM)

6.    The AGM is an opportunity to present the Annual Report to shareholders and reflect on the performance of the company and the key challenges that it currently faces.

7.    The Directors of the company will give their perspective of how the company has performed in the 2020/21 year and the key challenges that it currently faces.

8.    Audit NZ will report on the how performance is reported in the Annual Report.

Audit Improvement Plan Update

9.    In response to receiving a qualified audit opinion, for the 2019/20 annual audit, an Audit Improvement Plan was developed to improve our ability to report accurate and complete results of key performance measures. See Appendix 1 attached to the report for the full audit improvement plan.

10.  In consultation with our Councils and being conscious of impending water reform changes, a pragmatic approach was taken that balanced the maturity of existing systems, cost and resource implications of further investment in data collection and reporting against the potential value to management, our councils and improvements to the overall customer experience.

11.  The plan was peer reviewed by Deloitte NZ and shared with our client councils; and in the interests of transparency was also shared with Audit NZ.

12.  The Audit Improvement Plan has been completed and has improved the data collection and reporting specifically for the measures that were of concern to Audit NZ during the 2019/20 audit.


 

 

Measures

Improvement

Issues Resolved

Controlled by Wellington Water

1A

Fault attendance time

Final maximo solution implemented along with staff training to ensure completeness of data. Attendance time is not a key performance metric for Councils, further investment was unlikely to improve overall customer experience.

Data completeness resolved however

no additional QA implemented so will not meet audit requirements

 

 

1B

Resolution times*

A manual QA checking process has been implemented for Q4 to give assurance that data collection is timely and accurate.

Improvements to the Maximo system have been made to make data entry mandatory.

Yes

2

Number of dry-weather sewerage overflows for wastewater*

Methodology, processes and systems updated to ensure accurate and timely data collection by field crews

Yes

3

Customer satisfaction (SOI)*

 

Colmar Brunton have been running our customer satisfaction survey since early 2021

Yes


 

Controlled by Councils

4

Water loss

 

There are no plans to significantly increase meter coverage in the short term, therefore continuing the status quo was agreed as the best way forward

No

5

Number of complaints

Council system limitations mean that accurate numbers are not able to be recorded by water type and if the customer call is for a service request or complaint.

We are participating in a DIA led review to update the guidance notes so the definitions of the measure are better understood.

 No

 

*Implemented part way through the year so this measure is still likely to get a non-standard audit opinion

13.  Measures 1 to 3 are within Wellington Water Limited’s control, the remaining measures 4 and 5 are council controlled. We have worked with councils and the Department of Internal Affairs to influence the accuracy of reporting of these results, however final decisions rest with each council.

Progress

14.  All planned additional controls, and methodological and data collection improvements have been implemented.

15.  Changes to practices and processes were incrementally implemented across the 2021 financial year. An internal audit programme has been implemented to test the effectiveness of these improvements. PWC also completed an independent assurance review to ensure the internal controls are working as designed. Some further staff training is being completed as a result, of the recommendations from this review.

16.  We are continually refining and improving the way we work to meet reporting requirements by taking a continuous improvement approach.

17.  It is expected that on-going audit issues will occur as the current level of investment in the company performance reporting systems will not resolve all issues, and the required improvements for some measures are outside the control of the company eg the number of water meters, council call centre complaints recording systems.

18.  Increasingly the work required to get ready for reform will influence priorities and investment decisions in relation to improving existing systems.

2020/21 Audit

19.  The Audit for 2020/21 started in June 2021 with an interim audit of non-financial measures. The final audit is expected to be completed by mid to late September 2021 so that the Annual Report and Audit Opinion can be presented at the AGM. Audit NZ have indicated that audit resource is constrained but this should not impact the timing of the Wellington Water audit.

20.  Communication protocols have been agreed with Audit NZ. These outline the approach to communication during the audit. All key issues will be communicated to all stakeholders in a timely and structured manner. This is to ensure any issues and the implications of these are clearly understood and communicated appropriately to all key stakeholders. 

21.  Audit NZ will meet with management, the Chief Executive, the Audit and Risk Committee and the Board throughout the audit on a regular basis. All significant issues will be reported to the Audit and Risk Committee, the Board and the Wellington Water Committee. There will be ongoing, proactive discussion of issues as and when they arise to ensure there are “no surprises”.

Potential issues with reporting other measures

22.  The focus of the Audit Improvement Plan was specific to four DIA and one statement of intent measure.

23.  We also report against nine other mandatory DIA measures and 34 council specific measures on behalf of our councils: and 26 measures in the current statement of intent. 

24.  We have reviewed all measures and it is likely that further issues with data collection and data reliability could result in a small number not meeting the standard of reporting required by Audit NZ. 

Ongoing Challenges

25.  Developing scalable improvement options: We are committed to accurate and complete reporting against existing measures, while being mindful of impending changes to reporting as a result of reform. Further investment in existing systems will increasingly be of limited value.

26.  Introduction of manual rather than automated system controls: The manual controls introduced to increase assurance around accurate and complete data collection are likely to continue to fall short of the standard of reporting required by Audit NZ. This is likely to result in future qualified audit opinions.

27.  Time needed to fully realise the benefits of recent improvements: It will take time for the improved reporting systems, methodologies and increased functionality of tools to be fully embedded. Over time and as behaviours change, we expect a further lift in performance.

 

28.  The improvements have been incrementally implemented: The improvements have been designed, tested and implemented since December 2020 when the final audit report for 2019/20 was received. Training has been completed and will be ongoing where required. This means a full year’s results under the improved conditions are not yet available. Audit NZ has signalled their intention to again issue a qualified opinion where 12 months results are not available for any given measure. 

29.  The results of a recent internal audit review completed by PWC provide us the opportunity to further strengthen how the benefits of the improvements can be fully realised. The changes will be strengthened so that for next financial year the controls will be operating effectively for a full year.

30.  An internal audit programme will be implemented to check and recommend ways to increase the effectiveness of these and future improvements.

 

Appendices

No.

Title

Page

1

Appendix 1 Detailed Status Update Audit Improvement Plan

134

    

 

 

 

 

 

Author: Wellington Water Ltd

 

 

  



 


 


Our Reference          21/1082

TO:                      Chair and Members

Komiti Ngā Wai Hangarua Wellington Water Committee

FROM:                Kathryn Stannard

DATE:                06 July 2021

SUBJECT:           Meeting Schedule for the remainder of 2021

 

 

Recommendation

That the Committee:

 

(1)   agrees to adopt the following meetings dates for the remainder of 2021 as follows:

 

(a)     Friday, 24 September 2021; and

(b)     Monday, 29 November 2021;

 

(2)   confirms the venue for its meeting will be the Council Chambers, Hutt City Council, 30 Laings Road, Lower Hutt; and

 

(3)   agrees to live cast the public part of its meetings.

 

Purpose of Memorandum

1.    For the Wellington Water Committee (the Committee) to adopt its meeting schedule for the remainder of 2021.

Proposed meeting arrangements for the remainder of 2021

 

2.    Officers have contacted members to arrange appropriate dates for the Committee to meet for the remainder of 2021.

 

3.    It is envisaged that the Committee will meet every 10 weeks with additional meetings and workshops arranged as required.

 

Wellington Water Committee Terms of Reference

 

4.    Under the Committee’s Terms of Reference the Council, for which the Chair is an elected member, will provide secretariat services to the Committee.  The Chair is responsible for managing the agendas at Committee meetings.

 

5.    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 the Terms of Reference taking precedence.

 

 

 

6.    It is proposed that the venue for Committee meetings be held in the Council Chambers at Hutt City Council, 30 Laings Road, Lower Hutt.  This will improve administrative efficiency given that the Democratic Services team at Hutt City Council provides the secretariat support.

 

7.    It is proposed to live cast the public part of meetings to allow members to attend by means of an electronic link provided that Standing Orders 13.11 and 13.12 are met.  This also allows the public part of meetings being more accessible to the public without them having to be physically present.  Members of the public who wish to present under public comment will be able to do so either in person or via an audio/visual link.

 

Communication

 

8.    In accordance with legislation, public notice of the each formal meeting will be given at the appropriate time.  A copy of the Order Paper for each meeting will be made available for public inspection at the principal office of each shareholding local authority.

 

 

Appendices

There are no appendices for this memorandum.   

 

 

 

 

 

 

Author: Kathryn Stannard

Head of Democratic Services

Hutt City Council



[1] The total investment for investigations looks significant when compared with that for planned maintenance. Investigations activities include asset condition assessments, studies that inform planning for growth, water storage options, inflow and infiltration investigation studies. All these activities enable better investment decisions to be made in the future.