chambers ireland - national water authority
DESCRIPTION
Presentation to the Dublin Chamber of Commerce's Infrastructure & Transport Forum by Sean Murphy, Chambers Ireland, on plans to create a National Water Authority and how it could work best.TRANSCRIPT
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How a National Water Authority might work
Seán Murphy
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Funding Challenges
• Business is paying locally for the problems that we encounter daily due to the inadequate provision of funding at a national level.
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Water
• One of the core building blocks of an FDI proposition
• Taxes• Talent• Location• Electricity Supply• Water Availability
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Pharma and BioPharma
• Particularly important for this sector
• Wyeth in Grangecastle EUR1.8Bn invested in developing
• Pharma is strong in Cork for the same reason
• Clean Water Supply was a crucial Component of these decisions
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Major investments made
• 1994-2006: EUR4.4Bn invested in Water upgrades
• Yet upwards of 30pc of treated water is still being lost. (It was 43pc on ave in 2008 (Forfás) and some areas still exceed 50pc)
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Charging is the crucial element
• To fund infrastructure investment• Cut Demand• Incentivise better use• (A toilet scrappage scheme with
replacement of single flush to dual flush system would cut 15pc of total household usage – at a cost of EUR25m!)
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More Investment is Needed
• 2007-2015 EUR 4.75Bn?
• NDP was based on year on year growth rates!!!
• What now?
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Apply User Pays Principle
• Ireland is virtually unique in not charging for domestic water use.
• Water Services Act 2007 contains an absolute prohibition on domestic charges!
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It has been done before
• Domestic Waste Charges resulted in a dramatic decline in waste to land fill
• While water is free at tap it in fact costs EUR1.2Bn per year to deliver (Comhar)
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Charges Work!
• European Environment Agency (EEA) reports that ‘Water consumption by households has actually decreased in all regions of Europe in the past decade.
• This reduction can be directly linked to the water pricing and metering measures put in place to ensure the price of water better reflects its true costs
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Sliding Scale
• ‘Standard’ Access/Use charge incremented according to use
• This would drive our efforts to contain water use and fund infrastructure roll out.
• See: • Aurora, Colorado
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Aurora, Colorado
• 2000-2005 severe drought• 2002 Introduce a sliding scale of rising
charges – with a five-fold spread between the cheapest and most expensive block.
• This subsidised the availability of ‘smart meters’ for households that showed them how much they were using as they used it
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Aurora II
• Provided rebates for water-efficient indoor appliances.
• ($100 for one low-flow toilet to $400 for one water-efficient washer and two dual-flush toilets.)
• Almost immediate reductions in total annual deliveries of 8 per cent and 26 per cent in 2002 and 2003 respectively relative to the 2000-2001 period. (Comhar)
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Commission on Taxation
• Recommends that water charges be introduced.
• Water charges should come in two types: Flat rates for those without meters, and
• Volume-based rates for those with meters.
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Commission on Taxation II
• If flat rate set at approximately the average volume-based rate, then a substantial fraction of the population would have a reason to install a meter.
• If the flat rate is then adjusted to the average volume-based rate OF THOSE WITHOUT METERS, meters will soon be installed everywhere. If not, there will be a subsidy flow from those who save water to those who do not.(Tol)
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€175 Flat Rate Fee
• Not ideal...Does not incentivise conservation.
• But• It established User Pays Principle• Vital underpinning to a National Water
Authority model
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National Water Authority I
• Needs a Revenue Line• As a Semi State it will be able to raise
funds for infrastructure investment• Can achieve Scale• Strategic Vision• Cheaper storage of vital equipment• Separation of resources between
fresh/waste water maintenance/operations
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National Water Authority II
• Ireland as a whole is no bigger than any of the water Companies in the UK
• As with all infrastructure companies – size matters
• Scale also allows for prioritization of investment to locations with the greatest return potential
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National Water Authority III
• Must be on as regulated asset base model a la BGÉ or ESB
• Could bypass bureaucratic challenges to get approval for a water investment programmes
• NWA must also ensure that resources are prioritised
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Conclusion
• There is a good case for a National Water Authority
• Judicious use of incentives will drive take up and roll out of meters
• Implement the Commission on Taxation Recommendations... And secure cost savings from scale!