Rotorua Wastewater Services Operations - Statement of Proposal

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Statement of proposal - Establishing a stable, reliable and safe network

This conversation is about the day-to-day operations of our wastewater services. We need to talk to you about the operation of our wastewater services in the face of the risks and challenges including the environmental and financial risks.

This conversation is about the management of our wastewater services only. It is about the stewardship of a $400m service network and the future provisions that ensure we have a stable, reliable and safe wastewater service.

Please do not confuse this with the conversation on the Rotorua wastewater treatment plant upgrade and the treated wastewater release point option. This is a separate conversation and is on hold while we await a decision from the Environment Court.

Our key aim is to ensure that we have stable, reliable and safe wastewater services now and in the years ahead.

  • Stable means the condition of the critical part of the network does not deteriorate.
  • Reliable means the reliability of the service and that no unforeseen shock events disrupt the service for users.
  • Safe means that shock events do not cause unreasonable safety risks to our communities.

The proposal can be likened to car insurance. We currently have 'third party' but we actually need to have full coverage. We need to ensure we have the right cover to protect the network and ensure operations are managed to a level that is stable, reliable and safe. And we need a level of protection that will not cripple the district in the event of a major shock event.

Please let us know your thoughts on this proposal and get behind the stable, safe, reliable and cost-effective operation of our wastewater services.

Feedback has now closed on the Statement of Proposal - Thanks Rotorua for your responses!
We'll be updating this site shortly with all feedback received - next step is Hearings at our Strategy, Policy and Finance Committee on 25th June

This conversation is about the day-to-day operations of our wastewater services. We need to talk to you about the operation of our wastewater services in the face of the risks and challenges including the environmental and financial risks.

This conversation is about the management of our wastewater services only. It is about the stewardship of a $400m service network and the future provisions that ensure we have a stable, reliable and safe wastewater service.

Please do not confuse this with the conversation on the Rotorua wastewater treatment plant upgrade and the treated wastewater release point option. This is a separate conversation and is on hold while we await a decision from the Environment Court.

Our key aim is to ensure that we have stable, reliable and safe wastewater services now and in the years ahead.

  • Stable means the condition of the critical part of the network does not deteriorate.
  • Reliable means the reliability of the service and that no unforeseen shock events disrupt the service for users.
  • Safe means that shock events do not cause unreasonable safety risks to our communities.

The proposal can be likened to car insurance. We currently have 'third party' but we actually need to have full coverage. We need to ensure we have the right cover to protect the network and ensure operations are managed to a level that is stable, reliable and safe. And we need a level of protection that will not cripple the district in the event of a major shock event.

Please let us know your thoughts on this proposal and get behind the stable, safe, reliable and cost-effective operation of our wastewater services.

Feedback has now closed on the Statement of Proposal - Thanks Rotorua for your responses!
We'll be updating this site shortly with all feedback received - next step is Hearings at our Strategy, Policy and Finance Committee on 25th June

CLOSED: This discussion has concluded.

Following a lengthy review of the wastewater services there is a much better understanding of the service issues, emerging challenges and how the service can be delivered more effectively. This work has resulted in the Council preparing the Statement of Proposal found here

A two-year competitive procurement process identified a preferred service provider. Council proposes to enter into a contract with Trility (a consortium comprising Trility, Fulton Hogan and Stantec) for the provision of wastewater services across the district.

The Statement of Proposal discusses a number of options for the future of the service, including our preferred option to enter into a 10-year service delivery contract with an external provider; this is compared with the only viable alternative option in which we could continue to deliver the wastewater services based on current practice, but with optimisations to mitigate some of the current challenges and risks.

Please post your questions on the Statement of Proposal below - it is a complex and important topic. We'll endeavour to provide you with a timely answer to your question.

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    Community information session – Wednesday 10th June 2020 We fielded a number of questions during the first public information sessions and thought it was valuable sharing The following is a summary of the questions:

    5 months ago

    How many tons of wastewater do we create/process per year?   Approximately 10 Million cubic metres  per year

    How many leaks /overflow numbers does the city’s waste water network experience? These differ in terms of scale and severity. We do not at this stage have an accurate picture of how many. While we can always expect small leaks due pipe breaks etc  in the future the regulating/consenting authority is expected to develop  zero tolerances for spills of untreated waste water that would impact on  the environment. Therefore our network management approaches must change and become more robust to avoid prosecution but also to recognise public concerns about our environment health.

    Contract sounds great, why would Trility take risk?   The Trility consortium have done extensive due diligence investigations prior to arriving at the proposed contract and they have also accepted key performance levels of the proposed contract. Embedded into the contract there is a provision for an average  of $5.2M/year in critical asset renewals which it is targeting risk reduction.

    In a recent Council presentation there was a third bubble in the Operating Cost Summary (found here on slide 8). Can you explain that? The grey bubble represented  our current operating costs/risk. The blue bubble represents our operating costs/risk with the increases due to the new networks (Rotoiti/Rotoma), new electricity and extra maintenance costs for the current old Treatment Plant that needs to be kept operational longer than anticipated. This bubble has an open ceiling for repair costs because of the ageing network. This risk sits fully with the ratepayer now.  The dark grey bubble is the operating costs and the significantly reduced level of risk to Council via the Trility proposed contract

    The costs would be reduced by $700K per year if could keep “in house” and ran the service? In terms of budgets, Yes. However this keeps the risk of all cost escalations due to failing assets with council and does not shield us from any actual cost fluctuations.

    If issues with the network operation could Trility “walk away”? The proposed contract is a contract. Any party in a contract can walk away but they have to face the legal and financial consequences of being in breach of their contracted obligations. In this proposed contract, RLC keeps has access to a parent company bond worth many millions so it protects us from being financially disadvantaged from a possible contract breach by the other party.

    If leak/issues that cause a massive cost overrun who pay? The Contractor has assessed that risk and they carry that risk in their proposal and fee. They do have contingency  insurance in the case of large events but overall this is a risk that they have priced.

    Why can’t RLC take out insurance for network? RLC has emergency insurance to cover catastrophic damages. However like any insurance we have an excess payable. That means only called on for a catastrophe/large scale event

    What will the future condition of our waste water network look like in 10 yrs at the end of the contract? At the end of 10 yrs the overall condition of the critical network will be improved through systematic renewal investment as outlined above. This renewal/uplift in the condition is a part of the objectives of the proposed contract

    How does the growth of the city/network fit within the contract? The contract anticipates a waste water generation growth factor  of 0.7% p.a. and the contractor is required to maintain pumping and treatment capacity for that medium growth projection.

    Will the cost of the contract go up per year? The contract has a construction industry price index adjustment per year built in.

    How much of wastewater operations is “local”?  It expected that the vast majority of the contract fee payments will remain local for personnel, materials, services and plant and equipment. There are some service/cost elements that cannot be local such as, the Kawerau based bio-solids composting, payments for electricity use, purchasing of goods that are not produced in the districts such as  Pumps, pipes of various types, membranes, blowers, etc so these are sourced from appropriate sources.

    Rate of replacement with contract?  There is an increase in the rate of replacement, most of which is focused on critical network  components and is embedded in our 30 year Infrastructure Strategy.

    Quality of products that the contractor (Trility) uses? RLC retains the oversight and the approval over quality of components/products and an ability to audit all installed works.

    The contractor, Trility, who owns them? Is it Beijing? We are contracting with Trility NZ Ltd. The company is owned by the parent company Trility Group Pty Ltd, an  Australia registered company.  – They are connected to “Beijing Enterprises Water Group” a public company listed on the Hong Kong stock exchange. The Trility NZ will be supported by Fulton Hogan (NZ company for all operations and maintenance) and other NZ contractors for specialised parts of the services.

    Where will we be in 10 yrs with staff? We expect that all staff who deliver these services will be  working /living here under the contract.

    Issues with the waste water network are historical, why should we trust new proposal? Because we are trying to rectify whayt occurred in the past. So our 30 yr infrastructure strategy and this proposed  10 yr contract ensures consistency of funding and delivery.

    Who will monitor the network/plant to ensure that it is done as said? Council will retain engineering skills in the Infrastructure Group for effective contract oversight and monitoring of the network performance and will be reporting to Council and the community.

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    Hi there. Thanks for an opportunity provide feedback. Has the Council completed the CBA analysis for these three options? Thanks

    Natalia Tropotova asked 5 months ago

    Hi Natalia, thank you very much for your question – we very much welcome these.

    The three options identified in the proposal have arisen out of a lengthy review of the operation of our wastewater services. Our key objectives for the review was to find a solution that met the complex and difficult to achieve requirements facing wastewater. We identified that the only way these could be addressed is by combining a contractor into a fixed-term contract for a fixed fee.

    Our cost-benefit analysis identified a need for the provision of certainty around costs and what will be provided for – reliable risk management with a party who is fit to address all of the challenges and risks in the wastewater space, one that has the expertise and technology needed for successful future operations. The best way to address the known service challenges, whilst also retaining full Council ownership of the assets, full Council control of funding for the service, and decision making on levels of service; was to bring all network operations under a single point of performance responsibility. Therefore, the preferred option is Option One to enter into a contract with Trility. This was identified as the most cost-effective and beneficial option for the sustainability of the service – ensuring stable, reliable and safe wastewater now and in the years ahead.

    We hope this answer has helped you and others to better understand this proposal and we are happy to answer any further questions you may have. Please remember to provide us with your feedback by writing a submission. We hope to hear from you soon.

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    How is this document (or documents) made available to tax/ratepayers to assist them in making a thoughtful and reasoned submission? " Following a lengthy review of the waste water services there is a much better understanding of the service issues, emerging challenges and how the service can be delivered more effectively." The information available on the RDC website is uninformative, really, useless.

    what? asked 5 months ago

    Thanks for being the first to ask a question! We have embarked on a campaign to inform our community about this important conversation and you can expect to see more activity on this in the coming weeks. The discussion on this topic is not new and was first broached with the community a year ago in the last Annual Plan (More info here and past discussion here). 

    As it mentions on the web page the proposal has taken a two-year competitive procurement process and identified a preferred service provider, hence, there is a lot of detail sitting behind the higher level information on the website. You can read the full statement of proposal that has been made available to the public here or watch the Council presentation on the statement of proposal (starts approx 12min mark).

    We are happy to answer any questions you may have about the proposal and hope that others will understand better by being able to see the answers to those questions. Hope to hear from you soon.