The regulator for Uisce Éireann has said that the water utility has missed a target for reducing leaks.
Under targets set out by the Commission for Regulation of Utilities, leaks were due to be reduced by 176 million litres between 2020 and 2024 but leaks were only reduced by 20 million litres.
The CRU's report said it is imposing a regulatory penalty of €20m because of Uisce Éireann's failure to meet the leakage reduction target.
As a result, the CRU said the revenue that Uisce Éireann has been approved to use over the coming five years has been reduced by €20m.
Uisce Éireann said it has had to contend with an exponential growth in the population which has led to a 15% increase in demand for supplies.
Despite not meeting the target, the organisation said it managed to reduce overall leakage rate in percentage terms from 48% in 2014 to 36% now.
It said the leakage rate in the greater Dublin area had been reduced to 30%.
"We are increasing the number of leak repairs each year, rolling out smart meters to better track water use, upgrading old pipes and infrastructure, investing in more leakage repair experts, and using new technology to find leaks faster - especially in hard-to-reach areas," Uisce Éireann said.
It said Ireland's water network spans 65,000km with an average age of 75 to 95 years which is more than double the EU average.
It said increased demand, more housing connections and climate change have led to more frequent and harder to detect leaks.
Uisce Éireann said that addressing leaks is challenging due to the location of pipes beneath roads and buildings which are often overlain by other pipework carrying electricity and gas.
Despite the issue of leaks, the CRU found the majority of its other targets had been met.
The regulator also approved a substantial expenditure package of €13.6 billion over the period 2025 to 2029.
The investment represents a 50% increase in funding on the previous period and excludes additional €2 billion under the National Development Plan.
The investment is expected to result in additional capacity in the water network, and provide new infrastructure for water and sewage treatment.
The regulator said it was making a "minor adjustment" to Uisce Éireann's requested expenditure and had sanctioned €13.6 billion compared to a requested spending of €13.8 billion.
The regulator said "while bills for non-domestic customers will increase" there will be benefits including improved water quality and more reliable services.
