Funding via taxation: A sustainable model for Irish Water

Transcription

1 Funding via taxation: A sustainable model for Irish Water Maria Graham Assistant Secretary Water Division Department of Housing, Planning & Local Government

2 The questions posed What the new funding model means for Irish Water? How the Government will push for increased efficiency? The long-term future for Irish Water s funding. Has water charging been consigned to history? What this model means for investors in the sector. 2

3 Or How we got from 1.2 million bills to one! Draft Domestic Water Services Bill Invoice to: Mr Patrick O Sullivan Water Sector Finance Department of Housing, Planning, and Local Government Custom House Dublin 1 D01 W6X0 Invoice issue date: ######### All values in EUR VAT Reg No JH Invoice no.: to be generated from CC&B Usage per customer Customers Base rate ( /m3) Total ( ) (m3) Current Water 1,298,210 (E) 9.63 (E) ,503,312 Wastewater 1,135,095 (E) 9.41 (E) ,489,492 Total - Current 49,992,804 Non Current - Depreciation Water 1,298,210 (E) 9.63 (E) ,250,317 Wastewater 1,135,095 (E) 9.41 (E) ,563,499 Total - Non current Depreciation 4,813,816 Non Current- Return on Capital Costs Water 1,298,210 (E) 9.63 (E) ,500,352 Wastewater 1,135,095 (E) 9.41 (E) ,777,124 Total - Non current Return on Capital Costs 5,277,477 Excess usage - 60,084,097 Cash Current 50,000,000 Non Current 10,000,000 Domestic Water Services Bill 60,000,000 (E) - estimates And what does it mean for Irish Water? 3

4 Key developments Confidence and Supply Agreement Expert Commission Joint Oireachtas Committee on the future funding of Water Services Working group established to consider implementation of new funding model. Water Services Act, 2017 reflecting legislative framework for JOC and Working Group considerations 4

5 Water Services Act, 2017 Provides mechanisms to ensure security of funding for Irish Water Focus on conservation and mechanism for tackling excessive usage Provides for normal domestic usage to be paid from taxation Water Advisory Body to report on implementation of Business Plan Water Forum for Stakeholder engagement 5

6 Key principles underpinning new funding model Ensure Compliance with the Water Framework Directive; Support the Economic Regulatory Process; Improve the transparency and accountability of funding arrangements and ensure compliance with public financial procedures; Avoid cross-subsidisation between domestic and non-domestic water services; Drive operational and capital efficiencies in line with regulatory regime; and Provide the necessary clarity to facilitate appropriate capital investment by Irish Water. 6

7 Ensuring Funding Security Water Services Policy Statement By 17 May 2018 Water Services Strategic Plan (25 years) Strategic Funding Plan By 17 Sept CRU Allowed Revenue Non-Domestic, Excessive domestic use paid through Tariffs Normal Usage Domestic paid by the Dept

8 Funding Security National Development Plan: 8.5 billion in capital funding reflected for Over 14 billion to mid 2030s noted Strategic Funding Plan (Section 19 of Water Services Act) Irish Water prepares plan to implement the 25 Water Services Strategic Plan for Ministerial approval. Costs to be incurred & recovery of those costs both domestic and nondomestic Estimated income Estimated capital and operating expenditure CRU Allowed Revenue Independent review of costs Benchmarked against other utilities Sets allowed revenue from tariffs State pays for normal usage 8

9 Development of 2018 funding 9

10 Water Policy Statement emerging themes Quality of drinking water and waste water treatment Conservation tackling leakage and excessive usage Future proofing - economic growth, resilience and climate change 10

11 Excessive use water charges Water Services Act 2017 Minister sets threshold at 1.7 times average rate of demand determined by the CRU; After 5 years, multiplier not exceeding 1.7 times average demand - take into account need to promote conservation, sustainable use of water, public health issues, River Basin Management Plans and proper planning & development. Allowance for medical needs and larger households (five or more people) 11

12 Threshold for current period S.I. 597/2017 Average demand 125,000 litres per annum Threshold of 213,000 litres per annum Allowance of 25,000 litres per annum per individual in households of five or more. 12

13 Conclusion New Funding Model seeks to Give certainty to support IW business planning Support the economic regulatory process Comply with the Water Framework Directive Balance long-term planning & annual budgetary cycle State funding of domestic and question of State funding of debt being examined Policy focussed on quality, conservation & future proofing and excessive charge regime set in this context. 13

14 Thank you for listening 14