Only half of businesses pay charges for water


JUST OVER half of water charges for business users in Ireland are collected, according to the Commission for Energy Regulation, which will be the State watchdog for water services.

Denis Cagney, director of gas, legal and renewables at the regulatory authority, said the collection rate for non-domestic charges in Ireland is 53 per cent, compared with 78 per cent in the UK. The Irish rate is thus almost one-third lower (32 per cent) than the UK’s.

Despite the poor enforcement rate, however, Mr Cagney told the Dublin Economics Workshop conference in Galway it was “very important to get the inevitability of paying for water bedded down”.

Highlighting the difference between Ireland and other European countries in the attitude to paying for water services, Mr Cagney said, historically, countries reconstructing after the second World War faced difficulties with scarce resources and the “culture of paying for vital resources became embedded”.

Ireland is the only country out of 34 in the OECD where households do not pay directly for water services. Commercial operations are obliged to pay water charges.

The commission will be the regulator for water services and Mr Cagney acknowledged there was “zilch” possibility of universal water metering being in place by the 2014 target date.

Last week Bord Gáis, which runs Irish Water, confirmed that just 15 per cent of homes would be metered by 2014 when, under Ireland’s bailout agreement, it must introduce charges.

The company said it would be the end of 2016 before all 1.05 million qualifying homes would be metered. Universal metering is Government policy on the issue.

In Ireland five city councils and 29 county councils provide water services through the supply of drinking water and the treatment of waste water.

Mr Cagney said Irish Water would have local service agreements with the authorities, but he stressed it was very important that “one entity only is in charge” to ensure accountability.

The cost of supplying water services each year is about €1 billion and the State has invested about €5 billion in water services in the last decade.

“It is unlikely this rate of expenditure is going to decline,” Mr Cagney said at the conference.

There had been investment in water but there was huge leakage, he said. The operational expense in Ireland for each connection was 50 per cent to 100 per cent higher than in the UK, while leakage here was 41 per cent, compared with a UK average of 28 per cent.

A lot of decisions would have to be made in the next six to 12 months if Ireland was to meet its troika obligations, he said.

They included what the daily level of free allowance of water would be before the charge kicked in and who would set that level.

Mr Cagney said it would be an issue of public policy and the setting of the allowance “will largely be left with Government”.

He said that if the allowance was high, it could mean there would be a higher unit tariff when the charge kicked in, or a bigger burden on the exchequer.

Another important issue was what the minimal acceptable capital programme of Government investment would have to be during the first five years.

During a question-and-answer session Independent TD Stephen Donnelly and Independent Senator Seán Barrett, both economists, voiced their concerns about the charges.

Mr Donnelly said he was not against water charges, but questioned their imposition given the lack of proper structures and the level of water leakage.

Mr Barrett said leakages in some local authorities were up to 60 per cent and claimed the Government “don’t know what they’re doing”. “We don’t know if we could get meters cheaper at Ikea than the ones Government will get,” he said.

Mr Cagney said the argument over whether there should be water charges “should be over”.