Proposed Capital Investment Plan

Transcription

1 Irish Water Proposed Capital Investment Plan Interim Price Control Submission Document No: IW-IPC-002

2 1 EXECUTIVE SUMMARY BACKGROUND THE PROGR AMMES AND IMPLEMEN TATION SUMMAR Y INTRODUCTION EXECU TIVE SUMMAR Y CONTEXT FOR INVESTMENT CURRENT OVERVIEW WATER SUPPL Y CURRENT OVERVIEW - WASTE W ATER PREVIOUS CAPI TAL INVESTMEN T PROGR AMME FIN ANCI AL LI ABILITIES OF COMPLETED AND OTHER PROJECTS THE KEY INVESTMENT CHALLENGES EXECU TIVE SUMMAR Y INVESTMENT CH ALLENGES FOR ASSET MAN AGEMEN T FUNCTION ALITY & IMPLEMEN TATION ASSET INVEN TOR Y AND PERFORMANCE Critical Assets Capital Maintenance Programme Estimation of Capital maintenance Expenditure Requirement Asset Data Capture Systems INVESTMEN T ASSESSMEN T CRITERI A HEAL TH & SAFETY DRINKING WATER QU ALITY & RISK DRINKING WATER AVAIL ABILITY ENVIRONMENTAL COMPLIANCE, URBAN WASTEWATER TREATMENT REGULATIONS & THE WATER FRAMEWORK DIRECTIVE CUSTOMER SERVICEABILITY STAND ARDS CLIMATE CHANGE LONG TERM PL ANNING & STRATEGIC OBJECTIVES CAPITAL INVESTMENT PROGRAMME TRANSITION EXECU TIVE SUMMAR Y - KEY ELEMEN TS OF TR ANSITION PL ANNING TARGET OPER ATING MODEL AND ASSET MAN AGEMENT STRUCTURES Asset Information Management Investment Approval and Governance Programme Management CAPITAL INVESTMENT PLAN Irish Water

3 5.1 EXECU TIVE SUMMAR Y INVESTMENT PL AN DEVELOPMEN T DEVELOPMENT OF THE CAPITAL INVESTMENT PL AN Investment Drivers and Priorities Prioritisation of Investment Drivers Growth Projections / Factors Assumptions and Constraints Funding Availability and Prioritisation WATER TREATMEN T (ABOVE GROUND ASSETS) Water Capacity Prioritisation Proposals and Levels of Expenditure WATER NETWORKS (BELOW GROUND ASSETS) Progress to date Prioritisation Proposals and Levels of Expenditure WASTE W ATER TREATMENT (ABOVE GROUND ASSETS) Key Issues RIVER BASIN MAN AGEMEN T PL ANS AND URB AN W ASTE WATER TREATMEN T LICENSING URB AN WASTE W ATER TREATMEN T DIRECTIVE WATER FR AMEWORK DIRECTIVE LICENSING AND ENFORCEMEN T OF WASTE W ATER DISCH ARGES Progress to date Prioritisation Proposals and Levels of Expenditure WASTE W ATER NETWORKS (BELOW GROUND ASSETS) Key Issues Progress to Date Future Priorities MINOR CAPITAL PROJEC TS PROGR AMME Minor Capital Projects & Works DRINKING WATER PROGR AMME Process Optimisation and Control Programme Filter and Coagulation Programme Disinfection Programme Unidirectional Scour facilitation Programme Plant Refurbishment Programme Source Protection Measures Pressure Management Programme District Metering Area Programme Small Mains Rehabilitation Waste Water Minor Capital Programme Flow monitoring and Sampling Programme Irish Water

4 Process Optimisation Programme Inlet works Programme Quick Win Programme Small Plant Improvement Programme ECJ Projects Nutrient Management Programme Network Survey Programme Network Flow monitoring and Rehabilitation Programme Pump Station Upgrades Energy Efficiency Programme Sludge Programme Critical Asset Programme PROGR AMME KEY STUDIES DEVELOPER DRIVEN REINFORCEMENT HEAL TH & SAFETY SCADA & TELEMETR Y NON-CONTR AC T COST FOR PROJECTS UNDER STATUS C TOTAL CAPITAL FUNDING REQUIREMENT GLOSSARY APPENDICES Document Control Version 01 - dated 27/02/2014 Version 02 - dated 03/04/ Irish Water

5 1 EXECUTIVE SUMMARY The Irish Water (IW) Capital Investment Plan (the CIP) is required under Section 34 of the Water Services (No. 2) Act 2013 (the Act ) to set out and particularise the investment in water services infrastructure that Irish Water considers necessary for the effective performance by it of its functions. This, in combination with the water charges plan (termed the Price Control Submission) is for the purpose of allowing the Minister for the Environment, Community and Local Government (the Minister) and the Commission for Energy Regulation (CER) to determine financing, pursuant to Sections 36 and 22 of the Act respectively. It encompasses the transitional phase from the transfer of services from the Local Authorities (LAs) to IW, and contains projects that are at contract stage at present having completed any required statutory planning process, and those that are significantly far along in the planning process. The CIP for the period (the Period ) is a 3 year CAPEX funding plan. It outlines how IW proposes to fund these contracts to completion and progress projects that are at the planning and design stage, by examining their scope, budgets and timing, maximise existing assets and the capital available. The CIP consists of a number of targeted programmes made up of over 386 individual projects and a range of sub-programmes, which aim to deliver improvements to a range of water and wastewater services including the quality of drinking water, reduced leakages, waste water compliance, business efficiencies and customer service. The CIP does not establish or set out policy. In addition to the CIP, IW is commencing work on a 25 Year Water Services Strategic Plan (WSSP) which will set out long term strategy and objectives for the organisation. The WSSP will address the requirements of Section 33 of the Act, and will be subject to Strategic Environmental Assessment (SEA) and Appropriate Assessment (AA) (Habitats Directive). The CIP will be adjusted as required to meet the objectives and priorities of the WSSP, as adopted following assessment, on this occasion in the future the WSSP will be in place and will form the background to future Investment Plans, as envisaged by Section 34 of the Act. In addition to the WSSP, section 34(5) of the Act requires IW, in making its investment plan, to take account of river basin management plans, local area plans, development plans, regional planning guidelines and any strategic development zones. Due to the time limitations within which the CIP has had to be produced, IW has relied for this initial CIP on the fact that the vast majority of the projects included for funding were included in the WSIP (as reviewed and extended). The inclusion of those projects in that WSIP arose from a process which ensured that the documents referred to in section 34 (5) were "had regard to" by the LAs and by the DECLG as part of the "Assessment of Needs" submissions, as is detailed in the Foreword and Part 1 of the WSIP. In addition, IW asked each of the 34 LAs to submit business cases for priority projects (not all of which were within the WSIP) and conducted direct discussions with each of the LAs during the last quarter of 2013 on same. Section 34(6) of the Act requires IW, before preparing its investment plan, to consult with the EPA, and each regional body and planning authority in respect of whose functional area the investment plan is likely to apply. Again, due to the particular time constraints applying to the preparation of this initial CIP, that 5 Irish Water

6 consultation has had to be conducted in a foreshortened manner. All the relevant bodies were contacted via sent on 13th February 2014 inviting comments by 5pm on Monday 24th February Whilst much of the content of the submissions had been anticipated in the CIP, and it has been possible to address some further issues by way of amendment of the CIP prior to its submission to the Minister and the CER, there are other issues still being considered and these will be addressed in revisions to the CIP, necessitated post the financial decisions of the Minister and the CER under the Act, and the finalisation of the WSSP. The EPA has reserved its right to make further submissions direct to the CER. In its preliminary comments, the EPA has noted that the CIP, as drafted, does not appear to provide for compliance with all of the statutory requirements identified by the EPA. This is a matter for further discussions between IW and EPA. This CIP has had to be prepared in the absence of the WSSP and with very limited time to consider submissions due to the provisions of Section 34(I)(a) of the Act. It is required so as to provide the CER with an understanding of the capex investment that IW considers necessary for the effective performance by it of its statutory functions, and to allow the Minister to determine the grant pursuant to Section 36. The CIP outlines a requirement for 1,771m Capex to meet the objectives identified by previous DECLG programmes as well as those of IW. Funding for the Period is currently constrained to 930m together with un-quantified development levies. In the absence of additional funds, many of the projects outlined in this CIP will have to be deferred beyond the Period, and prioritised based on risk to critical services. Deferring such spend may affect water services customer welfare. The CIP and Price Control Submission will allow the Minister and the CER to decide on issues of funding and finance, and those decisions will in turn determine IW's ability to progress the projects and programmes detailed in this CIP. 1.1 BACKGROUND It is considered useful for the CER to be given a detailed background in this initial price control period, so as to assist its understanding of the CIP. Much of the CIP is therefore devoted to providing this information. For decades, the LAs have provided water and waste water services within the resources and limitations available to them. In January 2014, IW took over responsibility for the provision of most public water services from the 34 LAs. Further to section 31 of the Act, IW has entered into Service Level Agreements (SLAs) with the LAs for the operation of IW s assets for the next 12 years, so as to maintain continuity of service. IW is now responsible for the supply of drinking water to over 80% of the population via approx separate public water supplies, and the collection and treatment of wastewater across approx separate agglomerations. IW has also taken over a large portfolio of assets, including several thousand smaller installations and thousands of kilometres water and waste water pipelines. Due to the fragmented nature of water services across the 34 LAs to date, the level and quality of asset records varies widely. IW 6 Irish Water

7 does not have comprehensive or detailed knowledge of the asset base at this time, but will begin the process of capturing information on critical national infrastructure with immediate effect. The CIP represents the transition between the capital programmes previously overseen and largely funded by the DECLG, and the full price control investment plans to be regulated by the CER. The CIP is dominated by the existing contract commitments of LAs, which have now transitioned to IW. IW will seek to fund these contracts to completion during , within the funding envelope available, and subject to compliance with statutory consents and processes. IW aims to begin additional prioritised projects at the same time. IW will also develop a large portfolio of projects from the planning and design stage, reviewing their scope, budgets and timing to favour intensified capital maintenance and maximise the performance of existing assets. This activity will include proposals for additional capacity for both water and wastewater services to meet the long term needs of the Greater Dublin Area (GDA). Throughout the duration of the CIP, IW will continuously review the CIP, adjusting priorities to take into account emerging information, needs to optimise the investments being made, and the WSSP once assessed and finalised. The current state of IW s water and waste water asset base varies greatly, ranging from very good newer schemes to very poor smaller schemes vulnerable to microbiological contamination and subject to Boil Water Notices. Leakage from the water networks averages over 41% across the country, twice the level of those in the UK, where the assets are comparable but have been managed intensively over the last 20 years. Leakage is four times that of typical figures in Germany, Denmark and the Netherlands, where networks tend to be much newer. These figures indicate that significant investment is required to reach international standards in the water utility sector. While major investment has been made in waste water treatment over the past decade, further progress and investment is required to achieve full compliance with the Urban Waste Water Treatment Directive (UWWTD). An EU Infringement Case against Ireland requires improvements at 66 agglomerations. Separately, Programmes of Measures required under the Water Framework Directive (WFD) could cost IW in the region of 3-4bn, with emerging requirements under the Priority Substances Directive having a further cost implication of 2-3bn. IW will seek to address these compliance requirements in the most cost effective manner possible. The transfer of the DECLG Water Services Investment Programme (WSIP) to IW includes projects that are under construction, projects completed but not commercially closed-out and a significant number of projects tendered in 2013, which were approved to proceed to contract. These in-flight projects have, to a significant degree, defined the budget commitment in The estimated value of the inflight projects exceeds the 930m capital funds available to IW to deliver them. One of the key roles for IW will be to manage the project portfolio to deliver the optimum investment outcomes within its funding constraints. Below is a summary of the required spend across the period within each of the proposed spend areas. 7 Irish Water

8 Capital Project Office Staff, 60,000,000 Telemetry, 7,900,000 Key Studies (for Gate 1 WIAC process), 8,064,640 Health & Safety, 6,000,000 Legacy Final Accounts, 95,000,000 Developer Driven Reinforcement, 33,000,000 Suppressed Capital Maintenance, 100,000,000 Customer Side Leakage, 51,000,000 Metering Surveys, 2,000,000 Major Capital - Main Driver Drinking Water Quality, 193,506,625 Major Capital - Water Conservation, 151,997,184 Minor Capital Projects, 105,000,000 Major Capital - Main Driver Drinking Water Availability, 136,845,135 Minor Capital Works (Reactive), 75,000,000 Major Capital - Main Driver Waste Water Availability, 379,896,879 Major Capital - Main Driver Waste Water Compliance, 366,206,779 Figure 1: Capital Investment Plan Summary 1.2 THE PROGRAMMES AND IMPLEMENTATION In order to address historic deficiencies and to transition Ireland s water infrastructure to a high performance utility model, this CIP will focus on the following key areas: Asset Management IW has been established as an asset management driven business, in line with international best practice in the water utility sector. This represents a radical transformation to the water services planning and delivery model in Ireland. IW will prioritise investments from a whole-life (value for money) cost perspective in contrast to the previous model which tended to run to failure, with minimal maintenance and over-reliance on major one-off exchequer investment. IW will prioritise major compliance issues using the best combination of capital and operational responses, recognising that major plant upgrades are generally required where a change in standards is needed. In the first instance, IW will seek to maximise the capacity of existing assets, and upgrade operations, with the support of targeted capital maintenance. However, it must be recognised that a significant percentage of the existing water supply zones and waste water treatment plants are exceeding their current design capacity. IW will review options to upgrade existing assets as the next step, reviewing all technical opportunities as 8 Irish Water

9 part of the process. Where these measures are not sufficient to meet the long term needs IW will develop plans for new capacity to be delivered in a timely fashion. In 2014, IW will commence the rollout of asset management processes and systems and build a reliable asset database on which to develop the next Investment Plan for the price control investment decisions. Drinking Water Quality Strong progress has been made in recent years where investment has focussed on non-compliant water supplies on the EPA Remedial Action List (RAL), but significant risks to drinking water quality remain at a number of Water Supply Zones (WSZ). Microbiological non-compliance represents an immediate risk to public health and is one of IW s highest priority investment drivers. The CIP seeks funding to give effect to IW's commitment to strive to achieve drinking water compliance through both large scale capital upgrades and minor capital programmes that will eliminate many of the non-compliant legacies. In tandem with water quality programmes, IW will aggressively target leakage management in areas where a reduction in leakage levels can delay the need to invest in new treatment infrastructure, or reduce the stress on treatment. This will reduce costs on the system and the water services customer. The figure below illustrates the number and status of projects in the drinking water quality programme A. Continue in Construction B. Review Scope and Commence Construction C. Continue Planning and Business Case Review 68 Figure 2: Water Supply Projects Irish Water

10 Water Conservation High leakage levels are placing a strain on water resources; reducing the availability of drinking water to water service customers, increasing operating costs, impacting plant performance and water quality. Water conservation and leakage levels vary across the country, with some LAs lacking the basic infrastructure and resources to manage the problem. IW will establish systems and infrastructure to accurately assess leakage levels across all WSZs by introducing an asset management approach. This will balance funding between active leakage control, speed and quality of repairs, pressure management and investment in water main rehabilitation. Customer side leakage is another significant component of Unaccounted for Water (UFW). The domestic Water Metering Programme has already started to quantify the scale of customer side leakage and IW is working on a strategy to address this issue. This involves a first fix policy offering customers post meter installation repairs for leaks in the first instance. This policy will be subject to terms and conditions yet to be agreed and subject to approval for additional funding. A figure of 51 million, over the Period, has been included in this proposed CIP for customer service repairs. This is on the basis that it will be funded by special grant of the Exchequer. However, it should be noted that it forms a critical component of IW's Water Saving Strategy, with an estimated 5-6% of properties experiencing significant leaks based on data from the domestic Metering Programme to date. IW estimates that 15-20m per annum is required for this programme, amounting to at least 50m for the Period. 4 Leakage Management Infrastructure Mains Rehabilitation Projects 36 Figure 3: Water Conservation Projects ( ) Drinking Water Capacity Previous WSIPs indicate that the delivery of additional drinking water capacity and supply resilience through new infrastructure can take up to 15 years. As a consequence, and despite significant investment in recent years, over 25% of WSZs are currently operating beyond their design limits. IW has a key role in meeting current demand, and forecasting and planning to meet future demand to support national development and growth. IW will define water supply needs for a 25 year period, as per requirements of the WSSP, with the 10 Irish Water

11 flexibility to cater for demand growth, demand peaks and source risks, whilst meeting the social and economic needs of balanced regional development. In the short term IW will seek to deliver a number of key water supply capacity projects. Waste Water Environmental Compliance IW will develop its environmental capability and engage collaboratively with the EPA, DECLG and EU to achieve cost-effective and sustainable environmental improvements in compliance with statutory obligations. A study into European Court of Justice (ECJ) compliance and a longer term approach to such compliance has already commenced. Increasingly stringent standards for larger schemes and for Combined Sewer Overflows (CSOs) are being reviewed with a longer timeframe so that the most appropriate and affordable solutions are developed. IW considers that such an approach will save money for the water services customers. In the short-term, the CIP seeks funding for urgent schemes required to meet existing discharge license conditions and where pollution impacts are most evident A. Continue in Construction B. Review Scope and Commence Construction C. Continue Planning and Business Case Review 126 Figure 4: Waste Water Environmental Compliance Projects Large population growth over the last two decades has resulted in significant investment in new wastewater network infrastructure connecting new developments into existing networks. This investment has also assisted with the upgrading and replacement of the existing networks to accommodate additional flows and providing new assets to transfer flows to new/upgraded Wastewater Treatment Plants (WWTPs). Although investment has been made in the below ground assets, a considerable investment is still required to replace infrastructure that is at the end of its service life (especially in the larger cities), to cater for future development needs and to eliminate flooding of properties as a result of sewer surcharging. Storm Water and Emergency Overflows also need to be assessed to ensure that they are compliant with the relevant standards so that WFD good quality status can be achieved. Investment is required to survey and monitor 11 Irish Water

12 current performance, while gathering information on wastewater networks as a first step and then to implement appropriate solutions on a prioritised basis. Customer Serviceability Standards The ability to deliver high quality customer services will be a key focus for IW. The introduction of nationwide domestic charges for water services should guarantee acceptable standards and commitments in return. The CIP seeks funding for a range of long and short term programmes that will address some of the existing supply issues experienced by households, such as low supply pressure and localised drinking water quality issues. Targeted Investment IW will seek to improve business efficiencies across the original 34 LA model. Efficiencies include the introduction of a procurement framework for large expenditure categories such as energy, materials and construction contracts. Coordination in the areas of finance, workflow and project management systems will also help streamline processes and provide IW with the key information required to manage its business and deliver higher performance results. In addition to these actions, IW has launched a Minor Capital Programme which consists of programmes aimed at maximising the performance of existing assets with targeted low level investment. These programmes will address known asset deficiencies to deliver improvements in health and safety, quality/compliance, operations costs and sustainability. The Minor Capital Programme will drive standardisation and best practice, delivering significant business efficiencies and cost reductions. It will also address the asset information deficits required to develop future investment plans. Examples from the Minor Capital Programme include: a) Energy Efficiency - IW s operations use over circa 50m of electrical energy annually (excluding DBO contracts). The Minor Capital Energy Efficiency Programme will target reductions at significant energy consuming sites, in line with the principles of the ISO energy management standard. In conjunction with other programmes that will optimise energy tariffs, it is anticipated that this programme will deliver savings ranging from 10% to 40% on a project by project basis. b) Critical Assets - The potential failure of critical assets could have a significant impact on services, public health or the environment. Lack of capital investment in the past has led to the dilapidation of many critical water service assets, to the point that they are now at risk of imminent failure. Due to the scale of the asset portfolio, it is not feasible to carry out a condition and performance evaluation of all critical assets in the short term. In order to both mitigate risk and develop risk management based investment programmes, the minor capital critical asset programme will identify critical assets, assess the level of risk, establish indicative cost of replacement, operational cost impacts and solution options and develop preliminary investment projections to manage the risk. 12 Irish Water

13 1.3 SUMMARY The proposed CIP outlines funding required for the programmes and projects that IW aims to deliver over the next three years to improve water and wastewater services across the country, including the quality of drinking water, reduced leakages, waste water compliance, business efficiencies and customer service. The CIP seeks funding for a large number of projects with existing contractual commitments made by LAs and the DECLG under the Water Services Investment Programme IW will seek to complete and close out these projects in the coming years. The proposed CIP also seeks funding for measures and planned projects that are subject to approval pending compliance with specific legal obligations. To deliver on these objectives, IW will require funding totalling 1,771m for this proposed CIP, which is significantly more than the 930m available to IW at present. Without the required funding, many of these projects, measures and customer benefits will be deferred. An additional sum of approximately 51m is targeted for repairing customer side leaks as a part of the first fix policy, to achieve significant water savings in the three year period. The proposed CIP forms the basis on which funding can be considered both by the CER and by the Minister. 13 Irish Water

14 2 INTRODUCTION On January 1 st, 2014, IW took over the operations and capital investment programmes for water services from the 34 LAs, who formerly acted as water service authorities in Ireland. Traditionally water services, including water supply and waste water collection and treatment, have been provided by 34 separate county and city councils. Each LA was responsible for provision of water services within its own functional area with a limited amount of cross-county boundary service provision. There were however notable exceptions to the model, including the Greater Dublin Region which has an integrated water supply and drainage system for the region, though the services are separately operated with a degree of co-operation. The purpose of the proposed CIP is to detail the funding required by IW to deliver on its proposed projects and measures during the period January 1 st 2014 to December 31 st EXECUTIVE SUMMARY CONTEXT FOR INVESTMENT IW has inherited a range of water supply and wastewater assets across over 2,000 public schemes, in varying condition and with service levels ranging from good to poor. Key challenges facing IW include: The water supply infrastructure has been developed over 150 years, with limited restorations. While new schemes have been added to the system to meet the rapid economic growth, the lack of planned and reactive maintenance resulted in risks to service for most schemes. National leakage levels in the system average over 40% in distribution, and over 30% in the Greater Dublin Area (GDA), where supplies are critical. Customer side leaks are estimated at a further 5-6%. Water quality is generally good, but can be poor locally due to inadequate barrier protection from microbiological breakthroughs to treated water. Approximately 20,000 people are subject to Boil Water Notices and with an estimated 50,000 at risk. In addition, many larger supplies are not sufficiently robust to ensure effective treatment throughout the year. Wastewater compliance with Discharge Licence Standards falls short in the majority of plants for a variety of reasons. Compliance with environmental standards under EU Directives is complex and catchment specific, with the cost of full compliance potentially running to 5-6bn over the next decade or more. An ECJ Infringement Case is pending against Ireland in respect of a large number of treatment plants. The available resources for investment in wastewater treatment cannot meet all of the requirements of the ECJ notice, requiring engagement on how to achieve an agreed approach in the short-medium term. Limited details on physical attributes, condition and capacity, widespread infiltration and storm water inflows result in overflows and flooding risks. IW will be required to take urgent action to establish the operating parameters of these networks and to prioritise the works required to protect properties and the environment. 14 Irish Water

15 There is strong evidence that economic growth has resumed, particularly in the GDA. This growth will require an integrated strategy of both water supply and wastewater treatment, to meet short, medium and long term needs. IW must make provision in its investment strategy to resolve health and safety deficiencies, avail of opportunities to reduce energy; the use of chemicals and sludge production and to facilitate more effective control through automation and other systems. IW has inherited a substantial portfolio of in-flight projects which need to be funded to completion, including a large number of projects committed to contract for urgent needs. IW will also inherit the financial liabilities on historic contracts completed, but not commercially closed. Delivery of the Programme While the proposed CIP represents an ambitious ramping up of capital investment over the three years of the plan, we are confident that this can be achieved both in terms of project readiness and supply chain capacity. Project status has been assessed for all projects in the proposed CIP and this confirms construction readiness of the projects making up the overall programme. In terms of supply chain capacity, the overall output of the construction industry in Ireland peaked at about 38bn in 2007 but is now down to a level in the order of 7bn. Contractors and consulting engineers have demonstrated the ability to deliver output way above current levels and most of the main firms in the water sector are still active in the market. Local firms will also be supplemented by international firms if the demand is there, as has occurred in the past. The key to ensuring that there will be adequate supply chain capacity to deliver the required capital investment for Irish Water in is to provide the market with adequate notice of the level of investment that will be made. 2.2 CURRENT OVERVIEW W ATER SUPPLY Public water supplies cover over 80% of the population of Ireland via approx separate WSZs. These Public Water Supplies (PWSs) generally cover population centres with some coverage of rural areas, via regional schemes. They may also provide supplies to private Group Water Schemes (GWS). The LAs own and operate a large portfolio of assets which are used to abstract and treat water and deliver treated water to customers. These will transfer to IW during 2014, in accordance with the Water Services (No. 2) Act, 2013 ("the Act").These assets include: Raw water intake facilities and borehole sites; Raw water pipelines; Water treatment plants; Pumping stations; Chlorine boosting stations; Service reservoirs; Distribution networks of thousands of kilometres in length; and 15 Irish Water

16 Metering, SCADA and Telemetry systems. The Drinking Water Regulations 2007, 1 require that drinking water supplied complies with 48 different quality perimeters at the point of supply (i.e. at the consumer s main tap). These quality parameters include microbiological, chemical and indicator parameters and the regulations set out parametric values which must be complied with. In addition to meeting quality standards, Water Services Authorities are obliged to maintain pressures within the network such that the pressure at each consumer s connection is within an acceptable pressure range. There are no statutory requirements for supply pressure, however, Water Services Authorities aim to maintain a minimum supply pressure of 15m water gauge and to stay below a maximum pressure of 40m. The latter is not always practical and high pressures, especially at night, contribute to high leakage levels. Lack of consistency in asset operations can further compromise the actual service level achieved and has been an inevitable effect of having 34 separately managed operational units. The overall condition of the distribution network is poor by international standards with an average Unaccounted for Water (UFW) rate of 41% being reported by LAs. 2 This compares with typical UFW levels of 5-10% in the best quality networks in Europe in countries like Germany, Denmark and the Netherlands. UFW levels in the UK typically range from 20-25% in networks, with a similar profile of materials age and water type to Ireland. While there is a significant capital investment deficit in the water distribution network, it should be noted that considerable work has been carried out in the past decade rationalising distribution networks into District Metered Areas (DMAs) and undertaking active leakage control as a precursor to water mains rehabilitation. Since 2000, DECLG funding helped establish the DMA infrastructure, usually with a local telemetry system to track usage and included recruitment and training of leakage detection and repair crews. However, once capital funding ended, many of these capabilities fell away, with breaching of DMA boundaries and loss of skills and expertise. Little progress in leakage reduction was achieved as a result. The performance has been stronger in the GDA, driven by the scarcity of water for current needs, though even here, the performance varies considerably across the region. The challenge now is to re-assess the leakage situation, assess the requirements (at regional and local level), to gradually reduce losses to an acceptable target and to determine the urgent needs for targeted capital investment in pressure management and mains strengthening and replacement. The overall quality of drinking water in Ireland has been improving in recent years. Strategic initiatives by the EPA such as the Remedial Action List (RAL) and water treatment initiatives relating to Cryptosporidium and microbiological parameters have played an important role in this improvement. The RAL is a list of public water supplies which require remedial action in order to ensure adequate drinking water quality. The 1 European Communities (Drinking Water) (No.2) Regulations, 2007: S.I. No. 278 of Serv ice Indicators in Local Authorities, 2011; Local Gov ernment Management Agency 16 Irish Water

17 RAL was first prepared by the EPA in 2008 and included a total of 339 public water supplies on the list. Most of these schemes have been, or are now, being addressed through the current WSIP ( ), however 140 remain to be closed out. The older distribution assets can cause water quality failures, while open reservoirs are no longer fit to store treated water for consumption. Lead service pipes, both in public and private service pipes, are likely to risk breaches of the new lower lead standard from January Although the RAL scheme has been very effective in driving improvements there remains a backlog of schemes requiring investment. Many of those outstanding schemes are larger plants, requiring more costly works. Improved standards and consistency of operation, increased supervision and tighter process control will be vital to the delivery of services to customers and avoiding the risk of failure of key health parameters water users. 2.3 CURRENT OVERVIEW - W ASTE W ATER LAs have been providing waste water collection and treatment for approx agglomerations. An agglomeration is defined as an area where the population, and/or economic activities, are sufficiently concentrated for urban waste water to be collected and conducted to an urban waste water treatment plant or to a final discharge point. The agglomeration is the licensed unit regulated by EPA, taking account of the area served, connectivity to a collection system, treatment and discharge to a receiving water body. The large portfolio of assets for wastewater collection and treatment transferring to IW include: Foul and combined sewer collection systems; Rising mains and outfall pipes; Pumping stations; Storm attenuation tanks; Waste water treatment plants; Outfalls to receiving water; and SCADA and Telemetry. The Urban Waste Water Treatment Regulations set out requirements for the provision of waste water collection systems and treatment plants including the treated effluent standard which is to be achieved. More stringent standards than those laid down in these Regulations can be required on a caseby-case basis to meet the environmental objectives of the Water Framework Directive 3 (WFD), and also to address the requirements of protected areas. Under the Waste Water Discharge (Authorisation) Regulations 2007, the EPA has implemented an authorisation system for all LA waste water discharges. The Regulations outline the measures required under Directives on Groundwater, Drinking Water, Bathing Water, Dangerous Substance, Habitats and Birds. A total of 40 agglomerations do not have adequate appropriate or secondary treatment as required 3 EU Water Framework Directive 2000/60/EC 17 Irish Water

18 by the Regulations, while 12 agglomerations do not have adequate nutrient removal as required by the Regulations. In addition to these deficits it is estimated that in the order of 40% of the existing waste water treatment plants are exceeding their current design capacity. Based on 2011 data for performance of existing licensed waste water treatment plants, approximately 70% of the plants were in compliance with the effluent standards required under the Urban Waste Water Treatment Regulations. This means that a significant 30% of existing licensed plants needed some form of improvement for compliance. Not all waste water treatment plants have yet been licensed to date therefore the overall compliance figure may change when all the licences have been determined by the EPA. The collection networks in most of the older urban areas are combined systems, which collect both foul and surface water. Combined systems increase the possibility of overflow spills during rainfall events and the potential for combined sewer flooding of properties. The availability of comprehensive hydraulic network models is limited, hindering a better understanding and mitigation of these issues across the full asset base. IW considers that failing to meet compliance standards for these networks has a potential liability of several billion euros. The compliance programme will take place over at least 2 investment cycles, but the priority in the Period must be to prioritise those overflows based on environmental impacts. 2.4 PREVIOUS CAPITAL INV ESTMENT PROGRAMME Prior to this proposed CIP, the Capital Investment Programme was an Exchequer funded programme developed and adopted by the DECLG. Investment was delivered under two distinct programmes, the WSIP ( most recently) and the Rural Water Programme (RWP). Water Services Investment Programme The WSIP was a three year rolling funding plan derived from a submission of Assessment of Needs by each of the 34 WSAs. The process enabled the WSAs to put forward the candidate schemes that would enable their LA to meets its legislated and regulated requirements and also to meet the demands of future growth in line with its planning objectives. The last WSIP was initially adopted for , but was extended to 2013 due to the delayed start of many projects. Since then, many schemes have been further delayed by funding constraints and planning challenges. The value of all schemes in the WSIP was some 6bn, of which approximately 1.5bn was delivered due to emerging requirements for capital maintenance, growth in demand or new regulation/designations offsetting the gains. In the period from , a total of 5.6bn in Exchequer funding was invested under the WSIP with matching funds of 1bn provided by LAs resulting in an average capital investment of approximately 550m each year. Despite this substantial investment, the annual asset replacement rate was approximately 0.3% per annum, falling well short of the requirements and best practice within other water utilities. It also reflects an investment focus that was centred largely on compliance and capacity to meet the rapid demand growth in the period to Irish Water

19 The WSIP was to be fully aligned with the investment priorities identified in the River Basin Management Plan (RBMP), the RAL and the needs of enterprise. Accelerated investment in water main rehabilitation and emerging waste water discharge license criteria from EPA were also taken into account. The WSIP also focused on: Water conservation proposals to meet environmental and economic goals; Environmental objectives to respond to ECJ rulings; Environment/Public Health Objectives arising from EPA reports on drinking water standards; Waste water treatment standards including the authorisation of waste water discharges; Bathing water standards; Pollution Reduction Programme for shellfish waters, fresh water pearl mussel, etc.; Compliance with the WFD requirements; and Economic objectives. The WSIP was estimated at some 6bn, covering all projects in planning and construction. While IW would expect to achieve efficiencies in the CIP under various headings, this demonstrates the large capital funding deficit that will need to be met in the coming decade. This figure includes over 1bn to secure the long term water and wastewater needs of the GDA, without making any allowance for the major compliance and asset renewal challenges to be resolved in the metropolitan region. Any realistic assessment of the needs of the Dublin region would identify a medium term requirement of 2.5-3bn for both water and drainage. The needs outside of the GDA are more difficult to define as they represent a large number of much smaller systems. As well as meeting the specific requirements of individual LA s, based on their County Development Plans, the WSIP was also required to address strategic national objectives for growth; strategic and sustainable development under the National Spatial Strategy (NSS) and employment creation. It is important to note that due to historic under-investment, especially the absence of routine planned maintenance or incremental expansion, the majority of WSIP schemes were designed to achieve compliance and provide for medium to long term capacity issues simultaneously. Many WSZs and agglomerations experienced growth that outstripped the available water supplies and treatment capacities during a period of rapid growth. This growth, paired with tighter regulation, compounded the compliance challenges. The significant funds made available through the WSIP were only sufficient to catch-up on the under investment in the most critical locations and consequently, hundreds of less critical assets remain inadequate to meet demands. In addition to the failure to upgrade smaller plants, little or no work was done to replace fragile pipes, in both water and drainage networks, apart from a modest replacement programme in Dublin. While some GIS and modelling studies were carried out, such as the Greater Dublin Strategic Drainage Study (GDSDS) in 2004, the focus has been to advance the treatment processes, with no progress being made on serious network 19 Irish Water

20 deficiencies. Indeed, detailed studies into the problem of overflows in the city centre sewers only commenced in Each WSIP project has been engineered by consultancy firms to achieve the desired outcomes and benefits in terms of compliance and availability. For each project a firm had to demonstrate their competence to undertake the project and submit a fee proposal to the LA as part of a competitive tender process. Once engaged, the consultants would typically have examined the existing infrastructure, compliance, and legislative and growth requirements to arrive at solutions that met the LA and DECLG objectives. The fact that each project was designed to achieve specific benefits is of considerable reassurance to IW as it takes on in-flight projects and liabilities; however, the same process also presents some challenges. The favoured model for treatment plants (particularly wastewater treatment) was for a 20 year Design Build Operate (DBO) contract which requires performance guarantees over the period and a fit for purpose plant at the end of the contract. This model has proven robust in terms of risk transfer and delivering good quality outcomes with reasonable budget compliance. IW will however, where possible given the stage of the project, look to achieve value savings by tightening control of growth provisions and allocating shorter contracts, acknowledging the need for more regular capital interventions to achieve the best value in the long term. Contract budget data has not been kept up to date by LAs, who tended to rely on the consultants to retrospectively account for contract liabilities, resulting in significant fluctuations for contract liabilities and investment plan budgets. To establish some confidence in this area, IW has engaged directly with LAs to establish a more accurate outlook for future liabilities, and produced a first estimate of the committed liabilities at the end of IW and LAs undertook extensive work to determine accurate financial commitments to all major projects. It was necessary to net off the payments drawn down from DECLG during December 2013 (over 100m), and to validate new commencement instructions by LAs at the end of Liabilities up to December 2013 are being dealt with by accrual for resolution in the context of resolving an opening balance of financial assets and liabilities, to be completed in June Following a detailed review and validation, the capital investment estimate for committed work, and key priority needs, will be close to the available capital projected for 2014 of 310m and will exceed this figure in 2015 and It is estimated that an additional capital investment of 310m per annum will be required to meet immediate objectives, over and above the figures indicated by Government. IW will re-prioritise the projects throughout 2014 based on more detailed information on the project drivers and criticality in order to deliver the maximum benefits using the available capital. The capital funding position becomes even more critical when the estimated capital maintenance deficit, the cost of key surveys and studies and customer side programmes such as first fix, the cost of lead replacement, and of shared backyard services resolution are taken into account. 20 Irish Water

21 Rural Water Programme During the 12 year period , Exchequer grants in the order of 952m were issued to LAs under the RWP, equating to an annual spend in the region of 80m. The RWP was devolved to each LA and was administered locally to address deficiencies in: Group water schemes; Private supplies; and Small public water and sewerage schemes. Similar to the supervisory role the EPA has over PWSs; LAs had and retain a similar role over the group water and private supply schemes. A large proportion of the RWPs annual budget was ring-fenced for improvements to these private and group schemes and so has no bearing on IW. The fund allocated to small public water and sewerage schemes was typically spent on minor upgrades to increase capacity and compliance on LA assets and played a key role in keeping critical assets operating. The scheme has been a notable success, delivering significant improvements in both compliance and customer service, at modest cost, with a strong interface between capital & operational work streams. The programmes were: 1(a) Drinking Water Compliance - RAL (existing schemes) 1(a) Drinking Water Compliance - RAL (New 2013 Schemes) 1(b) Drinking Water Compliance - OTHER (Non RAL) 2(a)Waste Water Compliance based on EPA Discharge Authorisations 2(b)Waste Water Compliance - OTHER (Non EPA Discharge Authorisation) 3 Development - Plan Core Strategies 4 Integrated Constructed Wetlands Approvals 2.5 FINANCIAL LIABILITIE S OF COMPLETED AND OTHER PROJECTS IW will be responsible for the delivery of capital investment from January 1 st, 2014 and where projects are committed to contract IW will generally be obliged to honour contract terms, while seeking to ensure the best value outcomes through its governance processes. 4 The cost of the live projects includes the cost of 4 Pursuant to the provisions of the Water Services (No. 2) Act Irish Water

22 any contract claims and variations notified but not quantified. As stated, costs will also be incurred on completed legacy contracts, to achieve commercial closure. IW has asked LAs to accrue for these costs in the 2013 accounts for inclusion in the transfer of financial balances. 22 Irish Water

23 3 THE KEY INVESTMENT CHALLENGES 3.1 EXECUTIVE SUMMARY INVESTMENT CHALLENGE S FOR The focus of the proposed CIP is to seek funding to enable transition of the current live WSIP to IW, to review all current projects in planning and to establish a strong asset management capability to enable optimisation of the future investment decisions for maximum customer benefit. This section looks at the challenges in the context of the Period, the approach to be adopted and the priority needs in order to ensure customer and compliance requirements are reached. IW faces many challenges as it assumes responsibility for the provision of many water services. An Asset Management function has been established to enable IW to determine the optimum investment strategies, based on understanding the capabilities of the current assets and achieving the optimum output from operational and capital plans. This recognises the need to establish continuity of service delivery and to develop a programme of transformation based on continuous improvement and change initiatives capable of being delivered through SLAs. Key investment focuses include: Capital maintenance activity must address chronic deficiencies affecting customer performance of the asset base. This requires both the provision of the right level of funding, but also control and monitoring of all such investment via IW systems; Drinking water quality compliance is the top investment priority for IW over the Period, requiring fast-track investment and improved operations; Drinking water availability is critical in up to 25% of schemes, with short term measures focused on an integrated approach to leakage reduction (distribution & customer side), pressure management and targeted mains replacement; The ECJ Letter of Formal Notice requires immediate action to produce a compliance plan, which will require short term investment, upgrades to existing plant assets and operations; and A long-term plan is required to identify the future priorities for both water resource management and environmental compliance, within which major longer term investments need to be planned for delivery in 5-10 years. 3.2 ASSET MANAGEMENT FUNCTIONAL ITY & IMPLEMENTATIO N IW will work towards adoption of an industry quality standard for effective and sustainable asset management (i.e. PAS 55 /ISO55000). Integrated asset management based decision making represents a radical change from the current provision of water services in Ireland, where the level of asset information is limited and maintenance tends to be reactive rather than planned. As outlined in the previous section, reactionary major capital investment is the norm and there is limited implementation of a structured approach to asset management. Current data systems are ad hoc, with at best piecemeal GIS systems, little condition based data and very limited recording of asset maintenance activity. 23 Irish Water

24 The introduction of best practice asset management will bring major benefits in terms of achieving better performance and reduced risk from the existing and new asset base. It will facilitate more targeted investment that will provide better value to the water services customer. As the asset management systems develop and mature, best practice asset management will provide IW with a much better understanding of asset performance. For example, in the case of the waste water collection networks, comprehensive GIS databases and hydraulic models will be developed to record properties at risk of combined sewer flooding and to plan measures to mitigate the risks. At the core of asset management is a requirement for good quality data, which presents a major challenge to IW due to the limited asset data records or consistency of approach across LAs to date. There is reasonable information on the water supply networks, however in many instances the data has not been updated since the original project began. The waste water network has very limited information, with poor or fragmented mapping. Although manhole and CCTV surveys have been carried out occasionally, the results of these studies are not centrally stored and lack of referencing for confident integration to IW databases. The collection of data will be an on-going programme for IW as the business records information on several thousand above ground assets, on operational sites and also for a total water and waste water pipeline length. Data capture for the waste water collection network will be particularly challenging as this will require physical surveying for asset location, type and size and a CCTV survey for asset condition, unless reliably available. The asset management priorities for the Period therefore are: Asset Strategy & Sustainability; to establish the strategic planning function within water and wastewater services, initially founded on targeted studies and surveys, with the objective of transitioning to an asset management framework supported by industry standard data capture, analytics and reporting over a period of years. Asset Data & Information; will target a comprehensive GIS system covering all underground assets, using current data by end of This will be supplemented by a core telemetry/scada plan, to provide an initial central control, connecting the priority plants, with the capacity to develop a comprehensive supervisory & control system. Associated hydraulic modelling capabilities will begin by adopting and maintaining the GDA water & drainage models, defining standards and co-ordinating rollout of priority modelling studies to support the evaluation of investment scenarios. An urgent focus is license support which will target the expansion of the Discharge to Sewer licensing regime (s.16) of the Water Pollution Acts If delivered to a national standard, equivalent to that in Dublin City/South Dublin, licencing can reduce costs to treatment and operational problems due in particular to fats, oils and greases (FOGs) blockages. 24 Irish Water

25 Asset Policies & Standards; will prioritise critical policies on asset risk, public health standards, environmental compliance, spatial planning framework and key sustainability policies, while putting in place core standard specifications and details; and identifying key technical opportunities. A key output will be creating a 25 year vision for IW that defines a phased evolution for the regulated business, towards sustainable, robust, resilient and cost effective services that meet customers expectations. Water Services Strategies; will detail regional plans to achieve leakage reduction to economically and environmentally sustainable levels and water resources plans and to meet economic needs, with defined headroom levels appropriate to the risk model. The development of Water Safety Plans to EPA/WHO Guidelines is recognised as a key priority in medium term risk management for good quality drinking water. By initiating strategic plans for the GDA and other regions in 2014, this unit will define an optimum balance for water management and capacity upgrades, with priority asset renewals. Wastewater & Sludge Strategies; initial focus will be to respond to the ECJ Task Force Study and enforcement proceedings taken by the EU Commission against Ireland regarding delays in compliance. This area is highly complex and requires understanding of the water quality issues from an integrated catchment perspective, as a basis for economical and environmentally sustainable outcomes. A multidisciplinary study has already commenced, combining water quality, wastewater technology and local scheme specific data as a basis for EU/EPA engagement and a prioritised action plan. Other priorities include more effective load management at source, network leakage/overflow studies and updated national and regional sludge strategies. Asset Investments will work closely with Asset Programmes & Capital Delivery to take control of the CIP portfolio of projects, in order to establish a budget baseline and a process for managing a programme of m, the estimated minimum level of capital investment required to achieve meaningful progress towards short term service objectives. Key priorities are: Migrating all live projects and new projects into a fully costed set of work programmes, within a budget management framework capable of maintaining and reporting against monthly targets. This includes risk assessment of all in-flight projects and formatting budgets to IW requirements. Establishing and supporting a rigorous investment governance process, with criteria for prioritisation and approval of projects through a gated process, ensuring best value outcomes consistent with agreed policies and strategies. Technical & economic criteria and review processes to ensure that IW policies and standards are delivered on and completed projects are assessed for compliance with objectives. Asset Programmes; will take control of the CIP delivery in terms of quality, time and cost targets, supervising LA Capital Programme Offices (CPOs) and set up IW systems and reporting from the outset, including: 25 Irish Water

26 Water Major Capital will be responsible for covering production, network, water conservation/rehabilitation and resolving drinking water deficits. This will include a dedicated Programme Manager to take responsibility for resolving the inherited Boil Water notices, by working with LAs, the EPA and the HSE. Waste Water & Sludge Major Capital will address the priority wastewater compliance projects, while also providing upgraded capacity and supporting current sludge strategies in addition to significant new and upgraded network projects. Minor Capital will be a major focus given the known deficit in on-going planned maintenance for resolution of capacity and compliance deficits. Key challenges include reducing operating cost, or risk, as well as resolving local network issues and securing sufficient capital in this area, based on inherited commitments to major projects. New Development needs to be accompanied by capacity to strengthen networks, upgrade pumping stations and extend connectivity in conjunction with local development agreements. The initial focus will be to operate existing connection policies, review significant planning proposals, and to design and deliver urgent schemes to support employment and residential opportunities. A Contract Strategy Team will establish a suite of contracts, suitable for best value delivery of works and services across the business, with guidelines and support for selecting optimum contract and procurement frameworks and strategies. These priority areas for asset management mobilisation will deliver priority outcomes targeted at immediate customer benefit, meeting national objectives, and providing the core capabilities to be developed and expanded over the period. 3.3 ASSET INVENTORY AND PERFORMANCE To develop a meaningful approach to capital maintenance planning, there is a need to shift from a reactive to a planned approach to capital asset maintenance. Key elements of this shift are set out in the figure below. Asset Register Condition & Performance Assessments and Standards Servicibility forecasts and risk based prioritisation Capital Maintenance Plan Figure 5: Shift from a reactive to a planned approach for capital asset maintenance Currently no consolidated database of existing above ground assets exists, except at a very high level. Some LAs have listings of sub-components. However, condition, performance assessment and specific asset histories, particularly at unit process level and component levels, are not widely undertaken, nor can the spend history on specific assets be determined. 26 Irish Water

27 Good quality data has been gathered on below ground water assets through rehabilitation programmes over the last number of years, however a significant gap exists in data relating to sewers, with high quality data being available only for schemes that were included in the WSIP. A programme implementing asset data collection and performance assessment is key to progressing an effective capital maintenance plan. This will commence during the Period, but will take a significant period of time to complete. From a practical and financial point of view, it should be prioritised according to the criticality of schemes for investment, with first stage GIS and central SCADA capabilities, followed by strategic hydraulic models capable of simulating service levels under a variety of operational and development scenarios CRITICA L A SSETS A key task will be identifying critical assets, the failure of which could result in significant impacts on customers, the environment and costs. Generally such assets are not identified or ranked on the basis of risk to service maintenance deficit. In order to maximise return on investment and harness efficiencies, a shift to planned rather than reactive maintenance of these assets will be required. Identification of key assets will be prioritised during the Period, and supported by a risk analysis and decision matrix (including probability and consequences of failure) CA PITA L MA INTENA NCE PROGRA MME Whereas many LAs have effective routine maintenance programmes in place for certain mechanical plant items, ensuring the functionality of assets and extending asset lives, there is little or no planned capital maintenance that targets restoring or maximising their performance. The absence of capital replacement funds or accumulated depreciation funds, together with limited headroom in operations budgets to cater for such work, has led to the practice of running assets to failure. As such, resources are deployed largely towards reactive maintenance. Reactive maintenance is generally less cost efficient than planned maintenance, but is the default option where no risk based planning is available to target planned work. IW will implement a programme to evaluate asset performance and develop risk based prioritisation of active maintenance during the Period. This will evolve to a structured capital maintenance plan over subsequent periods. By 2016, IW plans, together with the LAs, to introduce workflow management, recording all maintenance activities, recorded with spatial reference to GIS. This data will define the profile of asset based maintenance expenditure, which will facilitate scenario analysis between combinations of capital and operational investment. 27 Irish Water

28 3.3.3 ESTIMA TION OF CA PITA L MA INTENA NCE EXPEND ITURE REQUIREMENT In order to estimate capital maintenance levels three companies in the UK, operating at a similar scale to Ireland, were identified for comparison: Scottish Water, Welsh Water and Wessex Water. Each of these companies have specific characteristics that impact on cost structures, however the former two operate in a spatially similar environment to Ireland, i.e. dispersed population with a number of larger centres. Scotland has more recently adopted an economic regulatory approach and may better reflect the Irish situation. Efficiencies that have evolved since the UK water companies were set up and the impac ts of historic capital investment programmes on asset age profile also need to be taken into consideration. Ireland in contrast, is likely to be carrying a large asset maintenance deficit. As detailed asset data is not available for Ireland, high level asset data from a PwC Report was utilised to make a first assessment of the deficit. 5 There is an unquantified deficit in investment, arising from historic underinvestment in infrastructure maintenance in Ireland, which will impact on the proportion of reactive to planned maintenance needs for a number of years. It should also be noted that major investment, via the WSIP, has been primarily focused on larger schemes. Ireland also has a significantly higher number of sources and small treatment facilities than Scotland, albeit underground assets would appear to be comparable in scale. Market costs for services in the UK may be different from Ireland, due to the larger market and shorter supply chains. In any cost comparison, factors such as labour costs, LA Central Management Charges (CMC), VAT treatment and the historic legacy deficit must be accounted for. Two estimate approaches based on the UK analysis resulted in an annual funding requirement range of between 170m and 312m, with the latter figure reflecting a revaluation of assets in Scottish Water based on more detailed asset data becoming available in Using the second methodology, based on an estimated Modern Equivalent Asset Value (MEAV) for Irish assets, infrastructural renewal investment based on 1% for below ground assets and 3.5% for above ground assets (representing the investment requirement to balance depreciation based on the weighted age of Scottish assets) amounted to 236m. An analysis of 2013 costs from LA budgets suggests that the capital element is currently 10-20% of this figure. The Capital Programme may cover about 50% of this requirement embedded in projects, with a contribution of 30m to this requirement coming from a small schemes budget. However, a balance of 50-70m per annum in the enduring state still exists for essential capital maintenance required to offset asset depreciation. 5 Irish Water: Phase 1 Report; PwC; 2 Nov ember Irish Water

29 3.3.4 A SSET DA TA CA PTURE SY STEMS Asset data will be acquired through a number of channels. The acceleration of this data acquisition will facilitate moving from a reactive to a planned capital maintenance approach. Next steps include: Collection of asset data associated with all reactive maintenance from January 2014, based on phased rollout of workflow planning and data capture via handheld systems; Specific asset surveys which will be funded under Minor Capital Works Programmes and other key studies; and Standardisation of asset data collection, against defined standards and policies, initially referenced to the Annual Service Plan (ASP) metrics agreed for the 2013 plan. Condition and performance data to be collected will include asset attribute data, cost of rehabilitation/replacement; historic data on asset service and availability, operational maintenance cos ts, unit capacity and system redundancy. Data will be used to establish asset criticality, performance and condition grades and, in time, utilised to forecast asset deterioration so as to inform future investment plans. Identification of critical assets will be prioritised, it will require a full transition to the planned utility systems, through a number of years of ASPs, before high level activity based costs can be assessed. 3.4 INVESTMENT ASSESSMENT CRITERIA IW anticipate that asset replacement investment will be prioritised based on asset failure (capacity based or compliance), primarily for plants and networks that were not upgraded as part of the WSIP or other investment streams over the last years, and where frequent data failure identifies the need for upgrade. Cost records for these activities will be captured and analysed to generate a spread of costs for similar undertakings. These will form the basis for target costs and will be used in conjunction with asset data to generate future investment programmes. It is likely that budget constraints will limit the scope of asset maintenance in Planned works will be assessed by business cases and prioritised by evidence-based asset condition, performance and criticality data and will address whole life cost of investment. Priority will be given to investments that can clearly maximise customer service benefit, deliver significant savings in operating costs and demonstrate effective delivery of selected projects. Cost, operational and performance review of works will be carried out to evaluate planned interventions and assess their suitability as standardised roll out solutions for future scalable efficiencies. Metrics based on risk reduction and whole life economic cost benefit analysis will be developed to inform investment decisions. Initially these will be based on economic criteria, but will progress to risk based criteria when adequate data on historic asset performance is available. 29 Irish Water

30 3.5 HEALTH & SAFETY As IW takes over responsibility for the provision of many water services, ensuring the health and safety of personnel working on behalf of IW at operational sites will be a fundamental priority for the organisation. This poses a significant challenge as the organisation currently has no assessment of the existing operational sites in terms of personnel safety. The provision of water services includes working in proximity to significant hazards including: Working close to deep water at IW sites and also at rivers and lakes; Working with hazardous chemicals; Working at heights; Working in confined spaces with potential for oxygen deficiency and toxic or explosive gases ; Explosive gas and dust; and Electrical installations. While IW does not have qualitative data on the requirements for safety upgrades at operational sites, the organisation is aware that investment will be required at many sites to bring them up to an adequate safety level. The challenge for the Period will be to identify safety deficits and to put plans in place to address these within an appropriate time frame. 3.6 DRINKING W ATER QUALITY & RISK The Drinking Water Regulations set out the quality standards to ensure that drinking water is clean and safe for human consumption. Quality standards are set for three groups of parameters; namely microbiological, chemical and indicator parameters. In terms of public health, the microbiological parameters are the most important as they can indicate a potential risk to health. This is followed closely by chemical parameters as prolonged exposure to these substances in the water supply can indicate a potential risk to health. Other indicator parameters can reflect operational performance weaknesses and risks to output standards. The key parameters targeted from a water quality perspective are: Bacterial contamination represented by the presence of E Coli; Cryptosporidium breakthrough into supply, derived from animal faeces and slurry spreading; it is resistant to chlorine and requires a multiple barrier approach for minimum risk; Trihalomethanes are products of dissolved organics with chlorine which require effective physic - chemical treatment; and Lead is a key challenge in supplies with lead service pipe, following reduction of the prescribed limit to 10µg/l from the end of December European Communities (Drinking Water) (No.2) Regulations 2007, S.I. No. 278 of Irish Water

31 3.7 DRINKING W ATER AVAILABILITY A key challenge for IW will be to ensure that adequate volumes of water are available to match varying, and in many cases, growing demands across all WSZs. Water demand typically varies over the year and normal practice is to aim to have capacity in the WSZ to cater for the Average Day Peak Week (ADPW) demand plus a headroom factor. The headroom factor adds resilience to the supply and ensures that demand can continue to be met in the event of plant failures or adverse weather conditions (such as flood impact or drought). Short term growth factors, seasonal peaks and critical infrastructure risks should also be taken into account. Given that it can currently take years to deliver new source and treatment capacity infrastructure from the concept stage to final delivery, it is a major challenge to ensure that adequate capacity will be available to meet future demands. IW expects to reduce the timeframe for capital delivery of major strategic infrastructure, although timelines of up to 10 years may still be required due to the complexity of the statutory approvals that are required. Based on supply capacity versus average distribution input data received from the DECLG for 2012, it would appear that up to 25% of WSZs across the country are operating at or below critical headroom. This provides an indication of the scale of challenge presented by current capacity deficits. Besides providing for current demands and planning for future demands, there is a challenge to provide security of supply and resilience to WSZs, which are appropriate to their size. IW will also have to identify critical infrastructure where a failure results in large numbers of people having no water supply for extended periods. IW will need to plan to manage the risk of failure of these assets at an acceptable risk level. 3.8 ENVIRONMENTAL COMPLIANCE, URBAN W ASTEW ATER TREATMENT REGULATIONS & THE W A TER FRAMEW ORK DIRECTIVE Since the 1970 s, the EU has championed higher standards of wastewater discharge to inland, estuarine and coastal waters across Europe. The original directives required treatment to defined limit values for parameters. The Urban Waste Water Treatment Directive 7 (UWWTD) subsequently required secondary treatment in most cases (BOD5 < 25mg/l and SS < 35mg/l), with tighter standards required where dilutions are reduced, together with limitations on such parameters as Nitrogen (N), Phosphorus (P) and limits on bacterial load (Faecal Coliforms) to bathing or shellfish waters. Prior to 2000, very few coastal discharges received treatment beyond screening and marine discharge, where environmental impacts were limited by the available dilution and dispersion characteristics. However, the UWWTD required that all such discharges receive secondary treatment as a minimum, and major new 7 EU Council Directive 91/271/EEC 31 Irish Water

32 plants have been provided to accommodate this. These include plants at Dublin Bay (Ringsend), Cork, Waterford, Limerick, Sligo and most recently in Shanganagh/Bray and Letterkenny. Given the scale and complexity of these plants, the capacity to operate and maintain them was outsourced, leading to long term DBO Contracts. Apart from the scale of capital investment, the operating cost of these plants is significant. While major progress has been made, the combination of a number of factors has created a substantial legacy of non-compliance with the UWWTD, resulting in the current ECJ infraction proceedings. These are: Many smaller plants remain to be treated, while a small number of larger plants are delayed by planning issues; The major economic and demographic changes since 2000 have impacted load conditions, resulting in plant overloading or the need for tighter standards to protect receiving waters; Conservation or protection designations by the DECLG, other Government departments or most frequently the National Parks & Wildlife Service (NPWS) can result in more stringent requirements, beyond those currently required; Excess storm inflows and infiltration to foul sewers can lead to excessive discharges at CSOs or at treatment, leading to breaches of standard. The poor quality of sewer records and limited condition or hydraulic modelling data makes it difficult to quantify the issue; and Plant operation by LAs is a factor in non-compliance, with inadequate maintenance or process control, inadequate inflow measurement or influent/effluent sampling all leading to compliance failures. The legacy issues under the UWWTD are a major challenge facing IW in 2014 and beyond. However, the EU focus has now moved beyond this emission value based regulation to a more holistic and output based approach, designed to reverse the impacts of societal activity by restoring all EU waters to good status. While the basic Emission Limit Value (ELV) standards continue to apply, the WFD will be the focus for action in pursuit of a better quality water environment. The WFD addresses all of the challenges faced by EU waters and requires a holistic and integrated approach to water management on a catchment wide basis. The key challenges for IW for the Period are: Achieving consensus across DECLG, EPA and the EU Commission on an achievable plan for meeting key compliance objectives in the short term; Developing an evidence based approach to license standards and targets for receiving waters and an agreed method of prioritising schemes for upgrade; Effective engagement across the stakeholder group in finalising the River Basin Management Plans for under the WFD; and Capturing the required system data to optimise the investment choices in determining the optimum approach to achieving compliance in wastewater agglomerations. 32 Irish Water

33 3.9 CUSTOMER SERVICEABILITY STANDARDS Customer serviceability standards represent the ability of the asset base to deliver defined levels of service to customers. With the exception of drinking water quality and certain measures of UFW, KPIs for customer serviceability standards are not currently measured. As IW takes over responsibility for the provision of water services, comprehensive records and measurement of customer KPIs will be put in place. They will include: Drinking water quality; Drinking water pressure and flow; Interruptions to supply; Leakage/UFW; Sewer blockages & pump failures, leading to flooding, overflows or incidents; and Sewer flooding and risk of sewer flooding. Based on anecdotal evidence, there are currently significant numbers of water service consumers who receive a level of service which is less than satisfactory, in terms of drinking water quality or supply pressure. As domestic consumers do not currently pay for their water supply, it is considered that they are willing to tolerate this level of service. However, when these domestic consumers start paying for their water supply, it can be expected that there will be a large demand for the level of service to be brought up to an acceptable standard. The propensity of water service customers, both domestic and non-domestic, to pay for water and wastewater services is likely to be substantially determined by progress on these basic issues of customer service. The challenge for IW during the Period will be to establish and record a baseline for customer KPIs. During this Period, programmes of work to address asset serviceability standards and deficiencies will also be identified and plans developed for future investments. The ASPs under the SLAs will endeavour to drive best practice operation to current asset capacity where possible, through better process control, effective maintenance, leakage control and measures to prevent sewer blockages CLIMATE CHANGE Climate change is likely to have a significant impact on IW operations in the medium to long term. These impacts are likely to cause a range of issues: Possible reduced sustainable abstraction rates from some raw water sources ; Combined sewer flooding due to more frequent extreme weather events; Flooding of IW assets due to extreme weather events; and Sea level rise causing inundation of IW assets. 33 Irish Water

34 Many UK water companies have identified climate change as one of the main challenges which they expect to face over the next 25 years. The challenge for IW during the Period is to identify assets at risk and to develop an appropriate climate change adaptation strategy. In addition to climate change adaptation there will also be a significant challenge in to the form of climate change mitigation. Water services including treatment and pumping of water and waste water are energy intensive. IW will be required to develop a strategy to increase energy efficiency and reduce its carbon footprint in line with ambitious Government targets for the public sector LONG TERM PLANNING & STRATEGIC OBJECTIVES In addition to the process of developing the CIP (required by statute to be submitted within four weeks of the transfer date, the IWP), IW has commenced work on the preparation of a WSSP to As noted above, the WSSP is required under the Water Services Act (No. 2) 2013 and will be a statutory plan, subject to Ministerial approval. This plan will undergo Strategic Environmental Assessment. The WSSP will set out the strategic direction of IW in the long term and will set out high level strategic objectives across a range of areas, including: Customer KPIs; Water Supply; Waste Water Management & Environmental Compliance; Sustainability & Climate Change; and Safety & Efficiency. The WSSP will provide a strategic framework under which the 6 year cycle CIPs will be developed. Furthermore, it will take into account national, regional and local development plans, and their associated socio-economic policy framework. IW will be obliged to consult with regional and local councils and a wide range of statutory stakeholders, during the making of the WSSP. The CIP will be reviewed as appropriate when the WSSP is in place. As part of the implementation of the WSSP, IW will need to develop a number of plans within the Period, which will define the strategic context for particular capital projects in order to achieve key policy objectives. These strategic plans will include the following: National Water Resource Management Plan; National Sludge Management Plan; Climate Mitigation and Adaptation Strategy; Region based plans for leakage reduction in water networks; and Region based plans for leakage reduction and renewal of waste water networks. IW will strive to develop and adopt these plan and strategies within the Period and in compliance with any applicable legal requirements. 34 Irish Water

35 4 CAPITAL INVESTMENT PROGRAMME TRANSITION 4.1 EXECUTIVE SUMMARY - KEY ELEMENTS OF TRANSITION PLANNING The WSIP was overseen by the DECLG up to the end of 2013, at which point it transitioned to IW. Delivery of individual projects under the programme have to date been managed by LAs who recouped expenditure from DECLG on an agreed cost split basis governed by a Water Services Pricing Policy agreement. This approach meant that funds were drawn down retrospectively from the Exchequer upon the delivery of projects, in accordance with a governance process. While this approach was straightforward for in flight projects, it was complicated by the scale and complexity of the multi-stage approvals, delaying the closing out of capital projects and resulting in LAs carrying substantial unfunded balances often for many years. To address this, the IWP has now developed systems and structures to support IW in the delivery of a high performance utility model that is capable of prioritising the appropriate investments and managing the efficient delivery of projects, as is described in this section. 4.2 TARGET OPERATING MODEL AND ASSET MANAGEM ENT STRUCTURES The IW TOM has set the foundation for the business capability and organisation development projects within the IWP. It consists of a number of key capabilities centred on defining the functions, organisation and processes that IW will need in order to undertake its business activities A SSET INFORMA TIO N MA NA GEMENT IW s Asset Information Management capability is accountable for the development of information strategy, security, governance structure and policies. It is also responsible for the design of appropriate data, systems and reporting architectures and maintenance of the asset registers. Maximo/Click/Syclo/GIS: the Work and Asset Management (WAM) systems have been developed to initiate, schedule, track, execute and manage work and inventory on all above ground and below ground assets. The full deployment of this capability will take a number of years to deliver across all operational activities, beginning with 3 initial pilot LAs in Q2, Oracle: Management of the payment process to contractors will be through the Oracle Procure to Pay process and will be linked back to the asset via Maximo. Primavera: Programme and project management of major capital projects will be through Primavera which will monitor and report on the project lifecycle from Water Investment Appraisal Committee (WIAC) Gate 1 to Gate 5 completion. 35 Irish Water

36 4.2.2 INV ESTMENT A PPROV A L A ND GOV ERNA NCE IW has established a system of governance and oversight on all expenditure to ensure that objectives are met and to comply with Board Policy (PD/03). To guarantee this IW has established a Water Investment Approval Committee (WIAC) to preside over the governance process with further reference to the Irish Water Board and ultimately the BGÉ Group Board above defined thresholds. Further governance for approval of major capital expenditures will apply from the Irish Water Board, BGÉ Group Executive and Board, and from the Exchequer in respect to major capital spending. The principle purpose of the approval process is to ensure that IW funds are allocated in an efficient manner by establishing the merits of expenditure (Capex & Opex) proposals using a consistent and comprehensive framework. Good governance for project review and approval requires that the needs and opportunities for expenditures are continually identified, assessed, approved, completed and reviewed in a timely, effective and informed manner. This will ensure that IW establishes the optimal asset investment portfolio and delivers the highest performance outcomes from its investments. The key participants in this process are: 1. Water Investment and Approval Committee (WIAC) is made up of the Heads of Departments of IW. Their authorisation is required before a project or programme can proceed. 2. Asset Strategy typically propose and progress the WSSP and CIP to Gate 0 and once approved submit the programme proposals to Gate Asset Programmes bring the project/programme through Gates 2 to Gate 4 and include statutory consents, design and cost estimates. 4. Asset Investments own the Phases and Gates processes. They also undertake post investment reviews at Gate 5 to complete the project/programme. 5. Capital Delivery progress projects through construction and commissioning. All capital projects and programmes require specific WIAC approval, above and beyond budget approval, i.e. appropriate business cases must be submitted for approval in advance of any expenditure relating to capital projects and programmes. Expenditure relating to minor capital works is the only capital expenditure that may be incurred on the strength of a WIAC budget approval only. An appraisal methodology has been developed and applied to the current capital programme assigning a relative importance, weighting and risk factor to relevant investment drivers. Decision trees have been developed for each asset category in order to prioritise projects within each of these key areas by driver and asset type. 36 Irish Water

37 Figure 6: Optimising the Portfolio. There are five mandatory review/approval points in the lifecycle of an IW project investment appraisal and approval process. These points are referred to as Gates. The 5 Gates cover the progressive approval of projects from conception to post implementation. Requirements for approval at each gate will vary depending on the business impact, risk and materiality of projects. Approval at a Gate means that the project/programme is permitted to proceed to the next Gate. It also means that the appropriate level of funding (Approved Cost Budget ACB), required to get to the next Gate has been granted. The following is a description of the 5 Gates in the WIAC process: Gate 0 - Business Plan Approval Gate 1 Approval to Start Concept Design Gate 2 Approval to Prepare Design and Cost Estimate Gate 3 Investment and Construction Approval Gate 4 Project Closure Approval Gate 5 Post Investment Review Approval Project Control Limits are defined as the limits on project parameters such as scope, schedule, budget, or the quality and expected project benefits which, if projected to over-run, require additional authorisation to proceed. When a project is expected to exceed a limit at any Gate, it will be referred back to the WIAC for an Exception Investment Review to consider whether the project is still viable in light of the new estimates for costs and benefits. Exceeding any of the following Control Limit parameters (at any Gate), will require a referral/resubmission back to WIAC: Where Forecast Out-turn Cost (FOC) is likely to exceed the budget; Where the project completion date is expected to be delayed; Where there is change in original scope; and Where the expected benefits have decreased such that the Net Present Value (NPV) of costs and benefits are no longer valid. 37 Irish Water

38 Any of the following conditions will also require a referral / resubmission back to WIAC: If the approval has exceeded 12 months and the project has not started/commenced; Should a project, although commenced, remains dormant for a period in excess of 12 months; or If the project is still viable in light of the new estimates for costs and benefits. 38 Irish Water

39 Figure 7: Investment Approval Committee Project Lifecycle Gates. 39 Irish Water

40 4.2.3 PROGRA MME MA NA GEMENT Management of the current programme involves the Asset Information Management systems outlined above for day to day management. IW staff will be responsible for the programme management. Delivery of the Capital Programme is being carried out through the LA staff currently working in Capital Project Offices reporting to IW Capital Delivery Team. They also manage the day to day project activities including interfaces with IW Programme managers, contractors and consultants. Commissioning support and asset handover procedures are managed by Capital Delivery (via Capital Project Office staff) with input from Asset Operations and LA operational staff via the SLAs. 40 Irish Water

41 5 CAPITAL INVESTMENT PLAN EXECUTIVE SUMMARY INVESTMENT PLAN DEVE LOPMENT This section sets out IW s approach to the investment challenges described in Section 3 and describes the processes that have been used to arrive at the total capital funding requirement detailed in Section 6. The plan is broadly categorised into two sections: Major Capital and other programmes. The Major Capital projects include all the WSIP projects and other programmes including those required to support and develop IWs asset management, business efficiency and related capabilities. This section sets out the context and treatment of IWs investment drivers and the programmes and priorities that have evolved. There are a range of legislative requirements that require IW to invest in measures to resolve drinking water and waste water compliance issues. IW has developed a decision-tree process to assign a weighting to the investment drivers and calculate the relative priority of projects, clearly favouring compliance issues over capacity. In addition to the Major Capital projects, IW has developed a new programme of Minor Capital projects. These are specific projects or programmes aimed at developing and delivering low capital cost solutions to address quality, statutory and business efficiency deficits, where possible utilising standardised solution packages. Each project will address specific drivers, but additional enhancement works may be incorporated if the benefit meets with investment approval criteria. IW will also need to progress a number of key studies during the Period in order to develop the Asset Management basis for the business; to ensure a clear strategic direction for capital investment; to provide best value for water service customers and to deliver sustainable and incremental environmental improvements. These key studies are also outlined in this section. 5.2 DEVELOPMENT OF THE CAPITAL INVESTMENT PLAN IW will be taking on projects at all stages in the project life cycle from the 34 LAs, which have up until now been delivered under the governance of the DECLG. During the Period, IW will deliver priority projects as effectively as possible, given the existing funding, statutory consents, procurement, contractual and governance constraints. It is important to note that only after IW has completed this full set of legacy projects will it have the ability to develop a full CIP based exclusively on the water utility procurement and delivery model. IW is actively developing priority contract models and procurement frameworks, utilising the BGÉ Group procurement capability and through the establishment of a Shared Services function, serving both the water and gas businesses. 41 Irish Water

42 5.2.1 INV ESTMENT DRIV ERS A ND PRIORITIES Investment projects were identified during the development of the WSIP The DECLG issued Circular L6/09, which set out parameters for the prioritisation of projects. It stated that the specific environmental and economic pressures, that had emerged in the preceding years, were to form the basis for developing the Assessment of Needs Reports, which would feed into the WSIP Priority projects were classified into the following categories: 8 Category 1: Water conservation proposals to meet environmental and economic goals; Category 2: Works required to respond to ECJ judgments; Category 3: Environment/Public Health Objectives arising from compliance with WFD requirements and other regulations; and Category 4: Works to support sustainable development of hubs and gateways under the NSS, strategic developing areas and works to support employment creation. IW recognises these priorities as key drivers for continued investment, but has identified two additional priorities of drinking water quality and quantity and customer service. Both are considered critical to encouraging customer propensity to pay water charges once bills are issued from Q As IW develops its Asset Management function, it will seek to identify critical investment needs to sustain and upgrade asset performance, while recognising the need to achieve best value outcomes from current and new assets. IW s fundamental goal is to deliver a reliable supply of clean, safe drinking water and effective waste water services at an affordable price. Its long-term strategy has led to the definition of the key investment drivers demonstrated in the figure below. Health & Safety Environmenta l Compliance Drinking Water Quality Wastewater Availability Investment Drivers Drinking Water Availability Asset Condition & Performance Business Efficiencies Meeting Customer Service Obligations Figure 8: Irish Water Capital Investment Drivers. 8 DECLG Adv ice Note Circular L6/09 Water Serv ices Inv estment Programme , Assessment of Needs 2009, Issued 17 th July Irish Water

43 These investment drivers build on the original drivers set by the DECLG, the EPA and LAs and will include evidence based studies to identify risks. It should also be noted that the overarching driver of health and safety will underpin investment in water assets. IW recognises that investment will be required in order to bring a proportion of existing assets in line with current health and safety standards. This investment need will be quantified more accurately as the IW HSQE function gains knowledge of its assets, through site surveys and risk identification studies PRIORITISA TIO N OF INV ESTMENT DRIV ERS IW will strive to achieve drinking water quality standards, environmental compliance and serviceability goals within limited budgets for capital investment. Therefore projects have been ranked in order of risk and criticality. The risk assessment methodology provides a means of assigning a relative importance weighting and risk factor, to the investment drivers which enables optimisation of spend across multiple drivers with competing priorities. The approach to asset investment for water and waste water infrastructure has been to determine the drivers for investment and to use decision trees to evaluate the relative priorities within each driver category. IW is faced with a large compliance deficit for the initial investment period and consequently, investment decisions are dominated by basic compliance and capacity requirements. As a result, asset condition, business efficiencies and customer serviceability obligations will come into focus as the utility matures. All projects within the current WSIP have been assessed using the relevant decision tree to develop the overall programme of priority projects for the CIP. The following example illustrates the use of decision trees for prioritisation of Water Quality and Environmental Compliance. Drinking Water Investment Prioritisation The primary aim for drinking water quality investment is to protect human health and achieve full compliance with the Drinking Water Regulations. On this basis, the order of priority for drinking water projects is to address exceedances firstly in terms of health and safety issues and microbiological parameters, then chemical and indicator parameters. Leakage and capacity issues are a secondary priority in this category. This reflects the hierarchy of issues impacting water service customers, from adverse health through to aesthetic nuisance or inconvenience impacts. For drinking water, the decision trees address quality and availability drivers. The process, as shown in the figure below is applied to projects, resulting in a decision score and prioritisation of projects. Scores 1 to 5 are deemed to be priority projects that should proceed, subject to scope review and funding availability. Scores 6 to 8 are lower priority and should be monitored, reconfigured as appropriate and considered for investment in the following investment period. 43 Irish Water

44 Figure 9: Drinking Water Investment Decision Tree GROWTH PROJECTIONS / FA CTORS IW is developing Interim Guidelines for the provision for demand and growth in water treatment and wastewater treatment projects. Growth factors will be based on interim population projections developed by the ESRI, 2011 Census figures, CSO reports and realistic inward and inter-regional migration rates and patterns of a continuing higher than European average birth rate. Growth rates for domestic customers will be available at overall county-level and for urban areas with populations of 1,500 or more. A percentage of domestic growth will be allowed for in community, commercial and industrial development. The percentage growth for industry will be based on the domestic growth rate being applied to the existing industrial demand, where continuing industrial development is considered realistic. The requirements of specific industry with significant demands will be considered where there is a realistic expectation that the development will take place within a 5 year timeframe. Growth projections should not exceed core strategies identified for the relevant settlement based on current Regional Planning Guidelines, but will take into account documented evidence of seasonal peak loadings on systems. 44 Irish Water

45 For the duration of the Period, the majority of projects that are at a Pre-Construction Gate will be legacy projects inherited from the WSIP. As each project moves towards the next WIAC approval gate, IW will review the original WSIP project scope and growth projections against its own. It is anticipat ed that the review may enable IW to significantly de-scope some projects and to defer others completely by implementing lower cost interim measures. All new projects developed by IW will reflect the new growth model A SSUMPTIONS A ND CONSTRA INTS Projects Committed The DECLG has made irrevocable commitments to proceed on a number of contracts and projects outside IW drivers that will be prioritised by IW to ensure that they are completed. These projects will not have been developed using the same IW investment appraisal approach, however each one was developed by consultants to deliver a particular outcome in line with growth, quality and environmental drivers of the time. Consequently, IW consider that the risk that these projects are not investment-worthy is low. One exception to this is the upgrading of the Ringsend WWTP, which is based on a major 9km long subsea tunnel. The cost of this project, its risk profile and the limited environmental benefit has prompted a radical review in order to deliver the required capacity at a markedly lower cost. Funding Mechanisms Until its own revenue streams develop with access to capital markets, IW is constrained by the availability of capital. At present, a capital funding limit has been set for the years 2014, 2015 and IW understands that this funding cap will be set at 310m for 2014 and may rise in 2015 and This limit has to cover the legacy WSIP programme projects, IW s capital programme, LA Capital Project office staff and overheads, IW IT and facilities costs. IW considers that this figure is well below any estimate of needs to meet the minimum objectives herein such that additional funding is required, as is set out in this proposed CIP. Data Gathering The DECLG has provided high level summaries of the current status of the WSIP and the EPA has provided information regarding monitoring systems, water and wastewater treatment plants and the RAL. Fact Finding IW has been developing this CIP on the basis of publicly and centrally available information. It has also engaged in direct communications with DECLG, EPA and the LAs to obtain detailed information on existing asset condition and performance, quality and capacity issues and to carry out business case reviews for the CIP s for and beyond. This process will continue in order to refine the individual project priority levels within the programme. 45 Irish Water

46 Current Data Assumptions It is currently assumed that figures and status of projects on the WSIP are accurate for each project and that all projects on the Remedial Action List Q are active issues until completely removed from the list. It is also assumed that DECLG data has accurately captured the main drivers of investment from the LA Assessment of Needs reports, including detailed submissions, strategy reports and preliminary reports. The most up to date publicly available data for leakage is from Risks Unless detailed information, accurate budget updates and funding mechanisms are confirmed and validated by IW, there is a significant risk to the accuracy and efficacy of this proposed CIP for IW will endeavour to mitigate this risk by completing Business Case Reviews across all projects, (except construction stage projects) as soon as it is in a position to do so. For construction stage projects, a major due diligence exercise is well advanced and is indicating that budgets to completion are substantially understated by DECLG figures, resulting in commitments being well in excess of the available capital FUNDING A V A ILA BILITY A ND PRIORITISA TIO N IW recognises that the water industry has a finite level of resources to undertake an investment programme within the Period. IW is constrained by the capital available to fund the CIP and further constrained by the expected out-turn cost to completion based on its due diligence. Based on current budget approvals, it will continue to be limited until the full Asset Management utility model and associated funding streams have been established. The following sections outline the priorities and investment requirements for Major Water, Major Waste Water and Minor Capital Programmes. IW considers that these sections make a compelling case for funding to at least 500m per annum for the medium term. 5.3 W ATER TREATMENT (ABOVE GROUND ASSETS) Providing clean, safe, reliable drinking water is IW s highest priority. In light of funding limitations over the coming years, capital investment on water treatment must focus on the opportunities to achieve maximum value through re-scoping of existing projects, urgent upgrading of existing treatment assets and the efficient delivery of approved works, required to meet strategic objectives. In terms of water quality, priority is driven by the requirement to comply with the Drinking Water Regulations. Regulation and policing of the WSA is carried out by the EPA and therefore, with the passing of the Act, many of IW s priorities will be directed towards compliance issues. IW has used compliance information to prioritise the capital programme. In future, IW will also have access to operational and asset performance monitoring information that will help to address emerging compliance issues before they become a major risk or cause harm. 9 Serv ice Indicators in Local Authorities Eighth Annual Report to the Minister f or the Env ironment, Community and Local Gov ernment by the Local Gov ernment Management Agency. 46 Irish Water

47 Three categories of tests are conducted by the WSAs to determine the quality of drinking water; microbiological, chemical and indicator tests. Almost 250,000 monitoring tests are conducted across water supplies in Ireland each year and the results compared against the limits set out in the Drinking Water Regulations. Microbiological parameters are the most important, as their presence can indicate a potential risk to health. Prolonged exposure to chemical parameters can also pose a potential risk to health. Indicator parameters are not normally a risk to health, but indicate that investigations are warranted in order to avoid a potential risk to human health. Chemical standard compliance in public water supplies slipped from 99.5% in 2011 to 99.3% in Trihalomethanes (THMs) compliance deteriorated compared to 2011 and accounted for 68% of all chemical standard breaches in Reducing the organic matter in the raw water, optimising treatment to remove organic matter and minimising chlorination, can all be used to reduce the formation of THMs. Care is needed, however, not to reduce chlorination to such an extent so as to compromise the microbial safety of drinking water. According to the EPA, drinking water quality in public water supplies continued to improve in 2012 although, the ability of public supplies to maintain supply quality during adverse weather events was severely tested in E. coli compliance in Public Water Supplies also continues to improve. Since 2005 there has been a 92% reduction in the number of public water supplies reporting E. coli exceedances. Trihalomethanes compliance in public water supplies declined from 89.1% in 2011 to 85.1% in The decrease is likely due to the poor weather conditions that prevailed in the summer of 2012 and the inability of some treatment plants to adequately cope with a variation in raw water quality. Since 2008, WSAs have completed remedial actions on 70% (237) of supplies from the original EPA RAL. The figure below illustrates the increasing level of microbiological compliance in Public Water Supplies, which is a credit to the level of investment delivered through the WSIP and Rural Water Programmes over the past few years. Figure 10: Number of Public Water Supplies in which E.Coli was detected at least once 47 Irish Water

48 The RAL developed by the EPA is a list of public water supplies where treated water does not meet the drinking water standards, where replacement or upgrades to treatment or supply assets are needed or where operational practises should be improved. This list represents the assets with greatest risk of causing a drinking water incident and therefore those presenting the greatest risk to public health. Figure 11: Progress made in reducing the number of supplies on RAL. The primary issues addressed by the RAL include disinfection for E. coli, Cryptosporidium barriers, adequate treatment for Trihalomethanes and operational controls for managing aluminium and turbidity levels WA TER CA PA CITY Some 4.6bn in Exchequer resources have been invested in water services over the past decade. This has included 3.7bn under the multi-annual WSIPs which, allied with a 900m spend from WSAs own resources, facilitated the completion of some 480 major water and wastewater public schemes over the period As a result, treatment capacity for drinking water has increased by a level equivalent to the needs of a population of 855,000 (i.e. 214 million litres per day) and storage capacity has increased by a level equivalent to the needs of a population of 1,510, PRIORITISA TIO N IW has developed the priorities identified by existing stakeholders (LAs, DECLG and EPA) in working towards its strategic objective - to deliver a reliable supply of safe, clean drinking water. Water Safety Plans (WSPs) currently being promoted by the EPA and considered by the World Health Organisation (WHO) as the most effective means of maintaining a safe supply of drinking water to the public will be developed to profile and manage risks. IW will initially advance WSPs for the larger WSZs and gradually extend their application across all supplies. 10 Water Serv ices Inv estment Programme Report, published by DECLG. 48 Irish Water

49 The performance and risk of failure of individual assets will be assessed in terms of the impact it will have on delivering defined service standards set out by the economic and environmental regulators. This systematic approach will allow IW to formulate targeted investment plans for replacing or refurbishing assets at the most appropriate time. IW has appointed a dedicated Programme Manager to oversee urgent measures to reduce and eliminate as far as practicable issues giving rise to Boil Water Notices, for schemes in County Roscommon. Their brief will include reviewing operational practices in these areas and ensuring that the agreed measures are delivered as an urgent priority, with monthly reporting to the Irish Water Management Team (IWMT). The role will quantify the number of consumers on such schemes at the time of asset transfer and develop a plan and programme for their reduction as rapidly as possible PROPOSA LS A ND LEV ELS OF EXPENDITURE There are currently 33 projects worth an estimated 89m (excluding water conservation) at Construction Stage in the WSIP These projects address a number of business drivers, primarily drinking water quality and drinking water availability. Projects at earlier stages in the WSIP are being assessed in terms of key outputs that can be delivered, e.g. reduction or removal of risk, the criticality of supply and the potential return on investment of the project. Prioritisation of projects is carried out using the methodology outlined above in section The level of risk is determined by first assessing water treatment projects under quality standards against the schemes that are currently deemed to be non-compliant by the EPA. New priorities have also been identified, such as risk studies to determine the current resilience of key water treatment and supply assets, the development of WSPs and investment in addressing health and safety issues. All projects currently prioritised will be subject to a business case review during 2014 to establish existing issues and budgets and to identify the scope for re-scoping, de-scoping and short-term interim measures where appropriate to defer large scale capital investment. This, it is considered, will save money for the water services customer. A key focus is to commit to delivering approved schemes, within each investment cycle, as quickly as possible, where they are managed within the available budgets and without delay. The total funding requirement for this section is included in the summary table under Major Capital - Water. The full list of prioritised water assets projects can be viewed in the Appendices, attached as part of this submission. 5.4 W ATER NETW ORKS (BELOW GROUND ASSETS) The key issues for below ground water assets are primarily: high levels of leakage across the country putting a strain on finite raw water sources, reducing the availability of drinking water, increasing variable costs such as energy and chemicals and in certain cases, affecting plant performance where demand for water exceeds the production capacity of the water treatment plant. The levels of progress in establishing water conservation infrastructure vary from county to county. Some LAs are still completing the installation of meters, valves and telemetry to establish district metered areas and so as to determine levels of leakage in their own authority region and WSZ. 49 Irish Water

50 Where DMAs have been established, the current calculation of leakage levels varies, as domestic demand is currently estimated by LAs. A common methodology for determining level of leakage is not used by all counties. Furthermore, there is no confirmed baseline for leakage levels across the country. A consistent and robust measurement of UFW across all WSZs is required in order to determine the scale of the issue and quantify the savings that IW can target and achieve. It is envisaged that IW will need immediate investment to establish systems and infrastructure to accurately assess leakage levels across all WSZs. This has been reflected in the prioritisation of projects, where basic leakage measurement infrastructure is not in place. The current water conservation programme is funding a significant amount of water main replacement. IW will introduce an Asset Management approach to below ground assets and will rebalance funding between the four pillars of leakage management (active leakage control, speed and quality of repairs, pressure management and water main rehabilitation). In addition, where below ground assets do not provide an adequate capacity of water to supply areas, they will need to be replaced to ensure security of supply. Private side leakage is a significant component of unaccounted for water levels in below ground assets. IW considers that it will become a high profile issue when the Metering Programme completes the installation of domestic meters and IW begins to charge domestic users for water. IW recognise that major benefits can be derived from a Customer First Fix policy, where IW agree to repair leaks reported following meter installation in the customer s property. Meter surveys to date show 5-6% of properties with significant flows, over double average normal use. There is real evidence that such a policy will deliver valuable benefits in saving critical water resources in the short term and money for water service customers in both the short and long-term. IW assumes separate Exchequer funding for this programme, which is estimated to cost 50m in the Period. The parametric value for lead levels in treated water reduced to 10µg/l in December According to The Provision and Quality of Drinking Water in Ireland, WSZs did not comply with the new lower standard. Reduction of lead can be achieved by a reduction of plumbosolvency through ph correction or by the removal of lead distribution and service connections in below ground water networks. The EPA Report 2011 stated that there was approximately 4km of lead distribution mains remaining in networks across the country, which must be removed. In addition, it is estimated that up to 11% of all service connections could be composed of lead. This would mean there is a possibility that up to 176,000 lead connections existing the below ground assets water networks. IW considers that a lead strategy must be developed to address this issue. Additional issues such as backyard and shared water services, which can be a particularly complicated issue to resolve, will also need to be addressed. These services will need to be located and assessed for condition and performance levels. Based on the outcome of these studies and surveys a strategy will be put in place to address these services. The category of shared service pipe is a particular priority, being typically of lead, located in private rear gardens, vulnerable to covering in under building extensions and to leakage from gardening activities, being inaccessible for repairs, while compromising service to multiple 11 The Provision and Quality of Drinking Water in Ireland, 2011, published by EPA. 50 Irish Water

51 consumers and making metering impossible. It is suggested that this category would be targeted for earliest resolution. Costs are considerable, estimated at 1,500-2,000 per property, with the requirement of a new main in the public road and moled or plumbed services to the rear of the property, in each case. The work in private property is also dependent on householder agreement as regards the works and remediation, as well as final connection to internal plumbing. Drinking Water Availability is another key driver under below ground assets which provide a critical supply of water, such as the Callow Hill Tunnel in Dublin. This asset has been in place for 150 years and the risk of structural failure of the tunnel is a serious concern. This asset is currently on the RAL as a drinking water quality risk due to infiltration and risk of collapse. If the tunnel were to fail, the availability of water to the GDA would be severely affected and parts of the region, including North County Wicklow, would have no water supply. Critical Assets and the limited headroom in Dublin will be addressed through a separate strategy for Network Management and Water Conservation. The study will examine the whole Dublin catchment area in terms of supply and demand balance across multiple LA boundaries to establish the most appropriate strategy. The supply crisis in Q4 2013, due to issues in the main treatment plant at Ballymore Eustace, underlined the lack of resilience in this supply, serving over 1.25m people and a large part of the commercial and industrial enterprise of the country. As a result, IW has commenced preparatory work to develop an urgent plan for the GDA water supply to determine the short and medium term priorities, in advance of a new major supply source for the region expected in 7-10 years. This reflects the need to cater for new demands from resumed economic growth without compromising current water service customers. This plan will focus on best use of the following measures: Review of leakage control strategies across the region and consideration of a programme of activity to limit losses in distribution to 25% within 5 years; Optimising production across the region s plants (Vartry, Liffey, Dodder, Barrow) including measures (operational and capital) to increase production resilience; Distribution network modelling and consideration of network reinforcement (trunk mains) to ensure effective utilisation of water produced across the region regardless of source plant; and Driving customer side leakage reduction, using the new meter asset base, together with public engagement on the minimisation of consumption PROGRESS TO DA TE A National Water Conservation Programme was undertaken by the DECLG over the last 7 years, with 130m invested to develop network management and leakage control capability across the LAs. 321m was allocated in the WSIP (as amended) to replace some 640km of the network (approximately 1.3% of total network length) and target existing public lead services to meet the new 2013 lead standard. Despite the expenditure to date, the levels of leakage remain high nationally and the challenge for IW will be to focus the capital investment based on reliable asset performance information. IW is now undertaking a review of the expenditure to date compared to the original allocation and the results achieved in terms of 51 Irish Water

52 leakage reduction. It is worth noting that the allocation of 321m represents a network renewal rate of 1.3%, which falls well short of the investment required to improve and maintain the asset base in the long term PRIORITISA TIO N The current methodology for ranking pipelines for rehabilitation or replacement is comprehensive and uses condition, performance and criticality factors to further rate projects. This ranking approach will be retained by IW and additional criteria will be included to maximize return on investment for the water service customer. Proposed additions to the ranking criteria will include production cost of water, criticality of providing the supply depending on demand needs of users and commercial customers. Investment will be balanced between leakage management, rehabilitation and replacement of water mains. A full review of proposed rehabilitation works will be carried out, driving efficiency and higher performance levels from existing assets and postponing capital investment where feasible and safe to do so. This approach will prioritise mains rehabilitation where demand savings give the greatest return and will seek to integrate all leakage reduction measures (find and fix, pressure management) with targeted mains replacement. The concept of economic levels of leakage will be applied and it is assumed that the CER will approve leakage targets for IW to achieve as part of its KPIs. Programmes of works will be coordinated on a regional level, in order to best utilise limited resources, drive efficiencies and maximize return on investment across the country. This approach will develop contract strategies and work scopes which will maximise sustainable leakage reduction, incentivise contractors to deliver on the most effective measures and integrate this with the operational investment in leakage control. This may involve inclusion of leakage reduction in the outsourced contracts or where LA Operations Teams are delivering the leakage control function, ensuring an integrated approach between the operational and capital elements. The decision tree for water conservation prioritises projects that deliver fundamental flow monitoring and data gathering infrastructure. Projects where the supply / demand balance is currently a critical risk factor are prioritised next, as per the figure below. 52 Irish Water

53 Figure 12: Decision tree - Ranking of water conservation projects in WSIP (as amended) and new IW programmes of works PROPOSA LS A ND LEV ELS OF EXPENDITURE IW will move towards a steady state of investment in the rehabilitation of the water network. This will target a percentage of the below ground assets, depending on the funding available and the meeting of IW s WIAC requirements. To optimise returns, this investment will, in the early stages, be targeted in parallel with intensive leak reduction for sustainable water savings. Investment will be required for active leakage control and pressure management works in order to rebalance the leakage management pillars. An immediate focus will be placed on WSZs where leakage reduction defers capital investment (thereby saving money for the water services customer) and improves plant performance. An investment will also be required in the procurement of a nationwide telemetry system, in order to gain full visibility of the network and target the highest levels of leakage across the country. This will seek to integrate, in the first instance, the many local systems in place, with a central control centre providing a high level of monitoring, in support of the programme delivery. The total funding requirement for this section is included in the summary table under Major Capital Water Conservation. 53 Irish Water

54 5.5 W ASTE W ATER TREATMENT (ABOVE GROUND ASSE TS) KEY ISSUES IW is faced with a major challenge in meeting EU and national environmental obligations and will be exposed to the on-going risk of prosecution for non-compliance with the requirements of EPA Waste Water Discharge Licences. Unless carefully managed, this regulatory uncertainty will interfere with the ability of IW to operate in a financially stable environment. It will also restrict its ability to plan and manage investments in the best interest of its customers and overall regulatory and environmental obligations: EU Commission Report on the Implementation of the UWWTD 12 reports poor performance by Ireland in meeting the Directive requirements; There is a current EU Prosecution Case 13 which claims that Ireland has failed to provide the required level of secondary treatment in the case of 59 larger urban agglomerations and that the requirement to provide more stringent treatment has not been met for 28 agglomerations. The Commission has also sought clarification in relation to 14 agglomerations where it believes additional infrastructural investment is needed to bring urban waste water collection systems into compliance with the Directive; and The most recent EPA report on the implementation of the UWWTD 14 indicates that 30% of the 165 larger urban agglomerations in the country did not comply with UWWTD effluent quality and/or sampling standards for secondary treatment in The 165 larger agglomerations account for over 92% of the national waste water load. A higher rate of non-compliance arises (36% of urban areas), when all 438 urban areas with secondary treatment are assessed against the UWWTD standards (these standards were used by EPA as a guide for assessing compliance but are not mandatory for the smaller agglomerations 15 ). More recently the EPA identified seven agglomerations 16 as national priorities for enforcement action. These were prioritised because they failed to comply with deadlines / requirements laid down in EPA waste water discharge licences. The EPA Board has approved prosecution in two of these cases, i.e. Bundoran and Clifden, and is keeping the other agglomerations on the list under review. It is to be expected that the EPA will add to the priority list and that future prosecutions will follow, driven (in part) by EU concerns 17 that 12 Report f rom the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Seventh Report on the Implementation of the Urban Waste water Treatment Directive (91/271/EEC), Brussels 7 August Case ENVI 14 The second Update Report on data presented in the EPA Report Focus on Urban Waste Water Discharges in Ireland, Urban Waste Water Treatment in Appropriate treatment is required f or discharges f rom agglomerations less than 2,000 PE to f reshwaters and estuaries, and f or discharges f rom agglomerations less than 10,000 PE to coastal waters 16 Bundoran, Midleton, Clif den, Cork City, Letterkenny, Balbriggan, Dublin City (Ringsend) 17 Pilot Inf ringement Case ENVI 54 Irish Water

55 treatment plants operating in breach of the requirements of the UWWTD and/or EPA licence conditions are not being followed up with appropriate enforcement action. 5.6 RIVER BASIN MANAGEME NT PLANS AND URBA N W ASTE W ATER TREATM ENT LICENSING The RBMP process is the main tool for the co-ordination and setting of water quality targets and for agreeing the programmes of measures (e.g. improvements in urban waste water management performance) needed to deliver the agreed water quality targets. The aim of the WFD is to achieve good status for all waters by However the Directive accepts that this may not be possible in all cases and allows for the phasing of objectives (up to 2027 in some cases), provided the phasing is undertaken on the basis of appropriate and transparent criteria 18 and that any time extensions beyond the 2015 deadline are explained and justified in river basin management plans. The UWWTD is one of a number of basic measures that must be implemented as part of an overall WFD programme of measures. The UWWTD was required to be fully implemented in Ireland by December Notwithstanding the major capital investment that has taken place over the past decade there remain a significant number of waste water treatment plants where the level of treatment is not in complianc e with the UWWTD requirements, or with discharge licences issued by EPA. Furthermore, more stringent emission limit values for urban waste water discharges are required in many cases to meet the water quality objectives of the WFD. At least 40% of the 226 licences issued by EPA to-date are significantly more demanding than the standards required by the UWWTD. However, such stringent requirements for urban waste water discharges will not always deliver a tangible environmental outcome (i.e. a water quality improvement) unless complimentary supplementary measures are implemented by other sectors at the same time. The RBMP set ambitious targets for water quality improvement which depended inter alia on delivering significant programmes of improvement in urban waste water infrastructure. These targets have already fallen by the wayside and will not be achieved in the current economic climate. The EPA, as required by regulation, continues to issue waste water discharge licences on the basis of the programmes of measures and water quality improvements foreseen in the RBMPs. This approach is giving rise to environmental demands that cannot be met by IW due to funding limitations, and will ultimately result in more and more agglomerations being in breach of licence conditions. The next set of RBMPs will cover the period and will largely coincide with the first full economic regulatory cycle. It will be essential to ensure that the preparation of the next set of RBMPs is undertaken in a way that enables IW prioritise capital investment delivery to optimise the meeting of environmental obligations under EU Directives. It should also enable IW to operate in a financially stable environment within the constraints set by the CER and available funding. Whilst responsibility for preparing RBMPs will 18 WFD Articles 4(4) to 4(9): Exemptions would generally need to be justif ied on the basis of technical f easibility or disproportionate cost; howev er, many Member States hold the v iew that constraints on the public budget can be used as a reason f or extending deadlines (W ater Directors, Brdo June 2008) 55 Irish Water

56 not rest directly with IW, IW will need to be an influential player in the river basin management planning process to ensure that measures required of water services infrastructure to meet the environmental objectives established for the RBMP are achievable. These measures must also give the best return on investment in terms of customer, regulatory and environmental benefit. The next set of RBMPs will need to review the feasibility and timeline of achieving the current level of environmental ambition, to prioritise water quality goals and to phase the achievement of environmental objectives and programmes of measures over a timeframe that can be realistically achieved in current economic circumstances. Furthermore, IW will need to work with the EPA on an approach to reviewing licensing of urban waste water treatment agglomerations in order that capital investment can be initially targeted towards the delivery of priority environmental outcomes, agreed within the framework of the overall river basin management planning process. 5.7 URBAN W ASTE W ATER TREATMENT DIRECTIVE The UWWTD lays out requirements for sewerage systems to be provided and deadlines for the provision of waste water treatment. The main requirements of the UWWTD are as follows: Scheduled provision of waste water collecting systems and treatment plants based on the size of the agglomeration and the type of water body to which the waste water is discharged (freshwater, estuarine or coastal, sensitive or non-sensitive); and Monitoring (including frequency of monitoring) of discharges from waste water treatment plants. The requirements of the UWWTD (and related Irish Regulations) in respect of the provision of treatment are summarised in the figure below. 56 Irish Water

57 Figure 13: Treatment provision required by the UWWTD. The UWWTD also sets out criteria for identification of sensitive areas, such as freshwater bodies, estuaries and coastal waters, which are eutrophic or may become eutrophic if action is not taken. Fifty-one water bodies are now designated as sensitive in Ireland 19 with a specific level of treatment prescribed for 174 agglomerations. The 2011 national summary 20 of the effluent quality from all 544 urban areas, that are subject to the waste water discharge licensing process, is presented in the figure below. A total of 51% of all these urban areas achieved the Urban Waste Water effluent quality and sampling standards for Biological Oxy gen Demand (BOD), Chemical Oxygen Demand (COD) and Total Suspended Solids (TSS). 19 All the existing sensitiv e areas are identif ied in the Urban Waste Water Treatment (Amendment) Regulations 2010 (S.I. No. 48/ 2010) with maps included in the 2010 Regulations showing the location of designated areas. 20 The Second Update Report on data presented in the EPA Report Focus on Urban Waste Water Discharges in Ireland 57 Irish Water

58 4% 19% Achieved all the effluent quality and sampling standards 26% 51% Did not achieve the effluent standards Did not achieve the effluent standards solely due to insufficient effluent sampling Could not achieve the standards due to lack of secoundary treatment Figure 14: 2011 Assessment of 544 No. Discharges against Effluent Standards (BOD, COD, TSS). 5.8 W ATER FRAMEW ORK DIRE CTIVE The core requirements of the WFD were transposed under the Water Policy Regulations (S.I. No. 722 of 2003 as amended). Significant progress has been made in recent years in putting the necessary legislation in place to support the implementation of River Basin Management Plans and Programmes of Measures in Ireland. In addition, the Surface Waters Environmental Objectives Regulations (S.I. No. 272 of 2009) and the Groundwater Environmental Objectives Regulations (S.I. No. 9 of 2010) were made to give effect to the measures needed to achieve surface water and groundwater environmental objectives established in the RBMPs. Other legislation introduced in recent years, gives effect to various measures required by the WFD, these include: The Waste Water Discharge (Authorisation) Regulations (S.I. No. 684 of 2007) establishes an authorisation system for LA waste water discharges enforced by the EPA; The Water Services Act (No. 30 of 2007) introduces strategic planning for Water Services provision, strengthening the administrative arrangements for planning the delivery of Water Services at national and local level; The Bathing Water Quality Regulations (S.I. No. 79 of 2008) which transposed the new Bathing Waters Directive (2006/7/EC) establishes a new classification system for bathing water quality and requires monitoring and management plans to preserve, protect and improve the quality of bathing waters; The European Communities Environmental Objectives (Freshwater Pearl Mussel) Regulations (S.I. No. 296 of 2009) set legally binding objectives for water quality in rivers inhabited by freshwater pearl mussels and designated Special Areas of Conservation to protect those species; 58 Irish Water