Agenda item

Deputation - To receive Dr S Blockwell, Head of Investment Management and Mr C Nicell, Head of Business Analytics, NI Water to deliver a Presentation on NI Water Infrastructure Plans and Funding (copy attached).

Minutes:

 

The Committee received Dr S Blockwell, Head of Investment Management and Mr C Nicell, Head of Business Analytics, NI Water to deliver a presentation on NI Water Infrastructure Plans and Funding, a copy of which had previously been circulated.

 

Members thanked Dr Blockwell and Mr Nicell for their comprehensive presentation which addressed many issues of significance for this Council area.

 

Councillor Jackson referred to general assumptions regarding the accessibility and quality of our drinking water but referred to increased warnings that this resource was under considerable pressure.  He referred to a meeting which had taken place between Sinn Fein MLA Martina Anderson and NI Water’s Chief Executive regarding the challenges arising from the under investment in NI Water.  He said his Party had made a call for proper investment into NI Water and referred to in-Party discussions which had taken place regarding the ambitious plans for the City and District.  He referred to the announcement the previous week by the Minister for Communities regarding ambitious plans for NIHE and her statement that there would be a ring-fenced allocation of funding to deliver the much needed social housing in Derry and North and West Belfast.  He stated that this was a firm commitment to address housing need.  He referred to the Housing Executive’s plans to build three thousand new social housing dwellings within the next five years.  He reiterated the Minister’s efforts to address the housing problem in the City however, it was a matter of serious concern to learn that the relevant infrastructure might not be in place to facilitate this programme of new build by NIHE.  He acknowledged that the final recommendation was still awaited in regards to PC21 and questioned that, if successful, this would have an impact on the delivery of housing within the Derry and Strabane Council area.  He welcomed NI Water’s contribution to Council’s LDP and acknowledged the content of the response to the recent planned strategy.  He referred to the fact that Council’s LDP was based on a twelve year timeframe and expressed concern that a similar period of time would be required to bring the relevant waste water treatment infrastructure up to the required standard.  He queried the potential for Council’s ambitions as set out in its LDP being curtailed until the necessary investment in the works water treatment was forthcoming. 

 

Councillor Jackson referred to the issue of Brexit which had not been addressed in the presentation.  He said it was understood that many of the chemicals used to ensure the provision of safe drinking water were purchased from Europe.  He enquired if there was security of supply post Brexit, and, if so, if this would involve any additional costs. 

 

Alderman Ramsey referred to the major issues addressed in the presentation which NI Water had previously raised in terms of going forward.  He pointed out that PC21 required considerable funding and as such Alderman Ramsey Proposed

 

That    Council write to the Department for Infrastructure supporting calls for NI Water for much needed investment to allow for the future development of housing in this Council area.

 

He stated that one of the main local issues for elected representatives was development and said he dealt directly with a number of developers in this regard.  However, the situation was now arising whereby the stage for pre-development enquiries had passed as Council had areas with capacity in respect of which planning approval was already in place.  He said it was a major frustration for developers given that they had committed to the sites and the proposed developments.  He referred to the suggested 74% increase which was required for one hundred areas which was a shocking realisation, particularly, given the major housing need in this area. 

Alderman Ramsey referred to the green areas outlined in PC15 which were currently acceptable but expressed concern that these would progress to amber in the near future.  In regards to the pre-development enquiry he enquired if NI Water would consider phases where there were potential capacity issues.

 

Councillor Edwards suggested that as outlined in the presentation this was a matter for the Executive as it was for them to make a decision in regards to funding being made available to NI Water.  He sought information in regards to current developers both in respect of housing and other types of development whose plans were being delayed or withdrawn because of the current lack of investment into NI Water.  In regards to slide 6 of the presentation, he referred to the considerable number of amber and red dots particularly in regards to the Strabane and wider Derg area.  He enquired as to the future plans in regards to these areas given these dismal projections.

Dr Blockwell acknowledged the potential impact on housing development in this area arising from the continued under-investment in NI Water and the twelve year time-frame for the LDP, which was a major concern.  He pointed out that a significant amount of the investment received by NI Water in terms of upgrading the treatment works would be received during the latter part of PC21 which would mean that the bulk of these works would likely be carried out in the final two/three years of the programme. He stated, however, that if greater certainty was forthcoming in regards to funding in the medium to longer term being guaranteed, this would help NI Water to plan and advance projects more efficiently and deliver more at a lesser cost.  However, this certainty over central price control was necessary.  He felt that a number of development plans across Northern Ireland would be curtailed including plans for the Derry City and Strabane District Council area.  He stated that NI Water were trying to work with developers in terms of phasing works and were currently working with DfI Roads in regards to the A2 Buncrana Road Scheme in respect of upgrading the water system and reinforcing and building new stations on the waste water site to service this scheme. 

 

Mr Nicell referred to concerns regarding the secure delivery of chemicals from Europe post Brexit and pointed out that following the Brexit agreement a Senior Manager within NI Waters Operations Team was tasked with the role of trying to assess the impact of Brexit.  He confirmed that the chemicals used by NI Water were produced around the world and in some instances products were pre-purchased in order to minimise risk.  However, in other cases NI Water had examined security of supply and at this stage this was not considered to be a high risk activity for the organisation.  He also pointed out that there were other different treatment types which, if required, would be considered.  He reiterated, however, that at this stage the risk to the organisation would be relatively low.  The situation would continue to be closely monitored and NI Water would endeavour to minimise risks as far as possible.

 

Dr Blockwell welcomed the proposal to write to the Executive in support of funding for NI Water.  He agreed that the Pre-Development Inquiry may be too late for many developers.  He pointed out that if planning approval had been granted in respect of proposed developments these would be included in the planning system and these needs would be serviced.  He stated that NI Water was working closely with developers in regards to proposed developments and if contacted by developers prior to submitting planning applications it would be possible to work with them in regards to achieving the best outcome.  He supported the use of PDs which were a very important tool for developers and NI Water.  He reiterated that NI Water would deliver its current programme of works, albeit, a number of upgrades would only be achieved towards the end of PC21. Many treatment works and sewerage systems would not be upgraded until price controls allowed possibly during PC27 or PC33 depending on the level of future investment into NI Water.

 

Dr Blockwell said NI Water was endeavouring to carry out as much works as possible whilst continuing to invest efficiently. It was for this reason that NI Water had produced an evidence based plan limited to £2 billion as it would not be possible to invest additional monies within this period.  He said it was important to achieve value for money.  He pointed out that as a regulated company NI Water’s business plans were scrutinised by the Utilities Regulator in terms of efficiency and delivering the best value for Northern Ireland.

Mr Nicell stated that from NI Water’s perspective it was important that people recognised that this was an integral part of the development for all areas of Northern Ireland.  He referred to the significance of the service provided by NI Water in terms of water supply in regards to the increase in housing stock required for this City Council area, planned development, road network development the use of broadband and their impact in regards to the wider economic picture.  These were the key elements in terms of the development and expansion of the City.

 

Dr Blockwell said he was not directly aware of developers withdrawing because of the lack of investment.  However, he imaged that if prior to purchasing land proposed developers contacted NI Water as part of the Pre-Development Inquiry Process, this would assist them in making an informed decision.  He said NI Water were open and transparent referring to the Developers Services Section of their website which contained a waste water capacity tab which showed treatment works and sewerage systems and the areas affected by capacity issues.  He stated that this was used to encourage developers to contact NI Water in regards to specific details which could be further investigated for example to carry out a network capacity check.  He said there was not a blanket red across any area in regards to capacity.  There may be ways in which NI Water could work with prospective developers such as reducing hydraulic capacity in respect of proposed developments by storm water separation which could be carried out on-site.  He stated that NI Water were also considering broader storm water offsetting across other areas, however, this was still at the early stages and required working with the Environmental Regulator.  He said NI Water were endeavouring to identify alternative methods to address the drainage issues.

Dr Blockwell referred to a further option being the provision of treatment works by a developer which would be built in accordance with NI Water standards for future adoption.  However, this was not generally encouraged as it created more diffused infrastructure scattered around Northern Ireland.  NI Water already had more than one thousand works and this proved a greater increase on base maintenance costs.  However, it was an option for a developer, albeit, it might not prove straightforward as the developer would have to negotiate consent with the Environment Agency.  He reiterated that NI Water was looking for alternative methods or means of assisting, helping or advising developers.  However, fundamentally a huge investment in waste water infrastructure would be required to address historical under-investment.

 

Dr Blockwell said he felt Strabane was affected more by a network issue.  He pointed out that PC21 contained an element of investment in respect of Strabane approximately £0.7 million.

 

Alderman Hussey enquired as to the process involved in the allocation of the water rate fund – rates from businesses – to NI Water.  With regard to capital funding he referred to the fact that NI Water required 2.8 billion for the 2020/2021 period with 3.3 billion being required for the 2021/2027 period and queried if there was a cumulative effect due to a lack of investment. He said it appeared that NI Water was only receiving approximately one third of the funding it required. 

 

Alderman Hussey expressed concern at the lack of green dots in regards to Castlederg and the impact this had on development whether business or residential.  He referred to NI Water’s apparent opposition to developer led facility provision. However, if this was carried out in association with NI Water would it not have the potential to provide additional funding into their budget to address the shortfalls which had been identified in regards to facility provision.

 

Alderman Hussey pointed out that many of the problems in regards to the adoption of new developments was due to NI Water requirements not having been met by developers.  He suggested that such problems should be addressed through the organisation’s Enforcement Section to ensure that the proper facilities were installed during the development process.

 

Councillor McCann enquired if it had been necessary to carry out additional testing of the water quality in the River Faughan in regards to output from the Mobuoy dumping site.  If so, he queried the cost involved.  He acknowledged the need for extra investment into NI Water in regards to the provision of a safe and secure water system and the impact thereof on every element of life.  He expressed concern, however, at some of the elements of the documentation provided to Members in regards to the apparent thrust towards the introduction of water charges and sought assurances that this was not the case.  He highlighted his concerns regarding the general privatisation of water and referred specifically to comments by the Chief Executive of NI Water regarding the funding crisis which he felt contained undertones regarding the possible privatisation of NI Water.  He felt this was a matter which was outside the remit of the Chief Executive.

 

Dr Blockwell stated that regardless of how efficiently NI Water was operating as a business, it could only invest what it received within the public expenditure cap and could not raise any additional monies.  He stated that NI Water was allocated an annual budget within which it had to operate and could not borrow above this. He stated that all of the organisations profits went directly to DfI and did not affect what NI Water could invest.

 

In regards to the totality of need identified in PC15 and the increases in

the levels of investment being sought in subsequent plans, Dr Blockwell agreed that there was a cumulative impact from continued under-investment which would continue to rise. 

 

In regards to the lack of green dots in respect of Castlederg, Dr Blockwell referred to the fact that Castlederg was amber suggesting that there would be some capacity issues at these works in that they may be nearing capacity or possible compliance issues which would require a lot more operational intervention.

 

Dr Blockwell pointed out that opposition to developer led water treatment works was due to the possibility of there being an increased number of treatment works to manage which would not prove efficient.  There was also the possibility of a developer wanting to develop near to a treatment works which was nearing capacity which would require greater investment for the main works.  He stated that these would be considered on an individual case basis and would also have to be negotiated with NIEA and whether they were willing to accept the discharge consent from the new treatment works. 

 

Dr Blockwell referred to the possibility of issuing Bonds to address the issues which arose with developers in regards to adoption.  He said NI Water were endeavouring to get developers to install the necessary sewerage systems required for adoption by NI Water prior to abandoning the site.  However, if these were not up to standard the development would not be adopted unless there was further investment by the developer.

 

Mr Nicell stated that NI Water were constantly being compared with other Water Companies the majority of which were private.  In regards to the Regulator he stated that NI Water bench-marked itself against other European companies and tried to learn from them and improve in the areas where this was necessary in order to provide a world class service.  He stated that NI Water was service driven and had to balance a high level of service being mindful of operational costs, compliance cost, consideration of energy carbon challenges and capital funding.  All of these parameters were taken into consideration when making decisions regarding investment.  He said he had not been aware in any of NI Water’s business plans a call for the introduction of water charges or privatisation.  He said NI Water’s Chief Executive was totally focused on the delivery of the core service and how the organisation performed as a business.  He said it was necessary for NI Water to compare itself against other organisations in order for it to improve.  He stated that NI Water had improved significantly in recent years in terms of its customer service scores which were at a top level however it continued to strive to improve.  He said it was important that the organisation continued to seek to improve in line with other successful businesses.  He reiterated that he had not received any information which would imply that the Chief Executive was pushing towards privatisation nor was it contained in the organisation’s business plan.  He also stated that at this stage the introduction of domestic water charges was not part of NI Water’s decision scope.

Dr Blockwell stated that one of the key issues was that the model for NI Water was not working.  He said it was a matter for the Executive to agree a different model.  He said currently the organisation’s main objective was to deliver a top quality, efficient service whilst providing an excellent customer service.

 

Dr Blockwell pointed out that additional testing of the water quality of River Faughan would have been carried out, however, he was unsure of the cost involved.  He undertook to investigate this matter and advise the said Member accordingly.

 

Mr Nicell advised that NI Water had carried out an enhanced level of testing of the River Faughan and the results did not show any increased levels of contamination.  He pointed that waters from the River Faughan would pass through Carnmoney Water Treatment Works.

 

Councillor Jackson referred to the issue of environmental protections and to media reports indicating that there were over 200,000 incidents of raw sewage dumped in rivers in England and Wales due to capacity issues.  Bearing in mind the capacity issues being experience in the North of Ireland, he enquired if there had been any instances where raw sewage had been dumped into local rivers.  He suggested that the problems which existed in regards to NI Water was the responsibility of the Minister for Infrastructure.  He referred to a previous proposal which had been made by Council to invite the Infrastructure Committee to the City and District, albeit, this was not appropriate during the current Covid crisis.  However, he anticipated this would take place prior to the finalisation of PC21 and he was sure that the issues in regards to A2 Buncrana Road Scheme and the water treatment infrastructure would be top of the agenda for this meeting.

 

Dr Blockwell explained that NI Water had safety valves in respect of its sewer networks know as combined sewer overflows.  These were consented to work at a certain frequency with the NIEA.  He pointed out that where capacity issues existed within the network there would be more frequent releases than desired which were classified as unsatisfactory discharges.  This was a classification given by NIEA and NI Water and a large part of the PC21 business plan was to address such issues within the network across Northern Ireland.  He stated that the reason for the combined sewer overflows, which were common in all waste water systems across the UK and Europe and elsewhere, was to prevent the backing up of sewerage entering peoples’ properties.  He said this was horrendous but did happen occasionally with around 120 properties across Northern Ireland having experienced this problem following periods of heavy rainfall.  He pointed out that NI Water had a targeted programme to address this issue and was the number one customer issue fed back through surveys over a number of price controls which to be addressed.

In regards to the proposal referred to by Councillor Jackson to invite the Infrastructure Committee to the City and District, the Director of Environment and Regeneration explained that this had been agreed by Council.  She advised that a letter of invitation had been sent, however, a response had not yet been received.  She undertook to arrange a follow-up in regards to this matter.   

 

The Chairperson thanked Dr Blockwell and Mr Nicell for their indepth presentation and referred to the clear indications regarding funding and the importance of our sewerage and water system in terms of promoting this Council area whether in regards to private or social housing and in regards to Council’s Local Development Plan.

 

Alderman Hussey requested that the proposal put forward by the Committee include a request that the Department carry out a review of NI Water’s business model.  He referred to the fact that it was the responsibility of the Department of Finance to assess business cases financially.

 

Mr Nicell reiterated that NI Water’s main concern was in regard to the quantum of funding.

 

Councillor McCann pointed out that this was not a matter for the Department for Infrastructure alone. He stressed that this was a cross cutting issue and was a matter for the Executive as a whole and should not be regarded as the responsibility on a single Departmental Minister.

 

Subsequently the Committee

 

Recommended       that Council write to the Stormont Executive (a) supporting calls for NI Water for much needed investment to allow for the future development of housing in this Council area; and (ii) request that a review be carried out of NI Water’s business model.         

 

Supporting documents: