Utility Week

20 | APRIL 2021 | UTILITY WEEK Policy & Regulation Interview N orthern Ireland's last price review (PC15) saw the company working within a restrictive £990 million budget. For PC21 it has set out plans costing £2.2 billion – and it will need every penny to make its waste- water and drainage systems fit for purpose, according to its director of finance and regulation Ronan Larkin. "Visiting a city and seeing lots of cranes is a sign of a vibrant growing city and something planners love to see," says Larkin. "We think cranes are great but if you're going to have cranes, you have to invest in drains. We're very supportive of development plans across Northern Ireland and we want to match the ambition with modern 21st century drainage and wastewater infrastructure for housing, industry and the natural environment." He says there is no reason why Northern Ireland should not have the same standard of water and waste- water infrastructure as other UK regions. "It is vital a sustained, significant increase in invest- ment must begin now and must be underpinned with a medium-term funding package to support the delivery of vital infrastructure across the six years to 2027," he says. Northern Ireland Water has set out its business plan for PC21 and the Utility Regulator has issued its dra' determination, which fell well short of giving the company what it says it needs. A final determination is due in May. Tariffs will be set before the final determina- tion is made, and any shortfall in funding will have to be met by the Department for Infrastructure, the company's sole shareholder. Larkin says discussions with the Utility Regulator have been going well and the regulator is supportive of the company's objectives, despite the significant short- fall in the dra' determination. "We have no issue with a determination being chal- lenging. However a determination must also be achiev- able if it is to work for customers. We feel there's more work to be done," he says. "For the final determination to be achievable, we will need to see significant change from the dra' determination. Without that, we wouldn't be able to deliver all that we need to for PC21." This includes spending for environmental protec- tion and enhancement, fighting the impacts of climate change and decarbonising the business in line with the UK's legislated 2050 net zero target. Carbon reduction was built into the plan, including expanding solar energy capacity and reducing the com- pany's carbon footprint. Larkin says the plan allows for using assets in different ways and engaging with land- owners to work together to enhance the natural world, which aligns with approaches outlined by the National Infrastructure Commission. "PC21 sets our ambition around that, but it must receive adequate funding," Larkin adds. "If the final determination looks like the dra' determination, some of the company's plans for tackling the effects of climate change won't be achieved." This "greatly disappointing outcome" would leave the company and its customers exposed to physical and transition risks associated with climate change, he says. While the message from the company is clear, enact- ing the plan requires funding. And the final say on that belongs to the Department for Infrastructure and the Northern Ireland Assembly & Executive. At PC15 the answer was no, and Larkin fears that further underin- vesting could restrain economic development and dam- age the natural environment. "The risk lands on people who use and depend on the service. We are working with our shareholder to mitigate that risk as best as we can," he says. Larkin is confident the open communication through- out the process between the company and the depart- ment means there shouldn't be any shocks when the final determination is published. A decision on whether to accept that decision will be made by the board in July. "We are working with the department to make sure the capital funding goes in at year one to begin the capi- tal programme with key suppliers. That's a good news story for any aspiring regional economy and where we need to be," he says. Ruth Williams, water correspondent "If you're going to have cranes, you have to invest in drains." Ronan Larkin, DIRECTOR OF FINANCE AND REGULATION, NORTHERN IRELAND WATER To read the full interview with Ronan Larkin, visit: www.utilityweek.co.uk

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