Philip Lee
Correct water pricing policies and appropriate metering are essential in order to ensure high quality water supplies, writes Philip Lee.
The immediate future promises to be challenging for the Irish water sector. The PwC Phase 1 report on Irish Water is unequivocally in favour of creating a new entity to own and manage the supply and treatment of water and waste water in Ireland. The Department of the Environment has reserved its position pending the outcome of a further consultation process and the publication of the Phase 2 PwC report. Add to this the Government’s proposal to introduce metered billing for domestic water services and pressure from the European Commission to comply with the Water Framework Directive (in particular in implementing full cost recovery), and the scale of the challenges becomes even more Herculean.
Still, achieving a ready supply of high quality but low priced water for the citizens of Ireland, many of whom are currently under significant financial pressure, is possible. Ensuring a supply of large quantities of high quality water to the non-domestic industrial sector at competitive prices is also an imperative. Many high tech foreign companies’ decisions to locate in Ireland depend on the availability of a secure and reasonably priced supply of water and energy.
A further challenge is the obligation on Ireland under Article 9 of the Water Framework Directive, to take account of the principle of the recovery of the costs of water services, including the environmental and resource costs. The directive included a derogation from this principle for particular water use but only if non-compliance with the principle of full cost recovery does not compromise the purpose and objectives of the directive. Ireland has relied upon this so-called derogation in order to avoid imposing domestic water charges.
By 2010, member states were also required to ensure their water pricing policies provided adequate incentives to conserve and use water resources efficiently. Such a conservation objective is not supported by an unlimited supply of water at no cost to households. Ireland has also not fully adhered to the obligation to specify costs for the disposal of waste water, or for the abstraction of water for industrial or agricultural purposes. Legislative measures are being prepared to address these issues.
If Ireland fails to introduce a pricing policy which takes steps to recover the full cost of water services, the likelihood is that Ireland will face fines from the European Court of Justice. The Commission has already issued a number of reasoned opinions against Ireland and other member states in this regard. The ‘troika’, is also applying pressure on Ireland to take steps to increase efficiency and to charge for water. It is not sustainable to provide water free to households.
The decisions taken over the coming months must be informed and designed to reduce the actual cost of water services, while aiming toward full cost recovery from all categories of users. Water meters fulfil two functions. They incentivise a reduction in usage, and they also help to identify customer side leakage. The meter placed in the household with no leakage is perhaps a luxury. The meter which identifies leakage is invaluable.
Experience with the non-domestic meter roll out has shown that installing meters can be complex and expensive. Extensive consultation with industry players is required prior to any national meter roll out. A pilot scheme should be looked at early to ensure that both the procurement and contractual methods chosen achieve the maximum efficiency. Put simply, Ireland cannot afford to make mistakes in its approach to this project.
For more information contact:
T: +353 (0)1 237 3700 E: plee@philiplee.ie W: www.philiplee.ie
