Water Services National Training Group

1
Water Services National Training Group

• 10th Annual Conference
• 7th September 2006

2
Water Services Operational Affordability

• Michael Roche
• Director of Services
• Offaly County Council

3
Affordability Challenges

• Water Pricing Policy
• DBO Implications
• Water Quality
• Energy Costs
• Legislation

4
Analogy

• Waste Management- After WMA, landfill gate prices
  rose from 5 to 130 per Tonne(2000) in 6 years,
  now retrenching to 90
• Reason-Historic underfunding followed by drastic
  upgrade to meet new higher standards

5

• Thankfully the situation in Water Services is
  nowhere near as drastic
• Nevertheless, the analogy has resonances for the
  sector

6
Water Pricing Policy

• Polluter Pays Principle
• Only applied to Non-Domestic Sector
• Full Cost Recovery
• Charges to be based on meter readings
• Domestic Costs to be met from Local Government
  Fund (LGF)

7
Water Pricing Policy

• Two principal concerns for Local Authorities
• Requirements of Non-Domestic Metering policy
• Recoupment of Domestic Costs

8
Non-Domestic Metering

• Non-profit
• 25 Unaccounted For Water (UFW)
• 95 recovery of Charges
• Transparent
• Operational Issues resulting

9
Non-Domestic Metering

• Combined Connections
• Domestic allowance
• Ability to recover charges/Power to disconnect
• Charging for UFW
• Recovery of Capital Costs
• Bad Debts

10
Recoupment of Domestic Costs

• CCMA Survey of period from 2002-2005
• Local Government Fund

11
Recoupment of Domestic Costs

• CCMA Survey carried out in 2002 found Domestic
  Costs represented 32 of LGF and would rise to
  66 by 2008.
• Revised survey carried out in 2005 found Total
  operating cost up 57 from 2002 with domestic
  costs up 53
• 2005 survey found Domestic Costs as proportion of
  Local Govt Fund rose from an estimated 32 to 37
  between 2002 and 2005.
• Conclusion operational costs are rising at
  faster rate than LGF increases.

12
Recoupment of Domestic Costs

• Survey Results

13
Recoupment of Domestic Costs
14
Recoupment of Domestic Costs
15
DBO Policy

• Resultant cost increase
• Profit margin for Operators
• Capital Replacement Fund
• Examples
• MONAGHAN-DBO for 3 villages, costs rose from
  157,368(2003) to 203,000 in 2005 - 29 increase

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DBO Policy

• OFFALY Clara WWTP- 2005 OM cost of 170,000 ,
  up from 50,000 in 2003 (new plant with increased
  capacity)
• OFFALY Tullamore proposed WWTP
• Doubling of Plant Capacity /Sludge treatment
• Op. cost estimated at 1.8m
• Existing Cost- 0.6m
• Increase of 50

17
Clara WWTP
18
Clara WWTP
19
Ferbane WWTP
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DBO Policy

• FERBANE WWTP
• Previous Annual Cost-50,000
• Current-200,000
• SOUTH TIPPERARY
• Pre DBO Operating Costs (2002)-2.2m
• Current DBO Operating Costs (2006)-3.35m
• Increase of 50

21
DBO Policy

• CLARE
• 2006 Operating Budget-11.8m
• Estimated additional cost of OM element-4.6m
• Increase of 39

22
Water Quality

• Drinking Water Quality
• EU Drinking Water Directive
• Increased sampling/analysis costs- number and
  skills of staff
• Increased Treatment Costs e.g. Cryptosporidium

23
Water Quality

• In Offaly, costs of monitoring Drinking Water
  have increased from 56,000 to 160,000 per annum

24
Water Quality

• Receiving Water Quality
• Water Framework Directive (WFD) requires all
  waters to have good status by 2015

25
Energy Costs

• Electricity Costs
• Rising price of Oil/Gas
• Deregulation of Energy Market

26
Legislation

• Water Quality
• Water Services Bill - Licensing of Group Schemes,
  Asset Management
• Health and Safety
• Training
• Staff Embargo