Provision of safe drinking water is critically important - Kelly

Issued : Thursday 18 September, 2014

Speaking on Private Members’ Bill, 17^th September 2014

I would like to thank Deputy Cowen for giving me the opportunity to address the issues associated with the Bill that he has published. The provision of safe and wholesome drinking water is of critical importance to the health and wellbeing of our citizens. As you will all be aware, modernizing and improving water services delivery in Ireland is a key policy objective in the Programme for Government, and one which this Government is delivering upon.

Significant reform of water services provision has already been delivered through the following measures–

• The establishment of Irish Water as a state-owned company within the Bord Gáis Group (now renamed as EIRVIA);
• The introduction of a new sustainable funding model to support much needed investment in water infrastructure, including the introduction of water meters in households to facilitate equitable water charges based on usage; and
• The establishment of an independent economic regulator for water services, with a key focus on consumer protection, through the conferral of statutory powers on the Commission for Energy Regulation.

The establishment of Irish Water has been one of the most significant elements among a wide range of public sector reform measures achieved by this Government. The move towards the utility model will deliver major benefits to our people and to our economy in a number of ways notably –

• Through providing a more structured and coordinated approach to the delivery of water services on a national basis;
• Achieving economies of scale in service delivery and more efficient procurement of materials and services;
• Reducing unacceptable levels of waste from the drinking water distribution system – with an estimated 40% of treated drinking water being unaccounted for prior to the establishment of Irish Water; and
• Reducing the overall costs of delivering water services.

The establishment of Irish Water within Bord Gáis Éireann was an important step in assisting the utility to leverage the existing core expertise available to Bord Gáis as a modern and efficiently run utility. Bord Gáis employed its internal expertise to establish functions in Irish Water in areas such as: Asset Management; Information Technology; Customer Operations; Financial Management; Risk Management; and Corporate Governance. Ervia and Irish Water estimate that establishing Irish Water within the BGE Group has saved potentially tens of millions. In the longer term, they estimate that the establishment of Irish Water will lead to a saving of over €1 billion over the period to 2021.

It is important to note that the reform of water services is not only important to delivering better value for money to our citizens, it is also critical to support economic development and growth. Worldwide, demand for natural water resources is rising, yet supplies are becoming more vulnerable. Ireland has a potential competitive advantage in having high quality supplies of freshwater available to use. We must make the most of this opportunity and create a world class system of water services delivery. By doing this, Ireland can both support indigenous industry as well as attracting overseas investment in water-intensive industries such as ICT and Pharma-Chem.

Already the metering programme undertaken by Irish Water is delivering an economic dividend, through the creation of over 1,200 jobs. This is an incredibly ambitious programme of capital works, with Irish Water planning to install over one million meters within a three-year period. Since the commencement of the installation programme in August 2013, over 400,000 meters have been installed and Irish Water has committed to completing the installation programme by mid-2016.

The metering programme is unparalleled in its scale and ambition and it is a considerable achievement.

The introduction of charges based on usage is a cornerstone of the Government’s water pricing policy and that is why the accelerated metering programme is of primary importance to the funding model being put in place. Water meters facilitate a fair form of charges for users of water services, and facilitate the provision of a free allowance to households and families. The OECD has previously stated that metered charges are the fairest form of charging. The OECD had also noted that failure to install water meters would give households zero incentive to save water or to minimise waste in the form of leaking pipes, running taps and other wasteful uses such as the unnecessary use of garden hoses. The OECD also advised that the failure to measure water use further perpetuates the public’s low awareness of consumption levels and the real cost of water services. A better understanding of costs could in itself promote some reduction in consumption.

The OECD went on to observe that water metering will also remove the inequities between households. A house with large gardens, or even a swimming pool, will pay significantly more than a smaller household with average consumption.

When households understand that they can manage their water bills through reducing consumption, they are provided with an important incentive to manage their water use responsibly. In Denmark, a reduction of 12.6% in household consumption was achieved in the period 1996 – 2007 following the introduction of water meters, along with the promotion of water saving devices. The Walker Report, prepared for the UK Government and published in 2009, estimates that water metering in the UK has the potential to achieve a reduction of approximately 16% of average household demand through reduced personal consumption and reduced customer side leakage.

A research project carried out in the Greater Dublin Area estimated that customer side leakage may be as high as 65 litres per property per day but more recent studies in Dublin suggest that customer side leakage could, in some locations, be significantly higher. The installation of water meters will ensure that these leaks can be identified and fixed. Metering will therefore achieve significant reductions in the volume of water that are required to be treated every day and will lead to savings in the operational costs of delivering water services and in deferred capital expenditure. Moreover, it will lead to other environment benefits such as reduced abstractions from our rivers and lakes and in reduced carbon emissions from lower energy consumption.

There is also evidence from closer to home, from the group water sector. The National Federation of Group Water Schemes has long advocated the introduction of water meters in group schemes throughout the country, and members of these schemes have become accustomed to paying for water based on usage for the lsat number of years.

The evidence from the group scheme sector provides further proof that very significant savings can be achieved through the introduction of metered charges.

Two comprehensive pieces of legislation approved by the Oireachtas during 2013, the Water Services Act 2013 and the Water Services (No. 2) Act 2013, provided the legislative basis for the programme of reforms. The two Acts addressed a wide range of issues to provide for the establishment of Irish Water and the subsequent transfer of water services from the city and county councils to Irish Water. However, with regard to the topic of the Bill before us today, I would like to outline the measures that are set out in the existing legislation regarding the levying of charges by Irish Water and the measures the legislation contains to safeguard the interests of the customers of Irish Water.

The Water Services (No. 2) Act 2013 provides Irish Water with the statutory power to charge customers for the water services provided. Specifically, section 21 of the Act sets out that Irish Water shall charge each customer for the provision by it of water services.

Such charges are to be calculated by Irish Water in its water charges plan which is subject to the approval of the Commission for Energy Regulation.

The water charges plan to be prepared by Irish Water by Irish Water is required to specify

(a) The manner and method by which charges are to be be calculated; and

(b) The costs likely to be incurred by Irish Water in the performance of its functions under the legislation during the period to which the water charges plan relates.

The water charges plan is also required to set out the requirement to charge for both water supply services and waste water services. While the majority of Irish Water’s customers will receive both water supply and waste water services, a proportion may only receive a water supply or a waste water service.

Where a customer receives both water and waste water services, the legislation provides that the amount of waste water discharged from a household or other premises is deemed equal to the amount of water supplied to the premises. This is often referred to as “water in – water out” and is a broadly adopted method for charging for water services internationally. This would apply whether the volume of water supplied was measured by a water meter or assessed based on criteria to be approved by the CER.

In preparing the water charge plan, Irish Water is required to take account of the public utility nature of its functions but also the need to perform its functions in a manner that maintains Irish Water as a commercially viable utility. The CER in evaluating the plan may approve the water charges plan submitted by Irish Water, with or without modifications, or may refuse to approve the water charges plan.

In addition to approving the water charges plan, the CER has a wider role in overseeing the level of service provided by Irish Water to its customers.

In particular, section 32 of the Water Services (No. 2) Act 2013, provides that Irish Water must prepare and submit to the CER, a code or codes of practice to address a wide range of customer protection issues. These include:

• Standards in relation to the performance by Irish Water of its functions;
• Billing by Irish Water of persons in respect of water services provided;
• Methods of payments of water charges;
• The provision of information to customers of Irish Water for the purposes of enabling customers to communicate with Irish Water;
• The making of complaints to Irish Water by customers in relation to the provision of water services, the standards of such services or the contesting of the amount of a charge; and importantly
• Any other matter the Commission considers necessary and appropriate to secure the interests of customers of Irish Water.

 

Section 39 of the Act sets out the requirements of the CER in the performance of its functions and in this regard, the CER is obliged to perform its functions in a manner that best serves the interests of customers of Irish Water. It is worth noting that the CER is required to perform its functions having regard to the need to ensure -

• That the customers of Irish Water are provided with the quality of service provided for in the aforementioned code of practice;
• That water services are provided by Irish Water in an economical and efficient manner;
• That Irish Water operates in a commercially viable manner;
• The continuity, safety, security and sustainability of water services;
• The recovery of costs of water services in accordance with Article 9 of the EU Water Framework Directive which requires Member States to take account of the principle of recovery of the costs of water services.

Section 42 of the Act provides an important role for the Minister for the Environment, Community and Local Government by providing that the Minister may issue a general policy direction to the CER.

In this regard, my predecessor as Minister, Deputy Phil Hogan, issued such a direction to the CER on the 2^nd of July 2014. The policy direction, which took account of decisions made by the Government, addressed a range of matters relating to the water charges plan to be submitted to the CER by Irish Water and relates to the interim regulatory cycle which will cover the period from October 2014 to the end of 2016. In particular, the direction provided for:

• The provision of a free allowance for domestic customers of Irish Water for their usage in their primary residences, amounting to 30,000 litres on an annual basis per household;
• An allowance to cover the normal consumption of both water supplied and waste water treated per child in primary residences in the State, with the level of this allowance to be verified through consumption data from metering;
• The requirement for assessed charges, applied by Irish Water, to be primarily based on occupancy, allowing for provision for other factors to be considered, such as a comparison with metered usage;
• Provision for special arrangements for customers who have specific medical conditions, which require increased water consumption, involving the capping of such charges at the relevant assessed charge;
• Provision that no standing charge should apply to domestic customers, other than provision for the CER to consider a minimum charge for non- primary residences; and
• Of particular relevance, given the subject matter of the Bill tabled by Deputy Cowen, the direction also provides that the Commission should make provision for circumstances where the quality of water services provided by Irish Water to customers is impaired or where services are reduced or restricted, for example, where there is a boil water notice in place.

 

I think it would be useful to outline the existing legislative provisions dealing with drinking water quality. To ensure the safety of our drinking water supplies, the quality of drinking water in Ireland is regulated by the European Union (Drinking Water Regulations) 2014. These Regulations specify 48 micro-biological, chemical and indicator parameters or standards which water suppliers (including Irish Water and Group Water Schemes) are required to monitor drinking water supplies for compliance with those standards. Irish Water is now responsible for public water supplies.

The EPA is the statutory body responsible for the supervision of drinking water supplies and has been provided with extensive powers by the Regulations to ensure that drinking water suppliers comply with the parameters contained in the Regulations. These include the power to issue a direction to a water supplier to ensure compliance. The regulations provide that it is an offence for a water supplier to fail to comply with such a direction.

As part of its statutory monitoring responsibilities, where Irish Water in consultation with the HSE considers that a water supply is a potential risk to human health, it is required to ensure that the supply of such water is prohibited or the use of such water is restricted and that consumers are informed promptly and given the necessary advice. This notification and in particular the advice provided for consumers will vary depending on the cause of the risk.

The main parameters for which restrictions are currently in place are E. coli, cryptosporidium and lead. Boil water notices are issued in relation to related to E.coli or cryptosporidium while water restrictions are issued for lead.

The EPA’s produces annual reports on the quality of drinking water supplies in Ireland which set out the compliance of drinking water supplies with the mandatory standards set out in the Drinking Water Regulations. The most recent report covers compliance in 2012 and shows that 98.7% of public water supplies were compliant.

This shows a high level of compliance, although clearly we want to improve on this and ensure that all supplies meet the necessary standards.

Significant progress has been made in improving the quality of drinking water supplies in recent years. Of particular note is the 92% reduction in the detection of E. Coli in public water supplies since 2005. At present there are 978 public water supplies, for which Irish Water is now responsible, serving approximately 82% of the population of the State. The remainder of households receive their supply from either private wells or private group water schemes. The EPA has recently reported to my Department that there are currently 31 restrictions in place on public water supplies, including 20 boil water notices. The restrictions in place affect approximately 26,000 people. Of the schemes affected by the boil water notice one is each of the Counties of Cork, Kerry, Leitrim, Longford, Mayo, Sligo, Waterford and Wexford, four are in County Tipperary and eight are in County Roscommon.

A number of restrictions issued under the Drinking Water Regulations relate to exceedances of the limits for lead. These exceedances arise from the solubility of lead in drinking water. The World Health Organisation has been advising on reduction in exposure to lead in recent years on the basis that prolonged exposure to lead can result in harmful health effects, especially in infants and unborn children. This has resulted in reduced limits being set by the European Union in the Drinking Water Directive, which is transposed into Irish legislation by the Drinking Water Regulations.

In 2003, the allowable limits for lead in drinking water were reduced from 50 microgrammes to 25 microgrammes per litre. At the end of 2013, the limit was further reduced to 10 microgrammes per litre or ten parts per billion. At this lower concentration, the risk of exceeding the limit exists wherever there is lead piping, especially when the water has been sitting in the pipe overnight. It is possible to treat the water using particular chemicals but this can only reduce rather than remove the risk.

For this reason the World Health Organisation recommends the removal of lead from drinking water systems as the necessary objective to reduce health concerns.

There is a negligible amount of lead pipes in the water distribution mains but Irish Water estimates that approximately 100,000 homes may be connected to lead service pipes – this is the pipe that connects the water main to the household stopcock or water meter. Irish Water has developed a 10-year timeframe to eliminate these service pipes and lead backyard services, which it estimates would involve an additional 30,000 to 40,000 homes. The estimated cost of this work is between €200 million to €300 million.

The Water Services Act 2007 provides that the owner of a premises is responsible for the maintenance and renewal of the internal water distribution system and shall ensure that it is kept in good order and repair, so as to prevent a risk to human health or the environment and that the water meets prescribed quality standards.

Responsibility for replacing lead pipes from the main stopcock to the house and within the house rests with the homeowner. As a precaution, Irish Water recommends persons in premises that have lead piping, to flush the supply at the kitchen tap first thing in the morning, before using for drinking. This is consistent with guidance in a Joint Position Paper on lead in water prepared by the EPA and the HSE – though I should point out that the optimal guidance in the Joint Position Paper is for the replacement of any lead pipes.

Irish Water is also evaluating the problem of lead piping within households. In this regard they are examining methods of water treatment to reduce and prevent lead being absorbed into household water supplies.

The Water Services (No. 2) Act 2013 requires the EPA and Irish Water to cooperate in a manner that best promotes the interests of consumers and the efficient provision of water services.

Irish Water is taking action in this regard by prioritising drinking water quality as its top priority in its interim investment plan which will operate for the period from 2014 to 2016. The main focus of the investment plan will be on –

• urgent provision of treatment plants to address schemes with boil water notices, 8 of which arise in County Roscommon;
• an action plan to address water supply schemes not considered sufficiently robust to ensure that water supply will comply with drinking water standards;
• a specific programme of work to address the long-term problem of lead piping in the public supply system, while also advising households on the implications of lead plumbing systems in older buildings.

The investment plan will provide for capital spending on new drinking water plants of €193m with a further €140m focused on drinking water availability and quality improvement.

A number of schemes are being fast- tracked where there are currently restrictions on supply. These include:

• six new treatment plants which are under construction in County Roscommon and will be completed between November 2014 and June 2015 and will serve over 20,000 people; and
• a new scheme to be completed in Tipperary to address boil water notices that have been in place for almost six years.

Another important development is the agreement between the Irish Water and the EPA to move towards a water safety planning approach. A water safety plan is a holistic approach to managing the integrity of the drinking water supply by managing the entire supply from source to tap. This more proactive approach will reduce the likelihood of future issues with supplies, once the water safety plans have been put in place.

It is clear that there is a dynamic effort being made by Irish Water to address, as a priority, drinking water supplies with impaired supplies.

To return to the issue of the charges, water charges for households will commence on the 1^st of October 2014, with the first bills issued by Irish Water to households from January 2015. In advance of this, and in accordance with the provisions of the legislation, Irish Water has submitted its proposed water charges plan to the CER. In July 2014, the CER published a public consultation on the proposed water charges plan, which has recently concluded. In its consultation document, the CER set out its initial proposals in relation to water charges and in particular how the requirements of the policy direction could be achieved. This included the following proposals:

• where a water supply is declared unfit for human consumption for a period of less than three months, a 50% discount on the water supply charge should apply;
• where the supply is unfit for human consumption for a period of more than three months, a 100% discount on the water supply charge should apply.

The CER proposals are more favourable to the customer than the proposals submitted by the Irish Water, who had sought that the 100% discount should only apply where the period involved is over six months, rather than three months. I understand that, following the public consultation process, the CER is now further considering the approach to compensating households, where the water supply is not fit for human consumption.

It is important to highlight that all of the households on 18 of the 20 public water supplies, including all 8 supplies in Roscommon, affected by a boil water notice that were notified to my Department by the EPA would be eligible to receive a 100% discount on the water supply element of their bill from Irish Water – in other words, as indicated in the documents published by the CER.

If confirmed when the water charges plan is published shortly, “as such, any customers that have on a Boil Water Notice or a Drinking Water Notice 3 months prior to the commencement of water charges on 1st October 2014, will not pay for their water supply.”

The legislative framework that the Government has put in place to establish Irish Water and the Commission for Energy Regulator as the economic regulator for Irish Water means that there is a robust process for the protection of customer interests and clearly demonstrates that the customer was at the centre of Government’s thinking when framing the legislation. As we can see from the extensive activity being undertaken by the CER, this is operating effectively.

Moving to specific elements of the Bill tabled by Deputy Cowen, this Bill aims to amend the provisions of section 21 of the Water Services to provide that “Irish Water shall not charge a customer for the provision of water services to his or her dwelling in circumstances where the water being provided to the dwelling is either –

(a) Subject to a boiled water notice; or

(b) Contaminated by a negative water condition or

(c) Both (a) and (b)

From the detailed measures I have outlined, it is clear that the legislative and administrative processes already in place, provide the basis for addressing the compensation of customers affected by a water supply that does not comply with the statutory standards. For this reason, the Government cannot support the Bill tabled by Deputy Cowen. As I have outlined, the existing legislation provides the basis for addressing this matter with the necessary flexibility, which is not addressed in the Bill now before the House. This flexibility is important to ensure equity and proportionality for all customers of Irish Water.

The CER in determining on the water charges plan, and specifically on how to deal with those with an impaired water supply, is proposing to address the level of time that the supply was impaired for, and to address the issue in relation to the water supply element of the charge.

This is an area where the Bill tabled by the Deputy is flawed. An exemption from all water charges is proposed by this Bill, and this ignores that the fact that the provision of a waste water service by Irish Water is not affected by any issue relating to the water supply.

In its own analysis, published as part of the public consultation on the water charges plan, the CER estimates that only 15 to 20% of water supplied to households is typically consumed directly by household occupants or used in food preparation and is therefore affected by water that is unfit for human consumption. While a final determination on this matter has not yet been made by the CER, it is proposing discounts that go well beyond this 15 to 20% level. However, to exempt a household from waste water charges, as well as water supply charges would be disproportionate. As stated, Irish Water is obliged to charge for the services provided by it and to operate in a commercially viable manner. The treatment of waste water discharged by households is a major component of the overall cost of water services delivery.

Compliance with the European Union Waste Water Directive has required extensive capital investment in new treatment plants, investment which will be continued by Irish Water in the coming years.

All of the waste water treatment plants operated by Irish Water are subject to a licensing regime by the EPA, in accordance with the Waste Water (Discharge Authorisation) Regulations 2007-2010. In this regard, the cost of treating waste water discharged by households is almost the same as the cost of supplying treated drinking water.

The CER is due to announce the approved water charges plan for Irish Water towards the end of this month. The approved water charges plan must fully reflect Government policy as outlined in the policy direction issued to the CER in July 2014.

The measures I have outlined are a key aspect of creating a sustainable funding model for water services delivery in Ireland. The introduction of regulated water charges creates a fair and equitable funding model for a new approach to water services delivery. This is critical from both a social and economic perspective.

The establishment of a new and sustainable funding model will help Irish Water secure the level of investment required to upgrade our public water and waste water infrastructure to ensure that the public receive a high quality drinking water supply and that waste water is treated to high standards to avoid the pollution of our watercourses and coastline. This is the service that our citizens expect and deserve and this is what this Government is delivering.

I appreciate the good intentions of the Deputy in bringing forward this Bill but as I have outlined, the current policy and legislative framework fully address the objectives of this Bill in a more comprehensive manner and therefore I oppose the Bill.