Utility Week

UTILITY Week 17th March 2017

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24 | 17TH - 23RD MARCH 2017 | UTILITY WEEK Operations & Assets Event WWT Water Northern Ireland Conference, 24 February 2017 NI Water faces unique challenges Funded by the taxpayer, NI Water faces political as well as financial pressure – but must still deliver. Lois Vallely reports. N orthern Ireland Water faces some unique challenges. As both a regu- lated utility and a non-departmental public body, it relies on the government for money. Being a long-term business in a short-term funding situation is not easy. Regulatory economist and policy adviser John Smith told delegates at WWT's Water Northern Ireland conference on 24 February that the company lacks medium-term fund- ing security, as it is forced to operate within an annual budgetary cycle of public funding. Introducing the conference, Smith said: "This is clearly an impediment to deliver- ing major capital schemes and contributing, along with other organisations, to the resolu- tion of Belfast's strategic drainage issues." This lack of long-term certainty for North- ern Ireland Water (NI Water) was an overrid- ing theme at the event. Chief executive Sara Venning spoke passionately on the issue, and warned that an erosion of funding is something that holds "the real and perhaps inevitable prospect of not just the aestivation of forward momentum, but of regression". A great deal has been achieved in the Northern Irish water sector in recent years, and this gives it a good platform on which to build. However, Department for Infrastruc- ture permanent secretary Peter May said this is no excuse for complacency. He told delegates: "As we move forward, we need to think differently about how we build an understanding of the place water infrastruc- ture has in wider society – both in order to continue the good work that has already been done, but also to be able to get the bind needed from across government and more widely, to deliver on the big strategic objec- tives underpinned and set out in the long- term water strategy." May applauded NI Water for having deliv- ered without being fully funded. But Venning told delegates it is not the company's inten- tion to rest on its laurels, but to match and exceed what it has done. "We have to be stra- tegic in our approach and plan ahead – we're a long-term business – so that we can con- tinue to safeguard our environment to pro- tect the health of the communities we serve and provide infrastructure that will allow the economy to develop and grow," she said. Aligning itself with this need for long- term planning, the Utility Regulator laid out plans to address longer-term sustainability issues in its latest price control – PC15. As part of this, the price control was length- ened from two or three years to six. The Util- ity Regulator's finance and network assets director, Brian McHugh, explained to del- egates that one of the reasons for that was to give utility companies more space to invest and deliver solutions, and more time to get a reward for their innovation. As it starts work on the next price control – PC21 – McHugh said the Utility Regulator will look to other regulators to work out best practice, and what should be done to pro- mote innovation. However, it is committed to a hands-off approach, and does not wish to "get in the way" of innovation. "We see our role as understanding when there are any regulatory blockages in the existing frame- work which would prevent companies from innovating. We then leave it in the hands of the companies to decide what innovation they want to do and what risks they want to take," McHugh told delegates. "We are very happy to talk about what incentive package there should be to pro- mote innovation, and then let the companies get on and do it in order to deliver against the outcomes that consumers want." Ultimately, speakers agreed, a collabora- tive approach will be needed to ensure the successful delivery of exceptional service to customers and to address long-term sustain- ability and environmental issues. Views from the speakers: Peter May, permanent secretary, Department for Infrastructure "When everything goes well, that all too often gets taken for granted. But when it does not, and people don't have access to the services they need, it is a calamity. And, perhaps par- ticularly given where we are today, it is a calamity for which someone must be held to blame." "The UK water industry has invested heavily, over the last quarter century, in improving drinking water, bathing waters and river quality – investment since privatisation totals £116 billion. Most of this has been driven by EU directives, and now Brexit brings uncertainties about the future framework for the industry." John Smith, regulatory economist and policy adviser

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