Utility Week

Operations & Assets 20 | 18TH - 24TH MARCH 2016 | UTILITY WEEK Analysis T he water industries of Northern Ire- land and Great Britain face many of the same challenges, such as climate change, population growth, ageing assets, and rising customer expectations. Perhaps the most obvious difference between the water markets of Northern Ire- land and the rest of the UK is the number of companies active in the retail market. While England and Wales have ten water and sew- erage companies and eight water-only com- panies between them, Northern Ireland – in much the same way as Scotland – has just one. Northern Ireland Water (NI Water) is the sole incumbent and has no competitors. It provides water and sewerage services to all 655,000 households and 85,000 non-house- holds across Northern Ireland. This means a distinct lack of competition. NI Water has dual status as a government- owned company and a non-departmental public body, and is regulated by the Utility Regulator – the same body responsible for regulating the gas and electricity markets. The company operates according to the con- ditions of its licence. Domestic charges Another notable difference is that NI Water does not levy charges on households – a long-standing hot topic in the country, with much debate over the past few years about whether charges should be introduced. Following an independent review in 2007, the NI Executive noted that consumers paid an average of £160 a year towards water and sewerage services through their regional rate, but it argued, and still argues, that this is not enough. The future of water and sew- erage services, and the possibility of direct charges, is a matter for the Executive, and any decision will have to wait until at least a"er the next NI Assembly election in May. Challenges Climate change brings in its wake more vola- tile and extreme weather. In just the past few years, droughts, floods, extreme rainfall, and cold weather have increased in severity, leading both to shortages and abundances of water. On top of this, environmental stand- ards are getting stricter, particularly around the quality of rivers and bathing waters. This requires high standards of water treatment and well-maintained sewer networks. Another big challenge common to all water companies is accommodating popula- tion growth. The UK's population is expected to rise by ten million by the 2030s and another ten million by around 2050. To overcome these challenges, British water companies are investing heavily in wastewater and sludge management, flood- ing and pollution, catchment management, climate change adaptation, energy use and renewable energy, and water resources planning. Funding However, NI Water has experienced a short- age of funding, which has made it especially difficult to invest in some of the upgrades and new projects it so desperately needs. NI Water chief executive Sara Venning argues that the company's ability to deliver results is being hampered because of its gov- ernment ownership, and has criticised the government for not having "a medium-term financial settlement in place". NI Water is an organisation which, as the monopoly sup- plier, is economically regulated by the Util- ity Regulator, in much the same way as the English and Welsh companies are regulated by Ofwat. However, NI Water is also designated as a non-departmental public body, operating within the financial framework and funding allocations of the Department for Regional Development. This effectively makes the Northern Irish government the company's single shareholder. Venning says: "We have a shareholder that needs to find the funds. All of us have a job to do to help ministers see that this is important." Due to a lack of funding, she argues, the company had been unable to sign up to a medium-term plan – a key requirement for a regulated utility. NI Water has had three price control peri- ods. The first was PC10, running from April 2010 to March 2013, the second was PC13, which lasted for two years, running from April 2013 to March 2015, and PC15 is six years, from April 2015 to March 2021. It is hoped that the longer term of the new price control will enable NI Water and all its stakeholders – including the Drinking Water Inspectorate and the Northern Ireland Environment Agency – to take a more strate- gic and sustainable approach to the future provision of services. Venning says NI Water's plan for the PC15 will help improve efficiency and drive cus- tomer service improvement. NI Water is "up for the challenge" and is "very keen to get on with it", she says, but the plan needs to be funded, and there needs to be recognition that more funding is necessary. "We all have a task to raise the profile and the importance of this as a priority for North- ern Ireland," she says. "You can't have the nice things if you don't have the infrastruc- ture, and we need to fund the infrastructure. "We're great at what we do, and we can deliver more for less if we're given the fund- ing to move forward. Can we afford not to do that?" Northern Ireland Water NI Water enjoys a free rein, unencumbered by competition on its home patch, but an uneasy ownership model and public funding mean it has its work cut out. Lois Vallely reports. Key numbers NI Water supplies 560 million litres of water a day and treats 320 million litres of wastewater a day. It manages and maintains 346 service reservoirs. It owns: 27 impounding reservoirs 23 water treatment works 656 wastewater treatment works 360 water pumping stations 1,277 wastewater pumping stations 26,700km of water mains 15,200km of sewers

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