REVIEW OF THE

RURAL WATER PROGRAMME 2003-2006

VALUE FOR MONEY AND POLICY REVIEW INITIATIVE

December 2007

Executive Summary(see glossary of terms p.7.)

Introduction

In November 2002, the European Court of Justice ruled that Ireland was in contravention of the EU’s Drinking Water Directive mainly due to the substandard quality of drinking water on privately sourced community owned Group Water Schemes. The Court threatened to impose substantial fines on the IrishState if this situation was not resolved without delay.

Action Plan for Rural Drinking Water Quality 2003-2006

In response, the Department of the Environment, Heritage and Local Government initiated a major programme of capital upgrade works under the Action Plan for Rural Drinking Water Quality 2003-2006. This programme comprised five water quality upgrade solutions, involving either connection to the public water mains or the construction of standalone water treatment facilities, where public mains connection was not a viable technical option.

Review Methodology

This Review assessed the implementation, effectiveness and cost efficiency of the €298 million invested overall, under each of the five upgrade solutions as well as other capital measures, over the 2003-’06 period. This was achieved by taking an overview of programme implementation based on data collected in a questionnaire completed by all County Councils, implementing this devolved local authority programme. More detailed analysis of efficiency and effectiveness was carried out by examining a selection of upgraded schemes, under each solution type. The most recent EPA water quality test results for upgraded Group Schemes were checked to verify that they are now effectively complying with the Directive.

Conclusions

This Review found that while programme implementation to date has been substantial, there has been slower progress on the two solutions, involving connection to the public mains. According to local authority questionnaire returns, the unwillingness of some non-domestic Group Scheme consumers to pay for local authority water appears to lie at the heart of this delay in many cases. Councils have been granted additional enforcement powers under the 2007 Drinking Water Regulations to take remedial action, if necessary, on such Schemes. Although the Disinfection/Sterilisation upgrade solution was very cost efficient, schemes in two out of four Counties examined continued to report exceedances of the Drinking Water Directive’s microbiological and chemical parameters, after being upgraded under this solution. Some Schemes upgraded under the Non-DBO solution also showed inconsistent effectiveness post upgrading. The Disinfection/Sterilisation and Non-DBO solutions have been designated respectively for 17% and 3% of all Schemes. In both cases, inadequate maintenance of water treatment infrastructure by some Group Scheme volunteers may be the problem. Local authorities should insist that, as a minimum, members of such Group Schemes attend the Group Scheme maintenance courses run by the Water Services National Training Group (WSNTG). The DBO treatment plant solution and the two solutions involving connection to the public mains were found to be effective. 72% of new Group Schemes built during the 2003-’06 period were publicly sourced with the number of newly constructed privately sourced group schemes decreasing each year. This is an encouraging sign as the EPA regards the quality of public drinking water as generally satisfactory. The DBO treatment plant solution was found to be the most expensive treatment solution but was the only viable technical option in cases, where the raw water chemistry was not appropriate for disinfection/sterilisation or connection to the public mains was not possible. The practice of procuring several DBO treatment plants together in bundles appears to have been successful in attracting more competitively priced bids for these bigger contracts. The cost of pipe network upgrades was found in many cases to exceed the cost of water treatment upgrades for all treatment solutions and it is essential that future such expenditure is carefully targeted.

Recommendations

The programme of water quality upgrades, required to comply with the Drinking Water Regulations, must be completed without delay to protect the public health of Group Water Scheme householders. It is also important that the Department reminds Councils that while a partnership approach with the Group Schemes’ sector is vital for programme implementation, the ‘most economically advantageous’ effective treatment approach must ultimately continue to be adopted in the interests of the taxpayer. There also needs to be a greater focus by Councils on source protection measures, particularly for newly constructed Group Schemes, to avoid a recurrence of water quality problems in the future requiring expensive remedial State investment. The Conclusions and Recommendations of the Rural Water Programme Review are set out in Chapter 7 on p.192. and proposed performance indicators on p. 175.

TABLE OF CONTENTS

Executive Summary Page 1

Table of Contents Page 3

List of Appendices Page 4

Terms of ReferencePage 5

List of AbbreviationsPage 6

Glossary of frequently used terms Page 7

Chapter 1 Introduction to the Rural Water ProgrammePage 8

Chapter 2 Literature Review Page 30

Chapter 3 Methodological Approach Page 56

Chapter 4 Findings and Analysis Page 70

Chapter 5Future Funding Needs/Alternative ApproachesPage 163

Chapter 6Proposed Performance IndicatorsPage 175

Chapter 7Conclusions and RecommendationsPage 192

AppendicesPage 213

BibliographyPage 241

List of Appendices

Appendix 1Breakdown of Relevant Group Schemes by County

Appendix 2Membership of National Rural Water Monitoring Committee

Appendix 3 National Federation of Group Water Schemes (NFGWS) response to questions re. Rural Water Programme Value for Money Issues

Appendix 4Circular L9/2006 and Questionnaire to Local Authorities re. Rural Water Value for Money Review

Appendix 5Drinking Water Regulations – Water Quality Parameters

Appendix 6 Estimated Non-Domestic Water demand for DBO Bundles

Appendix 7Provisional Design Build Costs for completed DBO Bundles

Appendix 8Ryan Hanley Submission re. Leakage Control

Appendix 9 Membership of Review Steering Group

Terms of Reference for Value for Money Review of the Rural Water Programme

The Value for Money (VFM) Review of the Rural Water Programme during the period of the Action Plan for Rural Drinking Water Quality 2003-2006 will:

1)Identify programme objectives.

2)Examine the current validity of those objectives and their compatibility with the overall strategy of the Department of the Environment, Heritage and Local Government.

3)Define the outputs associated with the programme activity and identify the level and trend of those outputs.

4)Examine the extent that the programme’s objectives have been achieved, and comment on the effectiveness with which they have been achieved.

5)Identify the level and trend of costs associated with the Action Plan for Rural Drinking Water Quality 2003-2006 and thus comment on the efficiency with which it has achieved its objectives.

6)Evaluate the degree to which the objectives warrant the allocation of public funding on a current and ongoing basis and examine the scope for alternative policy or organisational approaches to achieving these objectives on a more efficient and/or effective basis.

7)Specify potential future performance indicators that might be used to better monitor the performance of future Action Plans for Rural Drinking Water Quality.

8)The core objective of the Action Plan for Rural Drinking Water Quality 2003-2006 is to bring the Group Water Schemes sector into compliance with the terms of the European Communities (Drinking Water) Regulations 2000. Therefore, the Small Public Water and Sewerage Scheme and Well Grant elements of the Rural Water Programme will not be reviewed as part of this study as their objectives are not directly related to the Group Water Schemes sector.

9)As the administration of the Rural Water Programme is largely devolved to local authorities, the efficiency and effectiveness of the local government system in meeting the objectives of the Action Plan for Rural Drinking Water Quality 2003-2006 will be assessed.

List of Abbreviations

BMW / Border, Midlands and Western Region
CCMA / City and CountyManagers’ Association
CPI / Consumer Price Index
CRF / Capital Replacement Fund
CTPM / Connection to the Public Mains
DB / Design Build
DBO / Design Build Operate
DWD / Drinking Water Directive
ECJ / European Court of Justice
EPA / Environmental Protection Agency
ERDF / European Regional Development Fund
EU / European Union
GWS / Group Water Scheme
M&E / Mechanical and Electrical
NDP / National Development Plan
NFGWS / National Federation of Group Water Schemes
NPV / Net Present Value
NRWMC / National Rural Water Monitoring Committee
O+M / Operation and Maintenance
P/E / Population Equivalent
PMS / Project Programme Management System
PPP / Public Private Partnership
PPP / Polluter Pays Principle
PWS / Public Water Supplies
RWP / Rural Water Programme
S & E / Southern & Eastern Region
THM / Trihalomethanes
ToR / Terms of Reference
UFW / Unaccounted For Water
VFM / Value-for-Money
WSNTG / Water Services National Training Group

Glossary of frequently used terms

Client Representative / Consulting Engineers jointly employed by the DBO Bundle Group Schemes and County Council to procure and oversee the work of the DBO operator during the Design Build phase of the contract
Compliance / Compliance with the water quality parameters of the Drinking Water Regulations 2000
Cost per House / The capital cost of a Group Scheme’s water treatment solution and/or pipe network upgrade divided by the number of houses connected to the Group Water Scheme
DBO Operator / Consortia contracted to design and build the water treatment plants in a DBO Bundle and operate the plants for 20 years
Design Capacity / The maximum amount of water that the plant is designed to treat
Drinking Water Regulations 2000 / Regulations, which came into effect on January 1st 2004, transpose the EU’s Drinking Water Directive into Irish law. The Drinking Water Regulations 2007 recently superceded the 2000 Regulations
DBO Bundle / A number of water treatment plants serving individual Group Water Schemes procured together as one contract
DBO Sub-bundle / Two or more Group Water Schemes being served by the same water treatment plant within a DBO Bundle contract
ECJ Ruling / 2002 European Court of Justice (ECJ) ruling that Ireland’s private water supplies i.e. Group Schemes are in contravention of the Drinking Water Directive
Groundwater / Water sourced from underground aquifers.
Group Water Scheme / Private entities involving two or more premises abstracting water from a common water source and sharing a pipe distribution system
Network Upgrade / Upgrade works relating to the water pipe distribution network
Operation and Maintenance / Fixed and Volumetric Costs involved in treating Group Scheme water and maintaining the pipe distribution network
Parameters / Minimum water quality standards categorised into microbiological, chemical and indicator parameters
Private GWS / Group Water Scheme served by a private water source
Public GWS / Group Water Scheme connected to the public mains
Rationalisation / The merger of two or more Group Schemes into a single legal entity to be served by a single treatment plant
Raw Water / Untreated source water
Source Protection / Measures to protect source of drinking water supplies
Subsidy / Annual payment to Group Schemes to subsidise the domestic household portion of the operational costs of Group Water Schemes
Surface Water / Lake or River Water Sources
Treatment Solution / Upgrade works relating to improving water quality
Unaccounted for Water (UFW) / Water that is lost out of the water distribution system through leakage and wastage

Chapter 1

Introduction to the Rural Water Programme

Background to the Group Water Schemes’ Programme

The Group Water Schemes’ Programme was introduced in 1962 to provide capital grant aid to rural dwellers for the construction of water distribution systems to pipe water from local water sources such as lakes or boreholes into their homes and farms. Communities set up voluntary co-operative structures known as Group Water Schemes to privately manage these water distribution systems with current operating costs being funded through contributions from Group Scheme members. Groups varied in size from a minimum of two houses sharing a water connection to the same source to over a thousand houses in some cases (Dept of Finance 1989, p1.) The number of Group Water Schemes increased throughout the 1960s, facilitated by the rural electrification programme, which provided the power to pump water (Fitzpatrick Associates 2005, p.9). Many of these new Group Schemes were connected up to the public water mains but retained control over their pipe distribution network. There are now estimated to be over 5,500 Group Water Schemes in Ireland serving up to 300,000 households (Fitzpatrick Associates 2005, p.11).

The twin objectives of the Group Water Schemes Programme, from its inception, were quantity and quality. The quantity objective was to provide a sufficient quantity of piped water in as many houses as feasible. The quality objective was to ensure that water provided was of a suitable quality for drinking water (Dept of Finance 1989, p.2.). Any uncertainty as to the definition of suitable drinking water quality was removed with the enactment into Irish legislation in 1988 of the European Communities (Quality of Water intended for Human Consumption) Regulations (ibid, p.3). The allocation and payment of capital grants under the Group Water Schemes’ Programme was administered centrally by the then Department of the Environment. Departmental inspectors provided technical advice to Groups and certified completed works for payment. In most counties, the local authorities’ role was minimal and was generally limited to approving water sources, the designs of Group schemes and liaising with Departmental inspectors (ibid, p.6-7.). Existing Group Schemes were also entitled to receive second grants in cases where the existing water supply had become ‘seriously deficient’ due to capacity constraints or a decline in water quality (ibid, p.5). Since 2002, the Department of Community, Rural and Gaeltacht Affairs also provides ‘top up’ capital grants to Group Water Schemes in Clár areas (Fitzpatrick Associates 2005, p.36.).

Devolution of the Group Water Schemes Programme

In January 1997, the Minister for the Environment announced that responsibility for the operation and administration of the Group Water Schemes’ Programme was to be devolved to local authorities (Circular L1/97). The Department would continue to pay block capital grants to local authorities but the appraisal and approval of applications for individual Group Scheme capital grants was solely a matter for the relevant County Council with no Departmental involvement.

Group Water Scheme Subsidy

In 1997, the Government abolished public water charges for domestic households and instead funded the operational costs of supplying treated water through the Local Government Fund (LGF). In the interests of equity, the Government also introduced a subsidy payment to Group Scheme households to cover the operating cost of providing for their domestic water needs. The payment is made directly to Group Schemes rather than individual householders by local authorities. The statutory basis for this scheme is Section 26 of the Local Government (Sanitary Services) Act, 1948. The annual domestic subsidy rates per household were increased to their current levels on 28th March 2000.

The current subsidy levels are 100% of the qualifying expenditure as approved by the local authority, subject to a limit of:-

-€50.79 for each house in a Group Scheme supplied from a local authority source;

-€ 101.58 for each house in a Group Scheme supplied from a private source

-€196.81 for each house in a Group Scheme where water disinfection and/or treatment is provided under a Design, Build, Operate (DBO) contract or where the water disinfection/treatment plant is operated and maintained by a contractor by way of a bona fide Operational and Maintenance Contract.

The conditions for the domestic subsidy scheme are set out in a Subsidy Explanatory Memorandum issued by the Department. Two of the eligibility conditions for the Group Scheme subsidy are that it is providing a supply of water for domestic purposes which is, in the opinion of the local authority, satisfactory, and water conservation measures are being actively implemented (Department of the Environment, Heritage and Local Government 2002).

National Rural Water Monitoring Committee and the Rural Water Programme

In February 1998, the Minister for the Environment and Local Government launched the Rural Water Programme with substantially increased capital provision for the improvement of rural water systems, with a strong focus on improved drinking water quality (NRWMC 2003, p.1). In May 1998, the Minister established the National Rural Water Monitoring Committee (NRWMC) “to advise the Minister on national policy on rural water services and to monitor the implementation, by local authorities, of the devolved rural water programme” (Preface, NRWMC – June 1999). The NRWMC comprises all the main stakeholders in the Rural Water sector including central and local government officials, farming organisations and most crucially the National Federation of Group Water Schemes (NFGWS) as representatives of the Group Water Schemes sector. The Department has developed a partnership approach in working with the NFGWS to meet the objectives of the Rural Water Programme. The member organisations of the National Rural Water Monitoring Committee are listed in full in Appendix 2. In March 2000, the Minister announced new capital grant structures for water quality upgrades based on advice from the NRWMC. The current capital grant levels are set out in Departmental Circular L11/04.

Rural Water Strategic Plans

The NRWMC “began a process of strategic planning for rural water supply and water quality in 1999” (NRWMC, foreword, May 2002). All County Councils were required to draw up Strategic Rural Water Plans for supplying rural water needs in their county and upgrading water quality. The NRWMC issued Strategic Plan guidance documentation to all County Councils in June 1999 and May 2002. County Councils were required to identify the most suitable water quality upgrading solution for Group Schemes in their area in consultation with the Group Scheme members. Both versions of the Strategic Guidance documentation specified that Councils should cost and consider all water quality upgrade options and select the most ‘economically advantageous’ solution (June 1999, p.2.15 & May 2002, p.4.7). Local Monitoring Committees were also established to monitor water quality issues on a County basis.