Presentation to Oireachtas Joint Committee on Environment,

Transport, Culture and the Gaeltacht

CCMA

11th October 2011

SUMMARY POINTS

• Local Authorities play pivotal role as Water Services Authorities

• Chronic underinvestment over many decades – improvement 2004-2009

• Investment lag of €600m (currently listed) and significantly in excess of €1bn (CCMA estimate) to reach European norms

• Excellent water quality in public supplies and low cost (average per cubic meter for combined water and wastewater services)

• Proud history of efficient responsive delivery by Local Government

Water-Overview

• Currently, 950 public supplies producing some 1,600 million litres of water daily through a network of 25,000 km of pipes

• There are approximately one million domestic and 160,000 non-domestic water consumer connections in Ireland.

• In Ireland the majority of drinking water (81.6%) originates from surface water (rivers and lakes) with the remainder originating from groundwater (10.3%) and springs (8%).

Water-Finance

• No domestic watercharges – non domestic charges substantially cover the cost of provision to this market segment

• Operational/current expenditure in relation to the provision of water services is not sufficient to meet LAs’ needs.

• It is estimated that there was a deficit of €453m in 2010 in relation to current expenditure which was funded from the general purpose grant received by LAs from the DoECLG and also local sources. Increased regulation and higher standards cost more.

• Approx €600m is provided annually in capital investment including approximately €100m from both rural water programme and local finance.

• The main local source of finance has been from development contributions – local authorities struggle to continue, largely through loans.

Income - Summary

• In addition to funding from the DoECLG, LAs raise income from:

– Development levies– Non-domestic water charges– Significant user contributions– Loans with the approval of the DoECLG– Rates

Capital Investment

Funding for the provision of infrastructure for the supply of drinking water is provided by the Department of the Environment, Community and Local Government under two programmes. – Major water supply schemes are included in the rolling three-

year Water Services Investment Programme (WSIP). These schemes focus on the larger concentrations of population in urban areas. (2000-2010 €4.2bn)

– Annual Rural Water Programmes (RWP) provide the bulk of funding for the construction of group water schemes and small public schemes in rural areas (2000-2010 €0.99bn)

Overall expenditure between 2000-2010 includes investment of over €1 billion on public water supply and networks and €168 million on water conservation.

Efficiency

Increase in water & wastewater treatment capacity in terms of population equivalent

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year

Un

it o

f M

easu

rem

ent

(pe)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Cumulative Expenditure

Un

it o

f M

easu

rem

ent

(€o

oo

's)

Water Treatment Capacity Wastewater Treatment Capacity Water Services Investment Programme - cumulative spending € m

Finance-Difficulties

LAs face difficulties under WSIP schemes in coming up with their share of investment in these schemes, sometimes up to 40% of the total cost

There is also a backlog of investment of approx €1bn + required to bring the infrastructure up to standards

Costs of compliance are increasing e.g. new wasterwater licences issued by EPA On average there is an additional cost of €17,290

associated with each of these licences Major financial challenges need to be addressed (in a

time of cutbacks!)

Legislation FrameworkAll aspects of the legislative environment, in particular the framework and standards, are shaped by applicable EU legislation:•Sets the framework within which participants in the sector must operate•Delegates the roles of participants in the sector in respect of:

- The regulation and supervision of the provision of water services- The provision of water services- Sets standardsLocal Authorities:LAs are required to produce and deliver high-quality drinking water,

to collect and treat sewage effluent and to dispose safely of residual sludges.

-The legislation has an impact on LA managers who have criminal liability for poor quality water yet LAs don't have any control over financial resources to meet these responsibilities

-Water Services Authorities, have been designated as the supervisory authority over private water supplies (including group water schemes) and have similar powers and responsibilities to the EPA in relation to these supplies.

Legislation Framework

The powers assigned to the EPA under the 2007 Drinking Water Regulations include:

• The use of enforceable Directions to ensure that water supplies comply with the relevant quality standards.

• The oversight of actions taken by Water Services Authorities in public water supplies to continue to meet the relevant quality standards.

• The oversight of monitoring carried out by Water Services Authorities.

• The completion of audits at Water Services Authorities water treatment plants.

• The publication of guidance to assist compliance with the Drinking Water Regulations.

Compliance

• Local authority performance in the delivery of quality water is measured by the percentage of drinking water sampled in the local authority that is in compliance with statutory requirements.

• The Environmental Protection Agency (EPA) reports publicly the results of water quality monitoring carried out by local authorities.

• Compliance with the chemical standards in Ireland in 2009 was extremely high at 99.2%

EPA REPORT 2008-2009The Provision & Quality of Drinking Water in Ireland

Figure E-1: Number of Public Water Supplies in which E-coli was detected at least once from 2004 to 2009

•Positive downward trend in E-coli detection in public water supplies;•Chemical Standards Compliance at 99.2%;•Compliance with Parameters such as aluminium (97%) and turbidity (92%) requires improvement;

0102030405060708090

100

2004 2005 2006 2007 2008 2009

Number of PublicWater Supplies

Source: EPA Report The Provision and Quality ofDrinking Water in Ireland

Commercial Water

• Based on Service Indicators, the collection rates for commercial water charges were 66% in 2006, and have fallen to an average of over 53.2% in 2009

• It is important to acknowledge local authority concerns that this measure does not give a fair reflection of local authority collection rates for two reasons: – firstly, under accrual accounting, the amount to be

collected always include an element of legacy arrears, which have not yet been written off;

– second, under accounting rules, local authorities are also obliged to include bills for a given year (e.g. 2009), which have not been issued until early the next year.

Water Charges

• Ireland’s water charges are some of the lowest in Europe.• The performance of LAs in collecting water charges needs to be viewed against the

backdrop of the local authority role in the competitiveness agenda. This is because: – LAs are under unprecedented pressure, to not only maintain a favourable

business environment, but to help reduce costs for business; – As a sector, local government needs to balance the efficient collection of charges

against the reality of the current economic situation. This is particularly the case in relation to water charges, where the disconnection of a property could directly affect the future of a business and jobs.

– As noted by the ERG, “local authorities are acutely aware of the need to minimise the difficulties businesses face at local level, and the need for pro-active support for economic development in their areas...” (p. 42)

– The priority has been to adopt a practical approach to sustain local jobs, to help businesses to “weather the storm” and to survive the worst recession the country has ever faced;

– Managers continue to engage with the DETI and business representatives including IBEC, Chambers Ireland, the Irish Hotels Federation, etc.

Water Charges per Cubic Metre (€)

Ireland

• Median 110 Mean 114  • Min 90 Max 150

UK

• Median 117.52 Mean 119.92  • Min 66.67 Max 172.08

Waste Water Charges (€)

• Median 121 Mean 127• Min 77 Max 193

• Median 129 Mean 132.41   • Min 53.35 Max 267.15

Unaccounted for Water

• The current level of Unaccounted for Water (UFW)(largely due to leakage) is currently at an average of 41% which is high against international standards

• This is improving significantly due to recent investment by the DoECLG• UFW does not accurately record levels of customer side leakage – very

significant• Several factors can influence UFW and can account for annual variations

in recorded levels or water loss, or differences between UFW levels in individual locations including:– The level of investment in network replacement– Per capita consumption figures– Industrial demand profiles– Urban/rural demographic profile– The length of the pipe network

Group Water Schemes

• The quality of group water schemes continues to be inferior to the public water supplies but it is improving

• As of March 2007, local authorities have been designated as the supervisory authority in respect of private water supplies, which includes group water schemes.

• As the supervisory authority, the local authority can now issue directions to water suppliers to prepare and implement action programmes.

• The local authority may also issue directions to the water supplier to secure compliance with the relevant water quality standards.

Typical Chlorination Building for a Small Water Supply Scheme in 2008.

Typical Treatment System for a Small Water Supply Scheme in 2008 – One Chlorine pump.

2011 - Three Slow sand Filters installed at Baile Breac WSS.

2011 - New Treatment Building and Slow Sand Filters at Baile Mór WSS.

Instrumentation installed in 2010.

Rapid Gravity Filters Installed at Mid-Kerry WSS in 2011.

CONCLUSIONS

• Water Services in Ireland needs significant capital and revenue investment

• Local Government performance has been good

• Irish Water – Programme for Government• Status quo is not viable• County and City Managers’ Association

will continue to work closely with Central Government to manage change.