Week in Review
Auckland’s drought: fate or failure?
Watercare is under the gun. A predictable drought mishandled, two critical reports in as many months, Auckland councillors fuming after being handed a last-minute unexpected $44 million budget expense in a Covid year. No wonder the chief executive resigned. But is it enough? And where is the council’s responsibility?
The resignation of Raveen Jaduram, head of Auckland’s water supply and treatment company Watercare, is a surprise - and no surprise at all.
The timing was unexpected. The resignation announcement came just one day before a memorandum went out from Auckland Council’s acting chief executive Patricia Reade announcing a new Water Taskforce to deal with the drought and other ongoing strategic water issues.
And the joint head of the overall steering team, and of the 2020-21 drought response team? Raveen Jaduram.
It seems possible that when she wrote that memo, Reade, whose council fully owns and controls Watercare, didn’t know the chief executive would be gone from the job at the end of October.
But the resignation itself wasn’t much of a surprise. Pressure on Watercare has been mounting in recent weeks from politicians and commentators wondering how Auckland ended up quite so unprepared for a few months of drier-than-normal weather, followed by what seems to anyone with a dog to walk, to be quite a lot of rain.
“Definitely the wettest drought on record”, as one colleague described it.
More on Mayor Phil Goff’s “one-in-200-year” drought below.
But anyway, why were we paying Jaduram a three quarters of a million dollars a year salary to not be ready for a predictable drought?
Well, now we’re not. At least not after October.
“Unprepared for such an event”
So what led up to Jaduram's resignation? Insiders say it was messy, he had lost the confidence of the council and the board. He had to go. But few people are prepared to talk on the record.
"I've been told to stay clear," one source told me. "Watercare is a huge monopoly and pulls a lot of strings."
Jaduram did not return Newsroom's call, saying only he was resigning to consider new opportunities.
But Auckland Councillor Chris Darby says he's always happy to talk water. He describes a high-pressure budget meeting in July.
Goff and his team were furious when Watercare dumped on them a $224 million cost for dealing with the short term water crisis - $44 million more than they were expecting, Darby remembers.
“The fireworks went off in the room that day."
“We were going through the emergency budget and we were suddenly told we had to give Watercare another $44 million to treat Waikato water. We are facing a $525 million revenue deficit [related largely to Covid-19] and had spent several months grappling with a difficult budget. Then suddenly, really late in the process, they are signalling they need this extra money.
“The fireworks went off in the room that day.
“You feel you are obliged to fund them, because this is a situation at crisis level and you assume if you don’t fund them, you exacerbate the water shortage problem.”
He says it was “inexplicable” that the news was delivered to council not by Jaduram or board chair Margaret Devlin, but by another member of the management team.
Meanwhile, a recent report into Auckland’s Council-Controlled Organisations (CCOs) had some tough words for both Watercare and the council that’s meant to be overseeing it.
The review, chaired by barrister and governance expert Miriam Dean and released in July, wasn’t meant to be looking at the drought, but the topic inevitably came up as the panel interviewed stakeholders.
“Many considered Watercare unprepared for such an event, and that some foresight in the form of extra capacity into the network would have made these restrictions unnecessary,” the report said.
“Some stakeholders rightly asked whether Watercare had notified the council early enough about the risks and potential costs of the drought. Its January 2020 report to the audit and risk committee fell far short of compliance with the no surprises policy.”
The report is scathing about the council’s role too.
“The council’s many plans, policies and strategies offer almost no practical strategic direction to CCOs. They do not contain careful, detailed information about the council’s expectations of CCOs so they can set their work programmes and priorities accordingly. In some crucial areas - such as water - there is no strategy at all.
Meanwhile, there is “insufficient support for councillors in holding CCOs to account, and insufficient resources for the council unit charged with monitoring CCOs’ activities and budgets, which are considerable.”
Doesn't sound good.
A second report, commissioned from Scotland’s water regulator, is still under wraps at Watercare, due for release in September. Councillor Chris Darby says he understands it is critical of the amount of investment Watercare has made in its infrastructure.
“In a very brief exchange with Raveen he told me they undertook an independent review, citing my call for benchmarking against international cities rather than New Zealand cities that in most cases don’t even meter water.
“I heard the Scottish water regulator was critical of Watercare’s asset management planning, particularly depreciation and renewals.”
Watercare says it has a plan.
“Between 2019 and 2028, we are investing more than $1.9 billion on expanding and upgrading our water network. A further $2.9 billion will be invested over the following 10 years to 2038.
“This investment enables us to continually expand our network capacity to keep ahead of Auckland’s increasing demand for water and wastewater services.”
Low prices, inadequate investment
Lack of investment and a policy of keeping water prices low is something that’s worried Darby for a while, and which has come to a head with the present drought.
For most Aucklanders, the amount they pay for water is still less than they paid before the Super City amalgamation in 2010
It’s something Watercare is proud of - and which is part of its mandate from government.
“We are required by law to manage our operations efficiently and keep overall costs of water supply and wastewater services to a minimum. Through efficiencies and economies of scale we have achieved this while delivering annual savings of around $100 million compared with long-term historical forecasts. Today the average water and wastewater bill represents less than 1 percent of the average household income.”
You gets what you pays for
Which is great for householders, but not necessarily great for keeping the pipes mended and the infrastructure up-to-date.
“Watercare’s policy has always been to do the bare minimum in terms of infrastructure investment,” says one former staffer. “They were set up to supply water at the lowest cost possible and took that very seriously and are very proud of that.
“There was always a suspicion among some of the executives that the engineers would always propose gold-plated schemes. There was a lot of pressure to keep costs down. They wanted to know what was the least that could be done to meet the objectives.”
"To have good reliable water services, we will have to pay more."
Miriam Dean’s CCO review also brought up the issue of Watercare pricing.
“Several interviewees from the council considered prices were being kept too low. Said one former senior council manager. ‘To have good reliable services, we will have to pay more'.
“Another council manager put it more bluntly. ‘Watercare’s price path is too low'." Watercare’s response was that ‘past investment had allowed it to keep the price low.’”
Chris Darby says “cost” shouldn’t just be about price. Resilience and sustainability are important too.
“Their revenue model has been the same for a long time. They have followed the 'minimum cost' line of the legislation and they pride themselves on providing cheap water.
“But the true cost being worn is societal and environmental.”
Meanwhile, since amalgamation, the amount of water lost to leakage in Auckland has soared.
Darby reckons the leakage rate is even higher now - heading towards 14 percent. This is despite Watercare saying in official documents it’s on track to get to 10 percent.
Why is leakage getting worse, not better?
This statement in Watercare’s 2007 strategic plan - a foundation document for the direction of water investment since - is illuminating. “Finding and fixing leaks can be a very effective way of saving water, although there will be a time when the cost of doing so is greater than the cost of developing a new source.”
That seems a shocking statement these days, where water is increasingly seen worldwide as a precious resource, but the leakage figures suggest that is still Watercare’s mantra.
As another source close to Watercare said to Newsroom: “Watercare staff proudly talk about ‘bleeding the network’, the maintenance contract requiring the contractor to run the piped network to failure. Just imagine you run your car until it breaks, no maintenance, no Wof.”
In particular, the source was concerned that Watercare has focused so heavily on the cheapest option - getting extra water from the Waikato River - rather than looking at other possibilities.
“Preliminary investigations to date indicate that expanded use of the Waikato River as the primary water source option will offer the least cost long term solution,” the 2007 strategic planning document said. “Options based around a new northern water source, the use of rain tanks and/or treated waterwater use would involve higher costs.”
“I’ve always had the sense that Watercare’s solutions for security of supply have been focused on big ticket infrastructure and not enough on water conservation and efficiency,” Darby says.
“When you look at big ticket solutions, like taking more water from the Waikato, you are putting a lot of eggs in one basket, so the resilience of the network is at risk, because the network goes back to one big tap.”
A 2007 report from the then North Shore City Council pointed out the risk for the people in the north and west of the city because all their water comes across two bridges. Without any local water source, the North Shore runs the risk of being cut off in the event of an earthquake or even a terrorist attack.
“Security of supply to North Shore City and Rodney Distrist would be provided with a new sub-harbour pipe crossing,” the 2007 Watercare strategic document says. This has not happened, despite the population of Auckland growing by more than 300,000 (23 percent) in the past 15 years, many of them in the north of the city.
“Raveen and Watercare were very resistant to discussions about local solutions like rainwater tanks,” Darby says.
And that’s not surprising, given Watercare gets its income from people buying water, he says.
Do rain water tanks help in a drought?
Partly the argument Watercare has used is water tanks don’t help in a drought. If there’s no rain, they empty out. But while that sounds logical, that’s not necessarily how it works in practice. Auckland was pretty dry for a few months months over summer, but had significantly more rain than usual before that - and plenty of rain in May and June.
The autumn rain didn’t fill up the storage dams as much as Watercare would like because dry ground takes a while to reach saturation, and until the ground is truly soaked, some of the rain doesn’t reach the reservoir.
But there was certainly enough to fill thousands of household water tanks - if we had them - and release the pressure on the storage dams, and the Waikato River.
We are not using less water
One more issue is relevant in terms of Auckland’s water supply and demand, before looking at the question of whether this is really a one-in-200-year drought at all: water consumption.
Watercare’s 2008 strategic document set a target of 15 percent reduction in water use from 2004 levels by 2024, through pricing mechanisms, leakage reduction, promotion of efficient appliances and systems, and changes to the legal framework which could, for example, make rain tanks compulsory.
The sort of thing we see in electricity in terms of efficiency and conservation, but not much in water, except in a drought.
Watercare says it is on track to achieve its 2024 target, but its own figures show otherwise.
Over the past five years Aucklanders have used more water, not less. And remember, this is a per person figure, and Auckland’s population has also been growing.
This “trend”, or lack of one, isn’t new. Back in 2007, a North Shore City Council report pointed to Watercare's poor performance on water conservation.
“Based on past experiences North Shore City Council is sceptical in terms of the actual willingness of Watercare to implement a water demand strategy.”
The report called for Watercare to provide proof that previous water use initiatives had actually produced the savings anticipated.
The document talked about “disappointing results” and a lack of concrete information meaning customers were getting “an overly optimistic picture”.
Back then, Jaduram wasn’t the Watercare chief executive, but the boss of Auckland’s southern water board Manukau Water. He became chief operating officer under Watercare chief executive Mark Ford after the Supercity amalgamation in 2010 and was seen as a protege of Ford, taking over after Ford died of cancer in 2014.
Darby says Watercare's focus on Auckland being the second most frugal New Zealand region in terms of water consumption hides the fact that we don't do so well internationally.
Europeans use an average of 128 litres a day, the stand-out Danes use only 104. More than half the world's population use less than 95 litres per person per day. On the other hand the Australians and the Americans use more than Aucklanders.
Three years behind on smart metering
Smart metering can help both with picking up household leaks and getting customers to save water. Metered customers on average use 12 per cent less, according to UK utility Thames Water, and smart metering is big in China, the US and Europe.
Watercare’s smart metering programme is three years behind schedule, Darby says. A 2016 trial of around 2000 smart meters in Waiuku in south Auckland is still problematic.
“During the trials we have identified communication difficulties with the smart meters,” Watercare says. “In Auckland, water meters are buried, however in in other countries water meters are not, which makes our meters more susceptible to issues such as water damage and poor cell phone coverage. We are reviewing the data and technical issues and are developing a programme for future years.”
Even homeowners with smart meters can’t monitor their own data - only Watercare can. “It is our intention to allow customers to access the useful usage data,” the company says on its site. “We haven’t determined when this will occur as it will take some time to analyse the data.
So, about that one-in-200 year drought?
Auckland Mayor Phil Goff blames the weather for Auckland’s water shortages.
“The water shortage situation in Auckland is primarily the result of a one-in-200-year drought, which neither Watercare nor any other organisation including the council predicted," he told Newsroom. "As such, even with the more joined-up approach which I support, I could not say with certainty that we would have avoided current restrictions.”
But where does that ‘one-in-200-year’ figure come from?
“The one-in-200-year drought statement refers to Watercare’s water supply system which operates with 99.5 per cent reliability, meaning to a 1-in-200-year drought security standard,” Goff says. “Following the 1993/94 drought, the water supply system was upgraded to handle a 1-in-200-year drought event, compared to the 1-in-50-year standard that was previously the case.”
But that argument doesn’t point to us being in a one-in-200-year event. The fact Watercare has designed its system to cater for a one-in-200 year drought, doesn’t mean that if everything goes horribly wrong, and we run into water shortages, we must be in a one-in-200-year drought.
Maybe someone just stuffed up.
Newsroom knows the “one in…” formula is about mathematical probability not the number of times a drought will occur in a particular period. So it’s too simplistic to point to the fact that there have been at least three worse droughts in the past 100 years - 1993/4, 1949-50 and the granddaddy of droughts in 1913-14.
What if you go back nearer 200 years, as University of Auckland geography professor Anthony Fowler did after the 1994 drought? Fowler was testing out the “one-in-100-year” drought statement being bandied around at that time - and found it wanting.
“Using the adjusted data for the period 1883-1909, [the table] shows six droughts in the second half of the nineteenth century more significant than the 1994 drought. This would make the 1994 drought only the ninth most significant in 144 years (less than a 20- year event).”
And that left Auckland’s water planners with a dilemma, he said. Should they write off the 19th century data as suspect - drier than it actually was. Or should they wonder whether the mid-20th century data was presenting an overly optimistic picture in terms of the amount of rainfall Aucklanders should expect.
Fowler, now in the university’s School of Environment, was inclined to favour the latter.
“A precautionary approach would perhaps ensure that planning was not based on a recent, atypical wet period.”
So how about our one-in-200-year event?
Lake levels have fallen to below 60 percent twice in the past five years. 2013 was even drier.
Meanwhile, in the 1994 drought, lake levels fell to 29 percent, considerably lower than the 41 percent low this year. Though, of course, we didn’t have the Waikato supply then.
Exhibit 2: Auckland reservoir storage 1980-2000
Exhibit 3: Auckland rainfall 2018 -2020
In May, National Institute of Water and Atmospheric Research (Niwa) meteorologist Ben Noll compared this year’s drought with those in 2013 and 1993-94.
“This is one of the most extreme drought events for Auckland in modern times and similar to one experience in 1993-94.
“Just 126mm of rain was recorded at Niwa’s Mangere weather station between January 1 and May 21 - that is 31 percent of normal.”
(Note “normal” for some reason is the period 1981-2010.)
So Niwa is saying the 2020 drought is similar to, but not necessarily worse than a drought that may, or may not, have been the ninth-worst drought in 150 years.
Most people agree, Watercare acted far too late. On January 31, it was not only not worried about a water shortage, it put out a press release celebrating Aucklanders' "new water consumption record".
And Niwa modelling suggests droughts are only going to get worse.
Niwa records show the country has warmed 1 degree in the past 100 years. Its climate change scenarios suggest Auckland is going to get drier over the next few decades.
No Plan B
Russ Rimmington is a former Mayor of Hamilton, and since October has been chair of the Waikato Regional Council. But he’s also a dairy farm owner and a sailor. He knows a bit about the weather.
He says the summer was dry, but not ‘one-in-200-year-drought’ dry. Like his fields were pretty green most of the time.
He is scathing about how Watercare and the Auckland Council have handled drought resilience planning and the present water shortage.
“They made fundamental errors. They should have had a Plan B, they should have invested in capital to ensure they had enough [Waikato river water] processing capacity at Tuakau, they should never have let those dams get that dry.”
Rimmington’s theory is that Watercare, smug in the knowledge its dams were 89 percent full at the beginning of November, continued using that water supply for too long, instead of gearing up to get more water via the Waikato river treatment route.
“To process water from Tuakau is more expensive than draining it from the dams at Hunua, so they were saving money by using the dams, hoping the autumn rains would come.”
“I’m an offshore sailor, and if I put as much planning into my sailing as [Raveen Jadurum] did into Auckland’s water supply, I’d be dead.”
When the autumn rains were late (“six weeks late, that’s my view,” Rimmington says), suddenly Auckland found itself in crisis mode. There was no backup supply, no way of turning on the Waikato tap at short notice, he says.
“[Jaduram] could have used more water from the Waikato; he has never used the allocation we’ve provided to him, but the treatment plant is too small. He took a risk and he got caught short.”
He says Auckland Council needs to take some of the blame. “Phil [Goff] always wanted to drive the price of water so low, too low to enable Jaduram to implement the capital expenditure Watercare needed. Or to roll out water conservation schemes.”
But it was Jaduram earning the big money ($775,000) and he should have known what the risks were and had a plan B for a dry year, Rimmington says.
“I’m an offshore sailor, and if I put as much planning into my sailing as Raveen Jaduram did into Auckland’s water supply, I’d be dead.”
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