CER Consultation on the Irish Water First Fix Policy DOCUMENT TYPE: REFERENCE: DATE PUBLISHED: CLOSING DATE: RESPONSES TO: Consultation Paper CER/15/074 15 April 2015 15 May 2015 Clare Mulcahy [email protected] The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24. www.cer.ie CER – Information Page Abstract: The CER is consulting on Irish Water’s First Fix Leak Repair Scheme. This proposed Scheme is to address the leakage on the customer supply pipes in accordance with the Government’s announcement in May 2014 that a free First Fix Leak Repair Scheme would be introduced by Irish Water. Irish Water has developed the proposals as to the scope and implementation of this Scheme and Irish Water’s proposed First Fix Leak Repair Scheme is published alongside this consultation paper. The CER has developed this consultation document to outline our proposed thinking on Irish Water’s proposal. The CER’s intention is to gather wider input through this consultation process to inform the development of its decision on Irish Water’s First Fix Leak Repair Scheme. Target Audience: All interested parties including Irish Water customers - both in terms of water supply and wastewater services, consumer representative organisations, and the water industry. Related Documents: CER/15/075 Irish Water First Fix Leak Repair Scheme for Domestic Customers Submission to the CER CER/15/005 Water Charges Plan Decision Paper Responses to this consultation should be returned by email, post or fax and marked with reference CER/15/074 for the attention of Clare Mulcahy, [email protected]. Postal submissions can be sent to the following address: The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24. Fax: + 353 4000850 The CER intends to publish all submissions received. Respondents who do not wish part of their submission to be published should mark this area clearly and separately or enclose it in an Appendix, stating the rationale for not publishing this part of their comments. Executive Summary Significant underinvestment in the water sector in Ireland over several decades has meant that much of the country’s water infrastructure has fallen into disrepair. It has been estimated that up to 49% of water supplied in Ireland is lost in the system through leakages. Irish Water has proposed that if a customer qualifies for the First Fix Leak Repair Scheme then the repair on their leak will be fixed for free. Under Section 54 of the Water Services Act 2007 the homeowner is responsible for addressing leaks that occur within the bounds of their property. Under the First Fix Leak Repair Scheme, Irish Water will offer a free fix where the leak is identified on the External Supply Pipe between the point of entry to the house and the property boundary. The Scheme will not apply to leaks within a house. Irish Water will use metering data to identify where the most significant leaks are located and the meters will trigger a Constant Flow Alarm. Customers who have a water flow that triggers this alarm will receive a Notification Letter on a phased basis. Irish Water has outlined the customer process within Section 5 of the attached proposed First Fix Leak Repair Scheme. 1 The proposed qualifying criteria are as follows: the customer is a domestic customer; the customer validated their details with IW; the customer is the owner or has the consent of the owner; the customer has a meter installed; a constant flow alarm set at a level of 6 litres per hour over a 48 hour period; a leak is located on the External Supply Pipe; the customer has an Internal Stop Valve; the customer is not a mixed use customer. Irish Water will be required to report to the CER on a quarterly basis in relation the number of notifications issued, responses received and investigations and repairs completed by region and local authority area. In addition, a detailed breakdown of the overall scheme expenditure and water savings achieved will be reported on a quarterly basis to the CER for review and approval of efficiently incurred costs. The CER is consulting on the attached Irish Water First Fix Leak Repair Scheme for Domestic Customers and is interested in receiving submissions on the policy and processes in Irish Water’s proposed Scheme. 1 Irish Water First Fix Leak Repair Scheme for Domestic Customers (CER/15/075) 3 Table of Contents Executive Summary ..........................................................................................................................3 1. Introduction ..............................................................................................................................5 1.1 The Commission for Energy Regulation ...........................................................................5 1.2 Purpose of this paper .......................................................................................................5 1.3 Background Information...................................................................................................5 1.4 Structure of this paper .....................................................................................................6 1.5 Responding to this paper..................................................................................................6 2. Irish Water’s Proposed First Fix Leak Repair Scheme...............................................................7 2.1 Introduction ......................................................................................................................7 2.2 Best Practice in the UK and the Pilot Scheme ..................................................................7 2.3 First Fix Leak Repair Scheme Objectives ..........................................................................8 2.4 Notification: Constant Flow Alarm and Phasing ...............................................................9 2.5 Eligibility ........................................................................................................................ 10 2.6 Leak Investigation .......................................................................................................... 12 2.7 Leak Repairs ................................................................................................................... 13 2.8 Resources, Costs and Reporting to the CER .................................................................. 15 3. Next Steps .............................................................................................................................. 16 Appendix A: Irish Water First Fix Leak Repair Scheme for Domestic Water Customers Submission to the CER (CER/15/075) – attached separately. 1. Introduction 1.1 The Commission for Energy Regulation The Commission for Energy Regulation (CER) is Ireland’s independent energy and water regulator. The CER was established in 1999 and now has a wide range of economic, customer protection and safety responsibilities in energy. The CER is also the regulator of Ireland’s public water and wastewater system. In 2014 the CER was appointed as Ireland's economic regulator of the Irish public water and wastewater sector. The CER’s role is to protect the interests of water customers, ensure water services are delivered in a safe, secure and sustainable manner and that Irish Water operates in an economic and efficient manner. Further information on the CER’s role and relevant legislation can be found on the CER’s website at www.cer.ie. 1.2 Purpose of this paper The purpose of this paper is to seek the view of the public and key stakeholders on Irish Water’s submission on Irish Water’s First Fix Leak Repair Scheme. This submission sets out the processes and criteria Irish Water proposes to employ for implementing a First Fix Leak Repair Scheme. In order to make an informed and impartial decision on this topic, the CER’s intention is to obtain comments from the water industry, members of the public, customers and all interested parties. The CER commits to considering all views equally and affording each respondent the opportunity to clarify any issue raised in this paper. 1.3 Background Information The Government announced on 6th May 20142 a funding allocation of €51 million for a First Fix Leak Repair Scheme for households to be operated by Irish Water. This was to address excessive leakage in the system and to assist in water conservation. .Irish Water has made a submission to the CER on the principles of the First Fix Scheme and the CER is now consulting on the proposed Scheme. Customers who qualify under the Scheme will have a free first fix. The CER views this as an enduring scheme to the extent that Irish Water demonstrates to the CER on an ongoing basis the cost effectiveness and benefits of the Scheme. 2 http://www.environ.ie/en/Environment/Water/WaterServices/News/MainBody,37946,en.htm 5 1.4 Structure of this paper This paper is structured in the following manner: Sections 2 outlines Irish Water’s proposal regarding the introduction of a First Fix Leak Repair Scheme; Section 3 outlines the CER’s proposed timetable for this consultation and for the delivery of a decision. 1.5 Responding to this paper Interested parties are invited to comment on the issues raised in this paper by close of business on 15 May 2015. Responses may be published in full on the CER’s website, therefore respondents should highlight if they wish their response to be kept confidential. Please note that there is a list of direct questions related to the proposals in this document. To aid regulatory transparency and assist in the delivery of an efficient consultative and decision making process, the CER asks respondents to address these questions directly in their responses. Although, comments put forward that are outside of these specific questions are also welcomed. Responses and submissions to this paper should be marked with reference CER/15/074 as a response to the Irish Water First Fix Leak Repair Scheme and sent to: Clare Mulcahy The Water Team Commission for Energy Regulation The Exchange Belgard Square North Tallaght Dublin 24 Email: [email protected] 6 2. Irish Water’s Proposed First Fix Leak Repair Scheme 2.1 Introduction Irish Water is introducing a First Fix Leak Repair Scheme to address the issue of leakage in the system by offering a First Fix Leak Repair Scheme to fix leaks on the customer’s water supply pipe. Significant underinvestment in the water sector in Ireland over several decades has meant that much of the country’s water infrastructure has fallen into disrepair. It has been estimated that up to 49% of water supplied in Ireland is lost in the system through leakages. The introduction of a free first fix is intended to contribute to reducing the leakage in the existing water network. Irish Water has outlined in their document entitled “Irish Water First Fix Leak Repair Scheme (CER/15/075)” the proposed policy and processes to implement the scheme. The aim of the Irish Water document is to outline to the CER the proposed details for implementing the First Fix Leak Repair Scheme, and the proposed processes for availing of it. The data gathered from Irish Water’s domestic metering programme and the Pilot Scheme undertaken by Irish Water has informed the development of their proposed First Fix Leak Repair Scheme. The CER in its role as approving Irish Water’s efficiently-incurred costs, is consulting on the policy and processes underpinning the proposed scheme in the adjoining document and will issue a Decision on the Scheme following this public consultation. 2.2 Best Practice in the UK and the Pilot Scheme In advance of developing the First Fix Leak Repair Scheme, Irish Water undertook a review of Best Practice in the UK and a Pilot Scheme to inform their submission on their proposed First Fix Leak Repair Scheme. The Pilot Scheme was undertaken to help design the Irish Water Scheme and the findings are outlined in Appendix 23 of Irish Water’s First Fix Leak Repair Scheme document. The key points arising from the Pilot Scheme4 are outlined by Irish Water as follows: The pilot scheme achieved good customer response rates of 82%, indicating that there would be strong customer participation in a national customer side leak repair scheme. An accessible Internal Stop Valve is required to avail of the First Fix Leak Repair Scheme. 3 Appendix 2: First Fix Leak Pilot Scheme Report in Irish Water First Fix Leak Repair Scheme (CER/15/075) Appendix 2: First Fix Leak Repair Pilot Scheme Report in Irish Water First Fix Leak Repair Scheme (CER/15/075). 4 7 IW pilot scheme indicated that 63% of leaks identified on customer properties occurred within the house. 37% of leaks on customer properties were external to the house – these customers were offered a free repair. It is estimated that 795m3/day of wasted water will be saved through repairs carried out under the pilot scheme. A potential further saving of 530m3/day could be made if customers address the internal leaks highlighted be the pilot scheme. The main finding of this Pilot Scheme undertaken by Irish Water was that a customer would need an Internal Stop Valve to avail of the First Fix Leak Repair Scheme. An Internal Stop Valve is necessary in order for Irish Water to shut off supply from the mains and observing the meter flow rate which will indicate the source of the leak as on the External Supply Pipe. Without an Internal Stop Valve this flow cannot be definitively attributed to a leak on the External Supply Pipe. Therefore Irish Water has included the requirement to have an Internal Stop Valve as a criterion to be eligible for inclusion in the First Fix Scheme. Other findings included a customer check procedure and Irish Water also learnt the average time taken to complete leak investigations thereby informing scheduling and resource planning. In the UK recently an increasing number of utilities have moved towards providing a subsidy towards replacements as this reduces their operational responsibilities and cost exposure. Information provided to IW by number of UK utilities suggests that the transition to a subsidy based model is only possible once the most significant leaks have been addressed and an approved register of suppliers is in place. Therefore Irish Water has proposed a free first fix leak repair model where pipe replacement is viewed as a more efficient model. 2.3 First Fix Leak Repair Scheme Objectives Irish Water has identified the following as the objectives for the First Fix Leak Repair Scheme5: Improve water conservation through increased public awareness of the existence of customer side leaks; Reduce water lost through customer side leakage through the offer of a free repair for leaks on External Supply Pipes to eligible customers; Develop an efficient data driven approach to the identification and prioritisation of leaks based upon water volumes; and Ensure the efficient operation of the scheme to minimise inconvenience to customers and to maximise the return on investment in the scheme. 5 Section 3.1 First Fix Leak Repair Scheme Objectives in Irish Water First Fix Leak Repair Scheme (CER/15/075) 8 The CER’s view is that Irish Water’s list of objectives reflects the principles which underpin the objectives of a First Fix Scheme. 2.4 Notification: Constant Flow Alarm and Phasing Irish Water has proposed to use meter read data to identify the most significant leaks for customers. Customers must have a meter in order for Irish Water to be alerted that there is a suspected leak in the property. A constant flow alarm is set to trigger when a constant flow of 6 litres per hour over a 48 period is reached and this indicates to Irish Water that there is a suspected leak. Customers who have a current Constant Flow Alarm activated will receive a Constant Flow Notification Letter from Irish Water. These letters will be issued on a phased basis and an explanation of the proposed process is set out in Section 3.2.2 of Irish Water’s First Fix Leak Repair Scheme Submission to the CER (CER/15/075). The CER is seeking views on what appropriate communication should be given to the customer during this interim period and how long this period should be. This is described as the Notification Stage in Irish Water’s proposal. At the Notification Stage, Irish Water proposes to write to customers on a phased basis so that only customers who could be scheduled within the proposed timeframe for a leak investigation/repair are sent a Customer Notification Letter. Irish Water intends to exclude from the scheme customers that have internal leaks in their property by providing an advice booklet detailing checks that can be done to help identify common sources of wastage. The customer is advised to contact Irish Water when they receive the Constant Flow Notification Letter. It is important to note that Irish Water gives 14 days to respond to the Customer Notification Letter. If the customer does not contact Irish Water having received two consecutive notification letters, Irish Water will deem the property no longer eligible for inclusion in the First Fix Leak Repair Scheme. The CER notes that a change of ownership process is not addressed in the Irish Water submission regarding Customer Notification Letters. The CER is seeking views if there should be a process whereby a new owner is not excluded from the Scheme as the previous owner had not responded to the Customer Notification Letter. Irish Water will use the principle of prioritising the largest leaks first and clustering on a regional basis. There are eight regions which are further subdivided into local authority areas. Customer notification letters will only be sent once this process has been completed. It is the CER’s view that Irish Water should prioritise and phase the leak repair work in the most cost efficient manner. This would to reduce the level of leakage in the system and result in an overall benefit of reducing the cost of water supply in the future. 9 Questions: 1. Do you consider the Customer Notification Letter sufficiently clear and should these letters be identified / branded as First Fix Scheme Leak Repair Scheme letters? 2. Is there an interim process that Irish Water should propose during the interim period where a customer is waiting to receive a Customer Notification Letter? What is an acceptable time between a leak alarm and scheduling receipt of a Customer Notification Letter? 3. Do you think that the Irish Water’s proposed principles on prioritisation and clustering of leaks is reasonable prior to send out the Customer Notification Letters? 4. Should there be a process for new owners to ensure that they are not excluded from the First Fix Leak Repair Scheme if the previous owner has been issued with the Customer Notification Letter? 5. Does Irish Water sufficiently address leaks that cannot be identified if there is no meter and the customer cannot have a meter installed? 2.5 Eligibility Irish Water’s proposed qualifying criteria can be summarised as follows: the customer is a domestic customer; the customer validated their details with IW; the customer is the owner or has the consent of the owner; the customer has a meter installed; a constant flow alarm set at a level of 6 litres per hour over a 48 hour period; a leak is located on the External Supply Pipe; the customer has an Internal Stop Valve; the customer is not a mixed use customer. The CER notes that Irish Water has not included in their submission a criterion that a customer must have paid their bill to qualify for the scheme. Irish Water has identified certain criteria that must be met in order for a customer to be eligible for the First Fix Leak Repair Scheme. There are some customers that will fall outside the First Fix Leak Repair Scheme and therefore are not eligible for a free first fix. The rationale for excluding 10 certain types of customers is explained in Section 3.2.3 and Section 3.2.4 of the Irish Water proposal6. These eligibility criteria are summarised as follows in the Irish Water proposal7 as follows: Metered Domestic Customers that have: • A Constant Flow Alarm; • An accessible Internal Stop Valve; • Validated their details with IW. Ineligible Customers: • Non-Domestic customers; • Mixed Use customers; • Unmetered Domestic customers. When a customer contacts Irish Water to schedule a leak investigation, it is proposed that the customer must validate with Irish Water if they have not already done so. Where a customer does not have a meter and reports a visible surface leak to a customer, Irish water propose a process where they will assess if the property is suitable for a meter. This process is explained in the Irish Water submission in Section 3.2.3.8 and states that where a domestic Customer is not eligible for meter installation but has a visible surface leak this will be referred to Irish Water’s operations for assessment of the leak. Question: 6. Do you consider the eligibility criteria to be reasonable and comprehensive? 7. Do you consider that customers who do not pay their Irish Water bill should still be eligible for the First Fix Leak Repair Scheme? 8. How should Irish Water deal with a visible surface leak where a customer does not have a meter installed? Is Irish Water’s proposal of assessment sufficient? 6 Irish Water First Fix Leak Repair Scheme (CER/15/075) Section 3.2.3 of Irish Water First Fix Leak Repair Scheme (CER/15/075) 8 Customer Eligibility: Leak Investigation in Irish Water First Fix Leak Repair Scheme (CER/15/075) for Domestic Customers 7 11 2.6 Leak Investigation Irish Water also propose that where a customer contacts Irish Water directly the property will be checked against meter read data to determine if there is an active Constant Flow Alarm. The customer will only be issued with a Constant Flow Notification Letter when they are included in the “cluster” of leak investigations to be carried out. This will result in some customers waiting to receive a Customer Notification Letter so that a leak investigation can be carried out. Irish Water proposes that if a customer cannot identify an internal source of leakage they should contact Irish Water to arrange an onsite leak investigation. Irish Water propose to conduct an on-site non-invasive investigation (i.e. no construction works) to classify the nature of the leak and whether it can be repaired within the scope of the ‘first fix’ scheme. Irish Water has proposed that it will contact the customer within 10 business days of a customer requesting a leak investigation following receipt of a Customer Notification Letter At this stage, customer cooperation and access for Irish Water approved technical staff will be necessary to verify an identifiable leak to the private customer service pipe to the house. The verification process will entail: Finding an Internal Stop Valve at the entry to the premises (usually on the riser pipe to the kitchen sink) and shutting-off, while observing the meter flow-rate to ascertain supply pipe loss; Checking for any evidence of shared services; Where a leak is confirmed, further tests may be carried out to check for flow noise (acoustic) and to assist in more accurate location of the leak. Customers will be required to facilitate a leak investigation visit during normal business hours (Working Days 7.30am to 6.30pm) to confirm the existence and location of any leak. If after 6 months, having made reasonable efforts, an investigation cannot be conducted (e.g. failed appointments or lack of customer engagement) then the customer will be removed from the First Fix Leak Repair Scheme. Irish Water Key Points: A leak investigation will be offered free of charge to customers. This will be offered within 10 business days of receipt by IW of their response to a Constant Flow Notification letter. Customers (or a nominated representative) must be present during a leak investigation to facilitate access to the property; Leak investigation techniques will be used to determine whether a leak can be located on the customer’s External Supply Pipe (qualifying leak); No excavations will occur during the investigation stage; 12 Repair of all leaks internal to the house remains the responsibility of the customer. Question: 9. Are Irish Water’s proposals regarding Leak Investigation process and timeline fair and reasonable? 2.7 Leak Repairs In Section 3.2.4 of Irish Water’s submission, Irish Water identifies the scope of repairs that will be undertaken. There is a limit to repairing leaks that occur between the Dwelling and Property boundary as outlined in the diagram under Section 3.2.4.9 The key points identified and proposed by Irish Water are as follows10: The First Fix Leak Repair scheme will be operated using meter read data to seek to identify the source of potential leaks. A Constant Flow Alarm reading will be the trigger in the First Fix Leak Repair scheme process. Customers for whom a Constant Flow Alarm reading is registered will be issued with a Constant Flow Notification letter and then (if they request it by contacting the IW call centre as set out in the Constant Flow Notification letter) a free leak investigation. Customers require an accessible Internal Stop Valve to participate in the First Fix Leak Repair scheme. Any Customers who are not also the Owner of the Property will need to have obtained the consent of the Owner of the Property in order to avail of a repair under the First Fix Leak Repair scheme (it is expected that an initial leak investigation will take place can be carried out without the need to obtain Owner consent). Customers also need to have validated their details with Irish Water. Where the need for a repair is identified under the First Fix Leak Repair scheme, this repair will be offered in respect of any applicable Property free of charge (subject to acceptance of Terms and Conditions). Repairs will only be carried on the External Supply Pipe, for internal leaks the Customer should contact a plumber (or Owner if appropriate). If an un-metered domestic Customer reports a visible surface leak to IW they will be scheduled for a Meter installation, if the property is deemed suitable for metering. Following the meter installation, the Customer may then become eligible for inclusion in the First Fix Leak Repair scheme, subject to the Terms and Conditions. 9 Section 3.2.4 Customer Eligibility: Repairs in Irish Water First Fix Leak Repair Scheme for Domestic Customers (CER/15/075) 10 Section 3.2.4 Customer Eligibility: Repairs in Irish Water First Fix Leak Repair Scheme for Domestic Customers (CER/15/075) 13 Non-domestic customers and mixed use customers will not be included in the First Fix Leak Repair scheme. Irish Water proposes that leaks are limited to the External Supply Pipe as represented in their diagram in Section 3.2.4. This is consistent with Repair Schemes in the UK and regarded as the most practical approach. Repairs internal to a customer’s property are the responsibility of the customer and this is seen as a fair approach by the CER given the complexity of addressing internal works in a house. Irish Water proposes that once a leak has been identified and falls within the scope of the Scheme, the owner will be issued with a First Fix Offer Document. Irish Water has stipulated that the owner’s name and address must be able to be identified and if this is the case they will issue the First Fix Offer Document within 5 business days. This First Fix Offer Document will detail the terms and conditions11 applying to the First Fix Leak Repair Scheme. A leak repair will be undertaken once this document is signed and returned to Irish Water. The owner has 30 days to sign and return the offer document. Once the customer accepts the offer, Irish Water has 10 business days from receipt of the document from the owner to schedule a repair. If after 60 days of Irish Water contacting the customer, the leak repair cannot be conducted then Irish Water will close the case and the customer will be notified of their removal from the First Fix Leak Repair Scheme. Irish Water plans to complete the repairs as soon as practicable after the leak is identified in order to meet the objective of water conservation of the First Fix Leak Repair Scheme. Irish Water plans to carry out the repair within a maximum time period of 4 months. However Irish Water has stated that with effective customer engagement the majority or repairs will be carried out within a few week of the leak identification. Irish Water has indicated that if a defect occurs on the external supply pipe within 12 months of the repair being completed, Irish Water will arrange to rectify the defect.11 The CER is of the view that there should be a distinction between costs associated with the application of the first fix policy and costs associated with repairs to work already carried out (and covered by a warranty). The CER proposes to require Irish Water to ensure that any costs associated with rectifying defective work will not be covered under the First Fix Leak Repair Scheme cost allocation; rather this is a matter between Irish Water and their contractors. Irish Water’s submission also includes details and proposals regarding reinstatement, resurfacing and making good works following repairs.11 Key Points: IW will offer to fix qualifying leaks on a customer’s External Supply Pipe free of charge upon receipt of a signed First Fix Leak Repair Offer document; 11 Please refer to Appendix 3 of Irish Water’s submission “Irish Water First Fix Leak Repair Offer Terms and Conditions” for details. 14 IW will prioritise repairs based upon the size of the leak and potential water savings resulting from the repair Questions: 10. Are the timelines set out by Irish Water in their proposal fair and reasonable? 11. Does Irish Water give sufficient warranty to customers regarding the repair? 2.8 Resources, Costs and Reporting to the CER Irish Water has provided estimated costs for the Scheme in Section 6.1 of the First Fix Leak Repair Scheme document. These have been based on the completion of the Irish Water First Fix Pilot Scheme set out as an appendix in their First Fix Leak Repair Scheme document. Irish Water will monitor expenditure during the Scheme and the costs of operating and the benefits achieved under the First Fix Leak Repair Scheme will be reported on a quarterly basis to the CER in an agreed structure. Irish Water will be required to report to the CER on a quarterly basis in relation the number of notifications issued, responses received and investigations and repairs completed by region and local authority area. In addition a detailed breakdown of the overall scheme expenditure and water savings achieved will be reported on a quarterly basis to the CER for review and approval of efficiently incurred costs. The CER will require Irish Water to provide an estimate of water savings and to provide to the CER detailed reporting of the costings together with the benefits achieved in order for the CER to monitor the ongoing effectiveness of the Scheme. 15 3. Next Steps The CER have highlighted the key issues from the Irish Water submission to the CER on their proposed First Fix Leak Repair Scheme. The CER seek responses to the questions but also seek comments on the entirety of the Irish Water proposal. The closing date for the consultation is the 15 May 2015. The CER will consider all relevant submissions prior to making a decision on Irish Water’s First Fix Leak Repair Scheme (CER/15/075). A decision on these proposals is expected to be published on the CER website in June 2015. It is intended that the First Fix Leak Repair Scheme is fully implemented once the CER’s Decision is published. Timetable of Implementation The table below provides a summary of the upcoming events in relation to this consultation and its outcomes. Event Date Consultation Opens 15 April 2015 Consultation Closes 15 May 2015 Target Date for CER Decision June 2015 16
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