Mark Griffin: Towards a public water utility

Mark-Griffin-3 New water structures are essential due to increasing environmental requirements and decreasing exchequer funding, Mark Griffin, Assistant Secretary General at the Department of the Environment, Community and Local Government tells the Environment Ireland conference.

Capital investment demands are rising but available funds are decreasing; the economic and environmental cases for careful water management are compelling. That was the message of Mark Griffin, the man overseeing water reforms at the Department of the Environment, Community and Local Government to delegates at the Environment Ireland conference.

Pointing to the declining capital allocations for water services investment (€500 million in 2010 and €371 million this year, falling to €296 million in 2016), Griffin said that this was happening “at a time when we need to be committing more money, particularly on the capital side.”

The 2009-2015 river basin management plans (required under the Water Framework Directive) had identified the need for “very significant investment on the wastewater side”. Other reasons for capital investment include compliance with drinking water standards, the Urban Waste Water Treatment Directive, the Shellfish Water Directive’s targets to reduce pollution and improved bathing water standards.

“There’s no way the State would be able to subvent the operational costs to the extent that it’s doing,” Griffin said on non-capital funding in the years ahead. The most recent figure for operational costs is €517 million in 2010.

“A lot of the commentary around the water reform programme is that the only reason we’re doing this is because we have a ‘gun to our head’ from the troika,” he stated. “That’s simply not the case.” As well as our environmental obligations, Ireland has “a very valuable resource which needs to be very carefully managed and used to enhance our competitiveness and support jobs.”

Griffin said that both his department and local authorities know from experience that “being able to provide adequate water and wastewater services is a huge attractor for foreign direct investment in particular sectors [e.g. ICT].”

Adequate services are also “a major consideration when some of our indigenous companies are considering their expansion plans.” He added: “I’m particularly thinking in terms of the food production processing sector, so we have a major competitive advantage here we need to sustain and enhance.”

Water reforms are due to occur in two phases: a first phase between the end of 2013 and the end of 2017, and the period beyond 2017.

During the first phase, Irish Water will become the statutory water services authority, with responsibility for water services planning and delivery. Legislation enacted during the third quarter of next year will facilitate this. Local authorities, however, will act as agents of Irish Water, delivering its functions under service level agreements.

Responsibility for capital funding will move from the Department of the Environment to Irish Water, with the department having policy and corporate oversight of the utility. The EPA will be responsible for regulating Irish Water. Griffin added that “how that feeds through to the local government system” regarding questions such as jurisdiction for environmental law enforcement will have to be teased out “as part of the roll-out of the implementation strategy” and through legislation.

After 2017, all functions will have been transferred and the public water utility will have established “a track record in accessing third party funding in water investment” and will be operating “as a fully, perfectly integrated public water utility.”

Griffin told delegates that the water metering programme will be initially rolled out by the department before being taken over by Irish Water. The new domestic water charges will supplement government funding, third party borrowing and non-domestic charges.

Variables that will determine the cost of water services will include the provision of free water allocated to households and the level of capital investment. He pointed to the PwC report on transferring water services from local authorities to a water utility, completed in November 2011, which predicted that €600 million per annum would be needed in water and wastewater capital investment between now and 2030.

“We expect to see additional costs arising by virtue of the new plan coming onstream [and] additional leak detection work,” he told delegates, as well as “increased sampling for compliance purposes that may need to be carried out.” Griffin added that the department expected to see “efficiencies secured through, for example, the introduction of improved and standardised operating procedures.”

The current system’s weaknesses, as identified by the PwC report, had underlined the case for reform. Duplication of costs occurs across large numbers of local authorities. Under-investment in assets has been a long-term problem. Operational costs were more expensive than those of benchmark water authorities in the UK. With the exception of Dublin, local authorities are below the minimum scale required (1.5 million customers) for economic provision of water services. “Only the Dublin region comes anywhere close to the scale required,” he said.

PwC’s report had identified strengths with the current system, Griffin added, such as the management of services by democratically-elected bodies which were close to customers. The quick response of local authorities during recent severe winters was evidence of these benefits, he explained, and there is a “need to ensure that we don’t lose that democratic accountability, whether it’s at local or central level.”

In his concluding remarks, Griffin quoted 16th century British theologian Richard Hooker: “Change is not made without inconvenience, even from worse to better.” The Assistant Secretary believed that many in the water sector will be operating out of their comfort zones for years to come: “I think that’s a good thing, and I think the inconvenience caused will be well worth the real change that we can bring about in this sector.”

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