Dr. Paul McGowan:

The CER is the economic regulator for Irish Water in the provision of its public water and wastewater services. Our primary role in this regard is to protect the interests of customers of Irish Water. There are a number of routes by which we do that, but of primary relevance to today's hearing is that we approve Irish Water's proposed water charges plan. In that regard, we set Irish Water's revenue, both its capital and operational expenditure, basically, the amount Irish Water is allowed to receive or earn for the services that it delivers. In addition, we also approve Irish Water's codes of practice on how it deals with all the users of its system. Finally, of relevance today, perhaps, we also co-operate with the Environmental Protection Agency. In fact, we have a memorandum of understanding in place which sets out our respective regulatory roles from both an environmental and an economic perspective.

Turning to slide 3 of our presentation, we have carried out two revenue controls in respect of Irish Water to date covering two two-year periods. We are in the middle of the second two-year period, which ends at the end of 2018. We review Irish Water's capital investment plan and we look at a number of issues, including its approach to how it balances and prioritises projects, essentially, the order in which the projects will get delivered. We also look at how it manages and governs its projects and at the costing of its submissions. We do an audit of some of its projects to determine that it has, in fact, identified an appropriate solution and that it is appropriately costed in terms of what it will deliver. On that basis, we determine an allowed revenue that Irish Water is permitted to earn for a set of defined targets and outcomes during the same period. This amount of money that we allow it also incorporates an efficiency challenge, both in terms of its operating expenditure and capital expenditure.

I turn to slide 4, specifically of relevance to the infringement. The CER allowed a total capital expenditure for 2017-2018 of €1.152 billion to Irish Water. We noted that, as part of its capital planning process, it had identified all the agglomerations that are the subject of this case as being mandatory. It knew it had to do these. Based on the evidence we received, 29 of those were still requiring work at the end of 2016. Based on the submission from Irish Water in terms of its costings, it has allowed €243 million in 2017 and 2018 as part of an overall €1 billion programme to address the issues in relation to wastewater treatment.

As part of our overall function, we will continue to monitor Irish Water's delivery of this capital programme against its targeted outcomes over the two-year period and beyond. That is all I propose to say at this stage but, obviously, I would be happy to answer any questions members may have.