Irish Water
Rising to the Challenges
Presentation to IBEC Conference
10th October 2012
Bord Gáis has a Vision for Irish Water
“To deliver sustainable, high-quality and efficient water and wastewater
services for the benefit of the citizens of Ireland.”
Delivery requires:
• Build consumer confidence and meet customer needs
• Use the experience and expertise of the Local Authorities and the
Department, and other bodies in addition to Bord Gáis utility experience
• Have an efficiency focus harnessing the scale
• Utilise Bord Gáis’ international financing capabilities to enable major
capital expenditure to be performed at least cost
• Build a solid governance structure and deliver exemplary customer
service
• It must engage with the public and explain the objectives and the benefits
of reform
Delivering the Government Objectives
Irish Water Programme
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Our Programme will work within the Industry Reform
Programme
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Project Overviews
The Irish Water programme has been divided into five key sub programmes of activity. Each sub
programme has a number of projects within it.
Programme Management
Programme Management is responsible for running the overall programme, establishing the
governance model, managing the PMO office, engaging with key internal and external
stakeholders and providing guidance and direction to the rest of the sub programmes.
Company Establishment
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 & Industry Model, Fact Finding, Commercial & SLA
Approach, and Customer Engagement & Brand Management, and Facilities
Business Capability
Establishment
Business Capability establishment is focused on the delivery of the capabilities (people,
processes, systems & data) that are required for a water utility to effectively deliver a service
to their customers. This following projects are included here: Customer Capability, Work &
Asset Management, Support Services and IT Infrastructure
Organisation
Establishment
Organisation Establishment is responsible for all projects that relate to the people elements
of the organisation. It incudes the following projects: Organisation Design & Development,
Employee Relations, Transition & Integration and Pensions
Irish Water Functions
Establishment
Irish Water Functions establishment is responsible for establishing strategic functions which
must delivered as part of the programme for the enduring organisation. It includes: Metering,
Capital Investment Programme, Delivery of Efficiencies, and Strategic Plan for Irish Water
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Blueprint for Irish Water
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As part of the 12 week mobilisation phase that
commenced in April 2012, Bord Gáis has developed •
a blueprint for the Irish Water organisation. This
blueprint will form the foundation for the detailed
design of the Irish Water organisation including
detailed business process design, detailed
organisation design and detailed systems design.
Three important dimensions of the
Operating Model that have been designed to
date are:
1. Functional Operating Model
2. Functional Organisation Design
3. Systems Landscape
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The Irish Water organisation will be established via a
phased approach with key milestones to develop
and transition the Operating Model, Organisation
Structure and Systems Landscape to the end state.
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2
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Bord Gáis Values Acceptance
Values Acceptance 2008 - 2012
Safety
Performing
Honesty & Integrity
90
88
86
85
83
85
79
76
75
71
69
2008
2009
Empathetic
Proactive
90
89
88
86
83
81
79
84
BGE has received significant international
customer service awards – we will extend these
standards to Irish Water
2010
7
2011
Jun-12
Activities to June 2013
By End Quarter 4 2012
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By End Quarter 2 2013
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Finalisation and approval of implementation plan
Preparation of metering procurement strategy
Drafting of interim legislation
Programme Management structures put in place
Consultative Forum with unions established – progress made
Early due diligence commenced
Communications strategy underway
Interim legislation to give powers to Bord Gáis and CER enacted
Government decisions on free allowance and approach to affordability
measures
Procurement processes and surveying for metering programme underway
Drafting of comprehensive Bill to establish Irish Water
Tasks advancing under 13 work-streams to implement water sector reforms
e.g. developing legislation, financial model, service level agreements, HR
and staffing issues, capital programme transfer plan etc
Senior tier of management for Irish Water in place
Irish Water Programme
Key Implementation Milestones & Challenges
The Irish Water programme will focus on delivering a number of key milestones
May
2013
Launch Day 1: Launch of a campaign to inform customers on vision for the reform
programme and the benefits of establishing Irish Water
July 2013 Launch Day 2: Launch of a campaign to confirm customer details and commencement
of meter rollout programme
Q1 2014
Billing Day 1: Irish Water starts sending bills to domestic customers. Capability required:
– Bill c. 1.4m customers, process payments and manage credit and collections
– Customer database established
– Provide customer support through established customer contact centre by May
2013
– Testing and validation of meter reads
– Work and Asset Management System to support these functions operational by
July 2013
Irish Water Programme –
Key Implementation Milestones & Challenges
Q1 2014
Operations Day 1: Irish Water begins to assume ownership of assets, responsibility for asset strategy
and investment management. Local Authorities continue management and operations of assets
through SLA’s with Irish Water. Capability required:
–
Service Level Agreements in place with Local Authorities in relation to operation of assets,
allowing for efficiency gains, use of technology, and robust enough to last up to 2017 and
possibly beyond
–
Strategic planning and capital programme capability built up in Irish Water, utilising
existing expertise in Local Government Sector
–
Asset Management Structure and Support Services capability in place in Irish Water
Q3 2014
Billing Day 2: Irish Water commences take on for billing of non-domestic customers on a region by
region basis
Q1 2015
Operations Day 2: Irish Water assumes responsibility for all operations relating to Ireland’s water
assets, including work planning, management & execution, and day to day network operations on a
phased basis:
– Irish Water structure established and populated
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–
Post 2017
Full Work and Asset Management System operational and active through the SLA’s
Ability to plan manage and execute work with field force mobility
End State: Irish Water operating model and capabilities are fully operational and in place
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Funding and Funding Migration –
Water Services
Existing Funding
Structure
Proposed Funding
Structure
Business
Customers
Domestic
Customers
Business
Customers
DECLG
External
Funding
2016 +
DCELG
2015
2014
Water Services
Funding today provided by
a combination of central
exchequer and business
customers
Water Services
Funding in the future from a more
diverse range of funding sources …. key
requirements
• Asset Base (RAV)
• Economic Regulatory structure
• Predicable revenue stream
• Credit rating
Challenges in Funding
To fully realise its potential to reduce industry funding costs, Bord Gáis Éireann needs
the co-operation of the Local Authorities to manage the uncertainty and risk
Significant new funding
requirements
High level of uncertainty for investors
Higher water charges
• Significant capital
investment in the water
industry is required
over the next few years
• To transition funding
away from the taxpayer,
financing must be
raised from private
investors
• As a new enterprise Irish Water carries a high
level of uncertainty for investors:
– Level of required capex is not fully known
– Cashflows from domestic billing may be
volatile in initial period
– No view on future replacement cost
liabilities can be made as the current water
and wastewater asset base is not
understood
• The greater the uncertainty
carried within an investment,
the higher the cost of
borrowing the capital
needed
• This raises water charges for
everyone
With its Energy and Networks background BGÉ has a proven track record of securing private sector funding
against Utility operations
However to minimise the financing costs for Irish Water and subsequent water bill increases, it is critical that we
work closely with the Local Authorities to reduce the uncertainty and financing risk
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The Metering Project will be delivered by a Joint
Approach ...
Joint Approach from DECLG, Local Authorities Irish Water
• Survey domestic water connections - Local Authorities using
forms developed by DECLG
• Establish regional frameworks of SME contractors/crews - DECLG
• Initiate procurement of boundary boxes - DECLG (Irish Water to
award contract)
• Customer Communications – Irish Water
• Installation of boundary boxes - Management Contractors
• Installation of water meters - Management Contractors
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Metering Programme Principles
Safely - Efficiently - Timely - Least Disruption - Customer Information
The Customer
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The customer will be informed of the purpose and benefits of the proposed metering programme
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The customer will be notified in advance of the proposed installation timing & nature of the works and support
service availability/access
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Support services will consist of on site local information and central call centre
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Real-time field updates leveraging BGN Workflow Capability will enable provision of seamless customer service
Timeline and Productivity
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A planned programme of work will ensure highest sustainable level of installation productivity - the programme
will be adjusted following ramp up phase to secure optimum/smooth installation levels
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Installation planning will include customer notification to provide an organised & controlled programme which
delivers a positive service experience to customers
Using Irish Resource
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The project will utilise competent, experienced resources from the existing industry
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The project will assure standards, coordinated installation delivery by planning, scheduling, dispatching and
returning all work via BGN leveraged work management systems & processes
Programme Efficiency
•
The programme will be procured, scheduled and managed to ensure installation value for money.
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Domestic Billing
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Earliest commencement Q1 2014
•
Commencing on “assessed” basis for households initially
– “Assessed” robust design and implementation critical as it is expected to endure in
respect of substantial number of customers for substantial period into the future
– Credible, engaging communication of “assessed” basis critical for the same reason
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Transitioning to “metered” basis commencing from Q4 2014
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Initial “assessed”, subsequent “metered”, transition protocols and “assessed” / “metered”
tariff elements all subject to CER consultation & decision
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Initial “assessed” tariff approach needs to be determined in advance of customer
certification / validation process (July ‘13)
– Customers need to know what they are signing up for
– Customers need to appreciate relevance / importance of requested information
– Benefits campaign to engage customers must be able to demonstrate reasonableness
and broad equality of treatment
Conclusion
Bord Gáis is ready meet the challenge to deliver one of the
largest reform projects in the history of the State
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Has a detailed implementation plan in place
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Irish Water Implementation Project Team working with industry experts, DECLG,
local authorities and NewERA to deliver plan
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Entering a new ‘action’ phase in coming weeks – period of significant activity
commencing with procurement (boundary boxes, contractors, meters) & draft
legislation
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Communications activity to be accelerated to support overall project.