Saturday 16 November 2019

Customers refusing to pay and political meddling top firm's nightmare scenarios

Paul Melia Environment Correspondent

POLITICAL interference and a fear that customers will not pay their bills have been highlighted as "key risks" facing Irish Water.

The utility company has compiled a detailed risk register setting out the impact non-payment of bills, interference from politicians and poor data collection will have on its business as it prepares to charge 1.3 million homeowners for their water from next October.

Internal documents seen by the Irish Independent show that concerns were flagged more than 18 months ago when Bord Gais Eireann was given responsibility for establishing the new water utility company.

Each risk is rated from "rare" to "very likely", and the impact it will have on the business is also assessed. Among the key concerns are that the public will not "buy into the campaign", and that local authorities will not co-operate with the transition of water services from councils to the new utility.

The latter fear appears to have been borne out, with weekend reports suggesting that councils refused to carry out scoping work on the state of the network until so-called Service Level Agreements – allowing local authorities to operate the system on behalf of Irish Water – were extended to 12 years.

The risk register also reveals concerns that the regulator will not approve the budget needed to upgrade the water network and meet day-to-day operating costs.

This comes amid controversy about the €86m spent on outside consultants to develop IT systems and other business functions since the semi-state company was established.

This spending will have to be approved by the regulator if it is to be factored into customer bills.

Some €10bn is required between now and 2027 to improve water quality and upgrade treatment plants, which will be funded through customer bills, borrowings and a government subvention.

A key risk identified – seen as "likely" to occur and which would be "hugely significant" for the business – is the impact that "external stakeholders" which include "investors, political" will have.

"There are various external stakeholders that have limited experience with monopoly economic regulation who will exert influence over Irish Water," it said.

Sources said that among the risks identified were politicians lobbying to have particular projects progressed, despite others being of a higher priority, and the company not having sufficient powers to discharge its duties. It is understood there is some disquiet within Irish Water that unlike other utility companies, it does not have the power to disconnect customers who refuse to pay.

Instead, it can reduce supply and can only recover unpaid debts by going to court. Given high legal costs here, that course of action is unlikely unless large bills are racked up.

"The political risk would be in the legislation and regulation," one source said. "The big risk is the ability to chase people for money.

"It's only through the court. Say the annual charge is €300, (the property owner) needs to be €5,000 or €6,000 in debt to chase them in the courts, but you could take sample cases.

"The interference is also in investment – in terms of does one place get works done before another. It's local rather than national politics."

The utility company has compiled a detailed risk register which sets out the "top level risks" across all business sectors including finance, customer service, operations and billing. Among those are a concern that local authorities will not cooperate in moving services across to Irish Water; a risk that the public "do not buy into the campaign"; a concern that customers will not pay; and that city and county councils will not be in a position to provide "operational data" allowing it to plan improvements and operate the network.

In addition, it also refers to "customer engagement and brand development", expressing concerns that any "premature external communication" such as a leaflet drop to homeowners could "damage brand reputation".

CONTROL

Last year, some two million leaflets were distributed to houses setting out the water metering programme and highlighting the jobs to be created.

Irish Water took control of the water network in January, and will oversee some €1.2bn in spending across the system this year. Some €500m is expected to be invested in new infrastructure every year.

It has sought information from local authorities on payment rates for commercial customers, the number and condition of treatment plants, water pipes and other assets and data on any outstanding legal claims.

It is expected that debts amounting to "hundreds of millions" of euro will transfer from local authorities to Irish Water. Dublin City Council, for example, makes loan payments of €9.4m a year. Irish Water is also exploring the possibility of buying out contractors who provide services such as billing or meter reading for local authorities.

Irish Independent

Also in Business