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© Cranleigh. Page 1© Cranleigh. Page 1

FUTURE DELIVERY MODEL OF WATER SERVICES

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© Cranleigh. Page 2

Enhanced Shared Services

Water Activities

Strategy & Planning

Activities- Asset Planning- Growth Planning- Demand Mgmt- Development Engineering- AMPs- Compliance & Consenting- Statutory Planning- Resilience Planning

Projects

Activities- Project Delivery- Project Management- Renewals

Operations

Activities- Network Ops- Plant Ops- Maintenance & Planning- Laboratory-Trade waste

Stakeholder Management

Activities- Comms- Customer Services-Iwi Engagement-Water Education

Corporate Services

Activities:- Finance-IT-Procurement-HR-Heath & Safety-Risk Mgmt-Business Improvement-Sustainability

Existing Shared Services

Enhanced Shared Services

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© Cranleigh. Page 3

CCO Option

Establishment Committee

Board

CEO

Strategy & Planning

GM

ProjectsGM

OperationsGM

Stakeholder Management

GM

Corporate Services

CFO

3 Councils

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CCO Option Governance Shareholder councils appoint representatives to a water CCO establishment

committee Committee will be responsible for:

o Appointing the CCO directors and monitoring their performanceo Approving the CCO Statement of Intent (formally endorsed by Councils)o Monitoring the CCO performanceo Approving water tariffs

2 Committee Members per Council Committee voting will be on the following basis:

o Ordinary business – 1 member 1 voteo Major decisions – voting in proportion to shareholding with 75% majority

required

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Savings by Type – CCO (3 Councils Combined)

Total Opex

$153.5m

Total Capex

$150.9m

Debt Optimisation

$164.0m

Total Savings $468m (Years 1 - 28)

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Savings by Recipient – CCO (3 Councils Combined)

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Savings by Council – CCOTotal Savings $107m

(Years 1 - 10)Total Savings $468m

(Years 1 - 28)

$282.1m$105.5m

$80.8m

Hamilton

Waikato

Waipa

$52.3m

$28.1m

$26.7m

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Indicative Waipa Savings

Years 1-10 28 YearsWAIPA CCO CCO ESS CCO CCO ESSSUMMARY OF SAVINGS Base Positive Base Positive $m $m $m $m $m $m

Opex 5.4 9.0 3.7 38.5 53.6 12.1Capex 10.1 16.5 3.0 19.5 30.4 7.4Debt Optimisation 11.2 8.7 0.0 22.7 27.6 0.0

Total Savings 26.7 34.2 6.1 80.8 111.6 19.5

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20%

30%

40%

50%

60%

70%

80%

90%

100%

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

Waipa Debt to Revenue Ratio

Status Quo Waipa without Water

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0%

5%

10%

15%

20%

25%

30%

35%

0

100

200

300

400

500

600

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28 Y29

Deb

t ($m

)Debt Comparison - 3 Councils' Status Quo (SQ) Debt v CCO Debt

SQ CCO CCO Debt/Equity Ratio

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0.60%

0.70%

0.80%

0.90%

1.00%

1.10%

1.20%

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28 Y29 Y30

% o

f Hou

seho

ld In

com

e

Waipa Water/Wastewater Affordability

Water Bill/ Income % SQ Water Bill/ Income % CCO

Source: NZ Average Household Income June 2014, Statistics NZ

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1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10Y11Y12Y13Y14Y15Y16Y17Y18Y19Y20Y21Y22Y23Y24Y25Y26Y27Y28Y29Y30

$

Waipa Average Water Cost per m3 (ex GST)

Status Quo CCO

Status Quo cost calculated for customer using 250 m3 of drinking water p.a. including both fixed and volume metric charges. Does not include wastewater or stormwater charges.

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2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

50.0

70.0

90.0

110.0

130.0

150.0

170.0

190.0

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

$

Waipa Reduction in Average Total Rate Bill

Water, Waste and Storm water % of Rates

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0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12

$m

Stranded Overhead Recovery Paid to Waipa by CCO

Governance etc Property HR, Finance etc

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0.15

0.17

0.19

0.21

0.23

0.25

0.27

Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12

$m

Monitoring & Planning Recovery Cost Paid to Waipa By CCO

$200,000 p.a. raising with inflation

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Council Impacts – Non Financial

Resourcing

Risks & Opportunities

Resource Consent

Planning

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