Part 19: How the wastewater scheme is operating now

19.1
In this Part, we discuss:

• what the Project Deed says about how the scheme is to be operated;
• how KDC is managing the contract;
• monitoring by the NRC;
• the suitability of the disposal site; and
• our comments.

19.2
In summary, we conclude that the wastewater scheme is now operating effectively. However:

• KDC did not actively manage the contract until very recently.
• Part of the disinfection process in the wastewater treatment plant has failed to work. This has resulted in changes to the operation of the plant and has required EarthTech and KDC to get the resource consents amended.
• The farm does not have enough land to dispose of all future flows of treated wastewater. KDC needs to assess how it will dispose of the treated wastewater in the future.

The operating requirements in the Project Deed

19.3
The Project Deed sets out the services that EarthTech must provide during the period it operates and maintains the wastewater scheme. EarthTech has a 10-year contract to operate the scheme, starting from July 2009. Under the Project Deed, KDC has an option to renew the operating contract for a further five-year period at the end of the 10 years.

19.4
Under the Project Deed, EarthTech is required to meet specified service standards. If it does not meet them, KDC is able to reduce the monthly operating payments it makes to EarthTech. The initial annual operating payment was $930,166 plus GST. The operating payments increase annually. KDC told us that it is currently paying $1,032,000 as an operating payment. This does not include power costs, which KDC pays separately. The Project Deed provides that KDC is to pay actual power costs plus 10% (net of GST) to EarthTech. We do not know the basis for the extra 10% or whether it is actually being paid. KDC told us that power costs in 2011/12 were $64,000.

19.5
EarthTech is required to maintain and repair the scheme while it is operating it. However, the Project Deed limits the works EarthTech is required to carry out for the operating payment. Some work is extra and is charged separately, such as maintaining sewer lines installed by property developers.

19.6
If EarthTech fails to provide the services it is required to under the Project Deed, KDC can use the default process under the Deed. If EarthTech does not remedy the failure, KDC has several remedies available to it, including terminating the contract.

How Kaipara District Council is managing the contract

19.7
The Project Deed is complex. EarthTech has several obligations on it to ensure that it is operating the scheme appropriately, and KDC has various powers to ensure that this is being done. KDC can reduce the amount it pays in monthly operating payments to EarthTech if EarthTech does not comply with the performance standards in the Deed. To do this, KDC needs to monitor EarthTech's performance under the contract. Therefore, KDC needs to have a clear plan for monitoring and managing the contract.

19.8
KDC took ownership of the scheme in July 2009, and EarthTech began operating the scheme from that date. In KDC's files, we found an incomplete draft contract management plan EPS prepared in March 2010. We were unable to find a completed version of the plan in KDC's files. Until recently, KDC has not been actively managing the contract or using the draft contract management plan. EPS told us that the draft contract management plan it provided to KDC was intended to be a working document to be used as the basis for managing the contract.

19.9
EarthTech is required to provide monthly reporting to KDC on whether it has met the performance standards specified in the Project Deed and various other flow and quality information. KDC's files do not contain a full set of these monthly reports. EarthTech told us that it has provided all monthly reports to KDC. The operations reports show that EarthTech had problems with grinder pumps, odours from the reticulation network, the UV disinfection system at the wastewater treatment plant, and stormwater infiltration into the reticulation network.

19.10
There were odour problems with pump stations and rising mains in the initial months of the scheme's operation. Beca told us that this became apparent during the commissioning of the plant and that KDC engaged it to provide technical advice. EarthTech installed odour control systems in these areas at its own cost. These appear to have resolved these issues.

19.11
There have been issues with the UV units used for disinfecting the effluent since they were installed, and they do not appear to have ever worked effectively. The UV units are used to kill coliforms and, in particular, E coli in the wastewater. EarthTech has managed to achieve the standards for E coli set in the resource consent by chlorinating the effluent. This occurs before the effluent is transferred to the dam. EarthTech told us that the UV units have had problems because of the unusually turbid nature of the wastewater. EarthTech told us that "… with all wastewaters having different characteristics, the success of this approach [UV disinfection followed by top-up disinfection with chlorination] was always an ‘unknown' until the wastewater was actually experienced at the plant and the level of transmissivity established". EarthTech told us that, for this reason, it was always recognised that there could be issues with this. EarthTech told us that this work has been carried out at its expense.

19.12
Because the application for resource consent provided that the UV units would be used to treat the wastewater, EarthTech has had to apply to the NRC to amend the resource consents to allow the alternative treatment. The NRC has amended the resource consents.

19.13
Stormwater infiltration of wastewater schemes is a problem because it increases the amount of water going into the scheme. This can make the scheme's operation more difficult. The monthly reports EarthTech prepared show that there have been problems with stormwater infiltration into the scheme in particular areas, such as Jack Boyd Drive. EarthTech has had to carry out work to limit the infiltration from these areas. EPS told us that stormwater has infiltrated in areas where developers of subdivisions installed sewers, rather than EarthTech.

19.14
Grinder pumps can be blocked by people putting the wrong items into the wastewater system. EarthTech has unblocked and fixed several grinder pumps for this reason. Some grinder pumps have failed because of manufacturing defects. These have either been replaced by the manufacturer under warranty or repaired by EarthTech where this has been possible.

19.15
The monthly report for December 2009 noted that there was a leak in the liner of the dam. EarthTech has placed a pump below the liner and pumps any escaped liquid back to the dam. It is unclear whether the liner has been repaired.

The Northland Regional Council's monitoring

19.16
The resource consents require EarthTech and the Council to send quarterly monitoring reports and an annual report to the NRC. We found a copy of only one quarterly monitoring report in KDC's files. The NRC advised us that EarthTech has sent all of the quarterly and annual reports it is required to.

19.17
The NRC's monitoring of the scheme once it became operational has shown that the plant has generally complied with its resource consents. The NRC has raised several compliance issues with EarthTech. These include the placement of irrigation sprinklers too close to a stream and stormwater infiltration. The NRC advised EarthTech in August 2011 that, because the volume of effluent to be treated in the wastewater treatment plant had increased, the amount to be irrigated would increase, and therefore the area irrigated needed to be increased. The initial area irrigated was 25 hectares. In February 2012, this was increased by five hectares. KDC considers that this is likely to still not be enough, and EarthTech is to assess whether more land needs to be added.

19.18
Because the UV units at the wastewater treatment plant are not functioning, the NRC has also amended the resource consent to include the use of chlorine as the final treatment method.

Suitability of the disposal site

19.19
Disposal of treated effluent to the disposal site is done using a "soil moisture deficit" system with a factor of safety. This means that irrigation is based on the ability of the upper soil layers to "hold" water and on the need of the associated plants for water uptake. This method is typically aimed at maximising the efficiency of an irrigation water resource and minimising the potential for deep drainage to underlying groundwater.

19.20
Our engineers advised us that this is considered to be quite a conservative approach. It is more usual for a dedicated effluent disposal irrigation system to be operated using a "precipitation index" or similar system. An irrigation system based on a precipitation index allows irrigation when the soil is above its water-holding capacity but there is little or no risk of overland flow. This method enables higher levels of irrigation compared to the "soil moisture deficit" system.

19.21
Our engineers advised us that irrigation using the precipitation index system would achieve the primary purpose of disposing of the treated effluent with minimal risk. They also told us that this system is used for other wastewater schemes in the North Island. The soil moisture deficit method is used for irrigation of treated wastewater where the treated wastewater is applied to areas such as golf course or sports fields. It is used where the disposal of the wastewater is a secondary purpose to ensuring appropriate irrigation for landscaping or turf requirements for amenity purposes. The major problem with the soil moisture deficit method is that, after heavy rainfall, the treated effluent cannot be applied and needs to be stored.

19.22
In simple terms, if the land is used only for disposing of the effluent, then it can be irrigated to the full capacity of the soil using the precipitation index system. If the land is used for some other purpose and effluent is being used to irrigate, then it can be irrigated only to the extent consistent with that other purpose. Surplus effluent has to be stored in a dam.

19.23
EPS told us that leading Australian specialists designed the irrigation system. It told us that:

... the critical issues for Council was long term sustainability and the establishment of a strategic base which would allow Council to develop further reuse in adjacent farm areas and on the Mangawhai Golf Course.

19.24
EPS told us that the system incorporates a modern approach involving sustainable (long-term) land use where nutrient levels are maintained at appropriate levels. It told us that the views of our engineers were based on outdated systems that are not considered best practice and that pose unacceptable risks.

19.25
In our view, if the land is to be used specifically for effluent disposal, then it is in KDC's interest to maximise its use for that purpose. The precipitation index system is currently used successfully in other effluent irrigation systems in New Zealand that include strict annual nutrient loading rules (which Northland does not have). The soil deficit method is feasible, but it is conservative and therefore limits the amount of irrigation that can be applied. As the scheme grows, if this method is retained, KDC will run out of irrigable land on the farm and will need to either find other land or find neighbouring landowners who want to use the treated effluent.

19.26
Beca told us that, when the farm was purchased, it was an operating dairy farm and that KDC considered the proposal to irrigate on a "soil moisture deficit" basis and continue dairying. KDC also discussed irrigation on the basis of "precipitation index". KDC approved the proposal to continue to operate the dairy farm. However, Beca noted that, if the farm is now being used only for effluent disposal, it would be sensible to review the method of irrigation.

19.27
Our engineers visited the disposal area. They noted that some of the irrigation blocks or parts of the blocks are situated in wet, swampy areas of the farm. They told us that this was inappropriate and should be remedied.

19.28
The land area of the farm is not enough to take all the projected treated wastewater created by the scheme. EPS advised KDC in 2012 that:

It was always envisaged that the farm was not sufficient in size to be able to manage the total flow that could be derived from Mangawhai in the future. Part of the strategy revolves around how much irrigation area the council needed to own to be able to adequately manage this aspect. The farm was purchased on this basis and it was always intended to develop relationships with adjacent farmers/landowners to take the reuse water to provide the additional area/s required to reuse the treated effluent. 200,000m3 per year was calculated as the maximum that could be managed on the farm.

19.29
EPS estimated that the irrigation area on the farm should be able to cope with 3000 connected properties and that, with an annual increase of about 6% in connected properties, the farm would reach capacity in 2018/19.

19.30
EarthTech told us that it was always known that the farm did not have enough irrigation area and that this led to the development of a reuse strategy. It told us that part of the reuse strategy is for KDC to develop arrangements with adjoining landowners to use the treated wastewater on their properties during the irrigation season: "As with many other reuse schemes, once the scheme has been proven and a comfort level is generated, farmers will be keen to enter into arrangements to take the recycled water."

19.31
In January 2008, the Council considered the re-use strategy prepared by Beca and EPS. The Council agreed to Beca and EPS, and the Australian irrigation consultants, carrying out work to look at re-use options and potential users of the treated wastewater, and to carry out initial negotiations with those potential users.

19.32
We understand that EPS, on behalf of KDC, looked at options for landowners adjacent to the treatment plant, transfer pipeline, and farm to use the treated wastewater. However, none of these were taken up.

19.33
EPS also looked at how the farm could generate an income as well as providing an effluent disposal site. The farm had originally been used for dairying. It appears that the desire to generate income drove the need for the wastewater treatment plant and the irrigation system to be upgraded so that the treated effluent would meet Fonterra standards and could be used on a working dairy farm. However, the Lincoln Downs farm is not used for dairying or any purpose other than disposal. No other farmers have been willing to buy the treated wastewater for irrigation on other properties.

19.34
KDC's former Chief Executive told us that it was always understood that the main purpose of the farm was as an effluent disposal site and that "the generation of revenue was a side benefit and was important but not the prime purpose". However, there were costs to generating this revenue, such as the changes to the wastewater treatment plan and irrigation system.

Our comments

19.35
KDC needs to have processes to ensure that it can actively monitor the contract. That way, if EarthTech is not carrying out its obligations under the contract, KDC can reduce its monthly operating payments.

19.36
It appears that the UV units have never worked properly and were not working when commercial acceptance was given. The original Project Plan and assessment of environmental effects for the resource consents provided that chlorination was not intended to be the primary method of disinfecting the effluent, although this is what has happened in practice. The primary method was to be through UV disinfection. As we set out above, the units not working has meant that EarthTech and KDC have had to have the resource consents varied, because the environmental effects of discharging the treated effluent are now different.

19.37
If the commercial acceptance process in the Project Deed had been applied properly, it is possible that KDC could have delayed taking ownership of the scheme until this issue had been resolved. Alternatively, KDC could have reduced the purchase price to reflect that this component did not work.

19.38
There was a lack of clarity about the purpose of the farm. It appears that it was purchased with the intention that it would generate an income, as well as providing a disposal site for the treated effluent. These two purposes conflict. The aim of disposing of treated effluent is to dispose of as much as possible without causing adverse environmental effects. If the land is being used to generate income, then the purpose of irrigation is different. That is, it is to apply only so much irrigation as is needed for production. This may be much less than in the first scenario.

19.39
In deciding to purchase the farm, KDC needed to determine what the primary purpose of the farm was. If the primary purpose was for disposing of the effluent, this should then have determined issues such as how the land was to be used, the standards that the treated wastewater would need to meet, and therefore the design of the wastewater treatment plant and the irrigation system. In that case, the capacity of the land to cope with future treated effluent flows should have been one of the main considerations in determining whether to purchase the land.

19.40
It appears that what has happened is that effluent disposal has been treated as a secondary purpose, which has led to decisions being made that conflict with that purpose. For example, the selected irrigation method is more appropriate where the primary purpose of the land is to generate income rather than to dispose of wastewater. The effluent is also being treated to a higher standard than is necessary for simple disposal. It is then stored in an open dam for some months until the ground has the capacity to absorb it. While it is stored, the quality of the treated effluent degrades again – for example, because of faecal matter from waterfowl.

19.41
When the land was purchased, it was clear that the land did not have enough capacity to cope with future effluent flows and that reuse options with neighbouring landowners would need to be pursued. In our view, KDC needs to determine what the primary purpose of the farm is, make any resulting changes to the existing disposal system to ensure that the system is as efficient as possible, and work out what else KDC will need to do to dispose of future flows of treated effluent.

19.42
As we set out in Part 10, when developing a wastewater scheme, it is usual to identify the disposal site first because this determines the design of the treatment plant and other aspects of the scheme. It also plays a significant role in determining the costs of the scheme. By leaving the identification of the disposal site to very late in the project, KDC limited its ability to find a suitable site. As a result, it ended up with a site that is not ideal and will not be adequate for significant growth of the scheme. It is clear that KDC always envisaged that others in the community would take some of the treated effluent as a way of reducing the need for it to irrigate it all to land it owned. The concept of reuse of treated effluent is relatively new in New Zealand, although it is used widely in Australia. If KDC wanted to rely on reuse as a way of dealing with future growth, we consider that it should have explored this with the community at the start of the project to determine if it was viable.