Irish Water: building a new public utility
19 March 2013
In April 2012, the Government announced that it will create a publicly owned national water utility to consolidate and build on the excellent delivery of water and wastewater services in Ireland by the local authorities. This new water utility, Irish Water, will replace the current system in which public water and wastewater services are delivered by 34 city and county councils. The creation of a national water utility has many benefits. Most importantly, this new approach will facilitate increased investment into the service, resulting in better quality water services.
NEED FOR WATER REFORM
While Ireland has an abundance of raw water, the cost of providing treated drinking water and the collection and treatment of our wastewater is a necessary expense. It costs about €1.2 billion per year to fund the current service, with a large percentage of this coming from State sources.
Given our ongoing financial situation, the Exchequer can no longer afford to maintain this level of financial support for the water service. The level of investment in the water service over the last few years has reduced significantly. This has resulted in infrastructural weaknesses, capacity strains and high leakage rates around the country. In parts, the current system is operating at maximum capacity and unless action is taken now our water services will not be able to meet the future demands of a growing population or cope with extreme weather conditions and the potential onset of climate change.
In addition, the current system of water services provision, based on 34 local authorities, lacks economies of scale. The Government decided that, in the current financial climate, a new funding model was needed and that this would be delivered by a new national water utility to resolve these issues.
BENEFITS OF IRISH WATER
Some of the initial key benefits that this new water services utility will bring include new employment opportunities through upgrading the provision of water services, installing meters, and creating a centralised point of contact for customer queries. Irish Water will provide increased investment to ensure that water services meet the growing needs of the business sector, in particularly those with high employment potential (agri-food, pharma-chem and IT, for example). Furthermore, global demand for water is expected to rise by 40% over the next 20 years, so investment in water infrastructure will ensure that Ireland is well positioned to attract foreign and indigenous investment, creating further potential for new jobs within the country.
Irish Water will be established within the Bord Gáis Group. Bord Gáis has extensive experience of managing a national gas network and will bring these skills to managing the establishment and on-going operations of the new public water utility. In addition, Bord Gáis has an excellent track record in attracting international finance and delivering customer care. The knowledge and experience of Bord Gáis will be married with the expertise of 34 local authorities to create a company with the capacity to deliver world class water services.
Essentially, Irish Water will manage the services that local authorities provide today, but as a cohesive organisation it will be able to take a strategic, national approach to planning, development, raising finance, investment and operations. This will enhance the quality and improve the efficiency of the water and wastewater services, and reduce operating costs.
Setting up Irish Water is a complex task and will be undertaken in several phases up to 2017 at a minimum. Bord Gáis will draw on the talent, experience, and commitment of the 34 local authorities and other important stakeholders such as the Department of Environment, Community & Local Government (DECLG), the Commission for Energy Regulation (CER) and the Environmental Protection Agency (EPA).
The Irish Water Programme began with an initial 12-week mobilisation or ‘project planning’ phase between April and July 2012. The key outputs of this phase were the identification of key programme milestones; a transition plan to manage the stages to launch and progress the new organisation; and a high level outline or “blueprint” for the Irish Water organisation.
This ‘blueprint’ defined the high level operating model, organisation structure and IT landscape required for the establishment of Irish Water. From September 2012 through to the end of the year, the programme team was mobilised and made significant progress across a number of areas.
The programme is split into four key ‘sub-programmes’:
Irish Water company establishment is responsible for all projects focused on the frameworks that need to be in place to establish Irish Water as a company. The projects included here include finance; governance regulation and industry model; due diligence commercial and service level agreement (SLA) approach; and customer engagement and brand management.
Irish Water functions establishment is responsible for establishing strategic functions which must delivered as part of the programme for the enduring organisation. These include: metering; a capital investment programme; delivery of efficiencies; and a strategic plan for Irish Water.
Business capability establishment
Irish Water’s business capability establishment is focused on the delivery of the capabilities (people, processes, systems and data) that are required for a water utility company to effectively deliver a service to their customers. These requirements were broken down into three broad areas: customer capabilities, work and asset management, and support services and IT infrastructure.
The first requirement, customer capabilities, referred to what kind of customer data confirmation tools, call centre operations and customer billing mechanisms would be needed to deliver satisfactory customer service.
The second area, work and asset management, required developing an integrated framework of asset planning, operations and capital delivery to manage water and waste water infrastructure. The third area, support services and IT infrastructure, involved the design and delivery of support services for departments like HR, Finance and IT.
Irish Water’s organisation establishment is responsible for all projects that relate to the people elements of the organisation. It includes organisation design and development; employee relations, staff transition and integration; and pensions
TARGET OPERATING MODEL
Since January 2013, the programme moved into the design phase. The first key activity in this phase is the development of the ‘target operating model’ (TOM) for Irish Water. The TOM plays a critical part in the overall success of the Irish Water programme. This phase of the work sets the vision and guiding principles for the detailed development of the enduring Irish Water organisation. The TOM takes the Irish Water ‘blueprint’ to the next level of detail, and defines how people, technology, processes and governance will interact together. It also outlines how each stakeholder group will be managed to ensure a cohesive and smooth transition towards this new organisation. Most importantly, it defines where the accountability will lie within each business process.
We are currently engaging with internal and external stakeholders and industry experts to develop the TOM for Irish Water, including, amongst others, representatives from local authorities and the Department of the Environment, Community and Local Government (DECLG).
The TOM will design both the end state Irish Water organisation and also how the organisation will operate at each key milestone throughout the establishment programme, for example what capabilities will be needed to be in place to support the installation of water meters in each household from July 2013.
SERVICE LEVEL AGREEMENTS
To manage water and wastewater services from 2014, Irish Water will develop service level agreements (SLAs) with the 34 local authorities. This means that while the ownership and management of water assets will transfer to Irish Water in 2014, asset operations will continue to be delivered locally by local authorities to agreed service levels. This SLA approach will ensure a smooth transition to the new national utility model, by building upon the valuable experience and skillsets of the local authorities’ water services personnel and guarding against the loss of local expertise. It will also mean that the majority of staff will remain in the direct employment of local authorities for a considerable period.
Skill retention and staff transition are key issues to be addressed in developing the overall implementation plan, and will involve close co-operation with local authorities, staff and the unions to ensure that the change is managed effectively.
Irish Water will work closely with local authority personnel, both those managed through the SLA process and those seconded into roles within the Irish Water organisation. Irish Water will put in place training and Talent Management initiatives to allow all personnel within the Irish Water structure, including local authority secondees, to achieve their maximum potential. Irish water will also provide exciting permanent career opportunities within the enduring organisation for water services professionals, including engineers both within the local authorities and the private sector.
The work to define the SLAs with local authorities has already started and will continue throughout 2013. SLAs will come into operation in 2014, at the point at which Irish Water becomes ‘operational’ and takes on the ownership and management of Ireland’s water assets.
One of Irish Water’s first tasks will be to install domestic water meters countrywide. The installation work will begin in mid-2013 and it is planned that over 1 million homes will be fitted with meters over the next three and a half years. This activity will create up to 2,000 jobs.
In line with international experience, the Government believes that metering is the fairest way to charge households for water provision and wastewater treatment. They will also help reduce the operational costs of providing water services as well as providing longer term savings in relation to requirements for capital investment. From a ‘customer perspective’ the meter installation will be prefaced with advance customer notification to provide an organised and controlled programme which delivers a positive service experience to customers. Support services will consist of on-site local information and a central customer call centre.
The proposal is for domestic charges to commence in 2014. The rates and tariff structures for domestic customers will be decided by the regulator, the CER.
John Barry is acting CEO of Bord Gais Eireann. He commenced employment with Bord Gais in 1997, having previously worked in the private sector, mainly in the civil engineering field. In 2005, Barry was appointed to the role of head of networks construction, reporting to the CEO. The role involved responsibility for all networks developments, including all works relating to the distribution network. In December 2012, Barry dedicated 100% of his time to the establishment of Irish Water and currently holds the title of programme director. Barry holds a Bachelor of Engineering Degree (Civil) from University College Cork, with a postgraduate qualification in Mechanical Engineering from the same University. He is a Fellow of Engineers Ireland.http://www.engineersjournal.ie/2013/03/19/irish-water-building-a-new-public-utility/http://www.engineersjournal.ie/wp-content/uploads/2013/03/Tap_Large-1024x682.jpghttp://www.engineersjournal.ie/wp-content/uploads/2013/03/Tap_Large-300x300.jpgCivilgovernment,Irish Water,water