Above inflation increase to NI Water capital budget not justified, MLAs told

There was not “sufficient evidence” to justify an above inflation increase in the capital budget for Northern Ireland Water, MLAs have been told.

John French, chief executive of the Utility Regulator, updated Stormont’s Infrastructure Committee on a six-year price control plan within NI Water, which provides water and sewerage services.

The Utility Regulator is the independent economic regulator of NI Water.

Mr French told the committee a six-year price control plan determined in 2021 that NI Water required £2.1 billion of capital investment to “support and deliver an investment plan that was efficient and affordable from a tariff perspective”.

He added: “We also recognised there was a degree of uncertainty about the allowances that were set, in particular in relation to wastewater and sewage schemes and the need to deliver environmental obligations, to address capacity issues in the network and release development constraints.”

Mr French said a mid-term review provided the water company with a chance to “clarify its investment needs”.

He said: “We determined there needed to be an increase in the capital for Northern Ireland Water from £2.1 billion to £2.4 billion.

“This was needed to maintain existing services and deliver the upgrades required to meet its quality, environmental and service level obligations.

“An increase of £300 million from the May 2021 final determination was necessary due to the significant increases in inflation that occurred following the cost-of-living crisis.

“In terms of capital expenditure, Northern Ireland Water requested an additional £320 million on top of the £300 million I have just mentioned for above inflation capital increases.

“However, following our review we could not see sufficient evidence to justify this claim.

“This accounts for the greatest proportion of the difference between our mid-term review final determination of £2.4 billion and Northern Ireland Water’s submission of £2.75 billion.”