Householders facing hot water?

Tuesday 23 April 2013 14.24

PricewaterhouseCoopers' new report on water charges

By Business Editor David Murphy

Householders will have to pay water bills in future. It is not entirely clear when that will happen. But the big question is whether they will be paying for an efficient well-run service?

A draft report by PriceWaterhouseCoopers suggests the answer is ‘No’, unless there are radical reforms.

The document, called ”Irish Water: Second Interim Report” was released to RTÉ News following a Freedom of Information request and updates an earlier published study.

At present commercial users are supposed to pay charges. But the PWC report shows 52% of firms are in arrears on their water bills. The level of non-payment varies greatly from one county to another. The worst offenders are Kerry, Limerick and Cork where arrears are close to 70%.

Another worrying feature of commercial water charges is that the fees vary widely. Firms in Kildare are charged €1.75 per cubic metre but in Wicklow the fee is €3.04. The report also notes that there is no central system for logging calls, tracking problems or reporting that issues have been solved.

In Britain and Northern Ireland there are 12 water companies which PWC benchmarked against the existing Irish system. It found the cost per-connected-property of providing water in the Republic of Ireland is €162 higher than in the North.

Ireland has to meet tough EU environmental standards. The total cost of doing so is expected to be a whopping €20 billion. With 41% of water leaking from the system, it is expected the annual cost of fixing the network will be €600m. In Britain the leakage rate is 30%.

Leaving the statistics aside, there are some important fundamental issues. No doubt politicians would like to keep the charges low. Introducing efficiencies will help to achieve that. As the service will be a monopoly it will be important that it is properly regulated to ensure consumers are not ripped off.

How Irish Water charges its users is going to be a hot topic. It could introduce a free allowance and when householders exceed that ceiling they would begin to pay. But international experience suggests there are disadvantages with this model.

Consumers tend to reduce their consumption to remain within the free allowance. That frequently means the water company does not collect the revenue it requires for fixing leaks and other costs. That cash shortfall then raises the prospect of a smaller free water allowance and higher charges.

Water bills will become a reality for householders before too long. But attitudes towards a new service are likely to change. Consumers are likely to be much less tolerant of the usual water restrictions, boil notices and cut offs when they are paying the bills.

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