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Thursday, 10 July 2014 12:03

Utility Regulator announces consultation on 2015-21 price control proposals for NI Water

The Utility Regulator for Northern Ireland has today published its draft price control determination for NI Water for the period 2015-21 (PC15).

The draft determination is the Northern Ireland Authority for Utility Regulation (NIAUR) Regulator’s assessment of NI Water’s revenue requirements over the six-year period. NIAUR said the draft price control proposals will lead to:

  • lower bills for consumers  - the majority of consumers will see reductions in bills under our price control;
  • improved efficiency – delivering 13% real terms reduction in total operating expenditure by 2021 - building upon improved efficiency achieved within the first two price controls;
  • continued significant investment in water and sewerage

The regulator is proposing to allow Northern Ireland Water £1 billion for capital expenditure (Capex) - within which £556m (55%) is to be allocated to ongoing capital maintenance and £446m (45%) allocated to clearly defined outputs that are prioritised and targeted for enhancement, such as new and upgraded works.

NIAUR has also proposed a target of 9.1% increased capital efficiency for improving works, together with a target of 0.6% per year efficiency for the current levels of capital maintenance.

“Benchmarking information shows NI Water 23% less efficient than companies in England and Wales”

Commenting on operational expenditure (Opex), the regulator said benchmarking information shows that NI Water is 23% less efficient than similar companies in England and Wales - NI Water spends £0.30 more per £1 than more efficient companies.

The draft determination is proposing a reduction of this efficiency gap and challenges NI Water to deliver 2.9% per annum efficiency savings over PC15, saving the consumer £56m in 2012-13 prices.

The Utility Regulator said its proposals mean that consumers will see NI Water absorb much of any exceptional increase so that Opex will rise by a smaller proportion, or just £6m in the first year of PC15 before reducing. Operational costs are expected to reduce to £166m per annum by the end of PC15, from NI Water’s identified starting value of £193m in 2015-16.

NI Water investment proposals include:

  • Continued connection of new properties to the water and sewerage network and the release of development constraints.
  • Investment in a trunk main to Cookstown will improve security of supply in an area badly affected by the 2010-11 freeze thaw.
  • Investment to alleviate the risk of internal flooding at 62 domestic properties and 836 properties affected by low water pressure.
  • Investment in 19 wastewater treatment schemes to improve the quality of discharges from works > 250 population equivalent and upgrades of 45 small wastewater treatment works.
  • Upgrading 54 unsatisfactory intermittent discharges to meet quality standards.
  • Replacement or renovation of 816km of water mains and 74km of sewers.
  • Further investment in systems to support the delivery of service, improve interactions with consumers, improve efficiency and make the service more sustainable.
  • Proactive replacement of 11,000 lead communications pipes at consumer properties in addition to lead pipe replacement under water main rehabilitation and in response to sample failures.
  • Further reductions in leakage surpassing 159Mld (the economic level of leakage).
  • Completion of work to secure water supply assets in line with requirements of the Preservation of Services and Civil Emergency Measures Directive.

The PC15 price control proposals will now be subject to a period of public consultation  which closes on 15th October 2014. Following the consultation a final PC15 determination will be published before the end of the year.

Commenting on the proposals, Utility Regulator Chief Executive, Jenny Pyper, said:

“Our focus is on delivering positive outcomes for water and sewerage consumers – lower bills for non-domestic consumers, improved efficiency, continued investment in our water and sewerage services and improvements in levels of service. It is encouraging that NI Water has exceeded the targets that we set during previous price control periods. Our proposals will further challenge the company to build on this performance and move further along the pathway towards the most improved water and sewerage company in the UK.”

Click here to download the full draft determination 

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