Utility Regulator publishes Report of NI Water Investigation

Media Release

22 July 2008

Utility Regulator orders NI Water to sort out ‘significant planning and governance weaknesses’ identified in investigation report. This paper can be viewed usingTHIS LINK.
The Utility Regulator (1) today published the report of an investigation into how NI Water managed the release of information in late February about its costs and tariffs (2). This paper can be viewed using THIS LINK.The investigation centred on information about the amount of money that the water company raises from non-domestic customers which could have an impact on household bills.

The investigation has not found dishonesty or any conspiracy to hide information. However, it has found ‘serious shortfalls in areas of management’ at NI Water. Significant weaknesses were identified in NI Water’s systems of planning and governance procedures, which point to a prima facie breach of the water company’s licence (3).

As a consequence of the investigation, the Utility Regulator has ordered NI Water to immediately commit to an action plan to improve the major deficiencies identified by the investigation report (4).
Iain Osborne, Chief Executive of the Utility Regulator said:
“ NI Water has already given us an assurance that they will commit to implementing an action plan to improve deficiencies identified by our investigation. We welcome this constructive approach from the company, and we will take the necessary action to make sure that the water company delivers on their assurances.”
Additionally, the Utility Regulator has also indicated that its Board will meet in the autumn to formally consider whether or not NI Water has breached its licence. If a breach has occurred this may lead to an enforcement order imposing commitments on the water company. Alternatively, the water company may offer to convert commitments into legally binding obligations.
Mr Osborne continued:
“Our role is to protect the best interests of water and sewerage customers in Northern Ireland. We initiated the investigation to get to the bottom of the issue and to assure the public that mistakes will not be repeated. At the end of the day the Utility Regulator wishes to work with NI Water to help it deliver water and sewerage services which customers can have confidence in”.
ENDS

Notes to Editors

1. The Northern Ireland Authority for Utility Regulation (the Utility Regulator) is the non-Ministerial Government Department responsible for regulating the electricity and gas industries and water and sewerage services in Northern Ireland.
2. On 22 February it became publicly known that planning assumptions made by NI Water regarding the number of domestic and non-domestic customers were inaccurate. As a consequence, more revenue was required from water charges to domestic customers than had been expected and less revenue was due from water charges to non-domestic customers. It subsequently became clear that NI Water had been aware of this cost apportionment issue before 22 February but had failed to notify the regulator. Indeed it was aware of the issue at the time it submitted a range of financial information on 31 January, and had failed to make the regulator aware of the problem. The regulator announced on 8 April its intention to investigate this issue.
3. The investigation report identified significant concerns in the following areas of NI Water’s operation: (a) quality of customer data and assumptions, (b) corporate governance standards (especially systems of planning and internal control), (c) communication with the Utility Regulator, (d) interaction with stakeholders, and (e) the financial effect of the mitigation measures.
4. The action plan commitments relate to areas including: (a) an upfront approach drawing attention to known data and assumption shortfalls with an accompanying action plan, (b) the assessment of and an action plan to address internal governance shortfalls, (c) open, transparent and timely communications with the Utility Regulator, (d) full and comprehensive engagement with the Utility Regulator in order to address outstanding areas of concern.
5. A copy of the Investigation report and an associated Q and A can be found on the Utility Regulator’s website – www.niaur.gov.uk
6. Media contact: Greg Irwin (0779 433 5860)