Country Profile – Northern Ireland: Water

The water industries of Northern Ireland and Great Britain faces many of the same challenges, such as climate change, population growth, ageing assets, and rising customer expectations.

Perhaps the most obvious difference between the water markets of NI and the rest of the UK is the number of companies active in the retail market. While England and Wales have 10 water and sewerage companies and more than eight water-only companies and new entrants between them, Northern Ireland – in much the same way as Scotland – has just one.

Northern Ireland Water (NI Water) is the sole incumbent company with no competitors – providing water and sewerage services to all 655,000 households and 85,000 non-households across Northern Ireland. This means a distinct lack of competition in the Northern Irish market.

NI Water has dual status as a government-owned company and a non-departmental public body, and is regulated by the Utility Regulator – the same body responsible for regulating the gas and electricity markets. The company operates according to conditions of its licence.

Domestic charges

Another notable difference is that NI Water does not charge its domestic water customers for their water and sewerage services – a long-standing hot topic in the country, with much debate having occurred over the past few years about whether or not such charges should be introduced.

Following an independent review in 2007, the NI Executive noted that consumers already pay an average of £160 per year towards water and sewerage services through their regional rate, but it argued, and still argues, that this is not enough. The future for water and sewerage services and the possibility of direct water charges for domestic customers is a decision for the Executive, and one that has been pushed back until at least after the next NI Assembly election in May.

Challenges

Climate change brings in its wake more volatile and extreme weather patterns. In just the past few years droughts, floods, extremes of rainfall, and cold weather have increased in severity, leading to both shortages and abundances of water. On top of this environmental standards are getting tougher, particularly around the quality of rivers and bathing waters and this requires, for example, the highest standards of water treatment and well-maintained sewer networks.

Another big challenge facing many water companies is dealing with growth in population and housing. The UK’s population is expected to rise by 10 million by the 2030s and another 10 million by around 2050.

In order to overcome these challenges, GB water companies are investing heavily in wastewater and sludge management, sewer misuse, flooding and pollution, catchment management, climate change adaptation plans, energy use and renewable energy, and water resources planning.

Funding

However, NI Water has experienced a shortage of funding which has made it especially difficult to invest in some of the infrastructure it so desperately needs to upgrade, and some of the projects which will overcome the challenges it faces.

NI Water chief executive Sara Venning argues that the company’s ability to deliver results is being hampered because of its government ownership, and has criticised the government for not having “a medium-term financial settlement in place”. NI Water is an organisation which, as the monopoly supplier, is economically regulated by the Utility Regulator – in much the same way as the English and Welsh companies are regulated by Ofwat.

However, NI Water is also designated as a Non Departmental Public Body, operating within the financial framework and funding allocations of the Department for Regional Development. This effectively makes the Northern Irish government the company’s single shareholder.

Venning says: “We have a shareholder that needs to find the funds. All of us have a job to do to help ministers see that this is important.” Due to a lack of funding, she argues, the company had been unable to sign up to a medium-term plan – a key requirement for a regulated utility.

NI Water has had three price control periods. The first was PC10, running from April 2010 to March 2013, the second was PC13, which lasted for two years, running from April 2013 to March 2015, and PC15 will be six years from April 2015 to March 2021.

It is hoped that the longer term of the new price control will enable NI Water and all our stakeholders – including the Drinking Water Inspectorate and the Northern Ireland Environment Agency – to take a more strategic and sustainable approach to the future provision of services.

NI Water’s plan for the PC15 period will help deliver lower bills, improve efficiency and drive customer service improvements, Venning insists. NI Water is “up for the challenge” and is “very keen to get on with it”, but the plan needs to be funded, and there needs to be recognition that more funding is necessary.

“We all have a task to raise the profile and the importance of this as a priority for Northern Ireland,” she adds. “You can’t have the nice things if you don’t have the infrastructure, and we need to fund the infrastructure.

“We’re great at what we do, and we can deliver more for less if we’re given the funding to move forward. Can we afford not to do that?”

Read Sara Venning’s Q+A with Utility Week here