Asset Management Plan 2021 - 2041 1 July 2021 to 30 June 2041 www.water.co.nz An Auckland Council Organisation ASSET MANAGEMENT PLAN | 2021 – 2041 2 Contents Section 1 – Executive summary 4 Section 3 – Funding Plan 2021 – 2031 Section 2 – Asset Management Plan 2021 – 2041 1. Introduction 95 - Watercare’s vision and strategic priorities 1. Introduction 26 - Watercare’s strategic framework - Key strategies - Our areas of service - AMP and our strategic framework - Delivering value for customers 2. Funding Plan preparation 96 - Legislation - Delivering Māori outcomes - Pricing principles - Financial ratios and measures 36 2. Our asset management approach - Statement of intent - Asset management objectives - Asset management principles (water and wastewater-specific) 3. Application of funds – what do we 98 - Delivering our capital infrastructure programme spend your money on? - Operating expenditure - Capital expenditure 3. Our risk management process 39 - Finance costs - Risk Management Policy - Repayment of debt - Enterprise risk management framework - Risk evaluation 4. Sources of funds – where does the 100 - Risk mitigation money we spend come from? - Revenue 44 4. AMP development process - Borrowing - Factors shaping the AMP - Prioritisation of AMP projects 5. Growth infrastructure asset 102 - Base case for preferred investment profile funding - Debt constraints and risk associated with reduced investment - Funding for local network infrastructure investment - WICS and rating agency options - Funding for bulk infrastructure investment - Infrastructure Growth Charges 5. Water asset strategy 52 - The method for calculating the metropolitan - Auckland water strategy IGC rate - Metropolitan water supply network improvements - Housing Infrastructure Fund - Non-metropolitan water supply improvements - Water sources beyond 2041 6. Revenue and financing framework 104 60 6. Wastewater asset strategy 7. Financial projections 105 - Māngere Wastewater Treatment Plant and - Significant assumptions catchment • Growth forecasts - Rosedale Wastewater Treatment Plant and catchment • Cost adjustors - Army Bay Wastewater Treatment Plant and • Capex nominal and real expectations catchment • Asset revaluation - Pukekohe Wastewater Treatment Plant and • Interest rate catchment - Operating expenditure forecasts - Other wastewater servicing schemes - Capital expenditure forecasts - Revenue forecasts 7. Asset renewal strategy 69 • Water and wastewater service charges - Investment in asset renewals • Infrastructure Growth Charges - Ongoing operational and maintenance • Subvention receipts programmes • Other revenue - Maintenance activities - Debt - Critical assets renewal criteria - Asset values 8. Operations and maintenance strategies 74 Appendix 111 9. Shared services and technology 83 Glossary 112 programmes 10. AMP investment breakdown 84 ASSET MANAGEMENT PLAN | 2021 – 2041 3 Section 1 Executive summary Executive Summary Executive What is the Asset Management Plan (AMP) and Funding Plan? The AMP is Watercare’s future-focused investment plan that will meet the water and wastewater needs of Auckland. This plan: A Contributes to Auckland Council’s Long-Term Plan (LTP) and infrastructure strategy A Gives effect to Auckland Plan outcomes for the people of Auckland A Directs how we will operate, maintain and renew existing water and wastewater assets A Outlines how we will provide new assets to meet demand as Auckland grows Covers a 20-year period A The Funding Plan describes how Watercare will fund the AMP and its ongoing implementation. A Outlines the sources of funds and how Watercare will use revenue and debt to pay for assets A Determines the organisation’s cash requirements, which informs our price path ASSET MANAGEMENT PLAN | 2021 – 2041 4 The purpose of our AMP The AMP sets out programmes of works to enable beneficial outcomes for our customers across Auckland by: Summary Executive Catering for a growing Auckland A Developing a resilient and diverse water system for tomorrow A Protecting our environment A Adapting to climate change impacts and reducing emissions A Delivering value for money by running an efficient operation. A Reduce overflows into our streams, beaches and harbours and protect the environment Build Adapt to climate change resilience impacts and reduce against failure of emissions critical assets, extreme weather and climate change Cater for growth as Auckland expands to accommodate 476,000 Deliver more people in the next 20 value for money years by investing for today and tomorrow ASSET MANAGEMENT PLAN | 2021 – 2041 5 The AMP at a glance Over the next 20 years, we will invest about $18.5 billion to build and maintain water and wastewater infrastructure for Aucklanders. Summary Executive Investment in first decade 2022 – 2031 4,405 46% $9,653 million Growth 4,366 (nominal) 45% Renewal LoSI – Level of 882 service 9% improvement Investment in second decade 2032 – 2041 3,857 % Growth 44 $8,832 million 4,369 (nominal) 49% Renewal LoSI – Level of 606 service 7% improvement ASSET MANAGEMENT PLAN | 2021 – 2041 6 Catering for growth Our customers will have safe, guaranteed services into the future as Auckland’s population, business and industry continue to grow: Summary Executive A Over the coming 20 years, Auckland’s population is expected to grow by 29%, adding another 476,000 people to our current population of 1.7 million. A During this time, we will invest $8.26 billion to provide additional water and wastewater capacity to meet this growth. ASSET MANAGEMENT PLAN | 2021 – 2041 7 Catering for growth – water projects Executive Summary Executive Some of the strategic water projects we will deliver include: Waikato A – the staged construction of a t new water treatment plant (WTP) that will treat additional water from the Waikato River to cater for Auckland’s water supply needs over the next 20 years Waikato 2 Watermain – a new watermain t that will allow for growth and add resilience to the existing Waikato 1 watermain North Harbour 2 Watermain – to service t growing communities in the west and north, provide redundancy and improve transmission capacity Boost pumping of the Ōrewa 1 and 2 t watermains and a new Ōrewa 3 Watermain – to increase capacity to the north and meet forecast growth in the Silverdale, Dairy Flat and Wainui areas Encouraging efficient water use through t an enhanced demand management programme and expansion of the smart metering programme. ASSET MANAGEMENT PLAN | 2021 – 2041 8 Catering for growth – wastewater projects Executive Summary Executive Some of the strategic wastewater projects we will deliver include: Central Interceptor – the 14.7-kilometre-long t wastewater tunnel will run underground from Grey Lynn to our Māngere Wastewater Treatment Plant (WWTP), provide additional conveyance capacity, reduce overflows and clean up local beaches and waterways The Northern Interceptor wastewater pipeline t – this will divert flows currently treated by the Māngere WWTP, to the Rosedale Wastewater Treatment Plant, supporting growth in the north, west and southern regions of Auckland Māngere WWTP capacity upgrade – to support t growth, optimise performance and reduce carbon emissions and waste Rosedale WWTP upgrade – to enable process t optimisation, improve performance and reduce carbon emissions and waste. ASSET MANAGEMENT PLAN | 2021 – 2041 9 Developing resilience for tomorrow Executive Summary Executive Our customers expect safe and reliable services every day. This means: A Investing sufficiently so our water and wastewater networks can withstand disruptions and meet growth A Operating with minimal impact on our customers and the environment A Being resilient to changing conditions and climate change impacts To build a resilient water and wastewater system, and ensure reliability of service, we will invest about $10.2 billion in renewing and upgrading critical assets over the next 20 years. ASSET MANAGEMENT PLAN | 2021 – 2041 10 Developing a resilient water system Executive Summary Executive We will replace the ageing Huia WTP with a new 140 mega-litres per day (MLD) capacity plant to help meet peak demand and improve the system resilience. We will build two additional reservoirs (2 x 25ML t each) as part of the new Huia plant to increase storage and resilience for the region. Our water renewals and level-of-service improvement programme ($4.58 billion) includes: Ōrewa 1 Watermain replacement t Huia 1 and Nihotupu 1 watermains replacements t Domain Reservoir replacement t Khyber 3 Reservoir replacement t Huia 2 Watermain replacement t Hūnua 1 Watermain which will be replaced t by the extension to Hūnua 4 Watermain Other local water network renewals t Investing in projects to unlock water reuse t as a source of future water supply. ASSET MANAGEMENT PLAN | 2021 – 2041 11 Developing a resilient wastewater system Executive Summary Executive Timely renewal and upgrade of our plants, pipelines and network will ensure service reliability for our customers and reduce overflows and blockages on the wastewater network. Apart from the Central Interceptor and Northern Interceptor, resilience will be developed through our wastewater renewals and level-of-service improvement programme ($5.64 billion), which includes: Transmission network replacements t Local network renewals t Wellsford WWTP upgrades t Sub-regional WWTP upgrades t Rosedale WWTP upgrades t Pukekohe WWTP upgrades t Māngere WWTP Keyupgrades future projects: t Helensville WWTP upgrades. t ASSET MANAGEMENT PLAN | 2021 – 2041 12 Developing resilience to climate