Water supply problems are not of Irish Water’s making
Utility differs from energy sector in that it has no power to ensure it is financed
Irish Water: the obvious solution to funding shortfalls is metering but this is unlikely to happen for quite some time
The Environmental Protection Agency’s assessment of the Irish water system last week found that 1.1 million people in the State are served by treatment plants that are at risk of failure. It also warned of the lack of resilience in the system as a whole.
Looking behind these problems, the challenges Irish Water faces are huge. And the policy failures in the establishment of the system seven years ago are coming back to haunt the utility through no fault of its own.
The major benefit in establishing the national utility was the creation of a single integrated body to manage the infrastructure across the State. The previous fragmented management by different local authorities was inefficient and expensive. It made strategic planning exceptionally difficult.
Despite the major constraints placed on Irish Water at its creation, that unnecessarily raised its cost base, it has managed its business reasonably well, driving down costs.
It is useful to compare the position of Irish Water with that of the utilities responsible for the electricity and gas systems: the ESB, Eirgrid and Gas Networks. The energy sector shares one economic regulator, the Commission for Regulation of Utilities (CRU). That regulator sets the standards for safety and service that the utilities must meet. The utilities set out what they consider to be the investment programme necessary to deliver a stable and reliable electricity or gas system, and the regulator then checks to see that there are no plans for gold-plated wires or pipes.
Once the investment plans are agreed, the regulator permits these companies to charge customers an appropriate amount to finance the necessary investment, and the investment is then rolled out.
In the case of water, there are two regulators, the Environmental Protection Agency (EPA), which sets standards on water quality, and the CRU, which oversees treatment of consumers and the economic operation of the utility and its investment programme. While this dual regulation has worked reasonably well, a single regulator might be simpler.
Another difference from the energy sector is that, while the CRU can authorise and even encourage a necessary level of investment in water, it has no power to ensure it is financed. Domestic water consumers pay no charges, so Irish Water’s ability to finance improvements to supply and distribution of water is very limited.
The water regulators know that more needs to be done, and Irish Water knows that more needs to be done but the decision on what investment will take place is ultimately determined by the allocations of government funding. If electricity had to rely on government funding in this way, the lights might go out more often.
If the original plan had been followed, and Irish Water had been financed by appropriate water charges, overseen by the CRU, Ireland might be moving towards a clean, reliable, and resilient water supply.
The stopping of the leaks in the old pipe system would also be more advanced than it is now.
We need an effective system to identify, tackle and deter the waste of precious treated water by a small number of consumers
Without charges for water use, there is substantial waste of water. Central Statistics Office (CSO) data shows that in 2017 around 1.2 per cent of customers were responsible for 25 per cent of metered water consumption, suggesting a huge volume of waste.
The CSO data also shows water consumption in Dublin by post code. This illustrated that the highest consumption was in Dublin 24, followed by districts 22, 6 and 4.
An effective metering system would allow precise identification of leaks and of problematic overuse. If the top 10 per cent of water users were induced to reduce their consumption to the average of the remaining 90 per cent, overall water consumption would be reduced by 30 per cent. That would end the need for hose-pipe bans.
While the obvious solution to the endemic problems of water supply in Ireland is to meter consumption and charge for use, this is unlikely to happen for quite some time given the searing political experience of the attempt to introduce water charges some years ago. But we need an effective system to identify, tackle and deter the waste of precious treated water by a small number of consumers.
There remains a significant gap between the funding needed to guarantee a safe and secure supply of water, and the level of investment the State has been prepared to provide in the absence of user charges for most customers.
Ultimately, that is a political decision, and water investment is competing with many other demands.
It might be helpful in securing the required Oireachtas backing for the funding the system needs if the regulators were to publish annual estimates of the amount of funding, efficiently spent, that our water system needs.