Irish Water denies that its running costs will be ‘outlandish’

Irish Water’s running costs have been portrayed as “outlandish” following weekend newspaper reports contending its running costs are twice those of similar water companies in Britain.

Fianna Fáil environment spokesman Barry Cowen has said the reports copper-fasten the impression of a "bonus-driven" culture at the new utility.

He was responding to a report in the Sunday Business Post which said its €1.9 billion running costs over the next two years would work out at more than twice the average costs of water companies in England and Wales. Indeed, it found the running costs were closer to three times more that the running costs of the equivalent utility in Scotland.

The utility last night defended its operational costs, saying that a new company, less than a year in existence, could not be compared to UK companies which had been operating for a quarter of a century.

In a statement last night, it said it would have achieved some €1.4 billion in operational and capital expenditure efficiencies by 2021. “As part of the price control process, Irish Water (which is seven months in existence) has been compared to UK utilities that are over 25 years old. Therefore these utilities are 25 years ahead of Irish Water and have already achieved the very efficiencies that Irish Water has been established to achieve, but it has taken 25 years to do it.

“So comparing the two at this stage is not a like-for-like comparison. However it does demonstrate one of the reasons why IW has been established – a utility model delivers cost savings,” the statement said. It noted that start-up companies required investment and said the utility had achieved much within a short time.

It added: “It is a widely known fact that all our costs are scrutinised by an independent regulator.” It also said that the establishment cost of €176 million compared very favourably with other comparators. It did acknowledge that the 14 per cent reduction in costs that would be required by the regulator in the future would be “challenging”

For his part, Mr Cowen maintained the spending at the utility was “outlandish”.

"I am not surprised by these figures because from the very beginning, Irish Water has had a gold-plated bonus culture attached to it," he said. "This bonus culture was facilitated by the Government when it awarded the Irish Water contract to Bord Gáis against the advice of an independent report the Government itself commissioned. This opened the door to the generous bonus system at Irish Water which is contributing to the high staff salaries."

Much of Irish Water’s costs will be absorbed by staff salaries. Its own staff numbers are 267 but that will rise to some 747 by 2016. In addition, it also employs 4,300 staff who previously worked with the water divisions of local authorities.