The Department of the Environment has said it does not accept the assertions made about Irish Water in a draft report from the European Commission.
The department has also strongly defended its position on the new package of water charges.
In the report, the commission said the prospect of the utility "becoming self-funded seem distant" because charges will be frozen until the end of 2018.
The department said the changes in tariffs do not impact on the investment plan approved by the Commission for Energy Regulation for the period ahead.
The report had said the energy regulator may risk becoming politically influenced in the future.
On the issue of conservation, the department said people can still beat the cap as they are not fixed charges.
It said up to 30% can beat the cap, and if people introduce conservation measures, then up to 50% can beat the caps.
This is based on analysis by Irish Water of the metering programme to date.
The assessment of the Government's revised water charges was carried out by the European Commission as part of its review of Ireland's progress after the EU/IMF bailout.
Speaking to RTÉ's Drivetime this evening Fianna Fail's Environment Spokesperson said that the Government should be worried that the European Commission is raising questions.
Barry Cowen said that if the Government fails in getting Irish Water passed the Eurostat test, he expects there will be more than a referendum in May.
He said that the compliance rate, to date, in relation to returning forms and committing to the charging, as announced, is at 60% and that the figures submitted to Eurostat are projected and not actual.
Barry Cowen said that the Eurostat will be looking at actual figures.
