Section one: setting the local scene

Wellington Water Limited

Wellington Water Ltd (WWL) fully manages three waters assets for Hutt City Council. It provides high-quality, safe and environmentally sustainable services to Council with a focus on contracted service delivery for the operation, maintenance and ongoing development of drinking water, stormwater and wastewater assets and services, and asset management planning.

WWL operates on a non-profit basis. It represents an efficient and effective way to manage the three waters networks through a pool of expert staff and resources available to the region. Shareholding councils of WWL are Hutt City, Wellington, Porirua, Upper Hutt City Councils and South Wairarapa District Council. WWL also manages the bulk water supply assets for the Greater Wellington Regional Council.

Challenges we are facing

There is a need for significant additional investment in our water infrastructure as a result of a considerable period of underinvestment, combined with our growing population and climate change. Sixty per cent of our water infrastructure needs to be replaced over the next three decades.

As part of our 10-Year Plan we increased funding to enable a major programme of infrastructure investment to service existing and future residents.

Our financial context

The value of the three water assets held on our balance sheet as at 30 June 2021 was $0.5B. Total revenue across the three waters activities in 2021/22 is projected to be $61.7M. This is made up of $47.9M rates funding and $13.8M in other revenue, which includes user charges, government grants and development contributions. Total operating expenditure is projected to be $61M in 2021/22.

Hutt City’s three waters network is ageing. Sixty percent of the three waters assets need to be replaced over the next 30 years at an estimated cost of over $2B. Historically, investment in three water asset renewals has been relatively low and has resulted in a backlog of works estimated to be in the order of $250M.The increasing rate of water leaks over the past few years is one indication of the deterioration of the network.

Asset management

Infrastructure deteriotes as it ages, increasing the likelihood of failures and disrupting services to customers. These failures also increase maintenance, operations and customer service costs. We received advice as part of the preparation of our 10-Year Plan on our three waters assets based on the current information available from Wellington Water Ltd (WWL). This advice included the need for additional investment in understanding the condition of our underground assets.

The investment over the next 30 years included in the plan is expected to reduce the backlog of investment as well addressing future renewals needs.

Our three water assets

In the preparation of our Long Term Plan 2021-2031, we updated our 30 year Infrastructure Strategy. Table 1 summarises the three waters assets and includes information on their overall age and condition.

A challenge we face, particularly in relation to the condition of our three waters infrastructure, is this significant financial investment required over the long term. Council is acutely aware of the financial pressures on residents and businesses in the city, and particularly the impact of higher housing costs on some households, as well as the effects of COVID-19. We carefully considered affordability in preparing our 10-Year Plan 2021-2031.

Our financial strategy uses a combination of rates and borrowing to ensure that we are achieving a balanced approach to paying for services and developments in the city. Sharing the costs in a way that is fair and equitable to both current and future residents, as well as businesses, is important .

Due to affordability considerations, there are a range of three water investments which were restricted in the 10-Year Plan. This included investment in future growth, reducing carbon emissions, and heathy urban waterways.