Tuesday, 4 February 2014

Questions (125)

Thomas Pringle

Question:

125. Deputy Thomas Pringle asked the Minister for the Environment, Community and Local Government the way he expects savings to be generated from Irish Water; the way he foresees savings being generated after the service level agreements with local authority staff expire; and if he will make a statement on the matter. [5036/14]

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Written answers (Question to Environment)

The establishment of Irish Water in 2013 was an integral component of the Government’s water sector reform strategy and involves major organisational change, an entirely new funding structure governed by economic regulation, the introduction of domestic water charges based on usage and the roll-out of a national domestic metering programme. The PwC independent assessment on establishing a public water utility stated that the public utility model represented an opportunity to build a fit for purpose operating model, a more efficient cost base and lower unit of delivery. It also stated that with Irish Water controlling all assets, revenues and costs, it will be better positioned to leverage economies of scale, drive operational excellence, reduce operating costs and optimise the lending capacity of the company.

I expect significant savings to operational and capital expenditure through the delivery of water services by Irish Water. In capital project delivery, standardising asset design specifications to drive tender price reductions, centralising procurement spend and implementing best practice project management to reduce the risk of cost overruns are ways in which savings can accrue. In operational terms, procurement, volume and billing efficiencies are expected to be achieved. The Commmission for Energy Regulation, which will be responsible for the economic regulation of Irish Water, will seek efficiencies through its reviews of revenue controls.

These savings will accrue during the life of the service level agreements (SLA) which Irish Water has entered into with each of the 34 local authorities for the provision of specified services. The SLA reflects the transformation agenda required for the sector, with provision for annual service plans which will set out required performance, budgets and headcount. A particular focus is placed on the collaboration necessary to complete the transformation to a public utility model by the end of 2017.