Annual Report 2011 - Watercare

Watercare Services Limited
2011 ANNUAL REPORT
Chief executive’s
Report
“Our challenge involved radical rethinking
to ensure that the customer sits at the heart
of everything we do.”
Significant change occurred in our company
parts of our business to ensure we were
since it took over responsibility for service
from 1 November 2010. That was the date on
equipped to meet our new responsibilities.
delivery from the former network operators.
which we assumed responsibility for directly
serving around 1.3 million Aucklanders.
Before that, Watercare was purely a wholesaler
in the water and wastewater utility business.
Our half-dozen customers were local councils
or water retail companies that each operated
As a result, no part of the Watercare business
is unchanged. From the way we answer
phones to the thinking we employ when
designing a process improvement or
responding to a complaint, our approach
now puts the customer at the heart of
Wastewater prices increased by 4.5 per
cent from the same date. While no customer
welcomes a bigger bill, the wastewater
increase was significantly lower than the price
rises ranging from 6.9 to 36.9 per cent that
had been forecast by the previous councils.
local networks and onsold our services to
our operations.
For the 2011/12 financial year we are
Chief Executive’s report
PAGE 10
households and businesses in different parts
of the Auckland region. But legislative change
has resulted in our transformation into an
integrated water utility and we now have full
responsibility for all water supply from sourceto-tap,
and for all wastewater services.
By any measure this makes Watercare big
business. Our workforce has increased to
611 permanent staff and our annual revenue
is now $373 million. Our asset base has
increased and is valued at $7.8 billion –
greater than that of many of New Zealand’s
most significant listed companies. Despite the
huge growth in year-on-year revenue and the
significant capital programme we discharged,
I am pleased to report that our total operating
expenses of $156.5 million (excluding
depreciation) were under budget by more
than $10 million at year-end.
The greatest change we have experienced has
been about much more than the throughput
of cash or the addition of some new assets.
It has involved radical rethinking to ensure
that the customer sits at the heart of
everything we do.
Along the way, we have had to challenge
ourselves – and this has sometimes been
difficult. We have made structural and
organisational changes; some staff have left
and others have joined; we have rethought,
refreshed and, where necessary, relocated
We have brought forward significant IT
projects to ensure our retail billing and
customer-management systems are effective
and customer-friendly. We have engaged
with social agencies to ensure that our
approach to handling customers experiencing
hardship is fair. We have taken over a network
of maintenance contractors – the crews
that respond to faults in local water and
wastewater pipes, all of whom have had to
be inducted into the Watercare way of working.
Most of all, we are reminded every day of our
direct responsibility to the people of Auckland
who pay for our services.
Outstanding and affordable services
For many years, Aucklanders have paid
directly for the water they use through
meters in homes and businesses. It is a
matter of great pride at Watercare that we
have been able to reduce the retail price of
water across Auckland through cutting the
unit rate, and also scrapping the fixed service
charges for water that were previously
payable in some areas.
As the Chairman has noted on page 6,
Watercare cut the prices of water for all
Aucklanders effective 1 July 2011, with
the new tariff set at $1.30 (including GST)
for 1,000 litres. The lower price is thanks
to efficiencies generated by Watercare
continuing to charge for wastewater services
according to the various methodologies
applied by the old councils – that is to say,
either fixed fees per property or variable
sums linked to the consumption of metered
water. However, from 1 July 2012, Watercare
is required to introduce a new, single
wastewater tariff and Auckland Council has
proposed to us that it consults with the
public on tariff methodologies that meet
our funding requirements. While Watercare
is solely responsible for setting the charges
for both water and wastewater, we agree
with our shareholder’s logic on this point.
Watercare’s decisions on wastewater pricing
will coincide with a number of council
decisions which also impact on individual
households and businesses, including
the rationalisation of the rates system in
Auckland and a number of other council
funding decisions. One meaningful round
of public consultation – rather than several
– seems to us to be sensible.
Of course price is just one part of our
commitment to customers. Our vision is to
supply outstanding and affordable services to
all Aucklanders, and it is clear that some of the
assets we inherited on 1 November 2010 fell
well short of being outstanding, especially in
non-metropolitan parts of our region. We have
a range of long- and short-term initiatives
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