Executive

Summary
2012 -22

WATER SUPPLY
ASSET MANAGEMENT PLAN

Hauraki District Council

June 2012 Version

Table of Contents
1.

INTRODUCTION

1
1
1
1
2
2
3

1.1
1.2
1.3
1.4
1.5
1.6

Purpose of the Plan

Background and Rationale for the Councils Involvement
The Community Outcomes to which the Water Supply Service Contributes
The Councils Role and Strategic Approach
Legislative Requirements and Bylaws
HDC Asset Management Planning Policy

2.
2.1
2.2
2.3

LEVELS OF SERVICE, PERFORMANCE MEASURES AND LINKAGE WITH

COMMUNITY OUTCOMES
4
Levels of Service and Performance
4
Linkages to Community Outcomes and other plans, documents
6
Levels of Service Consultation
6

3.

DESCRIPTION OF ASSETS

3.1
3.2

Public Water Supply Systems

Private Water Supply Systems

4.

DEMAND AND GROWTH

4.1
4.2

Future Demand
Demand Management

10
10
10

5.

RISK MANAGEMENT

11

6.

LIFECYCLE MANAGEMENT

6.1
6.2

Lifecycle Analysis
System Information and Data

13
13
14

7.

FINANCIAL FORECASTS & MANAGEMENT

7.1
7.2
7.3

Operational and Capital Expenditure

Capital Expenditure, Renewals and Depreciation
Funding of Water Supply

8.

PLANNING ASSUMPTIONS & CONFIDENCE LEVELS (APPENDIX J)

7
7
8

15
15
17
17

8.1

Asset Condition & Confidence Levels

18
19

9.

SUSTAINABILITY

20

9.5

Sustainability Concept
20
The Hauraki Sustainability Tuner
20
Water Supply Sustainability Assessment
20
Environmental Management Resource Consents / Property Designations / Zonings and
Easements (Appendix M)
21
Sustainability Issues
21

10.

IMPROVEMENT PROGRAMME

10.1
10.2
10.3

Progress with Improvement Plan

Improvement Programme 2012-2022
Summary of Costs for Improvement Projects

11.

AMP FORMAT

11.1
11.2

Significant changes
AM Functions, Processes, Practises & Systems

24
24
24

12.

COUNCIL COMMITMENT

24

13.

AM PLANNING TEAM

24

9.1
9.2
9.3
9.4

22
22
22
22

1.

INTRODUCTION

1.1

Purpose of the Plan

The Water Supply Asset Management Plan is developed to provide the rationale for decision making
and to develop the ten year programme for the management of water supply infrastructure assets for
Hauraki district.
The AMP is intended as a business case for the long term financial forecasts and to provide the
analysis and detail information for Council to make decisions during the Long Term Plan (LTP)
development.

1.2

Background and Rationale for the Councils Involvement

Legislation requires Council to identify the need for potable water supplies. Council may provide the
supplies directly, as is currently being done, or maintain an overview of supplies provided by others.
Hauraki District operates eight public water supply systems to which approximately 7,500 properties
are connected at Kaimanawa, Karangahake, Mackaytown, Ohinemuri, Paeroa, Plains (West, East
and Kerepehi), Waihi and Waikino. Approximately 575 km of pipes convey water to these
connections, more than 8,000 water meters are installed and ten water treatment plants treat the
water to various standards.
In November 2010 Kaiaua area was incorporated into the Hauraki district. There were no water supply
systems transferred to HDC. All current water supply systems in the area are privately owned and
operated.
Apart from the public water supply systems approximately 2700 people obtain their water supply from
their own rainwater tanks, private bores, or a small number of minor reticulated supplies.
This plan summarises the Councils strategic and management approach for the water supply service.

1.3

The Community Outcomes to which the Water Supply Service Contributes

The contribution made by the Water Supply service is linked to each Community outcome named and
described below.
Thinking about current and future local needs and priorities is in the context of the identified desired
outcomes, which direct the setting of priorities and guide the ways in which the outcomes may be
delivered, either directly or in partnership with other providers.
Table 1.1: Council Community Outcomes and Water Supplys Contribution
COUNCIL COMMUNITY OUTCOMES

HOW
THE
WATER
CONTRIBUTES

PROGRESS HAURAKI
We have a positive climate that encourages balanced and
sustained economic growth in the District.

By providing and maintaining adequate

public water supply systems, delivering
water at an affordable rate.

PREPARED HAURAKI

By ensuring that the water supplied by

Executive Summary Water Supply Asset Management Plan June 2012

SUPPLY

ACTIVITY

COUNCIL COMMUNITY OUTCOMES

HOW
THE
WATER
CONTRIBUTES

SUPPLY

ACTIVITY

We provide a range of services and facilities to meet our

Districts needs and expectations for a safe environment.

public systems is always of an acceptable

quality, and that sufficient appropriately
located and suitably pressured
connections for fire fighting are provided in
the urban areas.
By ensuring that all inhabited buildings
have sufficient and safe water supplies.
By monitoring the private water supplies in
the District.

KOTAHITANGA HAURAKI
We take a collaborative approach with both Mana Whenua
and Tangata Whenua in our District.

By ensuring that cultural values are always

taken into account when planning for the
future taking of natural water and for the
management of the affected water sources
in the District.

SUSTAINABLE HAURAKI
We plan for the wise use and management of all land and
resources for the continued benefit of our District.

By ensuring that all conditions of all water

permits are complied with and that water
conservation is encouraged.

LIFESTYLE HAURAKI
We provide an environment that encourages vibrant
communities and an enhanced quality of life.

By always planning for the long-term and

responding proactively to forecast
changes in demand.

1.4

The Councils Role and Strategic Approach

Council operates and develops the water supply service within a defined strategic framework guided
by service levels and legislative standards. Linkages between major council plans, strategies and
legislative requirements are shown in the framework which is formatted within this section of the AMP.
The strategy aim is to continue providing the desired levels of service to future generations and to
improve asset management through use of appropriate practices and standards.
Community participation is principally by council representation. A Water and Wastes Consultative
Committee also meets to liaise and consult with community and stakeholder groups on important
water supply issues.
Councils Water Supply role is:
To provide pipe network to serve urban communities, some adjacent rural areas and the Plains
rural area
To address any potential health risks relating to private or public water supplies
To ensure that all inhabited buildings have safe and adequate water supplies
To ensure that fire hydrants are available and effective in the urban areas
To maintain an overview of private supplies, especially those serving community buildings;
To ensure potable water supply is adequately considered in building consent applications
To provide education and advice about the water supply and its safe use and management

1.5

Legislative Requirements and Bylaws

Part 7 of LGA 2002 requires Council to assess the provision of water supplies within its district from
time to time. The assessment must include all public and private water supplies and must provide

Executive Summary Water Supply Asset Management Plan June 2012

information regarding the means by which residents obtain water, any risks to the community, quality
and adequacy, current and future demand, options available.
The Health Act 1956 imposes a general public health responsibility on Council.
The Health (Drinking Water) Amendment Act 2007 (07/92) provides for ensuring adequate quantities
of safe and wholesome drinking water to communities.
Part 7 of LGA 2002 requires Council to assess from time to time all public and private water supplies
within the district in terms of water source, risks, quality and adequacy, demand, options available.
Maintenance of water services, water supply to buildings, fire hydrants and their standards are also
dealt with in legislation.
The bylaws for water supply are contained in Part 5 of the Hauraki District Council Consolidated
Bylaw. The bylaw came into effect on 1 December 2007. A copy of the new bylaw is included in
Appendix N.

1.6

HDC Asset Management Planning Policy

Management of the Water Supply assets aims to provide agreed levels of service to the community
cost effectively over the asset lives, and to plan and provide financially for replacement or disposal of
assets as needed.
Council has considered appropriate asset management levels for the Water Supply activity using
methodology developed by Waugh Infrastructure Management Ltd (WIML) and applied by council
officers in conjunction with WIML. This process delivered the Water Supply asset management levels
on which this plan is based, determined at the Core Plus level. This will be reviewed in 2014 prior to
the 2015-2025 Long Term Plan. Core Plus describes asset management practice which is more
advanced than core and but not fully compliant with comprehensive practice.

Executive Summary Water Supply Asset Management Plan June 2012

2.

LEVELS OF SERVICE, PERFORMANCE MEASURES

AND LINKAGE WITH COMMUNITY OUTCOMES

2.1

Levels of Service and Performance

Levels of Service for the water supply activity are determined at the Core level of asset management
practice, taking into account legislative requirements, public health considerations, customer
expectations, effects on the environment and affordability. Appropriate actions, measures and
initiatives are discussed in the General Summary section and the relevant appendices.
The Hauraki District Council owns and operates eight systems varying in size that supply the
communities of Paeroa, Karangahake, Mackaytown, Kaimanawa, Ohinemuri, Waihi, Waikino and the
Plains. The Plains, Ohinemuri and Kaimanawa systems where predominantly rural requirements exist
provide the 24 hour water supplies (requirement over 24 hours). On site storage must be provided by
users if needed to cover periods of high demand. Capital work is planned to store more treated water
in the Plains system.
The quality of water supplied varies throughout the district, depending on the water source, scheme
design and level of treatment. All supplies are chlorinated. Routine testing monitors the quality of each
supply. Water supply service complaints are received and tracked through the Hauraki District Council
service request system.
Fire fighting capacity is under review, working towards compliance with national standards.
1
The Level of Service statement describes the outputs to be achieved by the service .

Figure 2.1 Household Cost Comparison

Average Daily Household Costs Comparison - Hauraki District

(2012-22 LTP Term)
CupofCoffee
Newspaper
Milk
Bread
SkyTV
Parks
Phone
Power
LandDrainage
LocalRoads
Stormwater
Wastewater
WaterSupply
$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

This methodology is in line with the process and methodology described in the NAMS Developing
Levels of Service and Performance Measures, 2007.

Executive Summary Water Supply Asset Management Plan June 2012

The figure shows the comparison between some daily household costs and council services. This
provides an indication of the relative affordability and cost of the council services. The cost for water
per household is approximately $3.50 per day.
Customer Levels of service, performance measures and targets are provided in the table below and
technical performance measures and targets are provided in table form in the AMP.

TARGET
YEAR 4 -10

Customers are
satisfied with the
cost of water
supplied by the
Council

TARGET
YEAR 3

Affordability

Water supply
services are
affordable

TARGET
YEAR 2

PERFORMANCE
INDICATOR

TARGET
YEAR 1

CORE VALUE

LEVEL OF
SERVICE/
PERFORMANCE
OBJECTIVE

BASELINE

Table 2.1: Customer Levels of Service, Performance indicators & Targets

New
Measure

55%
Satisfied

TBA

TBA

TBA

Current &
Available
(Avail)

Current
& Avail

Current
& Avail

Current
& Avail

Current
& Avail

95%2

>95%

>95%

>95%

>95%

0
(2010/11)

The following
information relating
to the HDC water
supply is available
on the Councils
website:

Community
involvement

Information on
Water Supply
services is
available

current
resource
consents
relating to water
NZ drinking
water standards
links to water
supply
compliance
information
the water
supply asset
management
plan executive
summary.

Statutory LOS

Water supply
adequate for fire
fighting purposes

Percentage of
residential properties
within a gazetted
urban fire district that
have a fire hydrant
within the
recommended
distance.

Health & Safety

Quality

Water from
public water
supplies is safe
to drink

Number of notifiable
illnesses attributable
to Councils
management of
upgraded water

This is a new measure however the baseline has been calculated based on existing records

Executive Summary Water Supply Asset Management Plan June 2012

TARGET
YEAR 4 -10

TARGET
YEAR 2

Customers are
satisfied with the
water quality from
HDC networks.

53%
(2010/11)

>55%

>55%

TBA

TBA

The number of water

outages affecting
more than one
property as a
consequence of
Council action or
inaction.

297
(2010/11)

<260

<260

<260

<260

New
Measure

100%

100%

100%

100%

PERFORMANCE
INDICATOR

TARGET
YEAR 3

TARGET
YEAR 1

LEVEL OF
SERVICE/
PERFORMANCE
OBJECTIVE

BASELINE

CORE VALUE

supply networks.

Reliability &
Responsiveness

Sustainability

2.2

A reliable water
supply is
provided

Water resources
are used
efficiently and
sustainably

The Council
complies with the
following Resource
Consent conditions
for all upgraded
supplies:

Residual flow
requirements
Maximum take

Linkages to Community Outcomes and other plans, documents

Revised Levels of Service and related Performance Measures were developed from the Council
Community Outcomes and Core Values of water consumers obtained from the Level of Service
Review, using the Hauraki Levels of Service and Performance Measurement Framework. Appendix B
contains more detail.
There are three levels of planning in the Hauraki DC organisation and Levels of service link into the
strategic planning level.

2.3

Levels of Service Consultation

In order to provide an efficient level of service, an appropriate level of consultation is carried out to
identify the potential customers and stakeholders. The Council endeavours to provide the required
level of service that customers and stakeholders desire for the range of Water Supply service areas
supplied throughout the district. The mechanisms for consulting with customers and consumers are:

Residents Satisfaction Survey results

Levels of Service Review results
Water and Waste Consultative Committee

Executive Summary Water Supply Asset Management Plan June 2012

3.

DESCRIPTION OF ASSETS

3.1

Public Water Supply Systems

Hauraki District Council currently operates eight public water supply systems, Kaimanawa, Karangahake, Mackaytown, Ohinemuri, Paeroa, Plains, Waihi and
Waikino systems. The Plains water supply system comprises three interlinked systems named Kerepehi, Huirau Road (West Supply), and Waitakaruru (East
Supply).
Table 3.1: Public Water Supply Systems
LEVEL OF TREATMENT

LENGTH
OF
RETICULATION (km)

NUMBER
OF
CONNECTIONS

AVERAGE DAILY
DEMAND m/Day

Kaimanawa

17

77

700

Filtration
Chlorination

Karangahake

66

56

Chlorination
adjusted

Mackaytown

78

93

Ohinemuri

47

271

Paeroa

48

1,843

COMMUNITY

TYPE OF
TREATMENT

QUALITY
MEASURED

VOLUME

LOCATION

Bacteria
Chlorine

Nil

Bacteria
Chlorine pH

20

Dominion Dr

Filtration
Chlorination

Bacteria
Chlorine

Nil

609

Filtration
Chlorination

Bacteria
Chlorine

Nil

2,555

pH
adjusted
Filtration
Chlorination

Bacteria
Chlorine pH

9,000

Bennett St

3,490

Kerepehi Main
Rd
&
Waitakaruru
SH 25

6,000

Bulltown Rd

pH

Plains (include West, East and

Kerepehi Supplies)

375

1,972

11,885

Filtration
Chlorination
adjusted

pH

Bacteria
Chlorine pH

Waihi

70

2,342

1,729

pH
adjusted
Filtration
Chlorination

Bacteria
Chlorine pH

Executive Summary Water Supply Asset Management Plan June 2012

WATER STORAGE

HDC AM Policy has defined the appropriate level of asset management as Core for:

Process of Development
Physical Description of Asset
Financial Description of Asset
Remaining Useful Life
Ability to Aggregate & Disaggregate Information

And as Core Plus for:

Inventory of Physical attributes (location, material, age etc)

Particulars of the public water supply systems that are currently owned and managed by the Council
are shown in the General Summary and the Appendices.
Councils water assets have been valued as at 1 July 2011. Tables showing the Optimised
Replacement Cost (ORC) and Depreciated Optimised Replacement Cost (ODRC) for the water supply
systems and assets are provided in the General Summary and the Appendices.
Table 3.2: Water Supply Valuation Summary July 2011
WATER SUPPLY VALUATION SUMMARY JULY 2011
Components

Replacement Value

Depreciated Replacement Value

$78,629,552

$42,639,055

Laterals

$6,213,542

$3,719,069

Meters

$4,705,981

$2,368,752

$780,259

$526,479

$16,380,927

$6,110,024

$106,710,260

$55,363,379

Pipes

Consent
Above ground assets
Total

3.2

Private Water Supply Systems

These exist in communities not served by public water supply systems. In 2005 Council assessed all
water supply services (both public and private systems) in the District. This assessment was reviewed
in 2011 after incorporation of the Kaiaua area. The assessment considered each of the separately
identified communities:

The travelling public.

The urban and rural serviced areas.
The urban and rural un-serviced areas.
Industry and manufacturing.
The hospitality industry.
Schools and camp facilities.
Sports facilities, halls and churches.
Tramping huts.
Marae.

No significant problems were identified, but specific issues identified and being addressed include:
Individual marae will be consulted to assess individual needs and future demands

Executive Summary Water Supply Asset Management Plan June 2012

 Two schools and one camp facility are not connected to council water supply due to location.
One member of the hospitality industry is not connected to council supplies due to location.
Eight sports clubs and four country halls are not connected to council supplies. Those using rain
water collection methods require ongoing maintenance of the water tanks and installation of a first
flush system.
Non public water supply systems are monitored by the Department of Health and Councils
Environmental Health team. Four areas in the district do not have a reticulated Council water supply:

Whiritoa
Plains west of the Waihou river
Rural area east of Paeroa
Kaiaua incorporated area

A description of the supply arrangements and the issues involved is provided in the AMP.

Executive Summary Water Supply Asset Management Plan June 2012

4.

DEMAND AND GROWTH

4.1

Future Demand

Core level is appropriate for future demand and growth management. The graph below shows the
consumption of water by the three major customer classes identified namely rural, residential and
commercial customers.
Graph 4.1 - Consumption Levels of Customer Classes

Millions

m c o ns um e d

Hauraki District Water Consumption

6.0
5.0
4.0
3.0
2.0
1.0

Rural

Residential

0
20
09

""
1

9
""
0
20
08

~0
8
20
07

~0
7
20
06

~0
6
20
05

~0
5
20
04

~0
4
20
03

~0
3
20
02

20
01

~0
2

0.0

Commercial

The bulk of water is consumed by rural customers (approximately 3 million m annually) for farming
activity. The residential customers are responsible for the second biggest volume of consumption and
the commercial customer consumption make up the balance.

4.2

Demand Management

Demand management is not seen as a major issue. Water is metered and charged for by volume
district wide, one of the most effective methods available for reducing water consumption.

Executive Summary Water Supply Asset Management Plan June 2012

10

5.

RISK MANAGEMENT

The HDC AM Policy determines the appropriate level of asset management practice for risk
management as Core Plus.
Risk will be managed to consistently achieve the key business objectives and community outcomes.
Potential risks to the water supply services and assets are identified, analysed and mitigation
strategies developed
A comprehensive risk analysis for the water supply services and assets in Hauraki district has been
undertaken. Business risks as well as asset risks were identified and analysed using the corporate
risk evaluation frameworks, into extreme, high, medium or low risk categories.
Risks related to specific high and medium critical assets were also identified and analysed. For high or
extreme risks treatment options and control processes have been developed. The residual risks,
remaining after treatment plans and controls are implemented, are also assessed. The risk
management processes identified in AS/NZS 3100:2009 Risk Management Standard have been
followed.
Waugh Infrastructure Management has identified high, medium and low criticality assets and risks
relevant to these critical assets have been identified and analysed. This is a significant advance in this
asset management plan, compared to previous versions.
The business risks assessed with a high and extreme priority are:
Ad-hoc/reactive decision making with a resultant loss of focus on long term objectives.
Sub-standard operation of assets leading to damaged assets or below capacity service delivery.
Changing environmental standards requiring increased capital and operating expenditure to comply
to standards.
Errors in financial forecasting leading to pressure on Capex and Opex and LOS decline or rates
increase.
Flaws in design / construction of assets resulting in non provision of capacity to deliver required
level of service, additional cost incurred or LOS decline.
Contractor non-performance may lead to service disruption or reduction in level of service and
decline in condition of assets.
Consents not applied for or conditions not met resulting in environmental damage and possible
legal action.
Asset risks with the highest priority are:
Power supply failure leading to inoperable pumps and processes and major outages.
Major Flood resulting in a washout, water contaminated and subsequent health issues to the
community.
Electricity supply failure causing inoperable plant and therefore customer needs are not met.
Expansion and contraction due to moisture in Plains reticulation. Leading to failure of joints and
loss of supply.
High priority risks related to critical assets are:
Bush Road (525,PVC) - Damage by contractors (fence posts/fence drivers/ underground thrusting)
resulting in failure of mains. No water flow and therefore a loss of water supply
Suicide Bridge(300,AC) - Breakdown of pumps (stop/starting/higher pressure) leading to mains
failure and no water flowing to the treatment plant.
SH2 (300, AC,SS,MPDE) - Damage due to roading development resulting in excessive leaking,
vibration from traffic and excessive repair cost, due to position on road.
Waihi WTP (300,AC) - Subsidence/ground movement leading to mains failure and loss of supply
due to mining activities.

Executive Summary Water Supply Asset Management Plan June 2012

11

Risk control processes and mitigation strategies are discussed in more detail in Appendix F, where
procedures to mitigate significant negative effects, the impact on lifelines and emergency management
(Civil Defence Management Act) are also discussed, as are Corporate insurance policies.
Public Health Risk Management Plans (PHRMP) for treatment plants have been compiled with the
help of Opus International Consultants.

Executive Summary Water Supply Asset Management Plan June 2012

12

6.

LIFECYCLE MANAGEMENT

6.1

Lifecycle Analysis

HDC AM Policy determines Core as the appropriate level for Lifecycle Management for Water Supply
assets. Council manages a water collection, treatment and reticulation service on behalf of the
community. The assets used in delivering this service have a replacement cost of approximately
$106m. The figure below shows the distribution of these assets across the supply schemes.
Figure 6.1: Water Supply Systems Locations

Asset management processes to refine the renewal profiles and improve the understanding of the
annual renewal expenditure needed to maintain the current level of service, are currently in progress.
These processes include:
Updating asset data in the AMS, a re-valuation for 2011,
Updating the Renewals Strategy to take account of the impact of base lives, criticality, material
types, location and pressure on predicted asset lives.
Figure 6.2: Potential Renewal Profile based on 2008 asset valuation for water network
4,500,000
4,000,000

WaterAssetRenewals($)

3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000

Consent
Meters
5YearRol l i ngAverage

RenewalYear

Pi pes
100yearAverage
20yearAverage

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Pl antandFaci l i ti es
10YearRol l i ngAverage

Executive Summary Water Supply Asset Management Plan June 2012

13

Table 6.1: Water Supply Key Issues and Comments

KEY ISSUES AND COMMENTS
Condition and Performance data are assumed and need to be considered in more detail to assist with valuation
and renewal activities.
A large amount of Alkathene was used in the late 80s which is not a hard wearing product, and low rated
pressure. Renewals of alkathene is undertaken where condition and performance are an issue.
There is evidence of traffic loading on pipe joints in specific areas in the Plains scheme. Potentially significant
lengths of pipe renewals in certain areas
Plains certain joint fittings are corroding due to aggressive soil conditions.
Currently collating data to assist with more defined decision making around levels of service and to help with
renewals versus maintenance decisions.
Unaccounted for water. Plains meters are believed to be inaccurate; there are a number of incorrectly sized
meters.
Scada is being upgraded to assist with DWS Compliance and resource consents compliance.
Some fittings failures of new pipe renewals in some areas (10 year old assets).
Configuration decommissioning deferred in LTP, Plains schemes now connected, Huirau decommissioning to
be decided, planned connection of Mackaytown, and Karangahake to Paeroa in 2016/17; .
Some asset lives have been amended during the recent asset valuation, however there is still a need for further
review during the next valuation to align the asset lives with current expectations
Two other scheme connections are also planned, a) the connection of Kaimanawa to Plains in 2016/17 b)
Waikino to Waihi in 2015/16.

6.2

System Information and Data

Various systems and technologies are used to manage and operate water supply assets to provide the
level of service that customers require. The primary systems used in the operation and management
of water supply assets and services are:
Table 6.2: Data Information Systems relative to Water Supply Asset Management
SYSTEM NAME

PURPOSE

FUNCTION

Authority Financials

Financials

Capture
and
information.

Asset Information System (AM)

Asset
Register
&
management processes

MapInfo

Geographical Information System

Provides
multi
layer
spatial
information of Council assets via a
computer desktop application.

Intramaps

GIS Viewer

Provides location and summary

information of Council assets.

Hummingbird (FRED)

Document Management

Provide a structure for managing all

Council documents.

In Touch

SCADA Supervisory Control and

Data Acquisition

Provides opportunity to monitor and

have a remote access control of
operational activity.

Intranet Open service requests

Service Requests

Monitoring and tracking of service

requests made by residents and
stakeholders.

works

track

financial

Capture
asset
information,
maintenance actions and history.

Executive Summary Water Supply Asset Management Plan June 2012

14

7.

FINANCIAL FORECASTS & MANAGEMENT

HDC AM Policy determines Core as the appropriate level for Financial management for Water Supply.
The estimates will be updated once the 2011 Valuation and Long Term Plan are completed. The current information only provides the draft and provisional
estimates.

7.1

Operational and Capital Expenditure

Total operational and capital expenditure (and the operating revenue) for the next ten years is provided in Figure 7.1 below and is estimated to total
approximately $25.7M
Figure 7.1: Summary of Operational & Capital Expenditure and Revenue Forecast (2012/22)($000)
2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

2021-22

1,329
499
311
117
743
7
104
325
1,628
484
5,547

1,336
518
475
120
763
7
232
306
1,753
1,009
6,519

1,405
536
424
124
783
37
104
453
2,214
1,372
7,452

1,405
556
618
128
805
39
51
342
2,205
1,335
7,484

1,521
577
468
133
827
44
97
385
2,171
1,388
7,611

1,518
597
490
137
850
46
102
360
2,435
1,512
8,047

1,639
618
515
142
871
47
179
351
2,436
1,393
8,191

1,642
642
539
147
896
49
71
339
2,436
1,270
8,031

1,785
668
568
152
922
52
116
305
2,744
1,112
8,424

1,794
696
596
157
949
54
74
318
2,744
960
8,342

30
-

62
-

96
1,378

132
-

171
-

177
-

183
-

189
-

195
-

202
-

OPERATING EXPENDITURE
Treatment
Reticulation
Intakes and Headworks
Fixed Costs
Overheads
Pump Stations
Major Maintenance
Other
Depreciation
Interest
TOTAL
OPERATING REVENUE
Fees and Charges
External Subsidies

Executive Summary Water Supply Asset Management Plan June 2012

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Targeted Rates
General Rates
TOTAL
OPERATING SURPLUS/(DEFICIT)
TOTAL
CAPITAL EXPENDITURE
Capacity
Demand
Increases
Level
of
Service
Increases
Renewals
Other
Capital
Expenditure
TOTAL

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

2021-22

5,828
5,858

6,178
6,240

6,549
8,023

6,942
7,074

7,358
7,529

7,652
7,829

7,958
8,141

8,277
8,466

8,608
8,803

8,952
9,154

311

(279)

571

(410)

(82)

(218)

(50)

435

379

812

2,300

7,093

6,316

1,407

2,282

3,724

614

745

810

327

268

398

484

437

784

287

10,007

7,061

2,217

2,609

3,992

398

484

437

784

287

The detail forecasted expenditure for the LTP is included in Appendix H

Executive Summary Water Supply Asset Management Plan June 2012

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7.2

Capital Expenditure, Renewals and Depreciation

Provision has been made for all schemes to be upgraded to meet NZ Drinking Water Standards 2005
(revised in 2008). A number of investigations and studies have been completed to allow selection of
the preferred option or strategy to resolve issues. Graph 7.2 shows the capital expenditure profile for
the next ten years.
Graph 7.2: Estimated Capital Requirements for the next ten years (2012/22)

Capital Expenditure Forecast 2012-22

12,000
10,000
8,000
6,000
4,000
2,000
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

The estimated requirement for capital expenditure projects for the ten years amounts to approximately
$28.8 m, with about $25.9m scheduled for the first five years.

7.3

Funding of Water Supply

Councils current funding approach is:

Operating costs are funded by a combination of uniform annual charges, and a charge per cubic
metre of water supplied.
All connected properties pay a common annual charge.
There are three categories of metered charges:
Paeroa, Plains and Waihi consumers pay a fully treated charge per cubic metre of water supplied.
Kaimanawa, Karangahake, Ohinemuri and Waikino consumers pay a partially treated charge per
cubic metre of water supplied.
Rating units connected to a raw water main pay a raw water charge per cubic metre of water
supplied.
All rating units in the Karangahake Special Rating Area that did not make a lump sum contribution also
pay an additional annual charge for repaying the Karangahake Water Loan. A subsidy of $1,281,470
has been sourced for upgrading Paeroa treatment plant and linking to Mackaytown and Karangahake.

Executive Summary Water Supply Asset Management Plan June 2012

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8.

PLANNING ASSUMPTIONS & CONFIDENCE LEVELS

(APPENDIX J)

Planning assumptions and confidence levels are determined as being appropriately managed at Core
level. Listing of all assumptions including the organisations strategic plan is Core Plus level.
Below is a summary of the assumptions that relate to Water Supply activities.
Table 8.1: Summary of Assumptions for 2012/22 LTP and AMPs
ISSUE
Population Growth
Rating Unit Growth
Consultation
Levels of Service

ASSUMPTIONS
The population of the District will grow up to approximately 4% during the life of
this plan.
That the growth in the number of rateable units will likely be 0.5% per annum
over the first 5 years of the plan, and increase to 1% per annum over the second
half of the plan
There will be a continuation of increased levels of community consultation
required as a result of the provisions of the Local Government Act 2002.
Demand for Council services and community expectations regarding the levels
of service Council gives will not significantly change.

Resource Consents

Conditions of resource consents held by Council will not be altered significantly.

Operating Environment

There will be no significant changes to Councils operating environment which

have not already been planned for, e.g. natural disasters, health epidemics,
significant asset loss, changes to legislation and improvements in efficiency.

Method of Service Delivery

Services will continue to be delivered at the same cost (inflation-adjusted).

Asset Information

Performance data for assets is reliable.

Climate Change
Rainfall

Major rainfall
Sea Level

Temperature in Hauraki will likely rise 2.5 degree Celsius in the next 100 years,
although will most likely not alter significantly during the life of this plan.
Rainfall will be likely decrease by 10 mm in the Plains, 30 mm in Waihi and
10mm in Paeroa as an annual average over the next 100 years. During the life
of this plan, there is likely to be little change.
Major rainfall intensity will be likely to increase by 20 % in the next 100 years in
Hauraki. This will be a gradual increase, and only minor effect will be likely
during the life of this plan.
Sea Level is likely to rise by 0.5m over the next 100 years. There is likely to be
little change seen during the life of this plan.

Inflation

Separate inflation projections have been used for individual cost categories for
each year of the 10 year projections.

Interest

Interest on Term Debt is calculated at 6.5% per annum. Interest on Investments

is calculated at 5%.

Revaluation

Infrastructure Assets were last re-valued as at 30th June/1 July 2011. The
projections provide for changes in asset valuations every three years based on
capital works, retired assets and the amount of inflation over that period of time.

Vested Assets

No vesting of assets has been included in the plan.

Funding Sources

Sources of funds are as per the Revenue and Financing Policy.

Capital Works Costs

Asset Life

On average, costs of major capital works will not vary significantly from costs
estimated at the concept stage.
Useful lives of assets are as recorded in asset management plans or based
upon professional advice refer to the Accounting Policies in Note 1. The useful
lives of capital additions are based on an average percentage basis of the lives
used for existing assets.

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8.1

Asset Condition & Confidence Levels

Water Supply assets condition and performance assessments vary substantially depending on the
scheme and specific assets. Data related to quantity, size, capacity, material, performance, unit rate
and criticality is of a reliable confidence level while data related to location, age, base life and
condition is uncertain
Confidence level on demand and financial forecasts are that data that the forecasts are based on is
reliable.

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9.

SUSTAINABILITY

Core level is appropriate for management of Sustainability with the element of Incorporation of
national and regional sustainability policies and plans at Core Plus level.

9.1

Sustainability Concept

Sustainability and sustainable development considerations are basic to asset management planning
and guide the selection of options for development and service delivery. Decisions consider, and
where possible, balance:
the social, economic, and cultural well-being of people and communities;
the need to maintain and enhance the quality of the environment; and
the needs of future generations.
The policy is clear that Council has to act, operate and develop in the most sustainable way possible,
recognising the importance to and impact on cultural, economic, environmental and social well-being.

9.2

The Hauraki Sustainability Tuner

Council has developed a framework, the Hauraki Sustainability Tuner, which identifies the major
issues related to an activity and measures the impact of the activity on the four dimensions of wellbeing as an element of future sustainability.

9.3

Water Supply Sustainability Assessment

The assessment incorporates the experience and judgement of water supply personnel.
Table 9.1: Sustainability Tuner of Water Supply Well-Being Score
WELL-BEING DIMENSION FOR HDC WATER SUPPLY
SCORE

ECONOMIC

ENVIRONMENTAL

SOCIAL

CULTURAL

5
4
3
2
1
0
-1
-2
-3
-4
-5

Water supply services and activities generally have positive impacts on the social and environmental
dimensions of well being, providing useful infrastructure and creating a healthy and productive
environment in which communities can thrive. Negative impacts are the cost to provide and operate
these services and to the environment if natural resources are over-utilised.

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9.4

Environmental Management Resource Consents / Property Designations /

Zonings and Easements (Appendix M)

Resource consents are required for taking natural water. These are issued by Waikato Regional
Council, with whom the Council has a good working relationship.
The Council currently has (or is in the process of renewing) about 20 consents, all of which expire at
various times within the next 12 years.
Current high rates of extraction from streams to supply raw water are not environmentally sustainable.
Councils LTP rationalises the number of water intakes, and ensures that use is sustainable.

9.5

Sustainability Issues

The following sustainability issues are identified:

Balancing of well-beings and future sustainability needs to be developed and improved

Climate change may impact on water sources.
Strategies and operations should promote sustainability.
Compliance with resource consents and renewal of existing consents.

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10.

IMPROVEMENT PROGRAMME

The HDC AM Policy determines Core as the appropriate level for management of Water Supply
improvement plans and Core Plus for monitoring Improvement plans against KPIs.

10.1

Progress with Improvement Plan

Improvement actions that have been completed since the June 2009 Water Supply AMP shown in
Table 10.1 below:
Table 10.1: Progress with Improvement Plan 2009/19
OUTCOME
DECISION

NO

IMPROVEMENT

ACTION TAKEN

Develop an asset register for Water

Supply reticulation and treatment
assets

A new hierarchy and attribute sets were

developed and incorporated into the AM
system

Completed

Perform QA check of water utilities

data and data cleansing

Data reviewed and updated as part of

AM implementation

Ongoing

Processes developed to update and

to maintain data in AM

Processes for vested assets, capital

projects and maintenance actions

In progress

Develop monitoring strategies for the

development
of
the
electronic
monitoring SCADA system

Upgrade of telemetry processes to a

scada system

Implemented
and
refining in progress

Development
of
HDC
Management Planning Policy

Asset

Develop appropriate level of practice and

processes in each AM category

Policy completed and

being implemented

Identify criticality of assets to water

supply system

Develop criteria to determine criticality

and capture in AM system

Completed

AMP Compliance Assessment

A compliance assessment on the current

level of asset management practices for
the AM categories in relation to the HDC
AM Policy was performed by Waugh
Infrastructure

Completed

Develop monitoring and reporting

processes for resource consents

A structured monitoring and reporting

process have been implemented to all
steps are taken to achieve compliance

In progress

10.2

Improvement Programme 2012-2022

Waugh Infrastructure Management has compared the level of current practice and processes3 with
the appropriate level determined by HDC AM Policy. The resulting gap analysis has delivered
improvement actions, shown in Appendix P and in the General Summary.

10.3

Summary of Costs for Improvement Projects

A full summary of the estimated costs of external resources and time of internal personnel to be
allocated to the improvement plan over the next ten years are shown in the General Summary. The
3

HDC Asset Management Gap Analysis Assessment DM 778117

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table below profiles the estimated total cost to perform the improvements actions and projects under
each allocated section for the next ten years.
Table 10.2: Summary of Costs and Resources for Improvement Project Sections
DAYS REQUIRED INTERNAL
RESOURCES

ASSET MANAGEMENT SECTION

COST EXTERNAL
RESOURCES

Asset Management Plan Format

14

$5,513

Council Commitment

36

$24,188

Description of Assets

32

$52,988

Levels of Service

146

$18,788

Lifecycle Decision Making

297

$171,500

Managing Growth

191

$86,946

Outline Improvement Programmes

29

$13,388

Planning Assumptions and Confidence Levels

25

$29,325

Risk Management

270

$120,281

Total

1040

$522,915

The figure below profiles the estimated time of staff and contractors and the estimated expenditure to
perform the improvement actions and projects.
Figure 10.1: Estimated resources required for Improvement Actions
140

250

120
200
100
150

Thousands

80
60

100

40
50
20
0

0
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

ExternalCosts

InternalHours

The highest requirement for resources and funds occurs in the year 2014 prior to the next LTP and
provides for the next review of the AMP.

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11.

AMP FORMAT

The appropriate level for the development of the AMP format for the Water Supply AMP has been
determined as Core.

11.1

Significant changes

Some of the significant changes made to this version of the Water Supply AMP include inclusion of
HDC AM Planning Policy, capture criticality of assets into AM system, assessment of risks for critical
assets, development of lifecycle analysis, development of a gap analysis to identify improvement
actions to achieve appropriate AM level practises, incorporate 2011 Valuation numbers.

11.2

AM Functions, Processes, Practises & Systems

A framework of functions, processes and systems was developed to indicate the roles of these
elements in the decision making process and asset management of water supply assets.

12.

COUNCIL COMMITMENT

The appropriate level for Council commitment for the Water Supply AMP has been determined as
Core Plus.
An AMP Development Team, representing all Council Groups and asset activity areas assist, monitor
and guide the development and progress of all HDC asset management plans. The team encourages
use of common frameworks and processes to develop AMPs for all asset activity areas. Progress of
AMPs is monitored using a project management approach. Reporting on progress and quality is
scheduled for every second month. Common issues are discussed and a collaborative approach is
developed across all utilities and infrastructure asset activity areas.
The Water Supply AMP is adopted by Council and any subsequent changes are captured in the
Change Register.
The Water Supply AMP and LTP are aligned in all relevant areas e.g. analysis, demand forecasts,
estimates, income forecasts, strategies, improvements etc. The AMP also aligns with the District Plan
and any other plans and documents currently in operation by HDC.

13.

AM PLANNING TEAM

Personnel from multi disciplinary backgrounds in terms of experience, qualifications and skills have
developed this AMP as part of the Water Supply AMP Team. Their names and positions appear in the
control sheet at the beginning of the AMP document.
Staff input has been supplemented with the skills, time, experience and knowledge of external
consultants and contractors to develop sections of the plan, e.g. development of lifecycle analysis
(Babbage); development of the improvement plan (Waugh Infrastructure Management); and
development of appropriate HDC AM Policy (Waugh Infrastructure Management).
The Water Supply AMP will be used on an on-going day to day basis by personnel of the Utilities
Team and also other relevant Council officers.

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