NI Water has been told it must make dramatic spending cuts over the next three years.

Just weeks after the launch of a six-year plan to improve the quality of water in Northern Ireland's rivers, the Utility Regulator - an independent body which regulates water and sewerage services - has targeted revenue savings of £91m, a reduction of 8% on NI Water's original proposal.

The news comes after 'River Basin Management Plans' was launched by Environment Minister Edwin Poots in late January when he explained that the NI Environment Agency (NIEA) Water Management Unit will "actively work with a range of stakeholders in each river basin area across Northern Ireland to develop focused plans to improve the quality of water".

The Minister explained: "We rely on our water environment not only for drinking water but also recreation, industry, tourism and agriculture. As our waters are home to over 50% of our plants, animals and habitats, the quality is vitally important." he said.

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Now, despite this overall emphasis on 'quality', the regulator has published its ruling on NI Water's business plan for 2010-2013 and said that it supported an investment programme of £564m.

But the determination by the regulator also sets out the spending the firm is allowed to deliver water and sewerage services.

As a result, the subsidy required from Government would be £68m less than originally anticipated by NI Water and the regulator also said that business customer bills "can now be £23m lower than projected by the company".

That means NI Water must 'find' and additional £91m over and above that proposed in its original funding proposals.

Iain Osborne, Utility Regulator Chief Executive, said: "We have set clear targets for NI Water and we will closely monitor its progress."

He said other water companies in the UK "have been subject to a similar regulatory process and they have delivered".

"The targets we have set are challenging but achievable and we look forward to working with the company to ensure they are met," he said.

A NI Water spokesperson said "the company will now examine the proposals in detail and respond in due course".

The spokesperson said the "process has been a complex and very detailed exercise".

"Today's publication of the Regulator's Final Determination is the latest step in the process and an important one."

Last summer, NI Water announced plans to spend another £1.5bn upgrading water and sewage systems over the next eight years, but has been having funding problems as it inherited a significant backlog of underinvestment.

NI Water now has two months to accept the Utility Regulator's final determination or refer it to the Competition Commission.

(BMcC/GK)