Time to make sure we have a water network that's worth paying for

WHEN one considers that the public water distribution network in Ireland extends to 25,000km, one can almost understand how 41% of the country’s water supply is leaking out before it reaches the customer.

However, it becomes unacceptable when one considers that Germany’s drinking water network is 530,000km — and it has just 7% leakage.

It is even more unacceptable when, as the newly formed company Irish Water says itself, “clean water is expensive to both produce and manage. There is a complex process involved in turning raw water into clean drinking water, and treating wastewater so that it can be reintroduced back into our environment.”

Ireland’s public water system is not all-encompassing — just 80% of the population use the public water supply. Of the rest, more than 12% have to use private wells. Galway county is the most fitting example of an area which must make its own arrangements. There, just 74% of homes and businesses use the public water supply, while more than 50% of homes have to use a septic tank to deal with their waste water.

The under-developed network is compounded by the fact that Irish people’s daily water consumption is much higher than across much of the rest of Europe. Approximately 1.6bn litres of drinkable water are produced here daily and each person, on average, uses about 150 litres of clean treated water per day. While that corresponds with the figure for Britain, the average in some European countries is less than 130 litres — in Belgium and the Czech Republic it is less than 110 litres.

Figures such as these make the uphill task facing Irish Water and its regulator, the Commission for Energy Regulation, abundantly clear. It also shows how the issues which are currently affecting hundreds of thousands of homes and businesses in and around Dublin could so easily arise.

CER this week published a report outlining the issues which face Irish water and the role it intends to play as regulator in the coming years. It appears to identify a lack of investment as the main culprit for the leaky, inefficient system which exists.

A PricewaterhouseCoopers study on Irish water network investment found that, until recently, about €600m per year, on average, was being invested in the Irish water and wastewater system through a capital expenditure programme. That can be broken down into €400m for a Water Services Investment Programme; €100m to “match” funds from the country’s water service authorities (WSAs) run by city and county councils; and €100m on the rural water programme.

However, according to CER, that level of investment has decreased significantly in recent years predominantly due to “budgetary constraints”.

“It is clear that the economic downturn from 2008 onwards has affected the level of investment in the Irish water network,” said CER. “This is not as a result of say demand reduction or the requirement for capital investment falling off.

“The [PwC] study indicates that low levels of funding and an inability to access alternative sources of funding in the past have resulted in a backlog of investment and maintenance in the water services infrastructure. The report goes on to state that ‘the dependence on the Exchequer for capital funding has in the past constrained investment in the sector. While approximately €600m is provided annually in capital investment, it is estimated that there is currently a backlog of approximately €500m for essential projects’.”

CER compiled a table based on the accounts of WSAs in Dublin city, Meath, Kerry, and Mayo between 2006 and 2011 which, it said, proved a “downward trend in capital expenditure on the water and wastewater network due to financial constraints”.

In 2006, the investment across those authorities was roughly €170m. That rose to more than €250m by 2008. However, by 2011, the total investment was down to less than €100m.

The Irish water network “requires new build, replacement and maintenance, just like the gas or motorway network”, CER said. “Without such investment, levels of quality and service delivery will decrease, which could lead to increased health and safety risks,” it added.

THE good news is that CER expects regulation under its remit will give Irish Water the chance to create “a clear and stable environment” in which it will be able to make the necessary investment to create a modern, sustainable and efficient water network. It said there should ultimately be a reduction in the dependency between direct Exchequer funding and required investment in the network. Furthermore, the umbrella control of one organisation will stop duplication of services by 34 councils through their WSAs.

“The introduction of an independent regulatory regime will provide Irish Water with a stable revenue platform, which in turn will allow it to source funding for investment from international debt markets at reasonable interest rates,” CER said. “This access to capital is critical to ensure the continued necessary investment in the water network. Investment will mean an improvement in the quality of water services [including drinking water quality] and an improvement in the secure supply of those services.”

One of the key areas which CER will control will be the price we pay for every litre coming out of our taps. CER says it will set revenue, tariffs and charges. and performance targets that will enable Irish Water to invest “efficiently” in the water network so that costs to the consumer can ultimately be reduced.

However, it also admits there will have to be an “interim regulatory price control” when water charging comes in because it will not have gained the requisite data and analysis to set an effective price. It said that its first full regulatory price control period for water “is likely” to be from 2016.

One thing is for sure — if charges were in place now, the more than 1m people currently experiencing nights without water would not be happy to pay the meter charge for such a poor supply. Irish Water has a heavy onus on its shoulders to ensure that the water network which it inherits on Jan 1 is brought up to 21st century standards as quickly as possible.

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