Water Services National Training Group

1. Water Services National Training Group 12th Annual Conference 11th September, 2008

2. Water Services National Training Group Delivery

3. Water Services - Compliance, Capacity, Affordability Alec Fleming County Manager Clare County Council

4. Water • Food • Transporter of Waste

5. Compliance • As a food, water must be produced to the highest standard. • Consumer must have utmost confidence. • Failure to meet standards can have very serious consequences.

6. Compliance (contd.)The Current Situation • Ireland is facing a number of unfavourable ECJ Judgements with possible significant fines. • Recent EPA report on drinking water quality – unfavourable in its view of Las. • EPA Reports & water framework results indicate significant problems regarding quality of water resources. • LAs have received improvement notices from EPA re: Water Services Infrastructure. • HSA has also issued Improvement Notices. • Considerable backlog of under-investment. • Public confidence at an all-time low. • Fisheries have taken legal action against LAs.

7. Compliance (contd.)EPA Drinking Water Quality Report focuses on: • Risk Minimisation • Source Protection It puts security of supply firmly on the Agenda

8. Compliance (contd.)Water Quality • According to EPA, provision of high quality water standards is over-riding goal for ‘Ireland Inc’ • Main Threat: “…most widespread threat to the quality of our surface waters is the inputs of phosphorous and nitrogen above background levels…The principal sources…are municipal sewage discharges and losses from agricultural activities. In addition, a significant proportion of private drinking water supplies are contaminated by bacteria…” (EPA: 2020 Vision: 2007: 14) • Major Challenges: “…more than half of surface water and groundwater bodies in Ireland are at risk of failing to meet EU water quality objectives. Bringing water resources up to standard, eliminating contamination of drinking water supplies and implementing water conservation measures are key priorities for Ireland.The provision of urban wastewater treatment for all inland receiving waters is also a major challenge…” (EPA: 2007:14) • Beyond Catch-Up: “The supply of large quantities of clean water to an ever-increasing population depends on proper infrastructure being in place at the right time…we need to begin to plan for future water usage and wastewater treatment needs, and to move beyond a system of catch-up infrastructure…” (EPA:14)

9. Compliance (contd.)Implications for Local Authorities • Standards Determined. • Non-Compliance is a serious felony. • Corporate and Personal Liability.

10. Compliance (contd.)Issues • Water Framework Directive. • Demographic change. • Long-term funding challenge. • Activities subject to stricter monitoring. • Additional compliance and monitoring costs. • Legislation – additional responsibility and consequences for local authorities. • Staffing and resources more generally.

11. Category 2002 2006 % Inc Water Connections 937,765 1,092,998 + 17% Sewerage Connections 937,765 956,000 + 2% Compliance (contd.)Population Increase directly impacts on water services

12. Compliance (contd.)Recent Cases where Water Quality became an issue • Recent example and lessons for wider system. • Crisis caused by inadequate and out-dated treatment facilities, fast-growing population. • Contributory factors may have been: • Agricultural practices and municipal discharges. • Delays in putting necessary infrastructure in place. • Funding difficulties. • Staff resources a problem. • Processes for risk assessment and prioritisation nationally may be an issue.

13. Compliance (contd.)Fall-out • Health implications for members of public. • Lack of confidence. • Impact on business. • Political implications. • Inevitable financial Implications. • EU focus on water quality.

14. Compliance (contd.)Challenge is… • To learn from this experience. • Affords us opportunity to ensure that action is taken to deliver high quality water.

15. Compliance (contd.) Resources To move towards the achievement of a standards required, requires: • Certainty in relation to long-term funding both in terms of amount and sources; • Dependence on development contributions poses level of risks for local authorities; • Resources need to be targeted in strategic way at national level; • Radical approach on all sides will be needed to reach challenging targets – i.e. identifying actions required to deliver a programme.

16. Capacity • Water Services Infrastructure is critical to economic development similar to roads and telecommunications. • There must be sufficient capacity to provide for both the needs of industry and housing.

17. Independent Costs Arbitrary Unit Cost Limit (10K) > 1/3 of Costs to be Funded by Levies Approved Core of Settlement (Limits number of domestic units) Affordability

18. Affordability (contd.) • DoEH&LG previously provided 100% funding for domestic infrastructure. • Only existing domestic funded, leading to: • Under-Design of Schemes. • Schemes not feasible where capped unit cost if exceeded. • Heavy bias against undeveloped rural settlements. • Average cost to be met by local authority of 1/3 of capital cost. • Rural counties with large programme cannot make up deficit. • No account taken of economies of scale and realistic future demand.

19. Affordability (contd.) • In theory, “future domestic” funded via dev levies and water charges; • In practice, these are being part-funded through borrowing; • In order to fully recover monies, charges would need to rise substantially for many local authorities; • Depending on the stream of income “expected from development levies”, may not be a sustainable financial stream for the future; • It may be the case that depreciation is not provided for in current model – could lead to ‘running down’ of expensive asset base over time. • No certainty that level of income in individual cases derived from development contributions will provide sufficient funding for capital investment needed. • Storm Water: Govt funding needed in addition to this – particularly given impact of climate change on flooding. • Social/Affordable Housing: non-funding by DoEHLG of necessary additional infrastructure is an issue.

20. Affordability(contd.) • According to DoEHLG paper, non-domestic infrastructure are fully funded by LA via consolidated water charges or specific capital contributions from significant users. • But consolidated water charges in many cases do not reflect full cost recovery. • This is due to political, local and national competitiveness pressures. • Implication 1 – local govt sector funding dependent on future buoyancy of property market and commercial development, • Implication 2 - in order to meet water quality standards, infrastructure needs, and progress regional development, LAs will need to borrow to invest – without certainty of future income, • Implication 3 – increased pressure on borrowing likely in less developed areas, • Implication 4 - Unit cost of water charges will never be uniform - implications for regional development and regional competitiveness,

21. Affordability (contd.) • No certainty that ‘Ireland Inc’ can reach EU requirements by proceeding with this policy. • Assumption that level of need, level of development, or level of income derived from development is uniform across the country. • Appears to be expectation / belief that, once water pricing is fully applied, that water charges will be uniform across the country – this is unrealistic.

22. Affordability (contd.) • Rural authorities unable to fund local contribution – as interpreted currently under the WPP • Huge gap in resources (human & finance) currently available relative to what is required to achieve EPA standards

23. Affordability (contd.) • Depreciation (Cost of Capital). • Domestic element (identify and fund separately). • Cost of maintaining new assets. • Treat DBO and direct provision equally. • Risk minimisation to be funded. • Higher standards to be funded. • Cost of monitoring private supplies to be funded.

24. Finally: Essential to Accept The critical impact of provision of sanitary services to: • Support development generally. • Meet the economic & social objectives in the National Spatial Strategy, Regional Planning Guidelines & Local Plans. • Implement Government policy on regional development e.g. Rural Planning Guidelines.

25. Water Services National Training Group 12th Annual Conference 11th September, 2008