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Hogan and O’Dowd Announce Public Consultation on the Reform of the Water Sector

Published on Monday, 16 Jan 2012

Hogan and O’Dowd Announce Public Consultation on the Reform of the Water Sector

16/01/12

Irish Water will result in:  Job creation; Foreign Investment; Water Conservation; Better Infrastructure & an Integrated System which will be Cheaper and more Efficient.

Phil Hogan, T.D., Minister for the Environment, Community and Local Government, and Fergus O’Dowd, T.D., Minister of State with responsibility for NewERA today (15.1.2012 ) announced, starting tomorrow, a six week public consultation  on a suite of fundamental reforms of the water sector which the Government are planning to introduce.  Through the water metering programme and a steady level of capital investment of potentially €600 million per annum, the water sector will create and sustain 2,000 construction jobs. Minister Hogan said: “From tomorrow (Monday) members of the public and key stakeholders will have an opportunity to consider these reforms and provide their views which I am convinced will improve the implementation process.”

These reforms include:

1.     The establishment of a new public utility, Irish Water to take over the responsibility for the delivery of water services from local authorities;
2.     The introduction of water charges based on metered usage, with the metering programme to commence later in 2012;
3.     The introduction of independent economic regulation of the water sector under the Commission for Energy Regulation.  

The Programme for Government committed to the creation of  Irish Water, a State company to take over the water investment and maintenance programmes of the 34 existing county and city councils with the key aim of supervising and accelerating the significant investments needed to upgrade the State’s water and sewerage networks.  A number of key benefits would arise from the establishment of Irish Water as a full public utility:

• Creation of 2,000 long-term construction jobs;  
• Specific focus on fixing the current leaks in the system;
• Attracting foreign investment and job creation by funding the major investments water and sewerage services needed to support new businesses, industries and jobs;
• It would have responsibility for investment and the delivery of services;
• Protect the environment and public health;
• Water meters will encourage water conservation;
• Support implementation of River Basin Management Plans.
The local government system has served the country well in providing necessary water and sewerage infrastructure. However, the independent assessment highlighted a number of problems with the current model of water services provision that requires a fundamental reform on the way the State delivers water services:

• Fragmentation of current structures;
• The inability to achieve real economies of scale in delivery and operation;
• No independent economic regulation;
• Significant overheads in the management of water services;
• Operational expenditure is very high:
• Full potential for industry standard IT systems for management of water services is not being exploited;
• Difficultly in development of strategically important national water services projects, due to funding constraints;
• Unaccounted for water is a very significant problem and well above international standards;
• Current funding model for water services is unsustainable.
Minister Hogan recognises the need for Irish Water to build on the strengths of the existing system including an experienced and committed workforce.  Consequently Irish Water, although a national company, will have a regional and local focus and a phased transition is proposed to ensure continuity of service and the building of a fit for purpose organisation within a reasonable timescale.  

Water services cost over €1.2 billion to run in 2010, of which operational costs amounted to some €715 million, and capital costs of over €500 million. The Programme for Government also provides for the introduction of a fair funding model to deliver clean and reliable water with the objective of installing water meters in households and moving to a charging system that is based on use above a free allowance. 

Minister Hogan said: “We are the only country in the OECD where households do not pay directly for the water they use. Our current model of water provision, where unlimited quantities of an expensive product are provided at no charge, is simply not sustainable. The Government intends to embark on a universal metering programme with installation of the necessary infrastructure to commence this year, creating 2,000 jobs each year for the next three years in the construction industry.   The aim is to achieve completion of the metering programme to the highest standards as quickly as possible. Households who source their water from private supplies will not pay charges.”

Economic regulation of the water sector will be undertaken by the Commission for Energy Regulation. Minister O’Dowd said: “The primary duty of the economic regulator will be to protect the interests of customers.  This will be achieved by having an appropriate regulatory framework that is clearly enforced with the aim of ensuring that efficiencies are driven, costs are reduced and that these benefits are passed on to consumers. Cutting costs significantly from their present levels will be a key objective for the regulator. The Government will also ensure that policies are in place to address affordability for those on low incomes or those that have medical conditions that necessitate a high level of water use.”

Minister Hogan said: “The position paper “Reform of the water sector in Ireland highlights some of the weaknesses in the current model of water services. Meeting the challenges of the Water Framework Directive, and requirements for the treatment of drinking water and waste water will require very significant levels of investment and concerted action.  The high levels of unaccounted for water in some parts of the country are a serious concern and tackling uneconomic levels of leakage will be urgently prioritised in the future.  Increased investment in new treatment plants for drinking water and waste water together with rising energy costs and more stringent statutory compliance requirements will lead to increased operational costs. It is in this context that achieving operational efficiencies will be a priority.”

“Ireland, which is rich in water resources, can continue to exploit this natural advantage to attract foreign direct investment and high end employment, and meet the demands of our existing businesses and communities for high quality water and security of supply.” 

In conclusion, Minister Hogan said: “The programme of reforms set out in the paper will ensure that the appropriate organisation and funding model are in place to deliver water services to existing and future users, while also providing the volume and quality of water and waste water services required to protect public health and support employment.”

A consultation paper on these issues, and a copy of the independent assessment which examined the optimal organisational structure for an Irish water utility will be  available on the Department’s website tomorrow at www.environ.ie under “public consultation”.  Views are being sought by close of business on Friday 24th February 2012.

ENDS
Contact: Yvonne Hyland 086 850 8879

Press and Information Office
Tel: (01) 888 2638  (direct)
(01) 888 2000
E-Mail: press-office@environ.ie

Web site: www.environ.ie

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