Minister Kelly notes Eurostat ruling on Irish Water
Issued : Tuesday 28 July, 2015
The Government has noted that Eurostat have not concurred with the view of the CSO that Irish Water should be treated as off balance sheet at this stage.
The approach adopted by Eurostat appears to have been influenced significantly by uncertainties associated with a forward looking assessment of this kind; the Government remains confident that the full implementation of the Irish Water model will provide the evidence to address these uncertainties and that an “off balance sheet” classification can be achieved when the matter is reviewed by Eurostat again in the future. The Government also notes that the CSO has raised a number of technical issues and factual inaccuracies associated with aspects of Eurostat’s decision and that these issues, when followed up, will also support the achievement of a reclassification in due course.
This “point in time” classification decision in no way alters the fundamental case for a single national water utility with its own business plan to co-ordinate and increase the investment that is needed in our water infrastructure.
There are no budgetary implications arising from this decision for 2016. As a precautionary measure we had included Irish Water as “on balance sheet” for the purposes of the Spring Economic Statement so the same fiscal space remains. The funding for Irish Water is already agreed to the end of 2016.
Neither does the Eurostat decision impact on Irish Water’s consumers.
“This ruling from Eurostat is not written in stone. We will carefully review the issues raised, as will the CSO. The Government believe that the revenue accruing from affordable water charges, coupled with the forecast savings of over €1.6 billion to 2021, mean that Irish Water is a viable commercial utility which will in due course be treated in the same manner as our other utilities and many public water utilities in Europe. We therefore expect that in the normal review of classifications, this matter will be reconsidered.”
Commenting on the rationale for the establishment of Irish Water, the Minister emphasised the need for extensive investment in our water infrastructure – this is not only about the quantum of money but also about prioritising the correct investment, gaining economies of scale to deliver greater investment from any level of resources available and using innovation to gain efficiencies. Irish Water is already doing this:-
• Irish Water is increasing investment in water and waste water infrastructure. At least €410 million expected to be invested in 2015, an increase of 17% on 2014. Commenced work on six of the most urgently needed wastewater treatment plants, to deal with the forty four towns where raw sewage is being pumped directly into rivers and beaches.
• A new approach to asset management and infrastructural delivery. Central strategic planning is now based on accurate asset performance data and full control of all investment decisions. Irish Water is now planning investment consistently across the asset base rather than on large-scale, one-off investments. An example of this is the proposed Ringsend wastewater treatment plant upgrade, where an alternative approach to a treatment plant extension will save the company €170 million.
• A greater focus on reducing leakage. Irish Water is developing a regional, shared service model approach to key challenges such as leakage. It has also set annual improvement targets with local authorities as part of the annual service plans.
• Greater economies of scale in running water services: €12 million in procurement savings was achieved in the company’s first year alone. It is also benchmarking unit costs and targeting savings though energy management and chemicals.
• Prioritising the elimination of boil water notices: has removed boil water notices for 17,000 people in Roscommon with a further 6,000 due to be removed by the end of the year. Prioritised investment of €26.8m in Roscommon will ensure a clean secure drinking water supply to more than 22,700 customers by late 2015.
• Standardisation of operations: this is leading to benefits in performance and energy costs.
• Conducting plant and process audits: these are identifying repair needs, assisting in planned maintenance programmes and providing for efficiency scoping.
• Introduction of utility systems to manage spend, improve value for money, and to capture the condition and performance of water services infrastructure.
• Irish Water has become the main contact point for customer queries through its customer call centre. This was help deliver a single, standardised national service for those who use the public services.
• Over 725,000 meters installed through a programme that has been rolled out in every county in the country – over half of the easily metered dwellings in the country metered in 23 months: this will provide incentives to conserve water through water charges and help detect customer-side leakage. Irish Water estimate that about 6% of all water produced is lost through customer-side leakage, and 43% of all water produced lost through network leakage.
• Implementation of other initiatives under the service level agreements, annual service plans and the ‘2014-2017 Transformation Plan’ that will standardise and modernise operations, asset management, customer service, procurement improvement, and assets data intelligence.
Examples:
(1) councils will be given handheld devices so that they can be given orders quickly to fix water problems and report back when they are completed;
(2) there will be a single national laboratory service for testing water samples.
