Water & Wastewater Treatment Magazine
Issue link: https://fhpublishing.uberflip.com/i/957171
www.wwtonline.co.uk | APRIL 2018 | 11 can see the problem that is in store." John Mills, finance and network assets director at the Utility Regulator, had earlier told the conference that Northern Ireland Water is "broadly delivering against performance objectives with a couple of exceptions". He explained: "One is that because of the shortfall in funding in the early years, some of the capital outputs weren't delivered. The second is that the expectation of what will be delivered and available for capital budgets in the future means what we've identified as £55 million of efficiency savings from the capital programme for PC15 has effectively been taken away from us. We describe those as additional outputs, but they're essential things that need to be done that will now be deferred." Venning said that number had actually been as high as £90 million at one stage, adding: "The first part of the mid-term review is absolutely that a good job has been done, but it is really important to pick up on that message from the regulator: the £90 million of outputs that will not be delivered now in this six-year window because the funding hasn't been sorted out. That's huge. "That's £90 million of efficiencies that we would have driven. That's extras for the people of Northern Ireland, and that's tangible – that's wastewater treatment works that haven't been built or haven't been upgraded, or pipes that haven't been laid in the ground. That's a lot of money." She added: "A price control is always challenging but if you've got certainty of funding, you've got the time and space to get on with it and, through the efficiencies that you will deliver and that you will have planned to deliver, you can deliver additional outputs. When that certainty is taken away and your planning window is so much shortened, that in itself leads to inherent inefficiencies, so therefore less gets delivered for customers. Resource gets diverted from the good work of running a water and sewage utility to prioritising, and reprioritising, investment plans." Northern Ireland Water faces a unique funding challenge compared with the other British water utilities. It is a regulated utility but also a non- departmental public body (NDPB) and, because domestic customers do not pay directly for their water, more than 50 per cent of the company's income comes from central government. As an NDPB, there is oversight from the Department for Infrastructure going up to the Northern Ireland Assembly. While the Utility Regulator makes a determination on budget over price control periods, that is subject to amendment in relation to the funding that the government can make available. Linda MacHugh, director of water and drainage policy and the shareholder division at the Department for Infrastructure, said during her conference speech that funding uncertainty was a huge issue. MacHugh told delegates: "Every time we talk about our aspirations and what we can do, the elephant in the room is always funding. Since 2007, when Northern Ireland Water was set up, there's been about £2 billion of capital investment. There's a lot of money being spent, but the money that's available isn't as much as the regulator deems necessary. That is a concern for everybody. "The simple issue is that there isn't enough money around. Every department is facing significant budget cuts and we're waiting with bated breath as to when sectors will make an announcement about our budgets for next year and what those announcements will be. We are expecting pain and there's no getting around that." Venning: Funding uncertainty is leading to inefficiencies, to the detriment of customers "It is really important to pick up on that message from the regulator: the £90 million of outputs that will not be delivered now in this six-year window because the funding hasn't been sorted out. That's huge"