1. WSNTG Annual Conference September 2006 Water Services National Training Group 10 th Annual Conference 7 th September 2006

2. WSNTG Annual Conference September 2006 Water Services – Operational Affordability Michael Roche Director of Services Offaly County Council

3. WSNTG Annual Conference September 2006 Affordability Challenges 1.Water Pricing Policy 2.DBO Implications 3.Water Quality 4.Energy Costs 5.Legislation

4. WSNTG Annual Conference September 2006 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. WSNTG Annual Conference September 2006  Thankfully the situation in Water Services is nowhere near as drastic  Nevertheless, the analogy has resonances for the sector

6. WSNTG Annual Conference September 2006 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. WSNTG Annual Conference September 2006 Water Pricing Policy  Two principal concerns for Local Authorities 1.Requirements of Non-Domestic Metering policy 2.Recoupment of Domestic Costs

8. WSNTG Annual Conference September 2006 Non-Domestic Metering  Non-profit  25% Unaccounted For Water (UFW)  95% recovery of Charges  Transparent  Operational Issues resulting

9. WSNTG Annual Conference September 2006  Combined Connections  Domestic allowance  Ability to recover charges/Power to disconnect  Charging for UFW  Recovery of Capital Costs  Bad Debts Non-Domestic Metering

10. WSNTG Annual Conference September 2006 Recoupment of Domestic Costs  CCMA Survey of period from 2002- 2005  Local Government Fund

11. WSNTG Annual Conference September 2006 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. WSNTG Annual Conference September 2006 Recoupment of Domestic Costs  Survey Results Year Total Est Cost of Water Services (CCMA Survey) % Inc since ‘02 2002313.18 - 2003367.8417% 2004421.0334% 2005492.2657% Year Est Domestic Cost Water Services (CCMA Survey) % Inc since ‘02 2002182.66 - 2003219.22920% 2004249.2736% 2005278.6453%

13. WSNTG Annual Conference September 2006 Recoupment of Domestic Costs Year Domestic Cost as % LGF 200232% 200334.2% 200436.2% 200537.2%

14. WSNTG Annual Conference September 2006 Recoupment of Domestic Costs

15. WSNTG Annual Conference September 2006 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

16. WSNTG Annual Conference September 2006 DBO Policy  OFFALY – Clara WWTP- 2005 O&M 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. WSNTG Annual Conference September 2006 Clara WWTP

18. WSNTG Annual Conference September 2006 Clara WWTP

19. WSNTG Annual Conference September 2006 Ferbane WWTP

20. WSNTG Annual Conference September 2006 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. WSNTG Annual Conference September 2006 DBO Policy  CLARE  2006 Operating Budget-€11.8m  Estimated additional cost of O&M element- €4.6m  Increase of 39%

22. WSNTG Annual Conference September 2006 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. WSNTG Annual Conference September 2006 Water Quality  In Offaly, costs of monitoring Drinking Water have increased from €56,000 to €160,000 per annum

24. WSNTG Annual Conference September 2006 Water Quality  Receiving Water Quality  Water Framework Directive (WFD) requires all waters to have “good” status by 2015

25. WSNTG Annual Conference September 2006 Energy Costs Electricity Costs  Rising price of Oil/Gas  Deregulation of Energy Market

26. WSNTG Annual Conference September 2006 Legislation 1.Water Quality 2.Water Services Bill - Licensing of Group Schemes, Asset Management 3.Health and Safety 4.Training 5.“Staff Embargo”