standard connection charges for water and wastewater · 1 connection charging policy: standard...
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Connection Charging Policy:
Standard Connection Charges for
Water and Wastewater
Irish Water submission to the CRU
IW-CCPP-004
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Contents
1. EXECUTIVE SUMMARY .................................................................................................................3
2. INTRODUCTION ............................................................................................................................6
3. PROPOSED STANDARD CONNECTION CHARGES .........................................................................8
4. WORKS COVERED UNDER STANDARD CONNECTION CHARGES .................................................9
5. HOW THE PROPOSED STANDARD CONNECTION CHARGES WERE DEVELOPED ...................... 13
6. CUSTOMER IMPACT ASSESSMENT ............................................................................................ 16
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1. EXECUTIVE SUMMARY
________________________________________________________________________
Irish Water (IW) has been responsible for the provision of Ireland’s public water services since
1st January 2014. Since then, and in accordance with the Water Charges Plan1 approved by the
Commission for Regulation of Utilities (CRU), IW has continued to implement the Connection
charging policies and related charges formerly applied by each Local Authority (LA).
Prior to 1st January 2014, there were 34 LAs with c.57 different charging methodologies for
calculating a water or wastewater connection charge. The different methodologies resulted in
inconsistent classification of customer types; different charges for similar connections; and no
consistency in levels of connection service. In 2016, the CRU requested Irish Water to submit a
proposal for an enduring Connection Charging Policy for customers seeking a connection to the
IW network. The Policy is to be applied on a national basis and will ensure a simple, fair and
equitable charging methodology, and a consistent and timely connection service offering for all
customers seeking a water or wastewater connection.
The Connection Charging Policy2 proposed by IW establishes Standard Connection Charges for
the majority of connections3. Domestic and Non-Domestic connections are classified into
categories based on water and wastewater pipe size, and these classifications determine the
Standard Connection Charge to be applied.
The proposed Standard Connection Charges are set out in Tables 1 and 2 below, for water and
wastewater respectively.
Standard Connection Charges - Water
Category Service Pipe Size (mm) Connection Charge (€)
Single Domestic (1 Unit) 25 1,935
Domestic Development (Multiple Units)* Dependent on number of Units 1,935**
Non Domestic Small 1 25 1,935
Non Domestic Small 2 32 7,015
Non Domestic Medium 1 50 18,570
Non Domestic Medium 2 80 30,084
Non Domestic Medium 3 100 48,518
Non Domestic Medium 4 150 91,147
Non Domestic Medium 5 200 164,843
Non Domestic Large >200 Quotable
Table 1: Proposed standard charges for Water connections
* Domestic Development and apartments
**Domestic Development and apartments with multiple units will incur the charge per each individual unit
1 Water Charges Plan - scheme of charges from 1st January 2017 to 31st December 2018 – available on CRU website. 2 Connection Charging Policy IW-CCPP-002 3 New or modified connections
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Standard Connection Charges - Wastewater
Category Service Pipe Size (mm) Connection Charge (€)
Single Domestic (1 Unit) 100 3,701
Domestic Development (Multiple Units)* Dependent on number of Units 3,701**
Non Domestic Small 100 3,701
Non Domestic Medium 1 150 22,274
Non Domestic Medium 2 225 228,399
Non Domestic Large >225 Quotable
Table 2: Proposed standard charges for Wastewater connections
* Domestic Development and apartments
**Domestic Development and apartments with multiple units will incur the charge per each individual unit
IW has developed these Standard Connection Charges using a model as illustrated in Figure 1
below. This model collated the costs of all Standard Connections and assigned a uniform
connection charge to each customer category based on pipe size and projected volumes of
connections. This standardisation of charging within categories enables the equitable
allocation of costs while ensuring cost reflectivity at an aggregate level.
Each Standard Connection Charge covers:
the provision of Service Connection Infrastructure (up to 10m in length) required to
connect a premises from its boundary to the public water mains or sewer;
for Domestic Developments and Medium Non-Domestic connections only, a Mains
Extension in the public road up to 10m in length (where required); and
a contribution to the cost of wider Network Infrastructure required to facilitate new
and modified connections.
Large Non-Domestic connections and customers with additional and/or specific connection
requirements outside of the Standard Connection Parameters will incur a quotable charge in
accordance with the Connection Charging Policy (IW-CCPP-002).
Figure 1 Charges Model Overview
•Pipe size and average flow
•Historic and forecast connection numbers
•Construction rates
•Planned network investment for growth
Inputs
•Service Connection Infrastructure
•Mains Extension Infrastructure
•Network Infrastrucutre
Model•Equitable water
connection charges
•Equitable wastewater connection charges
Charges
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The Connection Charging Policy which is proposed by IW is based on guiding principles set out
by the CRU and will provide customers with:
equitable and non-discriminatory treatment, based on a single, clear Connection
Charging Policy;
Standard Connection Charges based on identified parameters, regardless of location;
and
a transparent end-to-end connection process, with IW as a single point of contact.
To enable a thorough Customer Impact Assessment, IW completed a like for like comparison of
the existing (LA) and proposed (IW) Connections processes, taking into account both the
service levels offered and the costs of the connection. This assessment indicates that IW’s
proposals present a more comprehensive and cost reflective connection service offering,
resulting in reduced complexity, increased transparency, and greater equity for customers.
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2. INTRODUCTION
________________________________________________________________________
IW has been responsible for the provision of Ireland’s public water services since 1st January
2014. Since then, and in accordance with the Water Charges Plan4 approved by the CRU, IW
has continued to implement the connection charging policies and related charges formerly
applied by each LA.
Prior to 1st January 2014, there were 34 LAs with c.57 different charging methodologies for
calculating a water or wastewater connection charge. The different methodologies resulted in
inconsistent classification of customer types; different charges for similar connections; and no
consistency in levels of connection service. In 2016, the CRU requested Irish Water to submit a
proposal for an enduring national Connection Charging Policy. To guide the development of the
Policy, the CRU provided IW with the following charging Principles:
1. Cost Reflectivity: Charges should be reflective of the costs associated with providing a
Connection service to a Customer.
2. Efficient Use of assets: The policy should promote efficient use of existing assets and
minimise the risk of stranding assets.
3. Equity and non-discrimination: Charges should be equitable and not unduly
discriminate between customers.
4. Stability: Charges should be designed to ensure charge level volatility is kept to a
minimum.
5. Simplicity: Connection charges and the charging policy should be clear, transparent and
easy to understand.
6. Cost recovery: The policy should ensure that the utility can recover the efficiently
incurred costs in providing new Connections.
The CRU did not set out a priority for any principle but it did acknowledge that ‘at times conflict
and trade-offs can exist between charging principles and it may be necessary for Irish Water to
strike an appropriate balance between the different principle objectives as necessary’.
IW has sought to strike this balance in the Connection Charging Policy which has been
proposed. The proposed Policy will be applied on a national basis and will ensure cost recovery
while delivering simple, fair and equitable charges for customers seeking a water or
wastewater connection.
Standard Connection Charges, based on pipe size, will apply to the majority of customers
requiring a connection. This standardisation of charging within categories enables the equitable
allocation of costs while ensuring cost reflectivity at an aggregate level.
4 Water Charges Plan - scheme of charges from 1st January 2017 to 31st December 2018 – available on CRU website.
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Large Non-Domestic connections and customers with additional and/or specific connection
requirements outside of the Standard Connection Parameters will incur a quotable charge in
accordance with the Connection Charging Policy.
This document sets out the Standard Connection Charges, the works which are covered and
those which will incur additional costs. A description of how the Standard Connection Charges
were developed and an assessment of how they impact on customers in comparison to the
previous LA charging methodologies is also included.
This document should be read in conjunction with the related Connection Charging documents:
Connection Charging Policy5: IW-CCPP-002
Connection Charging Policy Explanatory Document: IW-CCPP-003
5 Includes a glossary of defined terms.
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3. PROPOSED STANDARD CONNECTION CHARGES
________________________________________________________________________
The proposed Standard Connection Charges are set out in Tables 3 and 4 below, for water and
wastewater respectively.
Standard Connection Charges - Water
Category Service Pipe Size (mm) Connection Charge (€)
Single Domestic (1 Unit) 25 1,935
Domestic Development (Multiple Units)* Dependent on number of Units 1,935**
Non Domestic Small 1 25 1,935
Non Domestic Small 2 32 7,015
Non Domestic Medium 1 50 18,570
Non Domestic Medium 2 80 30,084
Non Domestic Medium 3 100 48,518
Non Domestic Medium 4 150 91,147
Non Domestic Medium 5 200 164,843
Non Domestic Large >200 Quotable
Table 3: Proposed Standard Connection Charges for Water
* Domestic Development and apartments
**Domestic Development and apartments with multiple units will incur the charge per each individual unit
Standard Connection Charges - Wastewater
Category Service Pipe Size (mm) Connection Charge (€)
Single Domestic (1 Unit) 100 3,701
Domestic Development (Multiple Units)* Dependent on number of Units 3,701**
Non Domestic Small 100 3,701
Non Domestic Medium 1 150 22,274
Non Domestic Medium 2 225 228,399
Non Domestic Large >225 Quotable
Table 4: Proposed Standard Connection Charges for Wastewater
* Domestic Development and apartments
**Domestic Development and apartments with multiple units will incur the charge per each individual unit
Large Non-Domestic connections and customers with additional and/or specific connection
requirements outside of the Standard Connection Parameters will incur a quotable charge in
accordance with the Connection Charging Policy.
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4. WORKS COVERED UNDER PROPOSED STANDARD CONNECTION CHARGES
________________________________________________________________________
Figure 2 below sets out a graphical illustration of the three major infrastructural components of
a new connection for a single dwelling or multi-unit development:
1. Service Connection Infrastructure – Infrastructure required to connect a premises to the
public water mains or sewer;
2. Mains Extension Infrastructure – Infrastructure required to extend the public water
main or sewer main in the public road; and
3. Network Infrastructure – the network infrastructure required to provide potable water
and collect wastewater. This includes investment which is planned to facilitate growth.
Figure 2: Infrastructural requirements of a new connection
The extent to which IW provision of each of these components is covered under the Standard
Connection Charges is set out below at a summary level. Further detail is provided in the
Connection Charging Policy document (IW-CCPP-002).
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Standard Connection Parameters – Water
Category
Service Pipe Size
(mm)
Service Connection
Infrastructure
Mains Extension Infrastructure
Network Infrastructure
Single Domestic (1 unit) 25 To max. of 10m Not included Included
Domestic Development (Multiple units)
Dependent on number
of units To max. of 10m To max. of 10m Included
Non Domestic Small 1 25 To max. of 10m Not included Included
Non Domestic Small 2 32 To max. of 10m Not included Included
Non Domestic Medium 1 50 To max. of 10m To max. of 10m Included
Non Domestic Medium 2 80 To max. of 10m To max. of 10m Included
Non Domestic Medium 3 100 To max. of 10m To max. of 10m Included
Non Domestic Medium 4 150 To max. of 10m To max. of 10m Included
Non Domestic Medium 5 200 To max. of 10m To max. of 10m Included
Non Domestic Large >200 Quotable Quotable Quotable
Table 5: Works Coverage of Proposed Standard Connection Parameters for Water connections
Standard Connection Parameters - Wastewater
Category
Service Pipe Size
(mm)
Service Connection
Infrastructure
Mains Extension Infrastructure
Network Infrastructure
Domestic (1 Unit ) 100 To max. of 10m Not included Included
Domestic Development (Multiple units)
Dependent on number
of units To max. of 10m To max. of 10m Included
Non Domestic Small 100 To max. of 10m Not included Included
Non Domestic Medium 1 150 To max. of 10m To max. of 10m Included
Non Domestic Medium 2 225 To max. of 10m To max. of 10m Included
Non Domestic Large >225 Quotable Quotable Quotable
Table 6: Works Coverage of Proposed Standard Connection Parameters for Wastewater connections
A detailed description of the works provided under each infrastructure component is set out
below. In accordance with the Connection Charging Policy, each of these components will be
quotable for Large Non-Domestic connections and for connections with additional and/or
specific connection requirements outside of the Standard Connection Parameters.
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Service Connection Infrastructure
Description Infrastructure required to connect a premises to the public water mains or sewer – up to 10m included in Standard Connection Charges
Works included in Standard Connection Charges
Construction and management of works required for connection to the distribution or trunk water main/ main sewer
Excavation in all surface categories
Materials required to complete the connection
Temporary and permanent reinstatement in all surface categories
Commissioning and testing
Traffic Management
Meter and Meter Fit ( Water only )
Chamber ( Waste only)
Road Opening Licence
Liaison with local authorities and agencies
Works not included in Standard Connection Charges
A quotable charge will apply for all Service Connection Infrastructure above 10m in length
Table 7: Service Connection Infrastructure Components
Mains Extension Infrastructure
Description Infrastructure required for a Mains Extension in Public Road – up to 10m included in Standard Connections Charges for Domestic Developments and Medium Non-Domestic connections only
Works included in Standard Connection Charges
Excavation in all surface categories
Materials required to complete the extension
Temporary and permanent reinstatement in all surface categories
Works required for connection to the distribution or trunk water main/ main sewer
Traffic Management
Road Opening Licence
Works not included in Standard Connection Charges
For single Domestic Units and Small Non-Domestic Connections, a quotable charge will apply for all Mains Extensions
For Domestic Developments and Medium Non-Domestic Connections, a quotable charge will apply for Mains Extensions above 10m in length
Table 8: Mains Extension Infrastructure Components
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Network Infrastructure
Description The network infrastructure required to provide potable water and collect wastewater. This includes investment which is planned to facilitate growth
Works included in Standard Connection Charges
Contribution included in Standard Connections Charges based on planned network infrastructure or upgrades to facilitate growth
Works not included in Standard Connection Charges
Unplanned investment related to the connection
Table 9: Network Infrastructure
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5. HOW THE PROPOSED STANDARD CONNECTION CHARGES WERE DEVELOPED
________________________________________________________________________
The standard charges were developed using a model which collated the costs of all Standard
Connections and assigned a uniform connection charge to each customer category based on
pipe size and projected volumes of connections.
The figure below illustrates how the proposed charges were developed. This is followed by a
description of each of the model inputs and a high level summary of the model methodology.
Figure 3 Charges Model Overview:
The inputs to the model are:
1. Pipe size and average flow
2. Historic and forecast connection numbers
3. Construction rates
4. Planned network investment for growth
Pipe size and average flow
The size of a water supply Service Connection to a customer premises is governed by the
requirement that there should be adequate water supply to meet the customer needs at
adequate pressure, while ensuring that water quality is not compromised through the use of
oversized pipes.
The size of a wastewater Service Connection to a customer premises is governed by the
requirement to ensure that there is adequate capacity available in the collection system to
accommodate wastewater flows and that this system is not subject to blockages.
Pipe sizes for water supply and wastewater collection pipework to Domestic and Non-Domestic
customer categories are outlined in the following Technical Documents, which are available on
the Irish Water website at www.water.ie/connections/:
•Pipe size and average flow
•Historic and forecast connection numbers
•Construction rates
•Planned network investment for growth
Inputs
•Service Connection Infrastructure
•Mains Extension Infrastructure
•Network Infrastructure
Model•Equitable water
connection charges
•Equitable wastewater connection charges
Charges
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Water Infrastructure Standard Details (Document Number: IW-CDS-5020-01);
Wastewater Infrastructure Standard Details (Document Number: IW-CDS-5030-01);
Code of Practice for Water Infrastructure (Document Number: IW-CDS-5020-03 ); and
Code of Practice for Wastewater Infrastructure (Document Number IW-CDS-5030-03).
Historic and forecast connection numbers
Historic applications were reviewed over a two and a half year period from Q3 2014 to Q4
2016. These were then categorised into Domestic and Non-Domestic applications and further
segmented on the basis of pipe size.
Based on the historic applications dataset, the number of historic connections per application
was analysed to determine an average number of connections per application for each
category. This analysis determined a reference historic data set.
To determine forecast connections, 2016 was taken as the base year and an annual growth rate
of 10% was applied for the period 2017-2021.
Construction rates
In 2016, IW ran a Public Procurement Process to put in place a framework of eight regional
contactors across Ireland. IW will complete all connections in the public road and to the IW
Assets via our eight regional contractors and Local Authority partners. This strategy will
transform the existing connection delivery mechanisms into a safer, more efficient and
customer focused process which will ensure:
A dedicated end to end connections service to all customers; and
Improved consistency and quality of delivery of connection works in line with IW
standards and codes of practice.
The average construction rates from the eight appointed regional contractors were used to
calculate the cost of delivering a:
Service Connection, and;
Mains Extension.
Planned network investment for growth
The Standard Connection Charges are designed to recover a contribution to the cost of
Network Infrastructure. The IW Capital Investment Plan (CIP; 2017-2021) was used to
determine the costs of planned network investment required to facilitate incremental growth
in the network. The cost portion benefiting all connections is recovered through the Standard
Connection Charges6.
6 Network Infrastructure costs recovered through Connection Charges are netted off the Regulatory Asset Base – this ensures that there is no
‘double recovery’.
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Summary of Model Methodology
Using the inputs outlined above, the proposed Standard Connection Charges were modelled
using a bottom-up methodology to reflect the total cost to Irish Water of implementing
Domestic and Non-Domestic water and wastewater connections in Ireland over the five year
forecast period (2017 – 2021):
The average cost of construction rates under the contractor framework process was
used to determine a ‘per connection’ charge for the provision of Service Connection
Infrastructure and Mains Extension Infrastructure under each category of pipe size.
The forecast connection numbers were multiplied by the ‘per connection’ construction
rates of the relevant pipe size category, providing the total cost of Service Connection
and Mains Extension provision over the forecast period.
An equitable distribution of the Network Infrastructure contribution was achieved
based on a network usage based weighting. Network usage was derived on the basis of
average daily flow (m3/day) per pipe size as detailed in the model inputs. Forecast
connection numbers were used to calculate a total average daily flow per connection
category over the forecast period. A percentage of the total Network Infrastructure
contribution was then apportioned based on this network usage weighting.
The total cost of the three infrastructure components i) Service Connection, ii) Mains
Extension, and iii) Network Infrastructure was calculated for each pipe size category.
The 25mm water connection category includes all Domestic water connections and the
majority of Small Non-Domestic water connections. A uniform per unit cost for 25mm
water connections and Domestic Development water connections was calculated on the
basis of connection numbers and the total category charge. A similar harmonised
calculation was used for 100mm wastewater connections and Domestic Development
wastewater connections.
Standard Connection Charges for all other categories were calculated using the total
charge per connection category and forecast connection numbers.
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6. CUSTOMER IMPACT ASSESSMENT
________________________________________________________________________
In accordance with the Water Charges Plan approved by the CRU, IW has thus far continued to
apply the connections charges which were in place in each LA prior to 1st January 2014.
These charging regimes (c.57) are complex and were influenced by differing considerations in
each LA at the time of their development. The current connection charges typically consist of
the elements and various methodologies set out in the table below:
Methods of Calculating Current Charges
Works fee
Standard minimum charge
Standard maximum charge
Bespoke charge based on case by case basis
Infrastructure Fee A per unit charge, regardless of floor area
A per m2 charge, based on total floor area
A per unit charge based on a range/range of floor area (range/bands of floor areas
A per unit charge up to a maximum floor area, plus a per m2 charge above maximum floor area
Some LAs give an exemption up to a minimum floor area and charge/range or m2 thereafter.
Supplemental Fee Same as Infrastructure Fee if applicable
Table 10: Typical Methods of Calculating Current Connection Charges
Currently the Infrastructure Fee element accounts for c.80% of the current connection cost. It is
typically based on the square area of the property, as set out in the planning permission. In
such cases, this charge does not reflect the customer’s water services need or the burden
placed on the IW network.
In addition to the current connection charges outlined above, and depending on local practices
in the individual LA, customers may also need to complete additional works and incur
associated costs to complete the connections process.
It is clear that the current Connections Charging practice is complex, inconsistent, and results in
inequitable treatment of customers across the country. In contrast, the Connection Charging
Policy which is proposed by IW is based on the guiding principles set out by the CRU and will
provide customers with:
equitable and non-discriminatory treatment, based on a single, clear Connection
Charging Policy;
Standard Connection Charges based on identified parameters and regardless of
location; and
a transparent end-to-end connection process, with IW as a single point of contact.
Given the diversity of connection charging methodologies across the country, it is inevitable
that the move to a single, national Connection Charging Policy will result in both positive and
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negative comparisons with the current connection charges. To enable a comprehensive
Customer Impact Assessment, IW completed a like for like comparison of the existing and
proposed Connections processes, taking into account both the service levels offered and the
costs of the connection.
Service Comparison
A standard connection service encompasses a broad scope of connection elements as outlined
in the table below. Under IW’s proposed Connection Charging Policy, a Standard Connection
Charge will cover this full standard scope of works for a connecting customer.
Service Activity Service Element
Administration and Operations
Initial Survey
Stakeholder Engagement re. Planned outages
Communications re. planned outages
Operational Shutdowns
As constructed drawings and records
Supervision of Works Supervision of Works Completed
Reinstatement Sign-Off
Tie-In Tie-In Physical Connection
Tie-In Testing
Materials Material Procurement
Civil Works Civil Works Excavation
Civil Works Reinstatement
Road Opening Licence
Road Opening Licence Application
Road Opening Bonds/Deposits
Road Opening Close-out
Traffic Management Traffic Management Set Up
Traffic Management Plan and Risk Assessment
Table 11: Scope of a standard connection service
IW’s analysis indicates that the current scope of LA service provision varies widely for a
standard connection charge. Any service element required by the customer which is not
provided by the LA must be borne directly by the customer, adding further costs.
The table below shows the number of the LAs providing various levels of connection service
offerings7, banded into percentages of the full service covered under IW’s proposed Standard
Connection Charges (100%).
7 Based on analysis of a Single Domestic 1 Unit connection – IW analysis indicates that other connection categories are not materially different.
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No. of Services <25% >25% - <50% >50% - <75% >75% - <100% 100%
Water 2 12 9 5 3
Wastewater 5 17 3 4 2
Table 11: Current LA provision of IW’s proposed service elements
Of the 31 charging regimes surveyed, only three provide a full service offering for water
connections, and two for wastewater connections.
14 of 31 LAs provide a water service offering of less than 50% of the IW service offering;
22 of 31 LAs provide a wastewater service offering of less than 50% of the IW service
offering;
Under IW’s proposed Connection Charging Policy, a Standard Connection Charge will
provide the full standard scope of works for a connecting customer.
Cost Comparison
For a range8 of customer connection scenarios, the tables below compare IW’s proposed
Standard Connection Charges against the median, average, highest and lowest of the current
costs9 for water and wastewater.
Water Single
Domestic 1 Unit
Domestic Developments
25 Units
Domestic Developments
200 Units
Non Domestic Small 1
Non Domestic Medium 2
Current Cost - Median €4,305 €52,382 €353,131 €4,141 €29,786
Current Cost - Average €4,211 €55,518 €381,710 €4,187 €35,605
Current Cost - Highest €6,753 €163,554 €779,355 €7,762 €81,838
Current Cost - Lowest €1,853 €14,989 €26,835 €1,573 €7,564
Proposed Standard Charge €1,935 €48,375 €387,000 €1,935 €30,084
Table 12: Cost Comparison Summary – Water
Wastewater Single
Domestic 1 Unit
Domestic Developments
25 Units
Domestic Developments
200 Units
Non Domestic
Small
Non Domestic Medium 1
Current Cost - Median €5,604 €62,286 €402,046 €5,411 €39,054
Current Cost - Average €5,586 €65,379 €429,358 €5,253 €43,836
Current Cost - Highest €8,570 €174,873 €1,327,598 €8,231 €95,244
Current Cost - Lowest €1,651 €18,345 €43,688 €991 €8,626
Proposed Standard Charge €3,701 €92,525 €740,200 €3,701 €22,274
Table 13: Cost Comparison Summary - Wastewater
8 Range represents majority of connection scenarios on basis of data available to IW 9 ‘Like for like’ service basis – total cost borne by the customer to receive the full IW connection service offering.
19
For water connections, IW’s proposed Standard Connection Charges are less than both
the current average and median costs in four cases, and marginally higher in one.
For wastewater connections, IW’s proposed Standard Connection Charges are less than
the current median and average costs in three cases, and higher in two.
For all cases in both water and wastewater, IW’s proposed Standard Connection
Charges are substantially less than the highest cost currently incurred by customers.
In summary, when taking both service level and cost impacts into account, IW’s proposals
presents a more comprehensive and cost reflective connection service offering, resulting in
reduced complexity, increased transparency, and greater equity for customers.