Charges in the pipeline but who pays for the meters?
ANALYSIS:DESPITE THE fact that almost 18 months have passed since proposals to introduce domestic water charges were first announced, consumers are no nearer to knowing how much they are likely to have to pay.
Nor do they know who will have to pay for the 1.2 million water meters that are to be rolled out starting next year or what kind of free allowance households are likely to get.
Minister for the Environment Phil Hogan remained tight-lipped on the issue yesterday and would only say that the free allowance would be “generous”. He also claimed that families would be able to avoid paying the water charges if they conserved water, although given the rate at which an average adult uses water and the speculation surrounding the free allocation, that claim seems unlikely.
The last administration, under Green Party minister John Gormley, proposed that the free water allowance per person be set at about 40 litres a day. To put that into perspective, a typical power shower uses about seven litres of water a minute while an adult uses more then 100 litres a day on average. Speculation this week suggested that the allowance could rise to closer to 60 litres per person per day.
The Republic is one of the few developed countries where water charges do not already exist.
In Australia people are given an annual water allowance but most use well in excess of that and the average cost to households is about $250 (€175) each year. In Britain people pay a flat rate for water, although meters are optional in many areas. The average bill is about £500 (€567) and it is estimated households using meters can save up to £125 (€141).
Germany’s water charges are among the highest in Europe with average bills running to €750, although prices across the country vary by as much as 300 per cent.
There are more than 6,000 water suppliers in Germany and last year the country’s constitutional court extended the powers of state competition authorities to regulate prices and to use price comparisons with other water suppliers as a basis for market abuse charges.
Such a scenario will not develop in the Republic as one of the few things that is known about the charges is that they will not differ from local authority to local authority and will be centrally administered by the newly established Irish Water company.
When the plan to reintroduce water charges was announced as part of the 2010 budget, the government had two choices: a metered system or a flat water charge. Meters are the preferred choice because they are considered more equitable and better suited for water conservation.
According to a number of international studies, 16 per cent less water is used when metered. They are, however, more expensive to introduce and to install them in 1.2 million houses and apartments is expected to cost about €500 million.
Where the money is to come from is one of the big unanswered questions and while the Department of the Environment suggested that the money could come from the National Pension Reserve Fund or from savings made from its cost-cutting programmes, a spokeswoman refused to rule out the possibility that homeowners will be asked to pay the costs themselves, possibly through a rental system.
The Government urgently needs the money that will be raised by the charges. It spends more than €1 billion annually on water treatment facilities and has plans to spend a further €1.5 billion on upgrading the water supply infrastructure over the next two years.
The upgrade is long overdue and as much as 58 per cent of the water supply disappears through leaky pipes in some local authority areas.