JOINT COMMITTEE ON THE ENVIRONMENT, TRANSPORT, CULTURE AND THE GAELTACHT debate -
Tuesday, 27 Sep 2011

Water Services: Discussion with Local Authorities

Chairman

I welcome the following: from Donegal County Council, Mr. Joe Peoples, director of services, and Mr. Paul Kilcoyne, senior engineer; from Dublin City Council, Mr. Seamus Lyons, assistant city manager, and Mr. Tom Leahy, executive manager, engineering; from Galway County Council, Ms Martina Moloney, county manager, and Mr. Jim Cullen, director of services; and from Cork City Council, Mr. Tim Lucey, city manager, Mr. Jim O'Donovan, director of services, community and enterprise and environment, Mr. Tim Healy, head of finance, Mr. Eamonn Walsh, senior engineer, drainage, and Mr. Pat Casey, senior engineer, water.

I draw witnesses' attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of the evidence they give to this committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

Before I call on the witnesses to speak I have some preliminary comments. The committee recently decided to conduct an in-depth analysis of the provision of water in Ireland and today's session is the first public session in this process. Over the coming weeks we will meet a wide range of stakeholders in the water sector, including various local authorities, the Department of the Environment, Community and Local Government, consumer organisations, engineers, environmentalists and the business sector. "Water provision" is a short generic working title adopted by the committee for its detailed examination of the problems, possibilities and alternatives available to the various stakeholders in the supply, storage, provision, disposal and costing of water.

Everyone knows there are limits and high costs involved in the provision of treated water to our growing population. We must provide water in highly populated areas such as Cork and Dublin cities as well as in rural areas of low population. We must adhere to the EU regulations and directives and be conscious of the economic costs and environmental impact of our decisions. The committee hopes to make a positive impact in this regard and, having considered carefully the evidence put before us, hopes to submit acceptable, practical, cross-party proposals to the Minister for the Environment, Community and Local Government. This is a very important issue, and as Chairman of this committee, I intend that we will give it full consideration on its merits.

I thank the various managers and their officials for agreeing to our request to attend the committee today. I shall call on the different managers to give their opening addresses, beginning with Mr. Tim Lucey.

Mr. Tim Lucey

I apologise for the logistics involved in preparing the presentation. I thank the committee for its invitation. We have no difficulty in attending to give members a briefing on the three topics outlined by the Chairman, and we welcome the opportunity to debate them afterwards, as needed. There are four members of staff with me: my two senior engineers, Mr. Pat Casey, senior engineer in water services, and Mr. Eamonn Walsh from waste water services, our director of environment, Mr. Jim O'Donovan, and our director of finance, Mr. Tim Healy, who will be in a position to respond to any detailed questions with regard to water, waste water and the financing of same in Cork city.

My presentation covers about 15 slides. I shall give a general overview at first to set the context for the three topics and will then address each of the three points indicated, namely, efficient infrastructure, alternative sources of supply and the administration and cost of supply and disposal of water. First, I shall give a scale of our work in Cork city in terms of domestic potable water. We have a domestic population of about 119,000 within the city boundary. The number of households, based on an average household occupancy, is 55,311. The domestic demand per property, based on 2.6 multiplied by an average of 150 litres per person per day is in the order of 390 litres of consumption per day. The average daily domestic demand in Cork city, therefore, is 21.57 million litres of water. In non-domestic consumption, which is clearly metered across the county at this time, demand is 11.4 million litres. The total daily demand of accounted for water, based on attributing an average consumption of 390 litres per day to households and the metered non-domestic consumption, is in the order of 33 million litres of water consumed in the city per day. The average daily volume of water supplied to the city and to certain contiguous areas in the county is in the order of nearly 68 million litres, thereby giving an unaccounted for overall level of water of nearly 35 million litres, or about 51% of the water we supply.

I shall give members an overview of the infrastructure, which might be difficult to see on the PowerPoint presentation. A print-out is available. We have four reservoir sites in the city: Knocknaheeny - tower level; Knocknaheeny - high level; Harbour View Road - an intermediate level reservoir; and Shanakiel, a lower reservoir. These are all on the north side of the city and the water is pumped up to them. Members may know that the north of Cork city is on the high side. We also have Inishcarra waterworks, maybe 10 km to 15 km west of the city, which is a joint scheme between Cork city and Cork county, and we take water in from that reservoir every day. Supply of water comes from both the Inishcarra waterworks and the Lee Road waterworks. The latter is a city council owned and managed facility, while the Inishcarra works are jointly run by the city and the county. The county runs it on our behalf but from the first day it was built it was a joint scheme. In terms of consumption, the Lee Road waterworks provides about two thirds of the supply to the city, Inishcarra about one third. The green areas on the map show the various take-off points from the Inishcarra works coming in from the county area.

In terms of waste water the map shows the scale of the area covered. Waste water disposal in the city is managed by the city council. We also manage a significant portion of the adjoining or contiguous county area. All the waste water goes for treatment at Carrigrennan in Little Island, a new plant completed in 2003-2004 which was built as a design, build and operate scheme and has been operated since 2004 for the city council on a 20 year contract. It was built by and is managed by the city council. In terms of volumes, there are in the order of 78 million litres per day from the city and 22 million litres per day from the county. There is a significant mix of industrial effluent because of the industrial areas covered, in particular in the supply coming from the county which has a significant mix in terms of flow, rate, volumes, and so on, that impacts on the load factors of the plant. The level of treatment we have to put into the waste coming into that plant is very much dependent on the quality of the waste coming in from many of the industrial areas.

As to capacity, that treatment plant is designed for a 413,000 population equivalent. It is currently working at in the order of a 310,000 population equivalent and clearly still has a significant capacity. Some 54% of the load is non-domestic. In terms of the non-domestic element, therefore, one is looking at an order of about a 150,000 population equivalent. To give an idea of the Cork drainage catchment, all of which is treated at Little Island, the map shows the red boundary being the city-council boundary. We also take in waste water from the likes of Glanmire, Little Island, Glounthane, Tramore Valley and other areas adjoining the boundary of the city.

Regarding what has been invested in the past eight to ten years in infrastructure under the water services investment programme, we have spent in the order of €9 million in recent years on a city water main network replacement programme. That was done in conjunction with the Cork main drainage works in that we took the opportunity at the time of that work to upgrade much of our city network. That sum of €9 million also provided for the introduction of 47 district meter areas, DMAs, across the city. Unidentified water currently varies from 22% in some DMAs to 64% in others, with a variety of ranges contained within those figures. The level of investment in the Cork main drainage scheme, which ran from 1998 to 2004, was €340 million. There were 22 contracts which included the construction of the treatment plant at Carrigrennan.

The issue of unidentified water is clearly of interest to the committee. It is a worldwide issue. There are various indicators of what one can actually reach in lowering the level of unidentified water. Figures of 20% to 25% are regarded as being exceptionally good as a benchmark. We have only a few areas at that benchmark level. The majority are at between 40% and 60%.

The next slide is difficult to read, but in visual terms, it shows how the city is broken up into 47 district meter areas. The introduction of metering across 47 areas was critical to the efficiency of our infrastructure in being able to manage and understand the information and to give us information on where flows were peaking. During severe weather events, in particular, it gave us a significant amount of information on where leakages were occurring and what the priority areas were for managing the supply of water, especially during severe weather in the last two winters.

I will move on to a study undertaken a number of years ago, the water replacement and rehabilitation study, which was undertaken to examine an integrated approach to the management of our water network. It recommended the creation of the district meter areas, DMAs, a critical element of understanding our consumption. It looked at updating our hydraulic model and GIS systems to facilitate better management of the network. It proposed the development of a system for condition and performance grading of individual mains, that is, looking at the condition of mains and their performance. The critical output of the study was that it came up with a prioritisation of DMAs for water mains rehabilitation and-or replacement and identified a range of trunk mains which required replacement or rehabilitation.

The priorities arising from the rehabilitation study were that 20 DMAs and 28 high priority trunk mains required significant replacement or rehabilitation. If we were able to undertake the work on all the DMAs and the 28 high priority trunk mains it would, in conjunction with our current active leak detection programme, give us a potential daily saving of 15.5 million litres of potable water which is currently being lost through the network. The cost of undertaking this work would be approximately €80 million during a ten year period. However, it would reduce the level of unidentified water to 28%. It would also obviously reduce production and network maintenance costs, the level of unaccounted for water and the number of call-outs to repair leaks in water mains. It would also be aimed at reducing pressure to acceptable levels across all DMAs. Pressure is a significant issue in leakages across our network, particularly given that some of the network dates back to the mid-19th century.

We are examining a number of other options, including the option of developing new low level storage reservoirs on the city network. This would assist in reducing the pressure and can be a very cost effective solution in managing the levels of unidentified water. If we could reduce the pressure by having a range of reservoirs at different locations around the city, it would put less pressure on the mains and result in a lower leakage level.

The contracts listed to start by 2012 in our water services investment programme include the Lee Road new waterworks, at a cost of approximately €17.5 million. We are in the process of appointing consultants for its design. It will be progressed on the basis of a design, build and operate scheme. What must be recognised is that the length of time it will take to have that scheme commissioned could be anything from four and a half or five to five and a half to six years from the current date. There is a lengthy lead-in time for any major infrastructural programme owing to the steps one must take in planning, design, seeking budget approvals and so forth.

In addition, there is the replacement of rising mains to reservoirs at a cost of €1.9 million. We are in the process of designing a city-county network interconnection. Effectively, this is an interconnection between the reservoirs in the county scheme and our scheme to provide for security of supply in severe weather in order that both city and county councils can share each other's water. The Docklands water supply scheme is estimated to cost €5.6 million and is at a very early design stage. There is a minor scheme costing €500,000 for the St. Patrick's Street culvert. The big scheme of interest is the water mains rehabilitation stage 1 phase, at a cost of €12.6 million. It is focused specifically on two of the 47 district meter areas, Shandon Street and Blarney Street and the Lower Glanmire Road area. These are the two areas with the highest unidentified water levels. As the committee can see, two of the 47 areas are costing us €12.6 million. There will be a significant benefit in these two areas, but in reducing the overall level of unidentified water in the city, it will not be significant.

In conjunction with this we are examining eliminating backyard services in a number of areas across the city, in particular lead pipes which present a particular difficulty with regard to leakages. That programme of work will cost approximately €2.75 million and will be undertaken in conjunction with the water mains rehabilitation stage 1 phase works in these areas.

To move to alternative sources of supply, storage and disposal that we are considering, we have clearly been focused on the issue of having sustainable urban drainage systems in any new developments, particularly in recent years in the context of granting planning permission for housing and other developments. This focuses on the re-use of water for non-potable applications. It is our top priority for any new developments within the city.

We are in the very early stages of examining the possibility of using groundwater sources in a number of areas in the city to see what supply that can give us. We have identified groundwater resources under the city as part of an integrated solution to complement the city's mains water supply scheme. Shallow groundwater abstracted from underlying parts of the city has been examined in both the Docklands and Lee Fields areas to the west of the city. Preliminary pumping and water quality test results are encouraging but require further investigation. A full investigation will determine the maximum volume of groundwater that can be safely abstracted and also allow for full assessment of water quality. In addition, we are examining the option of using such water for heating or cooling purposes, as the groundwater is higher than normal surface water owing to the "heat island" effect of urban development. Groundwater is potentially an alternative source.

I mentioned the city and county interconnector. If it is the case that the Lee Road waterworks cannot meet demand, we rely on the Inniscarra waterworks. We are considering an interconnector between the Lee Road waterworks and the Inniscarra waterworks in order that either authority could serve each other with water in the event of a severe disruption to either supply.

Another significant issue we are trying to deal with is infiltration into our wastewater network. The River Lee is tidal and there is a significant amount of infiltration from tidal or saline water into our wastewater network. The knock-on effect is that there is a cost and capacity issue at the Carrigrennan plant. If we can reduce the level of saline infiltration into our wastewater network, it will impact on reducing the cost of treatment at our wastewater treatment plant and prolong the capacity of that plant. That scheme is being progressed through the water services investment programme.

Moving to the last issue of water services costs, the graph will show the committee the manner in which both our water service water and wastewater service costs have grown since 2003. In 2003 we had a combined total cost of €10 million. The figure peaked in 2008 at €24 million but is now back down to €22.1 million. Members will note the increase from €10 million to €17.7 million between 2003 and 2004. That was a direct result of the introduction of the new wastewater treatment plant and mains drainage system in the city and the operating costs associated with these. The full effect was felt in 2005. In essence, during a period of two years our costs doubled as a result of putting in place appropriate treatment systems for the city and contiguous areas. The costs are distributed across the non-domestic and domestic sectors, although clearly not to the domestic sector directly. The domestic element is supposed to come from central overnment grants, but we are operating the polluter pays principle. The cost of supplying non-domestic water and treating non-domestic waste water is based on full cost recovery plus the marginal costs of the capital attributed to the non-domestic element of the plants.

The next part of the presentation demonstrates the impact of introducing appropriate treatment systems in 2003 and 2004. In 2003 we had a combined charge of 80 cent per cubic metre for both water and waste water. That had to rise to €2.30 with the introduction of the waste water treatment plant and the main drainage system. That remained at €2.30 up to 2008 and we now have it at €2.35 for 2009 to 2011. The next slide shows a breakdown of that figure. The current charge does not recover the full cost to us for supplying and treating water in the non-domestic sector.

The slide provides a breakdown of the charge between potable water, waste water and the marginal capital cost of contribution. Potable water is at 97 cent, waste water is at €1.09 and the addition to the waste water element for marginal capital costs associated with providing facilities over and above what would be required for domestic treatment is 29 cent per cubic metre. That will only recover the interest on our loans carried for the capital cost of infrastructure associated with the non-domestic sector at this time. If we were to charge the full cost, it would add another 17 cent per cubic metre, bringing the total charge to €2.52 per cubic metre. We have kept the charge at €2.35 and recognise that in the current economic climate, charges in business are significant and we do not want to increase the burden on the business sector in the city. Nevertheless, there is a stage where we cannot survive as a local authority without recovering our full cost. That we are currently not recovering the full cost is significant in the context of providing and treating water. That is the end of the presentation so the members should feel free to ask any questions on the detail.

Chairman

We will take all the presentations and deal with them together.

Mr. Joe Peoples

I apologise on behalf of the county manager, Mr. Neely, who is unavoidably absent today. I am delighted to have the opportunity to present to the committee and I invite my colleague, Mr. Kilcoyne, to go through our presentation.

Mr. Paul Kilcoyne

I will take members through a number of slides in our presentation, giving an overview of County Donegal which might be useful in the context of the other counties and authorities presenting today. I will set out current infrastructure, which in some instances is similar to elsewhere while in other cases it is very different. I will also provide an indication of costs and our own water needs in Donegal.

The preliminary results of the 2011 census indicate a population in Donegal of 160,000, up over 9% since 2006. It is the most populous county in the Border regional authority area but has the second lowest density. Leitrim has a lower density of population. Only 25% of the population lives in urban areas, with the remaining 75% in rural areas. Some of the urban areas are quite small despite being defined as urban. Effectively, 10% of the population live in large urban centres such as Letterkenny and Buncrana.

The county's area is 486,000 ha, which is a bigger land area than Cavan, Leitrim and Monaghan combined. Roughly speaking, just under half of the land is mountainous, with the remainder rolling lowland. Different percentages are outlined in the documentation showing categories of landscape, and these percentages can overlap. A significant portion of the land is peat bog and natural grassland.

There is a map of the county in the documentation and one can see in it how a significant part of the central portions of the county are mountainous, which presents certain challenges from a water supply and distribution perspective. There are significant issues associated with that. Some 17% of the county is of a high environmental sensitivity as a special area of conservation, with 5% as special protected areas. There are 16,000 ha of national park in Glenveagh and the county has 12 blue flag beaches, the country's longest coastline and the highest cliffs. The urban centres are marked in red on the map, and the national park is indicated, along with special areas of conservation, protected areas and national heritage areas. The urban centres straddle mountains to the west, south, east and north.

Existing water supplies are indicated on the map and circumscribe town areas. Water management systems have benefited from a recent multi-million euro investment, and that has been a significant advantage for us in being able to monitor what is happening at water treatment works and reservoirs through radio telemetry systems that have been installed. We have also been able to act on water conservation data in this regard.

As a result of the nature of the terrain and distribution of population, there is a long length of water main for the size of the county, with 4,500 km of piping, 73 treatment works, 178 reservoirs and 175 pumping stations. The water supplies have developed historically from very low quantities to higher quantities of significant schemes. Some 97% is from surface water, including rivers and lakes, with a very small percentage from groundwater, largely due to Donegal's geology. There are 52,000 single domestic water connections. From the reported data, unaccounted for water, which is a headline figure, is 53%. From the point of view of conveying a message, the headline figure of 53% is rather blunt, while for the top five producing schemes, the average is 39%. Viewed from a different perspective and taking into account the length of kilometres, we get a much more favourable figure in cubic metres per hour. That is generally an acceptable figure from the point of view of Department guidelines.

A small number of people live on offshore islands. Statistics show there are 84,000 houses, an increase of 20%. While 24,000 houses are listed as vacant, this is primarily due to the number of holiday homes. Some 88% of the population has a piped water supply. There are 88 water sources. There are 41 public water supplies, 25 public group water schemes, that is, private networks receiving public water, and seven private group water schemes on private sources, using 24 million cu. m per annum and four plants which are big producers supplying in excess of 4,000 cu. m per day is produced.

Of the 38 schemes supplying 100 million cu. m per day, 74% are more than 30 years old. A significant proportion of those have not undergone a serious upgrade in the intervening period. While members of the committee cannot see the numbers on the slide, the blue, green and yellow represent the materials in the water mains in the county. The yellow part is uPVC, some of which is old and not very good while some of the later PVC is fine. The blue signifies asbestos cement. Cast iron, with which we have a major problem, is shown in red. Ductile iron is shown beside the red and is used on smaller trunk mains.

The next slide shows the water infrastructure. The magenta and cyan colours represent the size of the water mains. This is a very small bore for the entire county. The next slide shows compliance with drinking water regulations. We are quite good in this area, being in the 96% to 99% range generally on all the schemes, or thereabouts. To achieve the last percentage is a significant problem.

The next slide shows the regional water supply study areas which we hope to rationalise over a number of years with substantial investment. I will not go into that in any detail.

The next slide is on waste water infrastructure. The map shows 35 settlements but they are in the range of 200 population equivalent, pe, to 20,000 pe, 11 of which are greater than 2,000 pe. There are 97 waste water schemes with 105 treatment plants. Some 48 have secondary treatment or better. Most of the schemes are quite old. To demonstrate the rural nature of the area, there are more than 35,000 septic tanks.

The next slide shows the water services design, build and operate contracts in Donegal which are integral to the water services investment programme and other major investments. We have a number of contracts for water supply and waste water. There is a high fixed cost element and operational charge once we get them built. There is no budgetary discretion. We have to pay once we enter into these contracts. The result is that along with our own schemes, we incur significant additional non-domestic borrowings.

The next slide deals with water pricing on a typical sewerage scheme. These figures are based on Letterkenny which has a capital cost of €30 million. At the time of tender, matching funding amounted to €7.5 million from borrowings and general development contributions. These are significant amounts for local authorities such as Donegal. While the next slide deals with water service charges, I will not go into them in detail. The charges are shown on the slide for the information of members. The total is €2.31 per cu. m for non-domestic while a domestic unit is in the mid-range.

The next slides focuses on Donegal's immediate infrastructural needs. This exercise was done for the county development plan, which is under review. Infrastructure requirements include €132 million for water treatment and trunk networks for the purpose of full compliance, €65 million for water distribution network, that is, water conservation, and €186 million for waste water treatment and trunk networks, amounting to the best part of €400 million. At the current rate at which we receive grant aid from the Department, €20 million per year, that is a 20 year investment.

The next slide deals with water services pricing policy. This is about recovering costs in line with the polluter pays principle and has caused us particular difficulties on the funding side. The lack of investment in rural counties such as Donegal means it has an expensive capital programme for which the council has to meet significant matching funding. The main element of that on the non-domestic side is borrowings, and that feeds into the water charge. While there is pressure to increase the water charge - that is what we should be doing - the capacity of the sector to carry that charge is questionable. Also there is not much in the way of development contributions.

Some of the anomalies in water pricing include the fact that the core operational costs have been rising steadily and there are new and higher environmental standards, such as EPA waste water licensing, EPA directions, water treatment works and water quality, all of which are desirable but very expensive from our point of view. The rural perspective on this is that counties with the greatest requirements for stand-alone infrastructure, lower population densities and greatest environmental sensitivity will incur the highest unit operating costs and core charges. I echo what was said earlier that we are not meeting the cost recovery on the non-domestic side.

In regard to what might change, given that the committee is feeding into the new national water authority, Water Ireland, our position concerns the major schemes. Local funding of these schemes is not sustainable. From our perspective, there should be national borrowing and national setting of charges for infrastructure that the member state needs, whether urban or rural, and the charge could be collected locally. I see no real difficulty with that. I apologise for going over time but I will be happy to take questions.

Chairman

I thank Mr. Kilcoyne and Mr. Peoples. I call Mr. Lyons for his opening statement.

Mr. Seamus Lyons

I thank the Chairman and members of the committee for the invitation to attend. Mr. John Tierney, the Dublin city manager, is out of the country and has asked Mr. Tom Leahy and I to brief the committee on the topic under discussion and, we hope, answer any questions that may arise afterwards. I will take members through the presentation at a high level, immediately after which my colleague, Mr. Leahy, will go into matters in more detail.

The Dublin water supply is jointly managed as a shared service by seven local authorities in the greater Dublin area - Dún Laoghaire-Rathdown County Council, Fingal County Council, South Dublin County Council, Dublin City Council, Kildare County Council, Wicklow County Council and Bray Urban District Council. The supply for the region comes from three city council plants, based in Ballymore Eustace, Roundwood and Ballyboden, as well as a Fingal County Council plant based in Leixlip. The supply from these four plants serves almost 40% of the national population and the daily output is in the region of 545 to 546 megalitres.

The current water supply strategy was the result of an indepth study in 1996 commissioned by the then Department of the Environment in conjunction with the seven local authorities and entitled, the Greater Dublin Water Supply Strategic Study, which took a 20 year view of the provision of water services. The main aim was to identify specific investment requirements in the period 1996 to 2016 and address leakages in the network system.

The drainage strategy was informed by the greater Dublin drainage strategic study of 2005 which covers the period up to 2031. It identified a need for key investment in infrastructure which members will see set out in diagrammatic form on the slide. There were a number of issues - the list is not exhaustive by any means - of which the first was the extension to the treatment plant in Ringsend. A number of sewer system upgrades were required. There was a proposal related to a new north Dublin treatment plant - the area marked on the slide is indicative only at this stage - and a new arterial trunk sewer on the Dublin north fringe.

The Dublin flooding initiative which covers the period 2002 to 2050 identifies a number of issues. It looks at the flooding which could be relevant, the major flooding risks and strategies to mitigate these risks during the period. Many of the risks such as those posed by rising sea levels associated with climate change will require innovative solutions. These are not short-term but long-term projects which we must ensure are sustainable in the long term. We are working on these.

The authorities in the Dublin region are heavily involved with their European partners, through the INTERREG and various other EU programmes. Many of the problems faced in Dublin and the eastern region are transnational in nature. As there is no point in reinventing the wheel, we must work together to come up with shared solutions.

I have tried to point out that water services involve a number of components - a clean water supply, a wastewater collection and treatment system and a storm water management system. Our main aim in dealing with the overall issue is to ensure we have in place a linked strategy and an integrated policy framework.

I will ask Mr. Leahy to give members more detail on some of these issues.

Mr. Tom Leahy

I thank my colleague, Mr. Lyons, the Chairman and members of the joint committee.

The water supply cycle starts with rainfall. The Dublin region is one of the driest in the country, although at times people may not think so. Annual rainfall is about 860 millimetres a year. This figure has not changed much in 150 years, but the intensity has altered dramatically. We experience intense rainfall and have relatively long periods without rain. Global warming could actually reduce rainfall in the east by a figure beyond 20%, which would have significant consequences for water resource management. Water must be stored in reservoirs to cater for periods in which it does not rain. The water stored in reservoirs is purified in water treatment plants; treated water is, in turn, stored in reservoirs to balance peak demand, that is, demand between various hours of the days and various days of the week, before being distributed through the network of water mains which in the Dublin region runs to almost 9,000 km. It reaches the customer and, in turn, is conveyed to the sewerage system to reach the wastewater treatment works, at which it is purified and again returned to the aquatic environment. This complex infrastructure is at the core of water services. I have taken a little time to explain the elements because I will be returning to some of them.

The drinking water strategy to deliver drinking water involves parallel and linked actions. It links five actions which must be delivered in parallel. We are talking about new source development; new infrastructure; rehabilitation of old mains, many of which in the Dublin region date from Victorian times and are well over 100 years of age; leakage control; and active demand management.

In the Dublin region there is a very active demand management policy. In 2001 ours was one of the first local authorities to introduce by-laws for the conservation of water and management of demand. To address future such shortages, we have looked at a range of ten possible water supply options which include every possible option, ranging from augmentation of existing sources and desalination to the use of ground and surface water. The option recommended by our consultant involves sourcing water from the River Shannon and storing it in a new midlands water based ecopark on cutaway bogs owned by the commercial State company Bord na Móna. The model we have identified is based on a model used by Rutland Water in the United Kingdom. It is a particularly innovative scheme which involves an international bird roosting sanctuary and also hosts well over 1 million visitors a year in a part of the country that is not near any particularly large city. The water reservoir will be filled during periods when the River Shannon is at high flow or in flood. In turn, the reservoir will be used to feed the surrounding area which includes both the Dublin and midlands region and can bring benefits to over ten counties.

Dublin has a history of acting as lead agent for similar regional projects, most notably in the 1860s when the Vartry scheme was initiated to bring water from County Wicklow and again in the 1940s when a joint venture with another commercial semi-State company, the ESB, created the basis of growth in foreign direct investment and indigenous industries in the east which is spearheading the revival and growth of the economy. I have given members a copy of the summary, but the key points to identify are that such projects are essential to ensure a reliable and sustainable regional water supply, security of supply and job creation. The plan announced recently takes account of stakeholder concerns identified during the public consultation phase. The new reservoir in the midlands, as part of an ecopark, will ensure water levels in the River Shannon are not impacted on. There will, of course, be full and detailed consultation with all stakeholders prior to any application to An Bord Pleanála under the strategic infrastructure Act, which is likely to occur in two years approximately, but that will depend on external factors. There will also be ample opportunity to engage in a full statutory consultation process at that stage.

Through investment in the Dublin region starting in 1996, we have one of the best pieces of infrastructure for managing water supply compared with any other water company in the world. The city council has been to the forefront of a number of demand management initiatives. Let me highlight the taps tips initiative; even now the website continues to receive a large number of hits.

We take our ideas from wherever we can get them. For example, we see the authorities in Denver are more focused than us in tackling the issue of running toilets. A particular favourite of mine is the suggested message on the watering of grass, that grass does not really know if one waters it for one minute or two less.

It would be wrong, however, not to discuss the issue of leakages because it is a topical item. The leakage strategy is complex and there are many linked and related factors, of which my colleagues have mentioned a number. There are three categories of leaks.

The good news about major leaks is that they can be repaired quickly. We are fortunate to have skilled and competent people to do this work. There are minor leaks which are found by using technology in which we have invested heavily since 1996. Beyond these categories, there are also tiny leaks. If one were to put a cup under the leak, it would take a long period to fill it.

There are at least 27 million joints in the Dublin region alone and the only way to address the problem is by beginning to replace pipework. The report published by Engineers Ireland in May found that water infrastructure required significant investment. I made a note to explain the significance of this investment in the Dublin region. A great many water mains are made of cast iron; they were built around 1860, 1880 and in the period up to 1900. The lifespan of a cast iron pipe is not dissimilar to that of a person. It is a little longer, but not by very much. Up until the 1950s there was very little investment money available; no replacements were put in place, nor should they have been because the pipes were well capable of delivering good service to the community.

I fast forward to 1979 when work should have started on replacing 60 to 65 year old pipes with newer ones and when the funding source for local government was removed at a stroke. The funding stream that would have enabled work to start on replacing the network had been cut off.

I fast forward to the early 1990s, when the gas company had in place a cast iron water mains network, not dissimilar to our own. Members may recall the explosion which occurred at Raglan House and other similar explosions. They prompted the gas company to replace its network of cast iron mains. I knew this at the time because I was managing traffic in the city and the company had three or four years of difficult work to manage the process, but it did it and it had one advantage that we did not have - its customers paid for gas.

I fast forward to 1995, at which stage the level of leakages in the Dublin region was 42.5%. This was unsustainable, but if one does not replace one's assets, such a percentage is not surprising. It was left to our colleagues in the European Union to work with us and they suggested they fund significant investment in the network through the Cohesion Fund to reduce the amount of water unaccounted for. In a short period of five years the level of leakages was reduced from 42.5% to 28%. That marked the start of the rehabilitation of the water network.

I fast forward to the last two years. The last two winters were exceptional. At that stage the water mains were 105 years old and for a human as well as a water network, the extreme temperatures experienced were not only difficult to deal with but fatal. That is why the network collapsed during the last two winters.

To move forward to 2020, we will face a challenge similar to the one the gas company faced in the early 1990s of having to replace our networks because one does not find anywhere in the world 135 year old cast iron mains fit for purpose. The picture on the slide shows what the inside of an old cast iron mains pipe looks like. If one were to try to clean a 100 year old mains pipe, it would fall apart.

That is a whistlestop tour through the investment programme for water mains rehabilitation. The good news is that our investment is producing dividends. The water conservation tranche one investment has led to a saving of 9 million litres of water. Roughly one third of this has been saved through the use of new pipes, one third by pressure management and one third by proper district meter management and demand management initiatives. We have the schemes designed and the contractors and team in place. We are ready and waiting for whatever finance becomes available.

The issue of unaccounted for water is topical. In the water mains rehabilitation projects in which we were involved, we regularly replaced perhaps 50% of the network in a district meter area and the level of unaccounted for water was 18%. We sometimes replaced 70% of the network in an area and the level of unaccounted for water remained at 18%. We sometimes replaced 90% of the network in an area and the level of unaccounted for water was still 19%. This made no sense. Therefore, I decided to replace the entire network in one small area near the Merrion Road gates. However, the level of unaccounted for water remained at 18%. In order to address this conundrum, we placed a smart meter in every property, using automatic meter reading technology. The results - we will share the full report with the committee - show that the leakage rate on the private side was enormous. Members will note from the slide that three houses alone used the volume of water that would be used by 160 houses. Invariably, the leaks generally were to be found under the front garden or the driveway. The three major leaks mentioned have been fixed. We worked with the customers concerned in dealing with them. This shows, in line with our experience, that in approximately 6% of any district meter area there is what would be regarded as exceptional use. We are working with customers to reduce this rate because it gives a good economic rate of return on investment.

Chairman

I want to clarify that Mr. Leahy is referring to leakages on residential property, not from the mains.

Mr. Tom Leahy

That is correct.

I wish to mention work we are doing with IBM as part of a smart Dublin initiative. IBM has sourced a smarter cities technology centre in its complex in Dublin, one of the very few in the world. We have the ambition that this centre will result in the Dublin region being the international smart technology centre of the world. The slide shows an example of a visualisation on which we have been working with IBM to allow the operator to see the significance of numbers, effectively the wood from the trees. If members are interested, the entire work can be seen at the Science Gallery exhibition on the Future of Water which opens on 20 October.

There is a good deal of talk about costs. The slide shows a water tariff survey, probably the most revealing I could share with the committee. It is a summary of the cost of water supply internationally produced in 2007 by the OECD. Members will note that Ireland is ranked at the bottom, with a zero tariff. Through Irish Water, we hope to move towards having a more sustainable water supply funding policy which I hope will give us a way of dealing with the legacy of a lack of investment in our underground networks. We have the teams in place and the necessary ability. I hope we can now use the finance wisely to address what is a significant problem in the region.

Mr. Seamus Lyons

We have for the Dublin region long-term water service strategies in place, to 2050 and beyond. The planning phase for the provision of infrastructure is very time-consuming. It takes years to advance a project from inception to the provision of infrastructure. It is essential, therefore, that we get work under way on all of the critical major schemes.

The issues involved are complex and not amenable to quick fix solutions. The leakage levels are a direct consequence of the lack of funding for asset replacement for many years. However, where funding has been provided in the Dublin region, it has been used to great effect to drive down leakage levels. The key challenges are to have a new sustainable national water pricing policy and water pricing to fund asset replacement into the future. Water supply is critical for job creation and economic growth, not only in the Dublin region but also throughout the country.

Chairman

I thank Mr. Lyons and Mr. Leahy for their presentation. I now invite Ms Moloney to make her opening statement.

Ms Martina Moloney

I thank members for the invitation to address them on water quality and water issues generally. This is a key priority for Galway County Council. I am accompanied by Mr. Jim Cullen, director of services for water services and the environment.

I will reflect, first, on the current position on water services. Water services are a key resource for the council. The water framework directive was adopted by the European Union to halt and reverse the decline in water quality. It sets strict deadlines for meeting water quality objectives, especially in protected areas. It provides for a strengthened system for the protection and improvement of water quality and aims to maintain high status and prevent deterioration in quality. It is based on a catchment management system and provides for the adoption of management plans for each of the eight river basin districts across the country. These river basin districts cross administrative boundaries. Galway County Council is the co-ordinating authority for the western river basin district. It is also influenced by what happens in the Shannon river basin district.

The river basin district management plans identify a range of activities and operations contributing to the pressures being exerted on water quality. These include agriculture, forestry, municipal wastewater discharges, water abstraction, industrial discharges and discharges from septic tanks and other activities. Some of these pressures, particularly those with a point source discharge, are readily identifiable and can be addressed relatively quickly. Others which are more diffuse will take longer to address.

The status of our water quality has a direct bearing on public health since the majority of drinking water supplies is derived from either groundwater or surface water sources. Deterioration in the quality of water sources gives rise to the increased risk of drinking contaminated water, as well as costly water treatment processes. While the quality of water in general is good in many areas, it will improve over time through the implementation of the river basin district management plans. It is essential that adequate water treatment systems are in place to ensure the drinking water supplies delivered to customers are safe and secure.

That is the key framework within which we are trying to operate. Within this there is an amount of enabling legislation, including the drinking water regulations and the wastewater discharge regulations, both of which were introduced in 2007. These are of particular importance to local authorities because they mandate an immediate response to the issues they raise. The drinking water regulations introduced in 2007 require minimum standards of drinking water quality. They convey supervisory and enforcement powers to the Environmental Protection Agency relating to public water supplies. Compliance with the regulations has presented local authorities, including ours, with a considerable challenge.

At the time the regulations were introduced Galway County Council, not unlike Donegal County Council, had a multiplicity of supplies. It is the second largest county in Ireland and, consequently, one source of supply would not and could not supply the entire area. Of the 44 schemes we had in place at the time, 30 were in need of improvement. There has been a concerted effort, with the aid of finance from the Department of the Environment, Community and Local Government, to implement the remedial action programme drawn up at the time. The programme has seen an investment in County Galway of approximately €9.3 million to date, but a total of €15 million is required. It is intended that by March 2012 the issues identified at that stage will have been addressed.

The remedial action programme was the key solution for us in dealing with water quality issues in the county. It has helped us to gain a compliance level of 100% in microbiological water quality and 99% in chemical use. In addition, it is important for the council to recognise the need for water safety plans. This is an issue we will have to address to ensure source protection.

Galway is one of the counties with the largest number of group water schemes. Compliance issues were identified in the European Court of Justice, ECJ, case relating to group water schemes, with 178 schemes in County Galway being identified as non-compliant. We have been working with the Department on these group schemes in recent years to ensure the quality of water in the schemes is brought up to standard. There is a spend of approximately €22 million in the current year. In addition, the local authority is taking in charge a number of the schemes, which has implications for the cost of our operations.

While there is clear progress to report in the area of drinking water standards compliance, there remains a significant challenge for us in a large rural county in dealing with discharges from municipal wastewater treatment facilities. Regrettably, there are still a number of towns and villages where the discharges from overloaded and outdated wastewater treatment plants are having a negative impact on the receiving waters. This is not sustainable. There are 30 wastewater treatment plants or network systems in County Galway, 16 of which are in need of upgrade and investment. Applications have been made to the EPA for licences and certificates of authorisation for these systems. To date, one licence and five certificates have issued. The remainder are expected in the coming months. Complying with the requirements of these authorisations will necessitate programmes of work to upgrade the inadequate facilities within specified timelines. A remedial action programme, similar to that employed to good effect in water supplies, might be necessary. This, of course, will involve significant capital investment and consequent increased operational costs. We have also been fortunate to obtain sanction under the water services investment programme to proceed with a number of schemes required.

Water conservation which has been mentioned by my colleagues is an area in which we are investing heavily. Galway County Council serves a population of approximately 125,000 with water; 94,000 people are receiving a direct supply from the county council, while 32,000 are in group schemes provided with water from the public supply. In 2005, when we began our water services conservation project, we had a water leakage or unaccounted for water level of 55%. By 2011 we had reduced this by 11%. To focus on the level of leaks we have repaired, 3,750 leaks have been detected, of which 2,250 were in the public mains and 1,500 in the private supply. To date, we have managed, at a cost of €9.35 million, to reduce the volume of unaccounted for water by 10,000 cubic metres per day.

The next phase is mains rehabilitation. We will require significant resources to complete this work. The initial phase will require a sum of approximately €13.8 million. As my colleagues said, it is important to recognise that when this work is done, we will still require ongoing investment in mains rehabilitation, with a minimum of 1% per annum of the network to be rehabilitated. In County Galway that would mean we would have to rehabilitate 20 km per annum at a cost of approximately €5 million. Members will see from the slide the progress made in dealing with the unaccounted for water issue as opposed to what we actually produce.

The water services investment programme is a key priorty for Galway County Council. It helps us to deal with the issues involved in water provision from a public health, environment and economic perspective. Although interim responses are needed to address immediate weaknesses highlighted by the regulations, as we have done through the water services remedial action programme and as we will need to do through the wastewater treatment plant process, the water services investment programme for the period 2010 to 2012 for County Galway is considerably slimmed down from previous versions. The setting of targets for schemes to go to construction during the term of the programme is a worthwhile approach, although achieving these targets will not be helped by the administrative processes involved.

In County Galway there are ten schemes of significance listed to start before the end of 2012 and the county council welcomes the approvals received to date from the Minister for the Environment, Community and Local Government. Advancing all of these schemes within the timeframe set will be a challenge, unless improvements in the process can be achieved. The current funding model for the water services investment programme has created an affordability issue for many local authorities, including ours. Excluding the remedial action programme and the water conservation programme, the projected capital cost of the schemes listed to go to construction in County Galway during the term of the programme is €96 million. The council will be expected to fund possibly €30 million of this figure. Already €34 million has been borrowed by the council to meet commitments arising from schemes completed or under way. The capacity of the council to continue to borrow at this level into the future is a source of concern, unless a sustainable source of funding for water services can be found. Naturally, this has implications for the delivery of water services infrastructure and could restrict economic development potential in the future.

Chairman

I apologise to Ms Moloney, but I must suspend the meeting as a vote has been called.

Sitting suspended at 4.50 p.m. and resumed at 5.10 p.m.

Ms Martina Moloney

I was discussing financial issues. Development levies were an important source of funding for major capital schemes. Unfortunately, since the downturn in the economy, this source has essentially dried up. The council continues to have a major borrowing requirement for the investment programme and in order to address this, we have had to extend repayment periods from 20 to 35 years. In addition, operational costs are constantly increasing owing to the impact of new and upgraded schemes, the cost of energy and network expansion through the takeover of group schemes. In spite of the fact that we achieved major efficiencies in energy usage and chemical costs in 2010, we are still facing dramatic increases for 2012. At the same time, our revenue is diminishing.

The next slide shows the budgetary trend on water services expenditure for operation and maintenance of water and waste water in County Galway. In 2008, the figure was €15.67 million, or 9.8% of our total budget. In 2010, it had grown to €20.42 million, or 13.7% of our revenue budget. With the achievement of some efficiencies, we managed to pull that back to 13% of our budget in 2011. At the same time, part of the source of funding for the domestic sector, the users of which do not pay charges, comes from the local government fund, which we receive from the Department of the Environment, Community and Local Government. We can see from this slide that this particular source of funding is falling dramatically. Between 2007 and 2011, it fell by 19% and this happened at a time when our expenditure on water services operation and maintenance increased dramatically.

We were asked by the committee to focus on the national water pricing policy and how water is charged. Our consolidated charge for water and waste water was €1.50. The charge for waste water has increased dramatically since then from 61 cent to €1.18 per cubic metre, and the water charge has increased from 89 cent to €1.10. Our consolidated charge in 2001 was €2.28, but the water pricing policy as currently structured indicates that we should be charging €3.07. Unfortunately, it is not feasible for us to increase our charges by that amount in the current economic climate.

What would help us to do our job better is to streamline the process for the delivery of water services infrastructure to promote public health, improve environmental quality and facilitate economic development. We need to revise the funding mechanism for capital investment to ensure affordability of water services projects. We need to focus on compliance, conservation and economic development potential to ensure priorities are met, and we need an appropriate funding stream to meet the increasing cost of water services provision by local authorities.

Chairman

I thank the witnesses. I now invite committee members to make their own contributions. I am conscious that the Donegal delegation needs to get on the road, so I would like to take any specific questions for the Donegal delegation first, and then we will deal with the other three local authorities. Is there anything specific for Donegal? No. On that basis, the Donegal delegation can be excused at 5.30 p.m.

Deputy Luke ‘Ming’ Flanagan

I have a question for any delegation that wishes to answer it. I have a concern as a result of a meeting with local water caretakers in Roscommon about the design, build and operate system which is used for putting in place new water treatment plants. I understand that in the previous Government, it was the policy of the Department that this be the preferred route. Now we have a new Government and, from what I understand locally, promises from the coalition that there would be a change in policy on the only option, or the preferred option as it is known. Has that policy actually changed? Do the councils have a choice on how projects are funded? If any council goes down that route, does it have to do a cost-benefit analysis? As far as I can see, it does not seem like great value. We have gone from a situation where we had one group of people taking care of it to a situation where Veolia takes care of metering and other companies take care of the water treatment. There seems to be less co-ordination between everyone. If we had gone down that road, we would have had a serious problem with putting out the fires in Roscommon due to a lack of co-ordination. Is the design, built and operate route the only option for getting money? Is it still the preferred option of the Department? Do councils have any choice at all on which route to take?

Deputy Catherine Murphy

I have a couple of questions. A major issue that arose in every presentation was the amount of unaccounted for water. The older urban areas seem to have the biggest problems, although the long water main in Donegal is also a problem. The witnesses are relying on water pricing as a means of providing for the investment. At the same time, the Government has been very clear that there is to be a free amount of supply and that it is over and above that level which will be priced. Do the witnesses think that is tenable? This might not be the right thing to ask county managers since they are relying on the Government to provide them with money. If this is being used to bring in revenue, would it not make the surplus water that people use very expensive?

When the witnesses talk about demand management, they are probably reducing the pressure at night-time to reduce leaks and so on. Does that produce false readings? What is their experience with those sectors which are metered, such as industry and the commercial sector? Are there complaints about false readings? Clearly, we need to anticipate that.

The Office of Public Works funds the remedial works for a project to deal with flooding. There seems to be an insurance implication for being flagged as an area that is prone to flooding when it was not prone to flooding before. When remedial works have taken place, what would it take to certify and unflag, so to speak, those areas? The local authorities are always going to be involved in carrying out the works or arranging for the works to be carried out.

I know that there were three 100 year floods in the space of eight years not so long ago, two of them within a fortnight. I cannot remember the year, but 8 September and 16 September are indelibly marked on my brain. The insurance issue is causing serious problems because insurance has become unaffordable in some locations which are flagged, and it is possible there could be a solution where works have taken place. I suppose it would have to be accredited.

Deputy Kevin Humphreys

From listening to all the presentations, I presume we are dealing with gravity-fed schemes and not high pressure schemes. What are the views of the delegations on the benefits of switching to a high-pressure scheme or staying with a gravity-fed scheme?

How well placed are the councils to service new foreign direct investment or set-up industries that need water? Chicago has targeted this as a major growth area for employment, both through education and for new company set-ups.

The delegates referred to leakage. If it is a general figure that roughly 18% of leakages are on the private side, is there a need for strengthening legislation to deal with such leakage where local authorities can insist that the leakage on private property is fixed in a timely fashion?

For planning work, I note from Mr. Lyons and Mr. Leahy that Dublin is dealing with ten local authorities. Is there a benefit to be derived in having catchment areas in which several local authorities would work together? Cork may already do that. In a broader sense, should we divide the country up into five or six catchment areas in which local authorities could share work and expertise?

In talking about setting up a new water company for Ireland, should water and waste automatically go together? I would be interested in the delegations' views on that.

The Dublin delegation touched on the work with IBM and smart metering. If any metering is to go ahead, what are its views on the importance of getting the right type of meters that will do the job correctly, and not necessarily the cheapest ones?

This is probably more appropriate for the Galway delegation which stated that it took over some group schemes. My experience of a group scheme is that members within the group pay for the scheme. How did they deal with that transition? Did they continue paying for the group scheme?

I fully support Deputy Catherine Murphy's point. The widespread experience is that people can no longer get household insurance in an area following flooding, despite local authorities putting in flood protection.

Chairman

I invite the Donegal delegation to refer to the wider stuff and then I will invite the other contributors to come in as well.

Mr. Paul Kilcoyne

I will address a couple of points in no particular order. Perhaps I will leave the flooding issue to be dealt with by someone else.

On design, build and operate, DBO, versus direct labour, DBO projects are largely confined to elements of schemes and do not apply to entire schemes. Generally speaking, they are used for designing and building water or waste water treatment plants and key associated pieces of infrastructure. Certainly, in the Donegal case, where we have DBO projects, the networks are still managed and operated by the local authority's direct labour staff.

On the specific question of whether there was a choice, there is an assessment done as part of almost every scheme as to whether DBO is suitable or whether conventional operation is as suitable, more suitable or less suitable. From an operational perspective, the DBO projects we have had worked out quite well. From a financial perspective, they lock the local authority into fixed costs and contract costs. I am not saying they are not the right costs. Even if we were operating them ourselves, we would need the same level of expenditure and the same level of funding to deliver the same level of service. Perhaps where the conventional method of direct labour operation is weak is that funding is not always available because of the way local government funding works. I will not say anything more on that.

On foreign direct investment, it is not a blanket answer of being able to accommodate anyone who comes in but we can certainly take investment of a certain scale depending on water demands and location. I am sure the same is the case for the other local authorities.

On leakage on the private side, I understand there are many provisions in the Water Services Act 2007 to allow water services authorities to deal with leakage. I am not sure if all the provisions of that Act have commenced, but to my knowledge there are sufficient provisions in place.

On a general point on the catchment areas and local authorities working together, some of my colleagues mentioned the water framework directive river basin management plans. The county is already carved up into river basin districts and that covers a number of local authority areas or parts of local authority areas. There is some logic. I would certainly agree with managing water services, water resources and environmental matters under such structures. That might be one of the directions in which we are heading.

Mr. Joe Peoples

I wish to add to the comments made by my colleagues. There were a few specific questions, the first of which was about the value and quality of data from meters, especially meter reading. In Donegal, we have had meters installed in non-domestic premises since 2005 or 2006. The initial experience was that it created awareness for the first time among businesses of the quantity of water they were using. In some cases, they were probably surprised at the quantities they were using and the quantities they may have been wasting as well. I would suggest that our meter reading data are quite good and that has prompted customers to be vigilant in their use of water. It has been a positive outcome in terms of the project in Donegal.

On leakage on the private side, in many cases citizens are not aware they have a leak as Mr. Leahy demonstrated earlier. That is a difficulty in terms of being able to find a leak. There was a demonstration earlier in a small catchment area where that was tested and proved to be the case.

On the demands on service provision and the Donegal experience which we did not refer to earlier as part of the presentation, we were significantly challenged in being able to maintain supplies during the severe weather of the past two autumn-winter seasons. There was significant loss, certainly on the private side, and we had to deploy resources, even during night hours, to try to find leaks on the private side. We have a very significant challenge in dealing with leakage on the private side. We also had very significant restrictions in place, primarily because our reservoirs were emptying more quickly than we could fill them on the basis that there was significant loss on the private side. That is an issue that probably needs to be looked at as well. Whether a universal metering project and associated costs and funding arrangements would be an economical way of dealing with it remains to be addressed comprehensively.

Mr. Tom Leahy

I will make a couple of observations and I will deal with them in the order in which the questions were raised.

As to whether DBO is the preferred method or not, it is not really anymore. Every scheme is looked at on its merits. We have had some very successful DBO schemes, such as Ringsend. Equally well, we are extending our plant at Ballymore Eustace by a conventional contract. One will look at each instance and select the one that gives best value for money.

On the issue of free supply, while I would undoubtedly respect that policy will be set by central government and anything I say is not to take away from that, my own observation is that drinking water is a manufactured product and is not free. It costs a great deal to catch, collect, treat and distribute. If one was to have a free allowance, the unit cost to all users would double if the allowance was 50%. If, on the other hand, the 50% who might have to pay for it were given an exemption, one would be down to a figure of one quarter for those paying for water and the unit cost would multiply by a factor of four. I would favour a situation where, while everybody had to pay for water in order to value it, the social protection structures of the State dealt with the issue of disadvantage, the model used in other jurisdictions.

On metering and the possibility of there being false readings, our experience is that at reasonably high flows there is a very good correlation, as happened in the pilot study, between the sum of all the meters in a particular area and the volume provided. At very low flows, which occur in the middle the night, there is a misreading to a figure of 30% to 40% between the meters, but since the volume provided is tiny, this is not particularly significant. One would look for the specification of the meter at high and average flows, in respect of which there is a very good correlation.

There was a discussion on the subject of universal metering. The experience in the United Kingdom, after 25 years of privatisation, is that there is meter coverage to a figure of approximately 33%. The water companies at the forefront such as Anglian Water have a coverage rate of approximately 66%.

I mentioned exceptional users. The correct strategy is to identify who these users are, meter them and, jointly with these customers, try to deal with whatever issues arise.

To refer to the UK water companies only, the most progressive are now beginning to consider how they should deal with leaks on the private side. They are sometimes prepared at their own cost to fund replacement to a distance of up to eight to ten metres inside a private property, which they find to be particularly cost-effective. Where one upgrades a 100 year old public supply pipe from the road but does not upgrade the 100 year old supply pipe on private property, one runs the risk of transferring the leak from one side-----

Chairman

I have an idea of the point Mr. Leahy wants to make on leaks. The way the sewerage system works is that the householder is responsible for the sewerage system from his or her property to the mains. Mr. Leahy is suggesting that in Britain the private companies took on the responsibility for making repairs on the piece of land between the household and the mains.

Mr. Tom Leahy

Some have, although there are limits to that liability. I would not for one moment suggest we take on additional unfunded liabilities. Nonetheless, it is a debate worth having. While I have mentioned the privatised system in the United Kingdom, there are other models in use throughout the world. An interesting one is the Paris model, a private model that is now a public model in order to save water for Paris. Interesting issues arise in this regard.

The issues of flooding and insurance are ones of which we in Dublin have had direct knowledge since 2002. The insurance industry is complex. One tends to think of a business in terms of "money in, money out", it either makes a profit or a loss. However, the money taken in by insurance companies actually goes into an investment vehicle; effectively, therefore, they invest in the Stock Exchange. When the Stock Exchange is impacted upon, this impacts upon the profitability of an insurance company. It is a more complex business than just having a balance at the end of the day.

While we have proved in some areas that we have defended communities fully to all international standards - the community in East Wall is a good example - they still suffer in their ability to get insurance cover. We have said these communities are as protected as any other in the city and if a person elsewhere with the same level of protection is able to obtain a lower premium, we are prepared to work with the people concerned to ensure there is community averaging. In our experience, where the State makes its own investment to raise the level of defence, it is unreasonable for the insurance industry not to respond in kind. I make the point that here there is probably a group of insurance companies rather than a mature industry.

My colleagues in the Office of Public Works are working with the insurance industry to see if they can deal with individual issues. We have had good success in Dublin where we operate a hotline with the insurance companies. Some successes have been recorded, but it remains a particular problem.

Deputy Catherine Murphy

On the same issue, it seems the good initiative of flood mapping is being used by the insurance companies to the disadvantage of communities where a potential problem has been flagged, even where there has not been a serious flooding incident. We are providing them with information, on which they are not acting in a responsible way.

Mr. Tom Leahy

The flooding issue is often linked with rivers. There is a perception that if one lives near a river, one might be at risk, and that if one is living on top of a hill, one is probably safe. The more recent flooding we experienced in Dublin was pluvial. It involved intense rainfall of very short duration and one was just as vulnerable on top of a hill as at the bottom. Therefore, we have identified risk areas and zones and are trying to work with the insurance industry in this regard. We are prepared to direct our efforts at reducing the risk, but, in turn, we expect the insurance companies to recognise this, particularly in covering vulnerable users.

Mr. Tim Lucey

Most of the issues raised have been covered, but I will comment on some of them. On the DBO model versus the traditional model, the Department of Finance has capital appraisal guidelines for major projects such as the Carrigrennan scheme or the Lee Road waterworks scheme in Cork. The decision making process for these projects will look at the full life-cycle costs of both operations, normally during a 20-year period. The decision as to whether the DBO or traditional model will be used is based on that consideration. I am not aware of any Government policy determining that the DBO model should be used rather than the traditional model. It comes down to the full life-cycle economic costs of a scheme. In some cases, as I know from experience in my previous role as divisional manager in Cork County Council, both models came through as being the preferred option, depending on the nature of the scheme and the associated skills set. The critical point is that it still does not solve the funding issue in terms of the capital investment required. For example, given that the cost of the Lee Road waterworks scheme is €17.5 million, I will have to raise a sum of between €3 million and €4 million, if not more, by way of a local contribution. As matters stand, a sum of up to 40% is required to be invested by the local authority in major infrastructural schemes.

As has been pointed out, development contributions are drying up. For example, Cork City Council took in approximately €18 million in the last eight or nine years in water and wastewater development charges, but it is now left with approximately €3 million that it can contribute to water services programme investment. This will pose a significant problem in that we will have to borrow or will not be in a position to proceed with schemes. There is a real issue around how local authorities can fund the level of investment they are required to make in new schemes.

The second issue arising is, as I have pointed out, that we are not recovering the full or the marginal capital cost from the non-domestic customer; therefore, new schemes will have more of an impact on our revenue budgets. This is not necessarily being picked up by the local government fund which is required to fund the domestic element of the shortfall. For example, when the Carrigrennan scheme was introduced in 2004, there was strong evidence to suggest the additional domestic cost associated with it in terms of maintenance and annual running costs to be carried by the city council would be of the order of €3 million to €3.4 million. However, this figure never materialised in increased local government funding and it had to be funded from the local rate base of the city council. These are significant issues, particularly in the current economic climate, in funding future capital investment.

On the issue of meter reading and complaints, one certainly will get complaints. In the majority of cases, this is not down to the meter itself, to poor calibration or to the operator of the meter. We have found that many of the issues arise from the non-domestic user's own pipe network. Consequently, monitoring the meter on a regular basis is a highly effective way to manage unidentified water loss within the private system. On the domestic side, it was mentioned earlier that it was in the order of 18% but I suggest it is much higher than that in many cases.

This leads me to the possible Government decision regarding the introduction of charges on domestic water and so on. While I do not intend to comment on whether this is desirable, were domestic charging to be introduced, the only way to so do that would be beneficial in the reduction of unidentified water loss would be by having a meter in every household. Potentially, more innovative ways to incentivise people to examine their use of water must be considered. As a thought, I offer the example of the highly successful home energy scheme. An incentive currently exists in cash terms to upgrade one's central heating system, to insulate one's attic and walls etc. A report was published last week indicating the scheme is highly successful in respect of the return to the economy, the reduction of energy consumption and so on. Very often, such an incentive to private owners leads them to invest more money themselves to ensure the private heating supply or private water network within their own households is adequate and is not costing them money. Potentially, if domestic water charging is to be introduced, some innovative method in this regard may need to be considered. Such innovation may have a commonality with the incentivised energy scheme.

On the issue of foreign direct investment, FDI, I will outline the position in Cork. From a waste water treatment perspective, we have 25% additional capacity in the Carrigrennan scheme, which deals with the city and contiguous areas of the country. Consequently we are reasonably okay in respect of FDI investment in the city. It provides us with additional capacity for the equivalent of a population of 110,000, which at present probably would allow for approximately 80% more industrial activity within the region, which is significant. On water supply, our own Lee Road plant is close to capacity at present but I refer to the Iniscarra water treatment plant, which is west of the city. While it is run by the county council, it was a joint development between city and county 25 years or more ago and it has capacity to serve the city. Consequently, at present there is no major significant issue with regard to capacity for foreign direct investment in Cork.

Deputy Clare Daly

While I do not wish to repeat points made previously, members are present to gain the benefit of the witnesses' expertise in order that they can formulate a viewpoint by Christmas time and these are the first of a number of presentations. However, with this in mind, obviously all public services cost money. While it is not necessarily the witnesses' role to decide how they should get money, I appreciate fully that all the authorities are massively underfunded and based on the resources currently available, cannot meet the challenges that have been put to them.

As for the other areas, I am a little confused about the position regarding design, build and operate contracts, DBOs. One engineer stated this was about selecting the best value for money but it is my opinion that the Department decides the method of funding. Is it the case that previously, the local authorities submitted proposals recommending a certain course of action, for example, to build it by direct labour but then were ordered to do it in a different way? I seek clarity in this regard. As for the proposed new water authority, a mass of expertise undoubtedly resides at local authority level in respect of familiarity with the network and constitutes a body of knowledge that far exceeds anything that could be bought in from outside. In many areas of Dublin for example, there is co-operation on a regional basis. How do the witnesses envisage such expertise being harnessed in connection with the proposed new water authority? Is it a bit too duplicitous and should the witnesses simply not be running the show and developing a form of unity in this regard?

I wish to make a couple of points on Dublin as the position there is the one with which I am most familiar. The reduction achieved in Dublin from the mid-1990s onwards was 15% or so, that is, from 42% to the high twenties and obviously this was done without domestic water metering. In fact, areas such as South Dublin County Council probably achieved reductions as high 21% or 22%, as probably did Fingal County Council at various stages. Nevertheless, the Dublin proposal states that to reduce the level of leakage in Dublin to 20% would be a massive challenge. While I do not suggest this would be easy, it is not impossible. Clearly there are engineering solutions to explain why this would be the case. Why is this not put up there as the best way to conserve water, rather than the idea of installing domestic water meters in every house?

It struck me that one of the speakers from Donegal County Council made the point of how the economies of scale diminish when one isolates the metering down. One can do a huge amount with district water metering, which has been an absolutely invaluable tool in the identification of leakage. There is no question or doubt about that. However, as one individualises metering down to household level, one loses much of that benefit because of the additional cost of installation. Presumably, measures such as water conservation in households, which has not really mentioned, should be introduced instead? I refer to measures such as rainwater harvesting facilities on public buildings, which would reduce consumption. Do the witnesses believe this should be done, rather than individual metering?

Fingal County Council, the local authority of which I was a member, isolated many of the leaks and identified that a huge part of the problem associated with what it called the private supply had nothing to do with private individuals who simply were victims, in many instances, of shoddy workmanship and poor quality of labour as a result of inadequate building regulations. Are there measures that would call to account the developers for not connecting adequately the household supply to the public mains and for the consequential leakage? Why should private householders be liable for this as it was not their fault? Can any measure be advocated in this regard? While the Dublin local authorities believe in taking money from the Shannon, I do not. I do not consider this to be a key project at present, while so much water is being lost back into the ground without the network being repaired. The Dublin authorities must start on the network and with water management. I acknowledge they have done brilliantly in respect of the management strategies as I am reasonably familiar with it and know it works well. However, it was wrong that, while the Dublin authorities were doing all this work, houses were being built that did not have in place proper conservation measures and, consequently, much is being lost because of the manner in which buildings are designed.

My final point pertains to Dublin in particular. What benefits in respect of cost arise from the leakage saving of approximately 15% or 74 million litres of water? Can the witnesses quantify this saving in financial terms or can they indicate how much it cost to deliver such savings, if possible?

Senator Cáit Keane

I will start where the last speaker left off, that is, on how much it costs. Everyone is aware that water is a valuable commodity. One is obliged to pay for a television licence and for many domestic commodities, such as electricity, gas or whatever. Consequently, one might conclude that to ensure people conserve water, paying for it definitely might be an avenue to be considered and recommended. For example, members should consider what happened when people were asked to pay for plastic bags. Previously, they had been thrown willy-nilly around the place but when people were obliged to pay for them, they decided not to use them any more. I believe the same will happen in respect of water.

While there has been much comment on the leakage issue, I will not dwell on it even though I was a member of South Dublin County Council, which was the top local authority in Ireland in this regard. However, whenever I make that point, people on Dublin City Council always remind me that our pipes are not as old as theirs. Consequently, I cannot get away with saying this too often. However, the point made regarding private households was very interesting. One of the first things I noticed when elected to Dublin County Council in 1991 was how the 1922 Act, which was then in force, differentiated between the left and right sides of Whitehall Road. On the left side of Whitehall Road, the pipe up to and including the stopcock was the responsibility of the householder whereas on the other side, the householder was not responsible outside the stopcock. The situation changed in the late 1980s. All of the pipes were replaced yet the leakage rate was the same. That is the case throughout the country.

I have not looked any further than Dublin where the service is streamlined up to and including the stopcock which is where the responsibility of the Department or council starts. Is that the case for the rest of Ireland? Are there other anomalies, such as those I discovered in Dublin city and county? I have not researched the issue. People will be burdened with additional expense.

The previous speaker referred to building regulations. I have heard all speakers refer to leakage but none spoke about water conservation. We have a lot of water in this country. We treat water to flush the toilet which is an utter waste of money. I may table a motion on building regulations. Any house built from today on should not require treated water to flush a toilet but should have a barrel. We have to go back to the old ways of doing things, namely, collecting water in barrels to flush toilets. A lot of water is wasted that could be collected.

If regulations were introduced it would create jobs for companies to provide systems suitable for back gardens. People are cutting old oil tanks in half because they know water charges will be introduced and want to be ready and have free water in their back gardens. Any information on the issue would be welcome.

I presume most old lead pipes have been replaced but there are still many in Dublin and other areas in the country. Every local authority needs to address the issue. We are aware of the research done on the damage caused by lead water pipes. The replacement of pipes, even for health reasons alone rather than because of leakage, should be a priority.

When and where will the science exhibition take place? What are we going to get out of the new IBM technology? A delegate said it would be a hub for technology. I missed the point on how it relates to water.

Deputy Brian Stanley

My first question concerns DBO schemes. The county managers and senior engineers present will be aware that many county councils are now using design, build and operate procedures for smaller schemes. Private companies build, operate and control schemes. Are county managers and senior engineers concerned that supply would be controlled by a private company?

The Shannon scheme is good. Has an analysis been done on the cost per cubic metre of water from the scheme compared with the cost from existing supplies? The cost needs to be factored in.

Some speakers spoke about Irish Water as if it had already been set up. Maybe I blinked and missed it, but as far as I am concerned it has not been set up. There is concern that it will become like Northern Ireland Water, and we all know the problems with that company. It was set up by the British Government. There were major problems last winter which shows the need for the power, authority and control over water to be brought back to local authorities.

If the levels of chlorine in the water supply exceed those recommended by the EPA and World Health Organization, do local authorities issue alerts to citizens in the areas concerned? Some local authorities do not do so and questions have been raised about the issue. Citizens are concerned they may be consuming levels of chlorine above those recommended.

Deputy Michael P. Kitt

I want to mention group water schemes. We should not forget the great voluntary effort involved in setting them up. Serious money was available from the European Union which, I understand, is no longer available. I hope we continue to support them. Galway and Mayo are two of the most important counties for water schemes.

I compliment the county manager, Ms Moloney, and Mr. Jim Cullen on their support for water schemes. A cost of €2,000 or more per house is serious money and I hope the schemes will be supported.

Flooding was mentioned. There was serious flooding in Galway. Was the water supply, group schemes in particular, affected? Given the amount of voluntary work and the concept of the meitheal, I would hate to think the problem could happen again.

There is a tendency to group sewerage schemes, which is good for small schemes in terms of economies of scale and so on. There can be too many in a group, however, which causes delays if large numbers of schemes come together. In Galway, as the county manager knows, there is a long list of small schemes. The council has to provide money, an issue raised by other managers. There should be some rationalisation of schemes and perhaps smaller groups could be set up.

Foreshore licences have caused delays to many schemes. Have any steps been taken to try to get them issued quickly enough so people are not told they have to wait to get them? It is an issue for coastal towns and has been a problem for Galway and other coastal towns.

Chairman

With regard to foreshore licences, the Deputy is roving beyond the remit of the meeting. I will defer the question to another meeting.

Deputy Michael P. Kitt

I am sure the county manager will not mind answering it.

Chairman

I have a lot of ground to cover and will not be spending time on the issue.

Deputy Marcella Corcoran Kennedy

Are local authorities satisfied the water quality being delivered to domestic and business users is consistently at the EU required levels for safe drinking water? What mechanisms do they have in place to flag a problem with the presence of undesirable matter, whether microbiological or chemical?

Are local authorities experiencing damage to existing water meters for commercial or business use located on footpaths and elsewhere? If so, what is the cost? Do local authorities have plans for harvesting water for domestic or other use? I agree with Senator Keane on treating all our water in the same way, which relates to harvesting. It is crazy to think that we are using the same water to wash our cars as we use for drinking.

Ms Martina Moloney

I will start and then ask Mr. Cullen to address some of the issues raised.

Much time has been spent on DBOs and Mr. Cullen will cover the issue again. I wish to make a point on water metering, pressure management and universal metering. The water conservation projects we have had in place in recent years have provided us with very valuable information not previously available to us which will certainly help us to identify the areas with the highest levels of leakages and allow us to establish a targeted approach to address the problem, even in advance of and separate from a need for universal metering.

The issue of water services in respect of foreign direct investment is a very important one for us. The water provision in Galway is certainly adequate to meet the needs of foreign direct investment companies. However, into the future a further wastewater treatment plant will be needed to service the needs of the city and the east, where we have identified a zone for strategic industrial development. We work very closely with IDA Ireland to ensure its needs are taken into account when carrying out our needs assessment. Forfás recently carried out a regional competitiveness analysis which might be of interest in identifying the needs and gaps in provision throughout the country.

Regarding local authorities' role in water provision, generally local authorities have considerable local expertise and commitment and dedication are shown by staff throughout the organisation which delivers the water services infrastructure. One of the key things we have is local knowledge. It is important that we harness what is available in delivering a service over a diffuse network throughout the country.

The issue of catchment-based approaches was raised. As I outlined in my presentation, water catchment management is a key requirement under the water framework directive. However, managing the water supply in a catchment can be done using a number of models. I agree entirely that water is a very valuable commodity which needs to be conserved. Certainly, water conservation in the domestic sector and the business community will need to be strongly encouraged in the future. This year we had a particular difficulty on Inis Oírr in the Aran Islands. As in the case of Dublin, the Aran Islands have very low rainfall. In the future we will be addressing the issues of rainwater harvesting and how we can manage a very scarce resource better.

I ask Mr. Cullen to deal with the issue on the group water schemes.

Mr. Jim Cullen

I will only address the issues that have not been covered in order not to duplicate.

Group water supply schemes are very important in rural areas, particularly in the west, in counties Galway and Mayo. Someone asked whether members of group water schemes paid. By and large, they do. One of the big challenges for a local authority such as ours is that when we take group water supply schemes in charge, obviously the domestic householder no longer needs to pay, yet we take on the full liability of the group water supply scheme. In some instances, they are very large schemes. A number of group schemes Galway County Council has taken in charge are as big as the regional water supply schemes that were serving them in the first place. In some cases, we are doubling our networks and taking on the liability. I agree with members that the work being done on group water supply schemes by volunteers is highly commendable and laudable.

I echo what the county manager said about rainwater harvesting. It is ironic that in the west, one of the wettest places in the country, we have some of the driest parts of the country on the islands. As a consequence, people are resorting to rainwater harvesting. It is not entirely suitable to the urban setting because the country is built on the system we have in place and it is not practical to re-plumb so many domestic properties. In rural areas where people experience shortages on a regular basis, rainwater harvesting is becoming more common and companies which are already well established in County Galway are to the forefront in promoting it.

On the question of damage to water meters, we have approximately 12,000 installed in non-domestic properties in County Galway. The rate of damage is small and malicious damage, thankfully, is rare.

Someone asked how we knew the water was safe at all times. All local authorities must agree a monitoring programme with the Environmental Protection Agency in advance each year. It sets out the frequency of monitoring and what must be monitored as set out in the drinking water regulations. If a case of non-compliance comes to our attention, we are required to notify the EPA within 24 hours and to take specific actions. That is a requirement under the drinking water regulations and enforceable by the EPA if we fail to comply. The quality of drinking water in this country compares to the best in the world.

The bundling of sewerage schemes has been a characteristic of the water services investment programme in recent years but will be less so in the future because the programme has been slimmed down and is now more likely to comprise single schemes or elements of schemes. I agree that at times this would have given rise to delays. However, it is less likely to be a feature of the programme in the future.

Mr. Seamus Lyons

I wish to comment on some of the issues raised and I am sure Mr. Leahy will have more detail if members wish.

On the DBO issue, there was a question on whether the plant was in some way controlled by the operator subsequently. Generally, the operators would work under a very tight contract and there would be agreement on what was required and expected. Our experience in the Dublin region is that they have been flexible in working with us to ensure we can guarantee the best available service. As Mr. Leahy mentioned, we have experience of both in some of our major plants. In Ringsend it is operated by an operator on our behalf and it is a very successful operation. In Ballymore Eustace it is run directly by us. The extension works have been carried out by a normal contract.

It is a matter for the Government to decide where the proposed new water authority should be located. It goes without saying the expertise built up in the local authorities during all the years we have been supplying water will need to be harnessed and used because there is no expertise available elsewhere. Without the expertise of local authorities, we are nowhere.

There is potential to reduce the level of leakages in the Dublin area further and it is our intention to continue to drive it down. However, it gets more difficult the lower we go and more expensive, given the replacement cost of pipes, etc. At some stage a point of diminishing returns will be reached. It certainly forms a very important part of our medium-term strategy to save water. The strategy is made up of three elements. The first element is upgrading of the treatment plants which will allow us to treat and produce a certain extra amount, albeit marginal. The second is the conservation message we are trying to drive on an ongoing basis. In recent years it has begun to show some results and we are seeing a slight reduction in water usage. The third element is leakage control, which is important in itself. Ensuring the Dublin region has a guaranteed long-term supply of water involves having a new supply system, which means the River Shannon scheme. That will ensure we will have scope to deal with any extra demands from industry for many years to come. Senator Keane spoke about a system of recycling water. There are systems and they can be expensive to put in, but there are simple things which can be done. "Tap Tips" can provide people with pointers on how they can make some further savings.

I reiterate what has been said about water quality. Certainly in the Dublin region, we can say that the water is consistently safe and consistently meets the standards set by the EPA. In the event that there were any issues, they would be reported immediately to the EPA.

Mr. Tim Lucey

I would like to pick up on a few of the points. Most of the issues have been covered. I will not comment specifically on the concept of a new water authority, but it will be interesting to us what form that suggestion takes. It can go a number of ways, whether it be on an agency basis or as an entirely private set-up with a transfer of assets and so on. The bottom line is that over the past 50 or 60 years, local authorities have consistently built a skills level which this country cannot do without when running a water service. If we look at the annual EPA reports, we will find that the majority of local authorities achieve in excess of 95% to 96% compliance with the agency's water testing. In many cases, such as Dublin and Cork city, as we only have one or two major supplies, we are hitting 100% consistently. The extremely small level of non-compliance probably only affects a very small percentage of the population and primarily occurs in group schemes. There is an extremely high level of compliance with water quality in this country.

There is no doubt that there will be headlines about a certain number of schemes being on a remedial action list. A scheme goes on a remedial action list if it fails any one of up to 25 to 30 parameters that are tested. Even if that parameter has no impact on water quality, it still goes on a remedial action list and that creates the headlines. There is a message in that about local authority water management. The skills level is extremely high. There is an incredible amount of knowledge and the water quality is consistently produced at an extremely high level. Taking into account the scale and age of the network, that is an important point to note.

There has been a significant move in recent years to put in place automatic chlorine barriers and alarm systems. The production plants and reservoirs in Cork are monitored automatically by sensors and if any level is exceeded or not reached, there is an automatic call to the plant engineer and a 24 hour attendant response to that. There is an extremely high level of compliance with chlorine levels as a result of that. Even if there is a high level of chlorine, it is important to note that the water is still safe for drinking. It is primarily an odour issue, and generally that will flush itself out of a system over time. There are certainly times where if that occurs, we put out a public notice to the effect that there is no issue with the quality of the water but there is a high level of chlorine in it. The chlorine level issue is not a significant factor.

We were asked if we were satisfied with the water quality. I am absolutely satisfied with the water quality under the control of Cork City Council. We assess every day and every month the water quality in our production plants, in all our reservoirs and in many of our network distribution points in accordance with the EPA requirements. That goes back to the EU requirements under the water directives. They are monitored monthly, both by ourselves and by the HSE which provides an independent monitoring system.

Chairman

I would like to make some comments and I will use this as an opportunity to conclude. Mr. Lucey, the manager of Cork City Council, alluded to where this is in the grand scheme of Irish Water. That is the question I would like answered from the outset. The programme for Government states that Irish Water will be created in the next couple of years. What is that company going to become? Where do the existing expertise, knowledge and operational systems in place with local authorities fit into that structure? I would also include water quality, other guarantees of sustainable supply, emergency responses, flood management and other aspects. Without pinning the witnesses to a position, I would be keen to hear their observations on this. Has any correspondence, contact or consultation taken place with any local authorities in respect of the establishment of Irish Water? Are they still awaiting a communication from the Department on this? Everyone assumes it is going to happen, but has there been any communication to each or any of the local authorities?

The other issue is the guaranteed issue of a sustained supply if there is a national utility. We have a localised structure at the moment. For the last two winters in Ireland, especially in Cork, we have had a prolonged period without a sustained supply of water. A sustained supply of water for a household is a particular difficulty because it means people have to go to their neighbours to take a shower or to get water, but it is a major issue for a business. Companies like Heineken and other breweries are dependent upon a very high quality of water to manufacture beers such as Beamish and Guinness. A high quality of water would be used for Beamish, but I am not too sure about Guinness. In this situation, the company which manufactures Heineken had to import its product from abroad because it could not manufacture it locally. If we have an ongoing difficulty with water supply over a period, the parent company at some stage will decide that it makes sense to manufacture the product elsewhere. Companies in Dublin such as Intel and others have huge water consumption, even though they do not manufacture water-based products. In the next few weeks, it is critical that we do not think of water as simply something that comes out of domestic taps, because it has multiple uses.

How much water consumption in the private sector is being targeted towards the manufacturing process? I am not talking about hairdressers using water to wash hair, but large water consumers such as Heineken, Guinness and Intel. How much does it account for in their production and manufacturing costs?

At the moment, the 34 local authorities throughout the country have a capacity to run water. There may be an argument to bring local authorities together to create a better synergy and a better outflow, and this is happening in some regions. Is it the case that Irish Water will be a regulating agency, guaranteeing water supply and so on, but that the roll-out of water will remain in the local authority structure on some brokered contract basis with Irish Water as the umbrella body?

The issue of water leads to rational and irrational debate. There is a very rational debate on whether we should be charging people for domestic water, and this committee will have to consider it. We should not fall into preconceived value judgments on it. Then we have the irrational side to it. There are levels of irrationality in some of the commentary on the proposal to develop a 30 year sustainable water supply for the Dublin region by taking some water out of the Shannon. Perhaps some of my fellow Corkonians would understand this better than other committee members, but it is as rational a position as two guys who come back from the county final, stop at the South Gate Bridge, throw their sandwiches in the river, and one guy says to the other, "What are we are feeding those swans for? Let's get to the North Gate Bridge and we'll feed our own." Transporting water from the River Shannon to Dublin makes sense and is rational to a certain degree. It takes us back to the story about the two guys on the South Gate Bridge.

I have one final question. What engagement has taken place between the Department and local authorities on the establishment of Irish Water?

Mr. Tom Leahy

I will make a quick observation. The consultants, PricewaterhouseCoopers, were appointed by the Government to produce recommendations on Irish Water. They had an opportunity to meet a number of interested parties. I am aware they met representatives of the County and City Managers Association because I was part of the group they met. Wearing a slightly different hat, they also had an input from Engineers Ireland in the Irish Academy of Engineering. There has, therefore, been an opportunity for an input into the PwC data collection exercise. Beyond this, I am not aware of where they have gone.

Deputy Luke ‘Ming’ Flanagan

There appears to be a consensus, if that word is not taking the matter too far, that-----

Chairman

I ask the Deputy to be brief as a division has been called in the Dáil.

Deputy Luke ‘Ming’ Flanagan

There appears to be a consensus among the delegates that the design, build and operate approach is working well. From speaking to the director of services in Roscommon County Council, my local council appears to share this consensus. I will make a proposal to the joint committee on the basis of something interesting I found. During a meeting with water caretakers from around the country the Technical Group was given a completely different story. Water caretakers are very concerned about going down the design, build and operate route.

Chairman

We have run out of a time for a reply from the delegates as a vote is taking place.

Deputy Luke ‘Ming’ Flanagan

Will the joint committee invite a group of water caretakers to appear before it to allow members to hear the views of people working on the ground about the design, build and operate approach? We should explore and examine their serious concerns about going down this route and take a decision on that basis.

Chairman

Does the Deputy have a question?

Deputy Luke ‘Ming’ Flanagan

I propose that the joint committee invite representatives of the water caretakers who met the Technical Group, Sinn Féin and, I expect, other parties. We should listen to their genuine concerns about this issue. It was only when we spoke to them that we realised that there were problems.

Chairman

We will discuss adding the meeting proposed by the Deputy to our schedule.

Deputy Luke ‘Ming’ Flanagan

That is mighty.

Chairman

Does anyone have anything to add?

Mr. Tim Lucey

I wish to clarify one issue. The Chairman referred to the manufacturing process and alluded to a particular company which I will not name. The company in question consumes approximately 10% of the water supply in Cork city. We place a significant emphasis on securing water supplies during severe weather and during the 2009 flood we supplied the company in question with tankers of water. It is critical that any company consuming such a high level of water consider having at least a 24 hour supply stored on site. Every household is required to have such a supply. That some manufacturing companies do not have even one day's supply is a significant issue.

Mr. Seamus Lyons

We believe approximately 40% of the water supply in the Dublin area goes towards industry, although that figure is not exact by any means. We need to drive up the amount of water we have available for industry in the region in years to come. That is not say, however, that we would in any way fail to meet the requirements of any industry which seeks to locate in the Dublin area. We will continue to take whatever steps are necessary to ensure water is available to such companies.

Chairman

I thank the delegation for coming before the joint committee. They are the experts in this field and their presentations were both comprehensive and complementary.

The joint committee adjourned at 6.25 p.m. until 2.30 p.m. on Tuesday, 4 October 2011.