1. WSNTG Annual Conference 8 th September 2005 WSNTG 9 th Annual Conference “Water Services Strategic Plans – Fact or Fiction”

2. WSNTG Annual Conference 8 th September 2005 Economics of Water Services Provision – Private Schemes John Casey Associate Director T.J. O’Connor & Associates

3. Overview of Presentation Background – Group Water Schemes Strategy to address Water Quality Issues Monaghan Pilot Project Implementation of Strategy Economics – Capital Works Economics – Service Phase Conclusions

4. Background – Group Water Schemes Private Group Water Schemes developed in 1960’s and 70’s Community Initiatives Most economical means of service provision at the time Generally little or no treatment

5. Water Quality Deficiencies Water Quality deteriorating over time Drinking Water Regulations S.I. No. 81 of 1988 (giving effect to Directive 80/778/EEC) S.I. No. 439 of 2000 (giving effect to Directive 98/83/EC) European Court of Justice Proceedings Initiated August 2000 ECJ finding (Nov. 2002) of failure to implement 80/778/EEC (850 public schemes and in excess of 810 group schemes)

6. Strategy to address Water Quality Issue Identify and prioritise needs Identify optimum solutions Concept of DBO and Bundling Adapted from French model for rural communities Seen as viable means to ensure: Connect to existing public supply Find alternative source Install treatment plants Ongoing water quality compliance Economy of scale Delivery in short time frame National Rural Water Monitoring Committee set up in 1998 Strategic Rural Water Plans, 1999 onwards NRWMC Action Plan 2003 – 2006

7. Monaghan Pilot Project Monaghan selected for DBO Bundle Pilot Project Purpose to test market and confirm that strategy workable 10 No. group schemes and 3 No. public schemes T.J. O’Connor & Associates appointed as Client’s Representative DBO tenders submitted in 2001 and Veolia Water appointed as DBO Contractor Most of schemes now completed and in O&M Service Phase Pilot Project confirmed market interest and that DBO strategy is workable Lessons learned for subsequent bundles

8. Implementation of Strategy - 1 Monaghan Cavan (3 No.) Clare Sligo (2 No.) South Leinster (Carlow, Kildare, Kilkenny, Laois, Wexford, Wicklow) Total Value of Treatment Works approx € 60M serving 30,000 Households Galway Limerick Mayo Further bundles are well advanced in: Galway Mayo Roscommon Leitrim A total of 11 No. DBO Bundles (131 No. schemes) have now been progressed to completion/construction or tender evaluation stage:

9. Implementation of Strategy - 2 Modular Designs Package Plants Maximising off-site fabrication and construction Contractor Innovations Part 8 Planning Post–Tender/Less Prescriptive Employer’s Requirements Rationalisation/Amalgamation of Schemes Evolving Strategy

10. Economics – Capital Works 1 100% for M&E 85% for civil Max Grant €6476/house Average Scheme DB Cost/House Across 10 No. Bundles : € 3,362/House Typical (10% ile to 90% ile) DB Cost/House range: € 1350/House to € 6400/House Good Value for Money Economies of Scale – 2000 Houses/Bundle Grants available for DBO Capital Cost Typical Range of 15% GWS Contribution € 40/House to € 400/House

11. Economics – Capital Works 2 MAX. GRANT € 6476/House Total DB Tender Cost v No. of Houses in Scheme For 10 No. DBO Bundles to date (2003 – 2005)

12. Economics – Service Phase 1 Size of Bundle Size of Schemes Level of Treatment Payments to DBO Contractor Fixed Annual Charge Volumetric Charge Capital Replacement Fund Factors

13. Economics – Service Phase 2 Average Annual Fixed & Volumetric Cost Cost/House across 10 No. Bundles (based on 219m3/House/Year) Average : € 198/House Typical Range (10% ile to 90%ile) € 153/House to € 249/House Capital Replacement Fund Range Variable, Typical Range € 2/House/Year to € 100/House/Year Affordable and Good Value Current Level of O&M Subsidy €196.81/House

14. Conclusions (131 No. schemes completed/under construction or about to start construction) Radical Change for Group Schemes Groups and NFGWS meeting challenge Good Value, Affordable Solutions being achieved Acknowledgements : Mr. Louis Kilmartin - National Project Manager Rural Water Jennings O’Donovan & Partners Ryan Hanley Consulting Engineers P.J. Tobin & Co. Ltd. Bundling/DBO Strategy progressing well

15. WSNTG Annual Conference 8 th September 2005 WSNTG 9 th Annual Conference “Water Services Strategic Plans – Fact or Fiction”