South Wairarapa Concerned About Wellington Water’s ‘Pattern Of Overspend’

Monday, 6 May 2024, 7:32 pm
Article: Emily Ireland - Local Democracy Reporter

Wellington Water has asked South Wairarapa District Council [SWDC] for an additional $1.01 million to complete capital works for the year ending June 30.

But council staff have recommended elected members instead approve just $530k and say they are concerned about “a pattern of overspend” by Wellington Water [WW].

Council-owned Wellington Water is in charge of the region's water services, including South Wairarapa, Upper and Lower Hutt and Wellington.

Approving an additional $530k means essential capital work can continue to be done but there would still be flow-on effects to the council’s 2024-25 Enhanced Annual Plan, council staff said.

It would result in a 0.16 per cent increase in total rates revenue required for the coming financial year, compared to the amount that has been consulted on in the proposed enhanced annual plan.

It could also impact the first year of the 2025-34 Long-Term Plan.

A report to the council’s Strategy Working Committee said there had been more network failures than expected over the past year and the actual costs of projects had exceeded budgets.

“All this has led to a situation where the remaining budget is not sufficient to cover the remaining planned work and WW has now asked us to increase the full-year budget amount.”

Council staff recommended approving an additional $530k instead of $1.01m “because it brings the approved budget back into alignment with the forecast but does not give WW any general increase in budget for them to prioritise and spend without our knowledge”, the report said.

“At the same time, we will be reviewing how we manage the programme and hence budget in the future.”

Wellington Water sent a briefing paper to SWDC last month which said the current revised budget for 2023-24 [excluding ring-fenced funds for the Greytown Water Treatment Plant upgrade] was $4.16m, but the forecast delivery of the current capital programme was $5.17m.

Increasing the budget by $1.1m would mean Wellington Water could continue to work on SWDC’s “priority projects”, the briefing paper said.

The $1.1m increase includes additional funding for the Featherston Wastewater Treatment Plant reconsenting project, operational reactive renewals, Pirinoa Water Treatment Plant filtration renewal, Waiohine Water Treatment Plant pH dosing system upgrade, and funding to continue annually recurring projects.

It is considered a “low-risk” option by Wellington Water.

The option that SWDC staff have recommended be approved — increasing funding by $530k — is considered a “medium-risk” option by Wellington Water.

In approving this option, SWDC would need to accept the risk of a capital expenditure overspend on reactive renewals budgets due to continued unexpected failures and increased operational expenditure costs due to temporary arrangements at the Pirinoa and Waiohine Water Treatment Plants.

A “high-risk” option has also been tabled for SWDC consideration but is not recommended for approval.

This option is to approve an additional $340k and would result in no budget to progress the design for the Tauwharenīkau River pipeline renewal, meaning construction would be delayed by 12 months.

Under this “high-risk” option, Wellington Water would be unable to progress dislodging for Martinborough and Greytown wastewater treatment plants, likely resulting in infringement notices from Greater Wellington Regional Council.

The SWDC Strategy Working Committee meets on Wednesday.

-NZLDR
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