In the comments on my piece on Irish Water, Paul Hunt reports back from his attempt to get the costings for water metering etc from the PWC report. This request was refused as it would be “commercially sensitive”.
To cite Paul, this is balderdash.
Irish Water will be 100% state-owned. Citizens of Ireland (of two of which I am the legal guardian) have the right to know what is going on in a company they (will) own.
Ireland is an unwilling party to the Aarhus Convention, which grants access to data except “where such confidentiality [of commercial and industrial information] is protected by law in order to protect a legitimate economic interest”. As Irish Water will be a monopoly, I do not think there is a “legitimate” economic interest in hiding data.
Unfortunately, state-owned companies have made a habit of hiding behind “commercial sensitivity” when there is none.
52 replies on “Commercial sensitivity”
Even if it was released it would only be an estimate (obviously!!!)
But it could reveal how much padding and where, etc….
In my unceasing efforts to highlight the idiocy of constructing a canal to Clones (go to http://irishwaterwayshistory.com and search for “ulster canal” if you’re really interested), I have pointed out that the cost figure usually quoted by governmental proponents, €35 million, has no basis.
I was glad to learn recently that Waterways Ireland, the cross-border body responsible for the canal, now has a more accurate figure, €38 million + VAT, which I am told comes to about €45 million. However, when I asked how the new figure was made up, I was told that that was a matter of commercial confidentiality as Waterways Ireland proposed to go to tender on the matter.
Given that their capital alllocation has been slashed and is entirely inadequate to pay for the canal, I see no prospect of their ever going to tender so I can’t see why the information cannot be released.
Incidentally, FOI requests to the relevant government department were refused on several different grounds: as matters relating to Northern Ireland, under catch-all provisions in Sections 19, 20 and 21 or under Section 46. (I have an appeal in with the Information Commissioner.)
Essentially, there is enough scope iin the legislation to allow access to pretty well any information to be refused, and government seems to take full advantage of that scope. The result, at least in my small area of concern, is that it is impossible to assess the validity of the case put forward by the government. We are expected, I presume, to trust official statements.
Does PWC have any economists ? Might their motive be concern over people looking over their workings ?
It might be worth considering an application under the regulations in Ireland that derive from the Aarhus convention since this information is clearly within scope.
Many thanks for posting on this. Just to be clear, though, while I am interested in all financial and economic aspects of what the Government is proposing for Irish Water, my principal focus is on the proposed options on financial structure and financing as this will impact on the cash flows and revenues required (to be determined by the CEWR) and ultimately on the level of water charges.
Inefficient financing will mean water charges much higher than they need be – in the same way that inefficient financing of the ESB and BGE (in addition to the impact of their integrated structures) means that final prices for electricity and gas are much higher than they need be. These final prices include an ESB (and a BGE) financing tax. This is a regressive tax as those on welfare and low incomes allocate a larger share of their disposable incomes to pay fuel bills than those on higher incomes. It is a deadweight cost and it creates another as the government is compelled to make higher transfer payments to the ‘fuel poor’ to compensate for the imposition of this ESB (and BGE) financing tax.
The primary objective is to ensure that average water charges are as low as possible consistent with the efficient delivery of water and waste water services to the required quality standard. We can then worry about how these charges are structured and the role of meters.
In addition I accept that the high-level financial assessment prepared by PwC – and which the DECLG is refusing to publish – provides only indicative financial projections, but there is no reason why it should not be publicly available as part of this public consultation.
I am surprised you have not figured out how politics in Ireland works. Horror of horrors if state owned monopolies were not able to hide behind protection of commercial interest clauses. Then, the whole world would get to know about the cronyism, nepotism, fraud and corruption. We cannot have that it violates the Celtic code of ethics. What was good enough for out grand parents since 1922 should be good enough for us now. A halfhearted inquiry every quarter century, dragging on for a decade, enriching the well connected, that’s the way to go.
I think the private sector can be just as dumb……..& because there is no integrated planning with anyone who really gives a damn the long term costs of planning mistakes are externalised on the wider community.
I hear a planning application for a 41 Million euro supermarket has gone in for Ballyvolane Cork.
This already has a Dunnes Stores supermarket ! and Blackpool supermarket which has turned the main commercial street there into something akin to Clockwork Orange land is just down the road.
Meanwhile shops are dropping like flys in Corks city centre.
Mahon shopping centre is sucking whatever life is remaining from the place.
My once beautiful city is being hollowed out into a miniature version of the Dublin chaos experiment.
Sometimes one just loses the will to live in this kip.
@ Richard and Paul Hunt
We shouldn’t be surprised. The commercial sensitivity excuse is commonly used in Ireland (and abroad) to hide information that should be in the public domain as Paul argues. An example I am familiar with is the value for money exercises that support the use of public private partnerships. These are never made available and independent scrutiny is therefore impossible. In fact, the Public Accounts Committee has complained that even they cannot access this data. Why? Because it is commercially sensitive!
On a related issue. The planned roll out of domestic water meters is of course the second such roll-out as non-domestic water meters have been installed in recent years. Is anybody aware of any analysis of this roll – out? I ask the question in the context of anecdotal evidence that the rollout was costly, ineffective and even corrupt (e.g. allegations of contractors showing users how to bypass the meters etc). If there were serious problems with the roll-out of non-domestic meters there are obvious implications for the plan to install domestic meters.
@Eoin – good question (r.e. commercial water meters).
Of course group water schemes have also installed meters (I have one). The UK Walker Report gives some details on the cost of different options in the UK – that can be used to judge any proposals against (e.g. €800 per meter seems high).
Too true! Commercial confidentiality is a plague in Irish capital spending policy.
Just look at the disasterous attempts to block cost figures on the proposed Metro lines.
“Just trust us, everyone, it’s a very good deal we’re getting here!”
@BJG, Eoin Reeves, Mickey Hickey,
I can understand the fatalism, but those in officialdom rely on this to avoid scrutiny. It is not that we should mistrust all official staements. We should ‘trust, but verify’. The ability to verify is being denied in this case. Making an issue of this refusal – and the specious grounds being advanced to justify the refusal – might have a salutary impact across the board.
But I can’t achieve anything on my own.
I might be contradicting what I wrote above, but generally official procedures advertised to provide access to information are designed to block it. Even if I were to use this AIE route they promise a decision within a month. And, even if they were to agree to provide the information, it would probably have to be massaged and god knows how long that would take. Submissions to the public consultation must be made by 24 Feb.
@Edgar & Eoin Reeves,
Focussing on meters – or the structure of charges – is playing right in to the Government’s hands. They are straining every sinew to distract attention from the composition of the projected annual costs (and revenues) that will have to be recovered – and the resulting annual average charge. The Government is relying on this interesting aspect of human behaviour that, when it comes to something that everyone has to pay, most people don’t worry too much about how much they will pay, but how this payment relates to what others are paying.
And the whole metering issue is being linked to the creation of jobs. So it doesn’t really matter how much they cost. They’ll create jobs. Now, surely, with unemployment stalking and blighting the land, you’re not against the creation of jobs, are you?
I’m more concerned that we’ll see an Irish Water ‘financing tax’ buried in water charges – in addition to the existing ESB and BGE financing taxes buried in final electricity and gas prices.
But nobody seems interested in this. Except, of course, the DECLG, because they know if they were to publish the high-level assessment prepared by PwC it would be possible to derive a reasonable estimate of the Irish Water financing tax embedded in the average water charge.
I applaud your motives. Any chance you could drop a letter to the IT, Indy, Examiner to get more widespread coverage of this?
I don’ t suppose any of you chaps might be looking in on this blog and care to leak it (pardon the pun) via an appropriate channel that will keep your identity protected?
A letter in the papers? In the vague hope of prompting some public attention and getting some journos on the case? Are you really a PR Guy? 🙂
Are you seriously expecting some journos, fed on a diet of pre-packaged press releases and official statements, swallowing and regurgitating the spin from officialdom and adhering to an editorial line, to actually try to get their heads around this and to start asking awkward questions? Do you mean some serious investigative journalism? Putting in some effort that is genuinely in the public interest and discharging one of the primary responsibiities of a free press? Are you mad?
And please leave PwC alone. They are totally innocent in this matter – and shouldn’t be encouraged, or expected, to breach the contractual terms of their engagement. The beef is with the DECLG – and with them alone.
Off topic – but since Richard T is a energy economist I will keep banging on about this.
I think the sales data for vehicles in 2011 as always is very interesting.
It charts the dynamics of both credit (oil brought obtained from the future) & its interaction with the present price / supply.
If you look at the period 1988 -1990 , you can observe the flow of credit in the real world pretty closely.
1988 : new private car sales :61,888 / 1990 (peak ) : 83,420
1988 : new goods vehicles :14,557 / 1990 : 23,979
1988 : total new vehicles :82,285 / 1990 :114,870
1988 : second hand cars : 6,238 / 1990 : 22,429
1988 : total all classes : 94,509 / 1990 :146,709.
What follows is the first Gulf war oil blip and then the european monetory crisis of the early 1990s.
1993(through) : new private car sales : 60,792
1993 : new goods vehicles : 9,887
1993 : second hand cars : 35,889 (it raised to 40,000ish for the remaining 1990s until declining dramatically in the early naughties before again rising in the late naughties
1993 : total all classes : 111,853.
Well we all know what happened when credit was at its most intense for consumer durables such as cars in the year 2000……..
2000 : new private cars : 225,269
2000 : new goods vehicles : 33,606
2000 : second hand cars : 24,003
2000 : total all classes : 314,292
Anyway ,we are where we are……so where exactly are we ?
The 2011 figures are very similar to the 1995 figures – the year the boom got boomier in my little head at least and so therefore I don’t think that year was sustainable although the cars bought in 2011 are more fuel efficient
1995 : new private cars : 82,730 / 2011 : 86,932
1995 : new goods vehicles : 13,790 / 2011 : 11,188
1995 : second hand cars : 41,865 / 2011 : 41,149
1995 :total all classes : 156,598 / 2011 : 160 ,777
What disappoints me about these debates is that it always comes down to who gets the scraps – while that is always a very important topic , just as important is the total final energy / wealth we can all use together.
Its pretty obvious that Ireland is a very exposed petro economy both in its internal energy systems and also its dependence on exports.
France however has some insulation from global Natural gas shocks via its 200,000+ strong nuclear utility sector which spreads domestic wealth into the economy in a much more sustained and less volatile manner which makes long term planning a little easier.
@Paul Hunt: perhaps PR Guy meant to direct you to the Leader of His Excellency’s Official Opposition: http://www.rte.ie/radio1/liveline/
@ Richard Tol
Unfortunately, state-owned companies have made a habit of hiding behind “commercial sensitivity” when there is none.
And, of course, private-owned companies would never dream of such a thing.
The state guarantee of employment for the public service and the secrecy that protects insiders in the €15bn public procurement system dates from the reign of Queen Victoria.
In recent years the Empire Day holiday has been on the agenda of the crew of the slow boat to China.
The conservative instinct is still very strong (note how lawyers on the left and right of the spectrum over the decades never saw reason for reform of the archaic British system.)
I wonder if the problem is more than just conservatism and self-interest.
We appear to have a big share of both dim and timid people in the country.
We have had ideas competitions but it would be strange to find the people who could implement change propose ideas that would gain public attention.
@ Aidan R
Of course, private sector organisations behave as public ones do.
Big law firms tendering for public business do not compete on prine because they don’t have to.
Units of Big 4 accounting firms overseas publish some annual financial information but the Irish ones provide very little.
Your reaction is typical of the defensive ‘whataboutery’ and the result: a state of chassis.
‘Its pretty obvious that Ireland is a very exposed petro economy both in its internal energy systems and also its dependence on exports.
France however has some insulation from global Natural gas shocks via its 200,000+ strong nuclear utility sector which spreads domestic wealth into the economy in a much more sustained and less volatile manner which makes long term planning a little easier’
I’ve no doubt you’re aware that pricing on US Natural Gas contracts have hit their lowest level in over a decade today. The enormous impact shale gas technology is going to have on the world economy partly explains in my mind a stabilisation in the US economy over the past 6 months or so.
The folks in the US have suddenly awoken to the fact that the prospect of cheap energy (on a relative basis, ex envirnomental concerns) is perhaps in the here and now and I read of coal, wind and nuclear energy sites and projects being mothballed in the US as the price of Nat Gas (U.S.A. Nat Gas for now) continues its collapse.
Being long wind and nuclear energy may not be the way to go (ex all the environmental issues) as I see all manner of Gas related securities hit lower lows almost on a daily basis. The market participants, like them or loathe them, believe something pretty fundamental is up with Natural Gas. Watch this space.
Private companies provide substantial detail to their owners.
@ Michael Hennigan
@ Michael H
Your reaction is typical of the defensive ‘whataboutery’ and the result: a state of chassis.
No, I simply do not share the obsession and fixed categorical assumptions of many economists that public-state = bad and private-market = good.
In terms of the substance of water metering, in the absence of a proper financing structure those who can least afford to pay for water charges will end up paying proportionality more relative to their income. So, Paul Hunt should be commended for his investigative work.
@ Richard Tol
“Private companies provide substantial details to their owners”
In theory private companies provide information to their shareholders. But anyone who has worked in a private company with access to senior management will know that information is always withheld from shareholders (not to mention the state, regulators, citizens and employees – I mean, just think about the financial sector).
Yes I am aware of the global gas glut – this is similar in some ways to the global oil glut of the 80s.
Because the global banking system is leveraged up to it tits this stored energy unfortunetly must always flow into further unsustainable day to day consumption & consumption of consumer durables.
It will lead to another malinvestment episode & collapse just as night follows day.
However they might get 10 years out of it this, which is one of the reasons why I am turning into a short run $ bull.
Its all very sad though.
Even a pre Basel 8 to 1 money to credit leverage ratio would prevent the worst of the forthcoming malinvestment.
Investing this tempory energy surplus into monetory batteries otherwise known as fission reactors via money rather then credit investment would be the smart thing to do.
But I guess people will never learn – the world is full of headbangers who like the pain of it all or maybe they get short term pain relief from all those credit tablets they keep swallowing.
Still I blame the drug dealers – the addicts are just stupid.
Sorry – its not a global gas glut yet , just American in the main.
Our NG imports priced in Euro are set to reach record levels again this year.
Just saying like.
If you look at the most recent oil / NG imports data……..
Jan – Oct 2010 : petroluem imports : 3502 million Euro (exports 711)
NG : 859 million Euro (not significant)
Jan – Oct 2010 : petroleum imports : 4379 million Euro (exports 1034)
NG : 1100 million Euro(not significant)
Maybe the mild Winter may help the situation though.
You are correct but I suspect that the technology (its coming to Leitrim for instance) may have a more profound influence than you potentially give credit for. The 10 year window looks at odds with what the market is pricing.
Take for instance some of the leveraged gas commodity funds which were trading north of $80 in the early part of 2008 – these same funds are now priced at less than 10c (not a mis print) that’s a loss of 99.9%. Whilst I respect its extremely difficult to predict future demand and supply in anything a loss of 99% for a commodity based fund which you suggest has a 10 year window of opportunity does not tally.
I believe the market is suggesting the shale gas technology travels and where that journey ends could more than interesting.
Sorry the bottom should read Jan – Oct 2011.
Yeah well I have to admit 10 years was a guess on my part – but from what heard fracking is all wham bam thank you Maam.
Its all sounds very desperate to me , this trollop hunting – its cheaper then getting married but either way you are going to end up poorer in the end.
@YoB: Fracking in Leitrim? Seriously? That’s utterly insane. That’s the head of Shannon basin. What manner of utter fools would allow this. We use the gas – its gone! What’s left? A completely shattered and heavily polluted acquifer. John Bryan might just be interested if he figures out that a lot of productive land will be rendered sterile. The EU will compo the farmers for that? As Bailey said to Gogarty, “They will like f**c!”
NG is cheap – for now. NG is used to generate electricity. F**k all use for aviation and long-haul road transport. Reprise Albert Bartlett and his exponentials. Use increases fast (low price and availability). Not long before price follows. Very steep decline rates for NG production. Also, and this is the kicker. NG is a very tricky chemical to handle in bulk: very energy intensive.
Go easy on PwC — they did such a good job reviewing the assets of de banx.
Leitrim and fracking is coming your way.
Despite what one may believe the transpotation of LNG or liquiified natural gas is actually a relatively safe pastime.
The problem is that European Gas is very expensive because its linked to oil whereas US Gas is not a product that’s exported outside the US and we get this very odd situation with two very different prices for exactly the same product on either side of the Atlantic and guess what the Russians make out like bandits.
The big issue I’d have with the plan are the statements about current public sector staff transferring to IW
If a proper arm’s length company was setting up then, there’d be an open recruiting to IW and redundancies from the present (waste) water services sections of local authorities; but like the corpo in Dublin didn’t make any of their staff from bin collection redundant, I can’t see this happening.
At least there’s no plans (yet0 to give 15% to the staff there.
There seems to be a big amalgamation of capital and current costs of water services provision, in the govt. docs; I would have thought planning fees were in place to cover these.
I haven’t read through all the posts above carefully so I may have missed some important points.
However, I just want to note that the Irish Sunday Mail of 8/1/2012 claimed to have sight of a report entitled ‘Delivering Ireland’s Water Services for the 21st Century ‘ compiled by the Irish Academy of Engineering, Engineering Ireland and representatives from the Office of Public Works and Dublin City Council.
It seems this report formed the basis of the subsequent PWC report.
It stated that the installation of water meters in households throughout the country would cost 1 billion euro rather than the 500m euro figure that the government estimates.
Thread here on pw.org:
@YoB: “Despite what one may believe the transpotation of LNG or liquiified natural gas is actually a relatively safe pastime.”
Yes indeed, but life being what it is, and the transport being a bit ‘high’ in the pressure area and a bit ‘low’ in the temperature area. Not much room for mistakes or failure. There will be one. Might change folks ideas about NG. Know what a BLEVE is? What it will do?
Hope your continuously right.
Re: Wrt Fracking; is there no end to greed, stupidity and arrogance?
Thanks for hat-tip.
My understanding (open to correction) is that LNG is not transported in a pressureised container.
re the greed etc – yeep totally agree.
I’m not denying that the proposed policy on meters and the costs of these meters (including installation, maintenance, interogation, assembly and precessing of data, issuing of bills, etc.) are not important, but the primary focus should be on securing efficient operation and on efficient financing of investment in these long-lived, specific assets. Metering imposes another layer of costs on top of this.
We should always beware when government is encouraging a public fixation on specific issues. They have been extremely successful in directing public attention to the structure of water charges and meters. This has allowed them to evade any public consideration of the efficient provision of existing services and the efficient financing of what will be a huge programme of investment. Indeed, they have refused, and continue to refuse, to publish the high level assessment conducted for them by PwC – even though a period for public submissions on its proposals is open until 24 Feb.
And as for meters, this is being covered with the sanctifying mantle of jobs, jobs, jobs. There will be no consideration of the costs the installation and operation of these meters will impose on households; the only metric that will be considered is the number of jobs that will be created.
@YoB: Thanks for that.
NG is – methane? But NG could also refer to ethane, propane and butanes. Those these latter three (aka: liquid petroleum gas, LPG) are easily liquified by lowish pressure. Methane is an entirely different animal (chemical one).
Morgan Downey (Oil 101: p 170-179) should be consulted. Methane is the lowest energy density member of the family (above). Excellent fuel. But a nasty chemical to handle, store and transport. NG production is not seasonal (well, approx), but usage is. Hence storage is a major economic matter. Every sentence about NG transport and storage contains the word ‘expensive’. You can take this to mean lots of money and energy costs.
LNG alla wiki
@ BigEnd: Thanks for that. Hello!, again. Best wishes for New Year, and all!
That little ‘firecracker’ incident in Whiddy? Methinks that was NG residues. Failures are – very fortunately, few. But increased use brings increased risk. And that stuff is sure hazardous! Rosaries all ’round.
Interestingly in the wiki article it says that “In its liquid state, LNG is not explosive and can not burn” but it also gives a history of accidents involving LNG.
Some interesting bits in there also on pricing and relativity to oil.
@BigEnd: Now with a moniker like that … …
Yeah, liquids don’t ‘burn’ its their vapours that are flammable. The Flash Point is the critical attribute wrt flammability. Air-fuel mix is v-important. Get it right and you get a goodly BOOM!. Most vapours ‘creep’. Very trecherous.
I had a nasty experience with petrol vapour. Accidental spillage. 250 ml approx. Warm day. I immediately retired to what I considered to be a same distance – 12 m. Bad decision. The vapour explosion gave me a flash burn and singed my eyebrows! You mess with volatile liquids at you peril. Liquiduified gas, rapidly warming up, is a real baddy. Flixboro!
It would be great if we could have a meter on threads to measure how much they drift off-topic!
I’d be a lot happier if ye were all badgering the DECLG to release the high-level assessment performed by PwC so that informed submissions might be made in this so-called public consultation before the deadline of 24 Feb.
@ Paul Hunt
Any particular email address for DECLG we should direct our request to?
@PH: Shades of Hughie Green’s Clapometer! A Driftometer!
They have dug in their heels, but people are entitled to some indication of the future level of charges and how they will be calculated. The objective is to get this buried in the CER (or the CEWR as it will become) as quickly as possible. There could easily be a difference of €100/year/household in the avergae charge depending on the approach used to finance investment. On the basis of the abysmally small amount of data presented in the PwC report – and other bits and pieces – plus some heroic assumptions, I’m having a go at estimating the projected revenue requirements under different financing options.
it will be easily dismissed by the official players because of the assumptions I’ll be forced to use to plug the daps in the data and information available.
It’s the usual Kafkaesque Catch 22 with ‘Official Ireland’.
Official Ireland: “Mr. Hunt, your analysis is flawed, it’s based on inaccurate data and faulty assumptions. The results are simply wrong and warrant no futher consideration.”
Me: “Please publish the high-level analysis you conducted so that I can develop my analysis on agreed data and assumptions.”
OI: “The high level assessment includes aspects that are considered commercially sensitive. If this were published it could prejudice the future competitive position of Irish Water.”
Me: This is balderdash. Irish Water will be a monopoly in terms of supply, a monopsony in terms of demand for external materials and services and a fully regulated public utility offering copper-bottomed assurances to prospective providers of finance. There is no competitive position anywhere to be prejudiced.”
OI: We have made a decision on this matter and we will not review this decision.
All of this might seem small beer compared to the amounts being paid on these darned Anglo promissory notes, but this is only one molehill. And as John FitzGerald of the ESRI observed in another context, many molehills make a mountain.
@PH: Note the web page. Have printed the report.
What am I to look for in this report? How should I frame a meaningful critique? ie: are there specific areas that I should concentrate on?
Every input to the Oireachtas Committee on Water by professional bodies was against the introduction of water metering at this stage. Water costs are about 70% for the pipe network and 30% for the provision of water itself, with most of this 30% being capital. So saving water doesn’t save costs – it merely reallocates costs to others. In electricity, 35% of the costs are the networks and the remainder for the fuel used to generate electricity, so saving electricity actually reduces fuel costs and is worthwhile.
PWC did not look at the justification for Metering because this was excluded in the Terms of Reference, but they did cover themselves by saying it would be very costly and complex ‘ a brave decision Minister’!
@Brian Wood Snr.,
Most of the report is ‘management consultant speak’ which is fine given that the main tasks of the asssignment were to to justify a decision already made and to outline an impementation strategy. However, the ToR also required an assessment of:
“funding requirements of a new company, including the scope for accessing private finance, valuation of existing water services infrastructure and any further options of relevance to revenue generation.”
It is this high level assessment which the DECLG refuses to publish and what is presented on pp115 and 116 provide absolutely nothing of any substance to allow an interested citizen to form a view on these issues. In the absence of this assessment the public consultation process is effectively null and void. Citizens, once again, are being asked to buy a pig in a poke. It’s the usual “trust us, we’ll do right by you on this”. Voters hsould have learned from bitter expereince that this is just not good enough.
The message to government should be that we’re prepared to trust it, but that we need to verify what they are asserting. They are obliged to publish this high-level financial assessment and have no grounds for refusing to do so.
Note IT editorial today.
I have pulled together a proforma for discussion (one i had prepared earlier for something else) and posted here:
The answer came out at €616 per average household.
Question I had is how are the 11BN of assets transferred (and associated liabilities)? And how is the regulatory capital value first established?
Looks interesting. Can you post it as a spreadsheet. I’ve extracted the very limited data from the PwC report and I’m having a go at the regulatory value as per the CER – and then the right way!
Try this (you will need Dropbox)
I am sure that there are mistakes but that it why it is a proforma for discussion!
Many thanks. I’m focusing on the asset valuation, capital charges etc, a la the CER (or soon to be CEWR). The number crunching is taking a bit longer than I anticipated.