Water charges

Under the 'Confidence and Supply Arrangement' it was agreed with Fianna Fáil, in the context of supporting a minority government, an Expert Commission on Domestic Public Water Services was to be established to assess and make recommendations on the funding of domestic public water services in Ireland and improvements in water quality, taking into account:

• the maintenance and investment needs of the public water and waste water system on a short, medium and long-term basis
• proposals on how the national utility in State ownership would be able to borrow to invest in water infrastructure
• the need to encourage water conservation, including through reviewing information campaigns on water conservation in other countries
• Ireland’s domestic and international environmental standards and obligations
• the role of the Regulator
• submissions from all interested parties

Report of the Expert Commission on the Funding of Domestic Public Water Service

The ‘Confidence and Supply Arrangement’ provided that the Expert Commission’s recommendations would be considered by a Special Oireachtas Committee, the Joint Oireachtas Committee on the Future Funding of Domestic Water Services, and, ultimately, the Oireachtas would then determine the enduring funding model for public water services into the future. The Joint Oireachtas Committee on the Future Funding of Domestic Water Services deliberated the Commission's findings and published its report on 12 April 2017. Both Houses of the Oireachtas approved the report in April. Its main recommendations were:

• funding domestic water services should be provided through general taxation, with such funding clearly identifiable within existing taxation
• long-term funding certainty for Uisce Éireann through multi-annual budgetary cycles
• a link between revenue provided to Uisce Éireann from the Exchequer and services that such revenue pays for
• public ownership of water services: support for a referendum to enshrine public ownership in the Constitution
• an expanded role for the Public Water Forum
• the setting by the Commission for Regulation of Utilities of an average consumption level for domestic water customers, setting the threshold at 1.7 times the average household use
• the curbing of wastage of water through an approach based on incentives, levies and other measures
• enhanced measures to increase water conservation, including a proactive retrofitting programme and ambitious amendment to existing building standards and regulations
• the use of district metering, existing domestic meters and modern technology to support leakage reduction, including bulk metering for multi-unit developments such as apartment blocks and the use of meters in new dwellings and dwelling refurbishments requiring full planning permission
• a review of the strategy based on the report after a five year period

Report of the Joint Committee on the Future Funding of Domestic Water Services

Following the publication of the report of the Joint Oireachtas Committee and its approval by the Oireachtas an interdepartmental working group was established containing representatives from the Department of Housing, Planning and Local Government, the Department of Finance and the Department of Public Expenditure and Reform to determine how to best implement a new funding model for Uisce Éireann in line with the recommendations of the Joint Oireachtas Committee. The recommendations of this Working Group were:

The revised funding model proposed for Uisce Éireann seeks to ensure that:

• the maximum level of funding certainty on a multi-annual basis is provided within the constraints of government budgetary planning
• the regulatory model is kept intact in order to drive efficiency and improved customer services
• the requirements of cost recovery under the WFD are met
• transparency and accountability for funding to the Oireachtas is improved

Uisce Éireann to develop a multi-annual Strategic Funding Plan which outlines the costs and revenue requirements associated with the implementation of the Water Services Strategic Plan covering the period of the relevant regulatory cycle (five/six years), having regard to a Water Services Policy Statement by the Minister.

This plan will be approved by the Minister as the basis for the Uisce Éireann submission to the CER for the forthcoming regulatory cycle. This will provide ensure a common understanding between Government and Uisce Éireann of the broad financial parameters and investment priorities. While Uisce Éireann will receive annual budgets, they will be framed against the backdrop of this plan, and where funding reductions are required, change control mechanisms will ensure that the CER is involved in the associated decision making process.

All State funding to Uisce Éireann in respect of domestic water services will be channelled through the DHPLG Vote and will be in the form of a payment for domestic water services as determined through the regulatory process and a capital contribution.

The payment in respect of domestic water services will be based on the purchase of water as heretofore, albeit that it is now covering the entirety of domestic water consumption other than excessive usage revenue. The capital contribution will be increased to encompass funding for domestic water services and will be paid, on broadly similar terms to Uisce Éireann, as when issued by the Minister for Finance in the past.

Uisce Éireann will raise debt (within limits) only for non-domestic sector capital expenditure in order to ensure that full cost recovery can be demonstrated for that sector and to avoid cross-subsidisation or state aid concerns.

Uisce Éireann are required to plan major infrastructural projects that are a key element of Uisce Éireann's overall nationwide remit to meet the bulk of domestic, commercial and industrial water services needs into the medium to long-term future (to 2050 and beyond). Such major projects will have substantial funding requirements, therefore, there will be a requirement to consider funding arrangements for these major infrastructure projects within this structure (e.g. unitary payments versus up-front capital).

Report of Working Group on Future Funding of Domestic Water Services