Irish Water: The outlook for the State utility is bleak

Two-thirds of Irish Water customers have paid some or all of their charges, leaving the company with a revenue shortfall of €176 million. To date Irish Water has collected €162 million – less than half what it is owed. During the last (January-March) billing period, revenue receipts fell sharply as households reacted to a Government decision to suspend domestic water charges for nine months from July. During this period while the exchequer will finance the shortfall in revenue, customers will remain liable for any outstanding balances on their bills.

The outlook for the State utility could hardly be bleaker. Debts mount at Irish Water as fewer customers pay their bills. In addition, the European Commission has recently stated that because Ireland has already agreed to apply water charges, it cannot now scrap them and “revert to any previous practice”. A failure to heed the commission’s warning could leave the State open to hefty fines for non-compliance with the EU water directive. In November, a review group on the future of water services is due to make its recommendations which an Oireachtas committee will consider. And, by the end of March the Dáil will vote on a new funding model for Irish Water.

The review group includes a number of experts of international repute. Whatever it recommends cannot be dismissed lightly or ignored easily. Water is a scare resource and one for which – most countries now accept – the user should have to pay. The group is unlikely to disagree or to recommend that Ireland be an exception to the user pays principle; not least given the need to finance some €5.5 billion in investment in water infrastructure over the next five years.

The European Commission has made its position clear on water charges. Any failure by the State to comply with the water directive would prove costly. Like the challenge of funding future higher education, as outlined in the Cassells report, the financing of Irish Water is yet another defining decision facing the Oireachtas that will test its political judgment. There is little reason to be optimistic it will rise to the challenge.