Joint Committee on Environment, Culture and the Gaeltacht debate

Expenditure Issues: Irish Water - Uisce Éireann

Chairman

Ba mhaith liom fáilte a chur roimh na finnéithe ó Uisce Éireann anseo inniu. Is dócha go mbeidh cruinniú spéisiúil agus suimiúil againn. Ar aghaidh linn. I welcome the team from Uisce Éireann, Mr. John Tierney, Mr. Paul O'Donoghue, Mr. John Dempsey, Mr. John Barry and Mr. Ger Cowhig to our meeting. I acknowledge that we issued an invitation to them to attend this meeting very late on Friday afternoon, for obvious reasons, and I thank them for confirming they would attend and supplying the information in advance of today's meeting. I am sure the committee members found it very helpful in terms of researching their questions for our exchange this afternoon.

I have stated consistently that the creation of Uisce Éireann is a good news story. It is a very significant undertaking and a gargantuan task on the part of the State to transfer the delivery of water services from 34 local authorities to one single public utility. Obviously the level of curiosity and disquiet on the issue of consultancy fees is the focus of our meeting this afternoon.

I acknowledge that the management of Uisce Éireann will come before the committee in February to discuss other issues related to the set-up, roll-out and so forth and other very significant matters.

The primary focus of this meeting, however, is to establish precisely how much money was spent on consultants, the purpose for which it was used, whether taxpayers obtained value for money, whether the expenditure was worthwhile and what we have as a result of it. I gave the example of information technology this morning when I asked whether Irish Water paid for IT advice or a physical manifestation of IT resources. This will be at the forefront of questioners' minds.

I will first call the main spokespersons who will have longer speaking times than other members. The first speaker is Deputy Brian Cowen, followed by Deputies Brian Stanley, Catherine Murphy, Kevin Humphreys and Noel Coonan. Other members of the committee may then contribute and non-members will subsequently have an opportunity to ask questions. The question-and-answer format is the best use of our time.

Before I ask Mr. Tierney some questions on the establishment of Irish Water and other matters, I will refer to the technical aspects of giving evidence and the protection afforded to witnesses. I draw attention to the fact that, by virtue of 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. However, if they are directed by it to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Opening statements made to the committee and the proceedings of the meeting will be published on the committee's website. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I described Bord Gáis as being in many respects the midwife of Uisce Éireann. The reasonable assumption on the part of all concerned is that, given that Bord Gáis is an established utility company, Irish Water would have expertise available to it in the areas of billing, supply, technical services and operational capacity. That being said, we accept that this expertise will not be 100% and Irish Water will have to avail of outside expertise on occasion. At what level did it become obvious that outside expertise was necessary? Can we be guaranteed that the consultancy services used by Uisce Éireann were not available within the resources of Bord Gáis?

On processes and the decisions made on consultancy services that have given rise to the expenditure under discussion, I ask Mr. Tierney to indicate who in Uisce Éireann made the relevant decisions and who ultimately signed off on those decisions. Was the Government kept informed of this expenditure? Was it made aware of it in advance and was its sanction required? Was the Cabinet aware of the expenditure? I ask Mr. Tierney to bear in mind my questions when he makes his opening remarks. I invite him to address the committee.

Mr. John Tierney

While the Chairman introduced my colleagues, I propose to elaborate on the position before we start. Mr. Paul O'Donoghue and Mr. John Dempsey, who are seated on either side of me, are part of the Irish Water management team, while Mr. John Barry and Mr. Ger Cowhig are part of the Irish Water programme in Bord Gáis. They are working on building the permanent organisation and its systems before handing them to us, as the Irish Water company, to run the business. To give a simple example of this, metering was set up and then handed to the business last July.

I thank the Chairman and members of the committee for the opportunity to present to them. We are here to talk to them about implementing Government policy and the process involved in undertaking one of the largest reform projects in the history of the State.

We understood the committee to have come here today to hear an explanation of four things: what money is being spent on establishing Irish Water; whether it is being appropriately spent and whether we are getting good value; whether the proper controls are in place to approve and control spending; and whether consultants or external service providers were required.

Bord Gáis was given a mandate to establish Irish Water as a key part of the water reform programme. We set out for Government our approach to delivering Irish Water back in January 2012. Our proposal was to establish it as a modern utility that would deliver a world-class water system and the best possible value for the customer. In order to deliver this we established the Irish Water programme and assembled a team comprising the best utility expertise in Bord Gáis combined with the water and wastewater expertise of the local authorities and the Department of the Environment, Community and Local Government. This team scoped out the full project to deliver a new company with the capability of managing all of the public water and waste water assets and deliver services to customers. That programme was to run from April 2012 to April 2015, with one of the key milestones being to ensure we had all the systems, processes and capabilities in place to take over €11 billion worth of assets from 1 January 2014.

The budget as submitted by Bord Gáis for the programme was €150 million, with a project contingency of €30 million. This entire programme and associated budget, as well as the approach to resourcing and staffing the programme, was rigorously examined and approved by both the internal Bord Gáis governance and approval processes and the relevant Departments. The full programme, associated works scope and full costs were presented to the Department in September 2012. Bord Gáis standard programme management methodology has been applied to the Irish Water programme, with monthly reports to the Bord Gáis internal steering committee, the Bord Gáis board, the recently established Irish Water board and the Department.

Bord Gáis set out clearly from the outset that while the core capability of defining what was required to establish Irish Water existed within Bord Gáis, it would require the use of specialist service providers to help implement the programme. In essence, the Bord Gáis team, in conjunction with secondees from the local authorities and the Department, specified what was required. Bord Gáis used its experience and its existing systems and processes to define the requirements for Irish Water. In the main, this required us to specify and implement five major utility information systems: a customer care and billing system, a work and asset management system, a financial system, a procurement system and capital project management systems. All of these were based on existing Bord Gáis systems, but the specification had to reflect the needs of a water utility, as distinct from an energy utility, and meet the needs of an organisation approximately three times the size of Bord Gáis today.

In order to design and implement these systems to the specifications set out by Bord Gáis, we engaged external service providers through a competitive procurement process. They are experts in the building and integration of complex utility information systems. The use of such expertise is standard practice for utilities internationally and is seen as the most efficient practice in terms of both delivery and cost management. These service providers have joined our team temporarily to help us build a hugely valuable asset. We did not bring in experts to tell us how to build Irish Water, to answer the Chairman's point. We brought in contractors to help us build the systems and processes necessary to run the business. This is standard practice in utility businesses. In our case, we simultaneously built five major systems and procured global specialist expertise to ensure that the most efficient industry practice is being deployed. The following are the major companies that were used by Irish Water to help deliver the required systems and processes: IBM, Accenture, Ernst & Young and KPMG. To date we have invested approximately €100 million in the delivery of the programme and approximately €50 million of this was used on such specialists. The Irish Water programme will run to April 2015 and will obviously be run down on a graduated basis between now and then in order to finalise the systems I have described and deliver two more, a geographic information system and a mobile workforce management system.

The main scope of external work went out to public tender in nine lots and, following a detailed evaluation of the bids, we secured fixed-price lump sum contracts to deliver the major work scopes. Importantly, we only pay out when we have a proven deliverable. Based on the delivery of the full scope of work, we expect the final cost of the work packages to be as follows: IBM, for three lots, €44.8 million; Accenture, for three lots, €17.2 million; Ernst & Young, €4.6 million; and KPMG, €2.2 million.

Detailed explanation of the works involved comes later in the document. These systems will enable Irish Water to deliver a minimum of €2 billion worth of savings for the Exchequer by 2021 and provide the Irish people with a fit-for-purpose water system that will ensure the public health and safety of our communities, facilitate economic development and protect our environment.

Bord Gáis is privileged to have been selected as the company to establish Irish Water. It has been a hugely demanding task and the approach taken accords with best international practice. The Irish water programme has been established to deliver this huge reform project and it is being delivered on time and within budget. Irish Water, as a new modern utility, is up and running since 1 January 2014 as planned.

I will go back to the questions I posed earlier. On the question of what money is being spent on establishing Irish Water, I have outlined the overall programme cost. With regard to whether it is being spent appropriately and whether we are getting good value, the answer is "Yes, it is," because we procured on the open market on the basis of fixed price. It benchmarks favourably and has the capacity to save the Exchequer €2 billion by 2021. On the question of whether the proper controls are in place to approve and control spending, governance both internally and externally is rigorous. On whether consultants and external service providers were required, from the very outset, Bord Gáis advised the Government that this type of support was critical to delivering the programme and achieving the targets set in a demanding timeframe. In terms of achieving targets to date, the performance has been outstanding in meeting the milestones set for the metering programme initially and now in having Irish Water in place to commence its work as Ireland’s newest utility.

I will now give a brief synopsis of what is in the rest of the document I submitted. Section 2, on page 4 of the document, deals with Government policy. The proposal to establish Irish Water was contained in the programme for Government announced in 2011. Despite the fact that since 2000 investment of €4 billion had been made in wastewater treatment, environmental compliance remains a major factor. Currently the EU is taking an infringement case against Ireland for non-compliance with EU standards on up to 80 plants. Many other plants cannot satisfy EPA licence standards. Despite the issues at the time, before making a decision to go ahead with the establishment of Irish Water, the Government asked the Department of the Environment, Community and Local Government to carry out an independent assessment in 2012. This assessment made key findings, recorded on page 5 of the document, which relate to both existing provisions and recommendations for the new organisation.

Page 6 of the document provided summarises these findings. In summary, to establish Irish Water to deal with the chronic problems in the system there was a requirement for utility-standard asset management, utility-standard workflow practices, utility-standard procurement practices, and an appropriate IT infrastructure to support this. In regard to the programme strategy and budget, as far back as January 2012 Bord Gáis set out its strategy to the Government for delivering Irish Water. The model put forward in response to what Government was requesting was to utilise the core experience of Bord Gáis and supplement that with support from third-party service providers for an intense short period in order to deliver Irish Water as cost-effectively as possible.

Page 8 of the document provides a summary of the budget submitted by Bord Gáis in September 2012. This budget work was grouped into various lots for the purpose of tendering activity. The tender process is described in detail on page 9, as is the conclusion of the contracts. Page 10 provides a summary of the significant lots plus the legal services tendered by Irish Water for consultants. The main legal services have been highlighted. On that page, reference is made to a figure of approximately €13.3 million and 18 contractors, but that should refer to 22 contractors, and we will circulate that list of contractors today for information. We are happy to respond to any other queries in regard to this.

Section 4 of the document, on page 11, deals with the budget process, the establishment of Irish Water and timelines. As I mentioned already, we made a submission in January 2012 and in response to the Department's queries a detailed statement of capability was provided, which confirmed that as part of the project Bord Gáis would have to use external service providers.

Next, we provide important timelines in the process, starting with the mobilisation phase from May to August 2012, following on to September 2012, when the budget for the programme was submitted in the sum of €150 million plus contingencies, recognising that any contingency would need further express approval of individual items from the Department if it arose. In December 2012, Bord Gáis received a cost recovery letter from the Department amounting to €50 million expenditure to the end of March 2013 and permission to enter capital commitments totalling €80 million with termination rights in the contracts. These were requirements of Bord Gáis, having regard to good governance prior to proceeding with the project. In March 2013 we began the formal financial reporting letters to the Department, with submission of the year to date budgets and the actual spend. We also submitted an outline of the lots that I mentioned earlier, defining what each lot means and the outcome of procurement processes and an indication of the scores. On 25 and 26 July, Irish Water received a letter from the Department of Communications, Energy and Natural Resources and the Department of the Environment, Community and Local Government for consent for Irish Water to enter into a €250 million loan facility with the National Pensions Reserve Fund, to facilitate the metering programme and establishment costs. We can see that in December, CER recognized that the establishment of Irish Water was a significant undertaking and efficiently incurred costs should be allowed into a regulated asset base. In other words, those costs themselves were to be treated as an asset. The CER further noted that all of the activities described by Irish Water are core to delivering the objective of a national integrated water service provider with associated benefits to customers and other stakeholders in Ireland. The CER also noted that Irish Water has drawn heavily on BGE personnel and processes, which is the most efficient means of establishing Irish Water; in other words, the most cost beneficial.

On page 15 of the presentation, we take the reader through what the money is being spent on, from the work and asset management and capital programme planning, and managing and operating €11 billion of assets, to page 17, where we outline customer operations and billing functions, and how we have to manage the expectations of 1.8 million customers, which is the largest customer base of any organisation in the country. The support services are listed on page 18 and outline the systems required for supporting 4,300 staff and so on, working with the local authorities to perform their roles.

I will not go through the issue of benefits, except to state that the end of the benefits section on page 20 shows the projection over an eight year period to 2021, regarding the combination of these total efficiencies of €1.1 billion, along with other factors such as the increased income resulting from the introduction of domestic water charges, which will result in a net reduction of at least €2 billion in Exchequer funding of the water industry than would have been the case, absent Irish Water.

Benchmarking, which is outlined on page 21, is quite important. We can glean certain information from documents in respect of UK utilities. For example, Severn Trent Water expects to spend £101 million to upgrade its systems with the objective of achieving the "lowest possible charges". Thames Water installed a new working asset management system in 2011, which is one of the five that we are talking about here, at a cost of £150 million. We provide a Scottish example and an Irish example from bringing together an all island single electricity market.

I have tried to convey the reality of the situation. Bord Gáis and Irish Water were asked to deliver a project based on Government policy, with an incredibly exacting timeframe. This is what we are doing, within time and on budget. There have been extremely demanding timelines involved, and the people who have worked in this project to make this happen deserve great credit in my view.

I have tried to cover as much as I could in the synopsis. Obviously, we will take every question the committee wishes to ask.

Chairman

It is a detailed document. Members who have had it for some time would have had a chance to go through it and they can ask whatever questions they wish.

A reasonable assumption was made relating to capacity within, and the expertise of, Bord Gáis Energy in utilities and technological services, the operational expertise in terms of building services, the size of the customer base and so on. The reasonable expectation was that Uisce Éireann would rely on that in the process of its inception. At what point did it become obvious that outside expertise was required?

Mr. John Tierney

It was given at the outset. I will ask Mr. Barry to cover the topic in terms of being there at the beginning of the project.

Mr. John Barry

Mr. John Barry

Absolutely.

Deputy Barry Cowen

I thank the CEO of Irish Water and his staff for making themselves available, regardless of the circumstances by which we have arrived at this juncture. There will be several interactions during this process of questioning on the report we have just received.

The document the delegates have presented today is very welcome. The circumstances surrounding its publication are unfortunate. Much of its content is answers that other members and I would have expected when they questioned the Minister in recent months. Irish Water has been handed what Mr. Tierney deems to be €11 billion worth of assets in the form of the networks throughout the country. It has been afforded hundreds of millions of euro of taxpayers’ money towards its formation and setting up. I am puzzled as to why others and I speaking on behalf of the taxpayer get no answers when we ask how that money has been spent. I get no answers from the Minister, the Department, Bord Gáis or Irish Water. Will Mr. Tierney, as CEO of this huge organisation which will deliver one of the most important services to the people on any given day, with the amount of expertise at his disposal, tell me what happens when a question such as mine is put to the Minister? Does he block information or is he directed to block it? Why did we have to wait until a question similar to one I had asked was asked by a radio journalist last week? Suddenly we find ourselves here with all of the answers. Will Mr. Tierney elaborate on that point first?

Mr. John Tierney

We do not supply the responses to parliamentary questions; that is not within the remit of Irish Water. The Deputy is correct about the importance of the €11 billion worth of assets mentioned. One of the reasons for setting up Irish Water is that these assets are in difficulty in many situations. Under the Water Services Investment Programme 2010-13, there was a call from local authorities that approximately €6.2 billion needed to be spent on these assets. One of the main reasons for setting us up is to deal with the issues associated with these assets.

Deputy Barry Cowen

I thank Mr. Tierney. He says Irish Water has no role in the process of responding to parliamentary questions. The Minister’s answer to me was that the Department would be in touch with Irish Water which would, in turn, give me an answer. I have not heard from it. It has public relations people at its disposal. Is it not their job to watch out for the publication of such questions? Did the Department or some of his own staff make Mr. Tierney aware of the questions asked? Was there a decision not to respond? Was the Department not in touch with him? Was he not in touch with it to give an answer? I am at a loss to know how this process breaks down. Like everybody else here, I am elected with a duty to the taxpayer to question and hold bodies to account for how they spend their funds. I am simply trying to do my job. Who is not doing his or her job? Why am I and others not getting the answers to which we believe the taxpayer is entitled?

Mr. John Tierney

The process for responding to parliamentary questions is governed by Departments.

Mr. John Tierney

The commitment to transparency is outlined in the document I have provided to the committee today. It is absolutely comprehensive in dealing with all the questions being posed about the expenditure. There is an absolute commitment to provide that type of information.

Deputy Barry Cowen

When I asked previously why Bord Gáis was used as the vehicle for the creation of Irish Water, against the advice of a PwC report commissioned by the Minister, I received an answer but it did not contain much information. If Mr. Tierney is telling me that the culture is going to change, I am pleased to hear it because this blocking of information cannot continue. I refer to the table in the reply. There is no information in it about me asking why a decision was taken against the advice of a PwC report.

There might be a very credible answer to that question and that should be the case. Unfortunately, however, it has not been provided. I am glad it has been stated that there will be a change in the culture and in the manner in which information is given to us and that the entire process will be transparent in nature.

Mr. John Tierney

I am not aware of the report to which the Deputy is referring.

Deputy Barry Cowen

Prior to the appointment of Bord Gáis, the Minister commissioned PwC to compile a report on the format to be used during the establishment of Irish Water. In other words, whether it should have been a stand-alone, from-the-ground-up entity or whether the offices of Bord Gáis, the ESB or Bord na Móna should have been used in the process. As already stated, I am no wiser in the aftermath of the answer I received. I hope that culture of information will change.

Mr. John Tierney

I presume that was part of the deliberative process at that stage and it would have been a relevant factor.

Mr. John Barry

I believe the document the Deputy has in front of him has been redacted and much of it is probably our submission, which I mentioned earlier, from January 2012. That was our statement of capability which we submitted to the Department in the context of it considering us to be worthy of taking on the project. I think that is the document the Deputy has in his possession, which I would have been heavily involved in putting together on behalf of BGE.

Deputy Barry Cowen

If our guests were asked a similar question in the future - and in the interests of the sort of transparency we are discussing and the type of accountability we expect with regard to Irish Water - I presume they would answer that they would be committed to providing information in a more transparent manner.

Mr. John Tierney

In the context of where we stand at present with the establishment of Irish Water - through the programme and now the permanent organisation - the committee has before it today a huge amount of information and that is demonstrative of the approach.

Deputy Barry Cowen

Exactly. The first point I made is that I welcome this but I also outlined my disappointment about communications breaking down to the extent that the same questions were asked some months ago and the relevant answers were not provided at that stage.

Does Mr. Tierney believe that Irish Water should be subject to scrutiny by the Comptroller and Auditor General? It is not configured to allow for such scrutiny as matters stands. If the legislation under which the company was established were amended, would he be amenable to that?

Chairman

The Deputy has had 22 minutes.

I will bring the Deputy back in. I call Deputy Stanley.

Deputy Brian Stanley

I welcome the fact that the management team from Uisce Éireann is appearing before us today. Like Deputy Cowen, I have been drawing a blank with my questions on this major project during the past two years. I do not agree with the political decision to set it up but, nevertheless, we are where we are.

On the recruitment process for outside consultants, was the Minister, Deputy Hogan, or the Minister of State, Deputy O'Dowd, informed of the scale of the outside help that would be needed? Were they aware of the major contracts that were being awarded? Mr. Tierney mentioned one of €44 million. That is one part of my question in that respect, and there is another part to it. It was reported in one of this morning's newspapers that four contracts had been awarded without open competition. Can Mr. Tierney clarify that? Can he state here categorically that every contract was open to competitive tendering on the open market? I have a number of questions and I will move along quickly.

Chairman

Mr. Tierney might answer that one.

Mr. John Tierney

Deputy Brian Stanley

In other words, the management team foresaw the scale of the external services that would be required.

On the cost of establishing Uisce Éireann, there is a fascination for me because I asked the question several times in the Dáil directly of Ministers but never received any type of clear answer which did not refer to the CER and go off on various other tangents in order to use up the allotted four minutes.

However, they have never actually answered this question. Like other questions that have been answered in recent days, people in the corner shop were able to give me the answers because they had heard Mr. Tierney talking on radio or through bits and pieces that have been emerging through the print media in recent days. However, Members have been unable to get such answers in the Chamber, which is the problem with setting up a company like this. Anyway, members are here now.

In terms of the establishment budget, obviously we have talked about the amount but that represents the once-off upfront investment that is necessary to deliver on the Government objective of establishing the water utility and transforming the water industry over time, both in the short and medium term and out over the longer term. Again, as previously mentioned, that is a once in a 20 or 30-year decision. The benefits one derives from making that upfront investment are of two different types. The first type would be quality improvements in respect of customer service quality and the quality of one's network, its integrity and efficiency. Moving onto the second broad type of benefit one derives from the investment, one is talking about generating efficiency. Consequently, Irish Water as a company is under an obligation and will be scrutinised on this obligation by the CER to deliver efficiencies for the benefit of the consumer.

Could the Deputy repeat the question?

Deputy Brian Stanley

I am asking a very direct question. The company has obviously had to pay consultants and it has been paying out money. Has it paid money into the bank account of a third party outside the jurisdiction on behalf of consultants that have provided services?

Mr. John Barry

As part of our contracts, we would have bank accounts and the payments would be made electronically.

Mr. Ger Cowhig

Many of the large contracts pertain to global companies. The company would normally be with the Irish branch of that company, to be fair.

Deputy Brian Stanley

I am asking whether moneys have been paid to the account of a third party outside the jurisdiction.

Mr. John Barry

Not that I am aware of, but we can certainly check and revert to the committee.

Deputy Brian Stanley

I have a question on the Minister and the Department. The Minister is a shareholder. Under section 26, Part 4, of the legislation, has he advised the CEO at any point that he intends to give direction in writing to Irish Water on the performance of its functions under the Act and requiring it to comply with the policies of the Government? Has he ever sent such a circular?

Mr. John Tierney

The Deputy will appreciate that the legislation was put in place only on 25 December. Therefore, we would have received no directions at this stage. In terms of directions, there would have been a small number in relation to the SLAs but not general policy directions.

Deputy Catherine Murphy

I thank the delegates for responding speedily to the request to appear before the committee. I want to elaborate on some of the questions already asked. What has probably taken most of us by surprise is the extent of the need for external consultants. It would be very useful for us to see the scoping document that would have been presented. The delegates might let us know whether this is possible. It would be very helpful. I presume the document would have covered the capacity of Bord Gáis. There is a feeling that we are at variance in terms of the information that was provided. For example, Bord Gáis delegates were before the committee some time ago and when we got into some detail we were told:

The billing system we use in Bord Gáis Energy is already being adapted for Irish Water and the design for the Irish Water billing system is in progress. The billing system will be ready by 1 January 2014 and we have already seconded resources from our energy retail business into Irish Water, transferring those who are proficient in the establishment of billing and customer service. Therefore, this expertise will not be lost with the privatisation. We have had to backfill some positions to replace those people, which means more employment within Bord Gáis for people from other customer service and billing organisations. This is already happening. We put forward the view that we would leverage and clearly we have already started that process. I can therefore assure the committee that we will have the billing system up and running ...

The only thing I could conclude from what was put on the record by the delegation is that this was all being done in-house. That must be considered in addition to the documents of early 2012, which I cannot put my hands on but which more or less gave the impression that there was surplus capacity within Bord Gáis. I want to be satisfied that there was not spare capacity in Bord Gáis. I do not feel satisfied that I have got that information. I accept that there sometimes needs to be expertise. The reason Bord Gáis was partnered with Uisce Éireann was because of the spare capacity.

We have to be absolutely sure of that but I cannot see how we can be sure of it without seeing the scoping document and what was there before the process started.

My second question is linked to that matter. Mr. Tierney said it was a tight timeline and I completely accept that he is right about that. Does Mr. Tierney believe that this might have added to the need to hire in expert assistance? He was working to particular timelines that were pretty much set by the Government. Most of the consultancy seems to be around areas where we had an expectation that there would be spare capacity, such as billing systems and customers but not in the engineering area. The bulk of the money has been spent on management, IT and financial systems. It is beyond the €50 million. The four lots Mr. Tierney cited totalled €68.8 million, while there is another €13 million for 21 smaller groups.

I presume that the engineering capacity would come predominantly from the local authority sector. In a rush to reduce local authority staffing levels, did we lose people who had the capacity to work directly on this, as opposed to potentially hiring consultants or even hiring them as consultants in future?

I will pose those two questions to begin with and will come back with a few others later.

Chairman

Is Mr. Tierney absolutely sure that the expenditure on service providers or consultants was not duplicated? Is he certain that there was no capacity in Bord Gáis to provide those services?

Mr. John Tierney

We can absolutely state that as a fact. The output of the three parts of the programme included the people who were brought in from Bord Gáis, local authorities and the Department, as well as all the external providers. It needs to be understood that these people were not producing reports, they were building an organisation to become a utility to do the work on assets, operations, customers and so on. The tight timeline has a great benefit in one respect because it was constructed on deliverables and that was hugely important.

I will ask Mr. Barry to comment on the bid document. I will also ask Mr. O'Donoghue to comment on the customer question that was asked.

Mr. John Barry

Before I come to the bid document, I want to remind the committee what has been achieved here. Bord Gáis got a letter asking us to carry out this task in April 2012. In approximately 18 months we stood up a national utility and all that goes with that. Therefore a lot of planning went into the first 12 weeks. I brought this document with me and will happily put this on the record if the Chairman wants me to do so. That is our scoping document, which is about 800 pages long. It goes into enormous detail about what we have to do concerning systems, organisation and timelines. A huge amount of planning went on. That document was, in turn, shared with our service providers because we wanted them to understand what they were bidding on when they put in their tender prices.

We developed that and put it into the bid documents, so that when the service providers engaged with them on a contractual basis they knew exactly what they had to deliver. I can assure the committee that only for that rigour and discipline we would not have achieved what we did in the 18 months. That is the answer to the first question.

As regards the timeline and increased costs, I would argue the other way. The fact that the timeline was defined, clear and concise has reduced the cost enormously. It has forced us as an entity developing it - as well as forcing our service providers and other parties - to make decisions.

I mentioned it when I was going through this. We have tried to maximise the amount of information in terms of the additional list but I said that if there were one or two other things that still needed to be dealt with, all of that would be put out in respect of the breakdown of who got what within the programme. We refer to these generally as service providers.

I return to my earlier point on the work they are doing. The work we are describing here is about producing the product and all the disciplines that have been involved in the support of that. We have already given out the information. If there are another three or four pieces of information to be given out we will do that. One of the major difficulties we had in the last couple of days was getting around to everybody to ensure we had the appropriate permissions to release, and we have done that to the maximum extent possible.

Deputy Catherine Murphy

From the outline here, from page 11 on, it is clear the Department was fully aware all along that it was signing off on amounts, so it should not have come as a surprise that very significant amounts of money were being expended and drawn down. Is that correct?

Mr. John Tierney

My colleagues may comment on this. We send our financial reporting letter at the end of each month outlining the original budget versus the spend. We notified the Department of the major lots but it would not have been involved in the day-to-day finances beyond that.

Mr. John Barry

Because we did not have a funding stream or the overall budget approved, we were getting letters of underwriting from the Department on a regular basis committing to cover us for the funding we were expending on the project, including forecasted spends. For good governance, our board was constantly looking for that to ensure Bord Gáis was kept cost-neutral on it. We were not spending money without notifying the Department and it was covering us in letters of underwriting.

Deputy Catherine Murphy

The fact that we are discussing this in retrospect is part of the problem. We need freedom of information because there is a lack of transparency in how we do things. Whether one can have full transparency here is another matter. It is clear that we did not know, but the Department knew, there were very sizeable amounts and I will not ask the witnesses to comment on that because, as they said, it is the political side of things.

The architecture of the proposed Irish Water is cryptic. It has service level agreements with the local authorities, which will continue to be the direct employers of the staff who will predominantly carry out the work. The Commission for Energy Regulation, CER, will oversee the cost. Irish Water will run it. Pardon me for being sceptical but we have not been good at building good institutions and we have not had a great heritage in that regard. It looks a little like the HSE from where I am standing and alarm bells are ringing. It remains to be seen what the nature of it will be.

How many people is it expected Irish Water will directly employ? Will the local authorities continue to levy development contributions and will they be directly payable to Irish Water? How will that kind of thing work in terms of an income? Part of the reason local authorities would have employed consultants, and it is part of the same reason the witnesses are talking about in terms of designing facilities, is because they would not have had the in-house expertise. Will there be the in-house expertise in Irish Water or will it continue to put out work to consultants when it designs or upgrades water or wastewater facilities?

Mr. John Tierney

We have a hybrid funding model.

We are regulated but we are not fully self-sustaining like gas and electricity so we are still subject to a certain amount of Government subvention. We are a slightly hybrid model in terms of operation as well through the service level agreements. However, the Deputy endeavoured to potentially compare us to another agency. Given the manner in which we prepared for that, we would strongly argue that by putting in the systems we are putting in at the moment, it will give the organisation the foundation to be a high performance utility model. The critical point in spending this money up front is to save the Exchequer substantial moneys over the medium to long term as we have explained.

I refer to the culture within the organisation and performance in terms of the programme and the hours people are putting in working on the programme to stand up the business by 1 January, which was a hugely demanding deadline. The Deputy asked about the number of staff. We have 299 staff recruited and we expect to have between 500 and 510 by April or May of this year but the overall figure will not be finally decided until we are aware of the funds we will have available from 2015 as we move towards the regulated model because we have two different funding sources and that is still critically relevant to us.

The development contributions under the legislation will pass from the local authorities to Irish Water as part of the connection charging system. We are adopting the model in the first year within the local authorities from the point of view of the charging regime. It will then move into the fully regulated model and be an output from that.

With regard to the in-house expertise, we have tried to design the operation of the company to require little consultancy but there will still be an ongoing need to use companies under the capital programme regarding the design of schemes and so on because one can get that on a once-off basis depending on the scale of the scheme. One could not necessarily hire permanent staff to do the design of the schemes that might only be once off for ten or 20 years, for example, in terms of scale. Different factors come into play as part of a capital programme for which one would have to use expertise outside the organisation. That is part of the capital spending but, on the operational side, there would be little consultancy.

Therefore, the Deputies who asked those parliamentary questions could have been answered by the Department at that stage.

The projected set-up cost for Irish Water was around €180 million. At the moment, is Mr. Tierney projecting an overrun?

Mr. John Tierney

With regard to the Department, it would not have been at liberty to release the successful tenders.

Deputy Kevin Humphreys

Deputy Noel Coonan

I welcome the delegation and wish Mr. Tierney and Irish Water every success. I feel confident it will be successful, particularly as it is headed by a Tipperary man. It cannot but go right.

In view of what Mr. Tierney has heard already today from my colleagues to my right there seems to be a serious problem with communication, whether with Irish Water, the Department or the Minister. Will Mr. Tierney bring forward plans to improve communication? Will he consider establishing a parliamentary division in Irish Water whereby elected public representatives could make direct contact and seek advice or answers and responses to their various queries? If it is to be a success we must not forget the public element as it advances. Many difficulties will arise with the general public and, as always, public representatives will be the first port of call. Is Mr. Tierney in the position this afternoon to give an undertaking that he will address this serious matter with a view to improving it?

Mr. John Tierney

During the establishment phase a number of parties are involved in the process, including Government Departments, the regulator, Irish Water and the parent company. Irish Water took over responsibility generally on 1 January. The Deputy will have noted that with regard to issues such as metering, Irish Water took on responsibility for communications in July. Committee members from counties where it has commenced will know strong communication has taken place in this regard. Equally, there will be a communications strategy with regard to the company itself, and we have already put in place separate measures for local representatives which have been circulated to all local authorities. We will try to brief Deputies as much as possible and will advise them of our proposals in this regard as we go along. The service level agreement means we need a specific measure in place for local authorities and we will also need to communicate with Members of the House.

Deputy Noel Coonan

I thank Mr. Tierney. Does that mean we can look forward to easy access to Irish Water and having queries and problems dealt with in a prompt and efficient manner?

Mr. John Tierney

I am sure we will need a particular resource to be able to deal with any of the problems mentioned by the Deputy.

Deputy Noel Coonan

In regard to the consultants, various figures have been bandied around, including €50 million, plus €30 million or €35 million for legal consultancies. Perhaps Mr. Tierney might elaborate briefly now and in detail later on what exactly was provided by these consultants. For example, were advice, direction, systems, equipment and so on provided? Mr. Tierney referred to a figure of €44.8 million in respect of IBM, €17.2 million in respect of Accenture, €4.6 million in respect of Ernst & Young and €2.2 million in respect of KPMG. Perhaps he might elaborate on what exactly was provided by these companies. The ordinary individual would like to know, without his going into detail, whether these companies provided advice or other services. The sum of €44.8 million is a lot of money and people would like to know if for this amount systems were put in place and equipment and so on was supplied.

I am always sceptical of consultants. Coming from a local authority background, as did Mr. Tierney, I know that to even hang a gate a consultant's report was necessary, which report often cost twice the amount to do the job. It has been said that it is because Mr. Tierney comes from that background that consultants have been engaged extensively. I am sure the reason is to ensure the putting in place of a modern utility that will deliver a world class water system that will provide the best possible value for the consumer. Perhaps Mr. Tierney might confirm that that is the case. While, as I stated, I am sceptical of consultants, perhaps if they had been engaged for the PCAR and e-voting systems, millions of euro would have been saved.

Mr. John Tierney

The Deputy referred to the amounts of €50 million and €35 million. They are not, in the information I have before me, broken down in the manner stated by him. The sum of €50 million referred to is the spend to date, whereas the figure we have provided is the forecasted spend in the document.

I will ask one of my colleagues to elaborate further on the systems issue. However, the Deputy will note that the systems are outlined on pages 15 to 19, inclusive, including in relation to asset management. One of the big issues for the system is the critical lack of data on the condition of the assets. This information is hugely important in ensuring efficiencies and a better capital spend in upgrading or improving these assets. That is a huge part of the work involved. Another important part of the work is in relation to customer and operations billing; again, it is an enormous system. I mentioned some of the international systems in relation to customer billing. Mr. O'Donoghue has already spoken about this issue and can elaborate further, if members wish. As in the case of other organisations, there are many other support systems required, including HR, financial, health and safety, environment, incident management, capital delivery, environment regulation and so on. Reference was made to a system set up a number of years ago, but it was never implemented. The systems about which we are speaking have been largely implemented, with some, for parts of the process which will come into force on 1 January next year, remaining to be completed, including in relation to customer billing. These are one-off costs. My employment has nothing whatsoever to do with these consultants. They were already in the process of being recruited when I joined.

They were needed to do this and whether I ever joined was irrelevant. These were needed and it was pointed out that they were needed. They were procured properly and that is the reason we have the foundation for the utility we currently have. One of the reasons I joined was that I knew that Bord Gáis would have approached this in a very professional manner. That was critical. The essential factor for any utility starting off is to be well prepared. If a body is not well prepared, it will run into endless trouble, and that is a critical point.

Deputy Noel Coonan

I recall the then chief executive of Bord Gáis attending a committee meeting and telling us it would cost in the region of between €100 million and €150 million to set up Irish Water, and he is being proven fairly accurate by what we are hearing this afternoon. The witness has indicated the setting-up cost will not be €180 million but I wish to speak about consultants. Does this include the proposal to extract water from Lough Derg and transport it to Dublin? Has money been spent on consultants for that project or is that outside the setting up of Irish Water?

Mr. John Tierney

Irish Water has taken responsibility for capital projects, including the project mentioned by the Deputy. That will be delivered through a capital project team and we would have taken on the capital project people dealing with this in the Dublin city organisation, on behalf of the region. That comes in under the remit, and with the projects like that mentioned by the Deputy, there will be a major projects piece to deal with the three or four really big projects which are currently part of the overall programme. The Deputy mentioned one and there is another in Cork, a major drainage scheme in Dublin and the Ringsend scheme extension. These are projects of that nature and they are significant.

Deputy Noel Coonan

There will be additional costs in that respect. They are not included in this setting up.

Mr. John Tierney

How a body delivers projects like that in a capital programme is dependent on how much money there is for capital investment on an ongoing basis. We want to achieve two critical matters. Currently, there is only approximately €310 million per annum available in that regard. It was difficult for local authorities because even at the height of output in the sector, the proper funding of the capital piece only existed for probably five of their 130 year existence. As a utility we can marshal ourselves in terms of economies of scale, the market and in establishing a consistent customer base in income and we are trying to get additional funds. Our target is to get approximately €600 million of investment. We are trying to deliver that investment with no more cost than approximately €450 million per annum. That is the type of efficiency we are trying to bring.

Chairman

There are quite a few members and non-members who wish to contribute and I propose to take the next three speakers in a group. I ask for questions only, where possible.

Senator Fiach Mac Conghail

I welcome the delegation from Uisce Éireann and Mr. Tierney in particular. I will not repeat questions but I want some clarification so as to hone in on the costs. It seems, having looked at the document, that €97.9 million was spent by December. The guts of €100 million has been spent so far. Mr. Tierney has also confirmed that there is a likelihood that there will be some contingencies, so the €30 million contingency fund might be delved into to an extent. I will not proceed with that question as Mr. Tierney has dealt with it.

With regard to the €97.9 million, the statement indicates that approximately €50 million was used on specialists.

Okay. I am seeking the breakdown for lots 1, 2 and 3 between capital costs and consultant fees for the €44.8 million, and the same with regard to Accenture and the €17.2 million. That is the first question.

Second, what overlap is there between Ernst & Young, the lot in respect of governance, finance and regulation, and lot 9 in respect of KPMG, which appears to be very similar although there is an obtuse use of language? There is an allocation of €2.2 million for KPMG to provide quality assurance services for the board and senior executives in lot 9.

Third, I thank the witness for giving us the additional breakdown of the €13.3 million. There appears to be approximately €4.2 million of legal costs. Are there any other legal costs inherent in lots 1 to 9 on top of that figure?

Fourth, what has happened to lot 7? Lot 7 is not mentioned here. Is there a reason for that? It could be that it is just a small amount, but perhaps the witness would clarify that.

Finally, have any of the service providers refused to give permission to release information on fees and costs, as opposed to not giving Irish Water an answer?

Chairman

That is five questions but I will also take questions from Senator Naughton and Senator Landy in this group.

Senator Hildegarde Naughton

I welcome the witnesses. How much was saved by establishing Irish Water under the auspices of Bord Gáis? Do the witnesses have a figure for those savings? Second, the witnesses might feel they are answering the same question a second time, but perhaps they would clarify a matter. If the systems were based on those of Bord Gáis, was it not possible to ask Bord Gáis's system provider to provide the services to the scale required by Irish Water, rather than hiring consultants or third party providers and re-inventing the wheel?

In the same vein, value for money is the big concern of Members of the Oireachtas and the public with regard to the figures quoted in the media. The witness said he got advice from Scottish Water and Welsh Water. With regard to comparative pricing for their establishment costs, can the witness give figures for establishing the Scottish Water and Welsh Water companies? That would be very telling with regard to the value for money for these consultancy fees. Also, page 8 of Mr. Tierney's document refers to €32 million for IT infrastructure. Was all of that put out to tender? It would be very helpful to get a breakdown of that. Were all the legal contracts also put out to tender and how many expressions of interest and quotes were received? Perhaps we could be given a breakdown of the tendering process.

Senator Denis Landy

I thank the witnesses for attending. I am cognisant of the fact that Mr. Tierney was appointed on 29 January 2013 so my first question applies to representatives from Bord Gáis. I understand that Bord Gáis won the tender to take over Irish Water over Bord na Móna. In that process, Bord Gáis put forward the argument that it had 55 experts in its employ who could provide expertise in setting up Irish Water. As reported in the document before us, those staff were not made available to Irish Water when it was set up so it required consultants.

I refer to pages 5 and 6 of the document. Can Mr. Tierney answer clearly whether this fact was made known to the Department before it made a decision on the awarding of the contract for the takeover of Irish Water by Bord Gáis? The Government and NewERA contracted this project to Bord Gáis and it appears they were sold a pup. They were given to understand staff were available but then the staff were told they would be needed to continue to run Bord Gáis. It reminds me of the story of the man in the nightclub late at night trying to attract a lady and telling her he will bring her home in his Porsche. Then, she discovers there is no Porsche and that she has to pay for the taxi to bring them home. That is how it looks to me. Bord Gáis got this contract on the basis of in-house expertise and now we are paying €86 million of the €150 million start-up costs, some 57% of the budget, because the expertise is not now available to Irish Water.

I am aware of the challenges facing Irish Water. We have 1,000 water schemes across the country at risk of bacterial and viral contamination. Water in Roscommon is subject to boil notices on a continual basis and some 41% of water is lost through leaks. There are flood warnings across the Shannon and water shortages in Dublin and Leinster. People are prepared to pay for services but not for poor water or no water. Approximately €1 million was spent on engineering companies known to me, such as Nicholas O'Dwyer and JR Barry. How much work has gone into dealing with the issue of the shortage of water in Dublin and in Leinster, as referred to by Deputy Coonan, and the problem along the Shannon? Over Christmas we saw people on television who were afraid that their front gardens would be washed away by flooding. How much work has gone in during the preparatory phases to set up the reservoir at Garryhinch, County Laois, to deal with the problem of the flooding in the Shannon and the lack of water in Dublin and Leinster?

Mr. John Tierney

Senator Naughton asked questions about savings for Irish Water under Bord Gáis and Mr. Barry will respond to those.

Mr. John Barry

When we put a budget together, we looked at the level of contingency and applied 20%, which is where the €30 million came from. Conservatively, when we looked at the figures, the estimate was that we would save an additional 15% on top of the number which was put out, amounting to €29 million. I believe that estimate is very conservative and does not cost in the risk for doing this by some other method. Additionally, there is the sum of €58 million for software licences, which we saved by going through the VEET notice and by placing our licences in a central location rather than in the 34 local authorities. At a minimum, we are looking at €28 million plus €58 million, with the latter amount spread over a five year period. What is not costed in is the cost of standing up the utility by some other method. It was mentioned earlier that the fact that the time-scales were well defined de-risked the project to an enormous extent.

The Senator asked about the set-up costs for Scottish Water. That was set up over a period of four years, from 2002 to 2006, and involved the amalgamation of three regional authorities into Scottish Water at a cost of £200 million. That is a very good comparator for what we are trying to do in 18 months, in terms of costs and the fact that we are going from 34 authorities to one.

Mr. John Tierney

I wish to address the second issue regarding clarification on the systems, although I cannot remember the exact question posed. I wish to give an analogy for the systems. If one imagines a major local authority area and one drives into it and finds it has no buildings and is only a car park. Setting up Irish Water is tantamount to that. We need premises, systems and processes for all of the things that we rely on every day in order to do our job, such as payroll, work management, customer services and so forth, as we have described here today. Then we need people, who must be trained in the particular processes we intend to implement, given that this is the first time we have had a water utility in Ireland. The enormity of that work has not been grasped fully. It is a huge piece of work to bring that about. It is an initial establishment cost that is necessary.

Members asked for comparisons with Wales and Scotland but it is very difficult to do that now because when those countries did it, they used slightly different models. The Welsh model has changed back from being a privatised model. What we tried to do in our report for the committee was to use benchmarkings in terms of some of the items we are talking about here and what they cost in other utilities. In terms of value for money, the regulatory environment is all about the protection of the customer and ensuring value for money in terms of what we do.

Mr. John Dempsey

On that point, I would like to repeat what I said earlier. We will have to make submissions on expenditure levels to the regulator. As mentioned earlier, in any utility, such submissions receive a very high level of scrutiny. We have to justify our costs both before and after the event. When we go through a particular price control period, we then have to look back and explain and account for how we spent the money.

Senator Hildegarde Naughton

I seek clarification from the witnesses. Are they categorically saying that the expertise was not within Bord Gáis for particular services in the set up or establishment of Irish Water?

Mr. Paul O'Donoghue

Correct. As I said, we were able to bring something to the party but not everything that was required. I will use a simple analogy to make my point.

We are all familiar with getting new televisions or phones which are pretty much plug and play devices. We switch them on and the machine tells us how to set them up, tune in stations and so on. These boxes of tricks are not simple or straightforward. They come out of the factory as a standard model and must then be shaped to suit one's utility and processes. We must switch on certain functions and move certain fields around. Then, depending on how much it needs to be changed, it may go beyond configuration which is what I am describing to customisation, particularly if one's processes are very different. Sometimes one is not in control of the process or the regulator might say he wants something to be done in a certain way or the Government might introduce a policy that requires a process to be gone through in a certain way. This might mean that there is a need to recode the machine, but this - recoding - is not the kind of expertise a utility keeps. Experts are required to come and recode the machines.

Senator Hildegarde Naughton

Is this being done in Scotland and Wales?

Mr. Paul O'Donoghue

In so far as they have implemented similar systems, they would have had to go through exactly the same kind of process. They would not carry that expertise as part of their standing complement of staff.

We have selected a particular suite of IT systems, many of which have been mentioned, such as work and asset management, customer care and billing, Core for HR and Oracle financials. All of these systems must talk to each other. Every utility will have a different mix of systems and how we get them to talk to each other is unique. We need a systems integrator to get them to talk to each other to ensure the data from one system get on the bus and go to the other system when required in order that the records are kept right. This expertise is something one brings to the party at the time the system is implemented, but it is not kept among permanent staff.

Mr. John Barry

A benchmark worth pointing to is that in 2011, npower, the energy utility in the UK, spent £200 million alone on a billing system programme. It has 7 million customers.

Deputy Paudie Coffey

I thank the executives for coming before the committee. This has been a very welcome public debate on the transparency and clarity that is required for these issues. We are establishing a new national utility, which I would equate to the establishment of the ESB or even Bord Gáis. I think we all need to keep that in mind.

It is important that we acknowledge the practical expertise of Mr. O'Donoghue and Mr. Barry which is very evident to me and how they have initiated this process in their engagement through Bord Gáis. They have explained in clear terms much that I did not know before. That is very helpful from a public information point of view.

Some of my questions may have been broached already. The specific asset management system in which these specialists have invested was not in place before and was required for the management of Irish Water. The new customer billing and support systems were not in place before and were required for the efficient management of Irish Water and what the delegates describe as an asset worth €11 billion. We spend over €1.2 billion a year on that asset which is not efficient because approximately 40% of the water leaks from it. Am I right in saying we have inherited an ad hoc asset system that has not been properly recorded, that has been managed and maintained at different levels by different local authorities, depending on the funding made available in them? Will the delegates clarify this for the public record? Can these specialised systems being installed be utilised? Mr. Tierney mentioned a life cycle of 20 years. I presume that we will not have to reinvest in these systems in the short to medium term. Will he clarify this, too, for the public record? As was said, some systems introduced by the public service such as PPARS which cost €110 million and e-voting machines which cost €50 million never saw the light of day. Will Mr. Tierney clarify whether these systems will be used and that they have a life cycle that has been determined?

I welcome the manner in which the delegates have come and put all of the information on the table and their commitment to continue to do so. That is essential for public confidence. I want to hear again the reassurance that all national procurement protocols have been adhered to. Benchmarking was mentioned. I would have expected people with the expertise of Bord Gáis and others now involved in Irish Water to have analysed and compared similar systems and best practice. I expect that they have a cost-effective model and a system to deliver real savings to the taxpayer through the efficient management of the water supply which we have not had heretofore.

From where has the funding come for this budget? Is it coming directly from the Department, the taxpayer, or is it being raised by way of a loan?

Deputy Marcella Corcoran Kennedy took the Chair.

Senator Labhrás Ó Murchú

The answers we have received today will allay some of the fears in the public domain. In the light of these answers it seems that the Minister was privy to all of this information when he refused to give it in response to parliamentary questions. Following that refusal, a vacuum was allowed to develop, in which a controversy arose, which has to be a distraction for Uisce Éireann. In the testimony we have heard today the delegates have mentioned that Uisce Éireann will always abide by the decisions of the Government. Will Mr. Tierney confirm that he has no objection to the Minister deciding in the future to put information he has received from Uisce Éireann on the public record? It is important to have that point clarified.

There is a lot of unrest in local authority areas regarding possible redundancies. Mr. Tierney has outlined that there will be no compulsory redundancies. Was this matter discussed during the engagement with 34 local authorities because I take it that redundancies could be a matter for local authorities rather than Uisce Éireann? It would be helpful to have that matter clarified.

While the assets being transferred, whether they are worth €11 billion as put forward by the local authorities or whatever figure is brought forward subsequently, I understand pension liabilities will not pass from the local authorities to Uisce Éireann.

Can Mr. Tierney elaborate on that point as I presume this has formed part of the discussion with the Department and with the local authorities? In the discussions which have taken place in the Oireachtas on that matter it would seem as if the assets were being taken from the local authorities - €11 billion would be very substantial - but liabilities relating to pensions would remain with the local authorities. Can Mr. Tierney expand on that point also?

As regards the projected €2 billion savings to the Exchequer, what is meant by savings? Are these to mean savings on investment in water services by the Department and investment by local authorities? Is it a profit situation of €2 billion coming forward from Uisce Éireann in the year to which Mr. Tierney referred? If that is the case, obviously this must be based on projected usage of water. To date, we do not have any report from the regulator as to the costs. If that is the case, how are we to estimate what the income is likely to be? If it is based on income, that income will be taxpayers' money. There is quite an amount of concern because we understood that the new arrangement was not just about the generation of income, it was also about saving water which in turn will result in less income. I ask Mr. Tierney to expand on where that €2 billion is coming from and what is the precise meaning of "savings". If we had that on the record it might be helpful.

Today's exercise has been good and helpful, and we would have had a meeting on the broader issues in February, but to what extent would today's exercise have been necessary if all the information had been placed on the floor of the Oireachtas when it was requested originally?

Deputy Gerald Nash

I will seamlessly move on from Senator Ó Murchú's point and he nailed it in pointing out that a very full and frank communication of all these issues previously would have obviated the need for a hearing such as this. I hope Mr. Tierney and his colleagues would admit that public confidence in Irish Water is crucial to its legitimacy, particularly when we are attempting to seek resources from the public to operate a public utility. It is very welcome that a public utility, owned by the Irish people and answerable to the Oireachtas, is now in operation, but Irish Water has not got off to a good start in the minds of members of the public because of the farrago over the last few days.

As a TD, a member of this committee and of the Committee of Public Accounts, and as a citizen, I find it offensive that the type of information we are discussing here this afternoon had to be extracted from Mr. Tierney in an interview with RTE's Sean O'Rourke last week. I find that appalling. In that regard, it is quite clear to this committee and to the wider general public that the modus operandi of Irish Water needs to change if it is to gain public confidence and acquire the legitimacy that it needs. I am confident that can happen but it can only happen if Irish Water learns lessons. My fundamental question to Mr. Tierney is what lessons has he learned over the last week and what lessons has Irish Water learned over the last week in terms of generating public confidence and in terms of its obligation to the Irish people as a public utility wholly owned by the Irish people?

I have a few more questions. There has been much debate in recent days about the fact that, as we speak, Irish Water is exempt from the scope of the Freedom of Information Act. We are all of the view that this needs to change. That Act was essentially reviewed in recent months and legislation in this respect is currently going through the Oireachtas. Can Mr. Tierney confirm whether Irish Water had any function whatsoever in terms of communicating with the Department? I would like to hear his view on whether the organisation should be exempt or otherwise from the scope of the freedom of information legislation.

I ask Mr. Tierney to put on record his salary. As I understand from public commentary, it is €50,000 below the pay ceiling for those in commercial State-companies. Can Mr. Tierney put on record also whether he, any of his colleagues or any full-time staff member, wholetime equivalent, in Uisce Éireann has received any bonus payments last year or whether any bonus payments would be expected as part of their contract for next year or any subsequent years?

We are dealing with fixed price contracts awarded to service providers which is a positive development. Related to that, I ask the witnesses whether those contracts provide for any sanctions or penalties where there are cost overruns or where elements of contracts fail to be delivered on time or within budget?

Acting Chairman (Deputy Marcella Corcoran Kennedy)

A series of questions has been asked and Mr. Tierney might answer them in the order of the speakers, starting with Deputies Coffey, followed by Senator Ó Murchú and Deputy Nash.

Mr. John Tierney

On Deputy Coffey's question in terms of equating with other utilities, in section 5 we go through that in the report in a serious level of detail, acknowledging the fact that we had to keep the report to a certain length. On the specific asset management system, the customer care and billing system and the other systems the Deputy mentioned, all of those were required. I will ask Mr. John Barry to go through that. We have verified in the report that the systems are already up and running. The metering programme was the first system launch in terms of Irish Water but in terms of the business we had a major take on in that respect on 1 January.

Mr. John Barry

The point the Deputy made is very relevant. We have inherited a relatively ad hoc system of asset management through no fault of the people involved but that is the way the structure of the industry was. We have now centralised that in one central system. Asset management systems are data hungry. They require an awful lot of data. As that data are gathered and fed in, that allows the asset managers to make informed decisions about where to direct the capital investment and where to direct their maintenance programmes. As Mr. John Tierney said, we launched the asset management system in mid-2013 to facilitate the metering programme and on 1 January we went live with the upgraded version of that, which was always part of the scope. We now have a functioning asset management system. I can give the Deputy a tangible example of that. When the operatives are installing meters the work orders to the individual houses where the meters are to be located are despatched remotely. They have a mobile device in their van and are notified of the jobs through their mobile device; they dig the hole, put in the meter and record what they find such as for example, lead pipes or leaks, and upload that data and that goes back into our central system. Equally, the completion of those jobs are recorded and they go through to our customer service centre. If a customer wants to know when a hole will be filled or whatever, the people in the contact centre have instant information on it. That is a tangible example of what these systems will involve.

Deputy Coffey queried the issue of reinvestment. Obviously we have made a very significant investment in the past 12 months and there will be continuous upgrades as the technology improves as we move forward but for us to invest we will require regulatory approval. We would have to go to the regulator if we want to invest more in these systems in years to come and seek approval for him to sanction that spend, be it upgrades or complete reinvestments in new systems. The Deputy can be assured that any money that is spent post this investment will be subject to absolute regulatory approval. From my experience in the gas business, there were many instances when we refused approval for the spending of money. We would have to make a strong business case for the spending of such money and there would always be a business case to support such investment.

Deputy Paudie Coffey

On the asset management system, there may have been a reasonable expectation by the public or others that the existing Bord Gáis asset management system might have been utilised, tweaked or whatever for Irish Water but it is clear from what Mr. Barry is saying that is not possible as they are two entirely different systems, entirely different networks, and a whole stand-alone system was required for Irish Water.

Mr. John Barry

We used the existing system to launch the metering programme which went forward initially and that was driven by the timescale of the metering programme.

If we are satisfied with that group of answers, we will move onto the next group of questioners, with Deputy Michelle Mulherin, Deputy James Bannon and Deputy Luke 'Ming' Flanagan.

Deputy Michelle Mulherin

I do not want to be repetitive and, at this stage, many questions have been asked and some of the concerns debunked. In a new social and political chapter in the history of the State, if we are going to charge people for domestic water, it is important we are assured that we have an effective operational system and a system of capital investment, that people are getting value for money and that we are not, in Irish Water, creating a monster that we will all have to account for in years to come. That is from where public concern comes. The idea of getting information is that we can ensure there is fairness and value for money.

The case for domestic charging is that it is common throughout the rest of Europe. To date, businesses have carried a disproportionate burden in respect of water and sewerage charges. The system we have does not tend to push the individual towards water conservation and it is more a matter for the individual's conscience and disposition. The witnesses have presented a serious company and a serious job of work that must be done to set up a company to service 1.4 million customers. The end result, or the aspiration, is an effective, somewhat commercial, efficient way of delivering the water and sewerage services to people.

It should also be a more dynamic and proactive way of getting the infrastructure in place that is badly needed. That would be very impressive, but it flags one concern. I know consultants are used to establish the cornerstones in order that we can build on them and get it right. However, my serious concern, based on experience, is that using the traditional polluter pays methods, a storage system or water services facility in a big urban centre could be affordable because the polluter contribution could result in more investment in the infrastructure, but in rural areas, like the one where I am from, there was not such investment because people could not come up with their segment of the money. Therefore, many rural areas did not see investment in water or sewerage infrastructure.

There have been comments that the company will be lean, mean and trim and that it will come with efficiencies, savings and plans for economic and regional development. As I have said, rural areas have not seen this investment, with one of the problem being economies of scale, as some areas do not have the big businesses that can supplement investment in the delivery of infrastructure, whether through development charges or other means. With regard to the delivery of the infrastructure, coupled with whatever the State puts into it, what safeguards has Irish Water put in place to ensure there will be equitable investment of capital in rural areas? How will it avoid the overriding consideration of achieving a return on investment, with the company looking at profit as the bottom line only? Where there are no economies of scale, how will projects be funded? We are talking about more a expensive delivery to smaller populations; therefore, how do we know they will not be put at the bottom of the pile or deprioritised?

What is the company's public service obligation in this regard? The likes of Bus Éireann and Iarnród Éireann have such an obligation, but what is Irish Water's obligation? This is more than just a commercial company and there is another aspect to the issue. I respect what the delegates are trying to do, but my concern is not really up for debate. It will be a real concern for the people I represent who live in environmentally sensitive areas. We saw what happened in Galway when cryptosporidium was found and there is also the septic tanks issue. Some people in rural Ireland do not have a proper water supply system; therefore, how will the company address such issues within its remit? The matter has not yet been addressed, but I would like some response on the matter at this point.

Deputy James Bannon

I thank the delegation for coming before the committee. In December 2011 the Minister, in addressing a water summit in Dublin, revealed that PricewaterhouseCoopers had carried out the first phase of its independent assessment of the concept of the Irish Water project as part of the programme for Government. I see no costs outlined in the document before us for its consultancy fees and no reference to who took care of them. Was a full analysis, including of costs, carried out by the Cabinet at the time? At the summit the Minister categorically stated he would be using the expertise of local authorities. There is a great deal of such expertise in local authorities up and down the country, as I know as I was a member of local authorities for a number of years and involved in the setting up of group water schemes. There were personnel with experience in the authorities that would be the equivalent of that of consultants.

The public is angry as it believes the €50 million spent on consultancy fees is excessive, considering that 34 local authorities around the country last year collected approximately €200 million in non-domestic charges. One quarter of what was collected last year has been spent on consultancy fees, which is excessive. We are overlooking the fact that the Department and, by extension, the Government and the State is spending in the region of €300 million to upgrade the water system and should not be giving the impression to the public that the infrastructure is also being dealt with, as it is not; the €50 million was solely spent on consultancy fees.

Will there be further spending by Irish Water on consultancy fees? In the document presented to us it is indicated that the Irish Water programme will run to April 2015 in order to finalise systems and deliver a further geographic information system and a mobile workforce management system. How much will this cost and is the cost included in the €50 million figure? The document also indicates that the Irish Water business model is to operate largely within Bord Gáis and the local authorities, with a very small element of support from third party providers. Who are the third party providers? Do they include the national confederation of group schemes or local authorities? How much will they cost and who is engaging them? I would like these questions to be answered.

The document indicates that the entire programme and associated budget, as well as the approach to resourcing and staffing, were rigorously examined and approved both by the internal Bord Gáis governance approval process and relevant Departments. What Departments were involved other than the Department of the Environment, Community and Local Government?

Deputy Luke 'Ming' Flanagan

It is quite obvious, having listened to Mr. Tierney, that there was a big hoo-ha because people did not know this money was being spent, but the Government knew it was being spent. It is very handy to dish all of the dirt on Irish Water as that is how things work in this country. The HSE was set up in order that we could dish the dirt on somebody else when it came to health matters. That is how the country works.

It is quite obvious what Irish Water is trying to do. It is building a massive cash register to collect money in order to repay debts that were not ours in the first place. It is sickening, as the idea that we do not pay for water is becoming the truth because of repetition. As we are talking about setting up a system, I will pay for water a third time. I currently pay for it through taxation and I also pay for it in going to the supermarket. As there is another system being set up, I will have to pay for it a third time. The only system that has worked so far is going to the shop. If it does not work in that scenario, in which there is great quality assurance, I will get an apology and my money back.

How much has been saved by going with Bord Gáis? The original idea was to make savings because the company had much of the required talent, but it now seems that it has none of it. What exactly was saved? When somebody has done a job, it is nice to know how many hours of work were done for the money and the wages involved. Were the consultants getting €1,000 or €1,500 a day, for example? They were probably getting plenty to decide what would be charged for water. Ordinary people will not receive such payments.

Mr. Tierney indicated that he had joined Bord Gáis because its approach would be very professional. Although we have strayed into the area of water quality, apparently the only reason we are here is to ask if we have received good value for money. I read today the Local Government Audit Service report on spending in Dublin City Council in the year ending 2011. It states:

It is evident that the financial management, as part of project management by the environment and engineering department for this project, has been weak. There needed to be evidence of much more comprehensive oversight in monitoring and controlling expenditure. No proper classification of expenditure on an invoice basis was available to account for moneys spent on this project in the initial audit stage (April 2012).

This is a project that was led by Mr. Tierney. The question is whether we trust what is going on. How the hell can one trust what is going on if the head of Irish Water is having such things said about him by the LGAS report? There is something wrong.

We were meant to meet to talk about whether we were getting good value for money but in his address and the documentation that was emailed to us, Mr. Tierney also strayed into the area of water quality. He brought it up and it must be addressed. As far as I can see the only quality that will be looked after is that the billing systems will be of quality but the water will not be of good drinking quality. Mr. Tierney referred to dealing with water quality issues. How will he deal with them? Will they all be end-of-pipe solutions – in other words, will a load of chlorine be fired into the water to make it drinkable or will the pollution be prevented in the first place? If that is the case, what will be the role of Irish Water?

Mr. Tierney raised the issue of water quality. He referred in the report he presented to us to storm water getting into sewerage systems and polluting water courses. I will give an example of what currently goes on and I would like Mr. Tierney to tell me what will happen when Irish Water takes over. Our local authority polluted the local water courses because of a problem with the storm water system which allowed storm water to get into the sewage treatment system. When I reported it to the Environmental Protection Agency, EPA, the EPA got the local council to investigate the matter. What will change under Irish Water? The same local authority system will be used to solve the problem. I am paying for water three times. It will cost a fortune to put in the payment system. Mr. Tierney cannot tell us what will be saved by going with Bord Gáis. Mr. Tierney’s record is not good in terms of what was said about him in the report unless what I read in The Irish Times today is not true. It would not be the first time that was the case but I urge Mr. Tierney to please prove the newspaper report wrong.

Deputy Michael McCarthy resumed the Chair.

Deputy Marcella Corcoran Kennedy

I thank Mr. Tierney and his team. He has explained many of the issues of concern held by the public. We wish to ensure value for money is being obtained. While I disagree with some of the previous speakers I am cognisant of the fact that we need Irish Water. We have needed such a body for a considerable time given the amount of taxpayers’ money that is wasted in treating water and the fact that 40% of it leaks back into the ground. Irish Water will also be responsible for wastewater. Other speakers have referred to the significant problem we have with contamination. It is an enormous challenge and must be addressed as quickly as possible. Has Mr. Tierney made any calculations of the fines that will be imposed on this country for having poor quality water or water contaminated by effluent or other undesirable matter?

My other question relates to the fact that Irish Water will, in effect, be a monopoly in its management of water and wastewater. Has Mr. Tierney put systems in place to ensure the consumer gets value for money and what are they? Could he also ensure that the money entrusted to him through the taxpayer will provide value for money?

Reference has been made to the fact that Mr. Tierney met with the Commission for Energy Regulation, CER. How often have Bord Gáis and Irish Water met with the CER to date and how often does Mr. Tierney expect to deal with the CER in the future?

Reference has been made to a matter previously but I wish to get further clarification. What amount of funding has been saved by the use of Bord Gáis’s own systems and processes? I would very much appreciate if Mr. Tierney could provide a figure for the total sum involved.

I understand a 12-year service level agreement has been obtained with local authorities.

Mr. John Tierney

Could Deputy Corcoran Kennedy just go back to her previous question?

Deputy Marcella Corcoran Kennedy

My question related to how much money has been saved by the fact that Bord Gáis's systems and processes are being used rather than the work being put out to tender. Mr. Tierney referred to the software licences, for example. What is the total amount of savings?

I had some other questions but they have already been answered so I will not waste time on them. The capital project team is slightly outside the remit of the meeting but reference was made to it earlier. I would greatly appreciate if a detailed report could be provided for the February meeting on the progress with water abstraction from the Shannon for Dublin.

Mr. John Tierney

The main point Deputy Mulherin raised was about rural versus urban water services. Irish Water must come up with a 25-year investment plan for our long-term strategies. In addition, we are preparing a two-year capital investment plan in the short term and we will also have to prepare plans as part of the price control review with the regulator.

Efficiency should be interpreted as the ability to have money to spend on more relevant pieces of work that we need to carry out. I mentioned capital. For an annual spend of what would be €600 million today, if we had it, our target is to try to drive the output of that for about €450 million. That is the type of target we are setting ourselves. We have 2,000 water and wastewater treatment plants to manage, not one or two big ones. We have all of those other ones to manage. We want to put in place procedures and investment that gets to the ones that need to be dealt with quickest. On the next day we intend to give a more detailed outline of the asset management approach and some of the planning approach. That will cover some of the questions that have been raised by certain Deputies.

In terms of compliance, we have to deal with the EU and Irish law. We are already dealing with a serious legacy with the European Court of Justice, ECJ, case and also with issues relating to the Environmental Protection Agency.

Deputy Michelle Mulherin

Mr. Tierney mentioned a two-year capital investment programme. Who approves the programme and is it the local authorities who prioritise what should be on the investment programme given their local knowledge?

Mr. John Tierney

We have consulted with every one of the 34 local authorities in putting the programme together. In terms of the handover of the capital programme to Irish Water, Deputy Mulherin will appreciate that a number of projects were under way and other projects had received approval. We have to take them on because they were approved by the Department on 1 January. That is accounted for in the programme. We will come back and provide all of those details on 11 February.

Chairman

Yes.

Mr. John Tierney

In regard to the internal processes involved, we have talked about the submissions we made to the Department and the approvals we have received. I understand the interaction with the other Departments will be covered separately by those Departments before their various committees.

Deputy James Bannon

In regard to the two additional systems being set up-----

Chairman

I ask the Deputy to remember that three members who have been here since 2.15 p.m. have yet to put their questions. I am anxious to get to those members. The Deputy has had a good hearing.

Deputy James Bannon

I am sorry, but two of my questions have not been answered, those relating to the geographic implementation of systems and the mobile workforce management schemes. How much will they cost and are they provided for?

Chairman

Please allow Mr. Tierney to answer the question.

Mr. John Tierney

The cost is included in the figures we have supplied to the committee today.

Deputy James Bannon

Are they only estimates at this stage?

Mr. John Tierney

The forecast expenditure is included in the presentation.

Mr. John Dempsey

The Deputy has asked about the systems we have in place to ensure the consumer will get value for money, to which there are two aspects. The first is from a financial perspective, about which I will speak. The second is from a customer service perspective, about which Mr. O'Donoghue will speak.

From a financial perspective, we want to keep costs as low as possible. Internally in Irish Water and within the Bord Gáis group we have appropriate controls for how we spend money. That was one of the reasons Bord Gáis was selected to set up the utility. An important aspect of the establishment of any utility is that one control costs. Apart from control internally within Irish Water and the group, there is also scrutiny by the Department and through other fora such as this one, as well as by the Commission for Energy Regulation. We have to make a submission to the commission on our costs and will be doing so in the next period of time.

Mr. Paul O'Donoghue

Consumers today will become our customers and have different expectations. We will be providing these services as a regulated utility and subject to the same codes, charters, guidelines and so forth that are imposed on Bord Gáis, the ESB and other energy providers in the State. We will be expected to publish our customer commitments and make promises to the public quite explicitly about how services will be provided, including, for example, about how quickly we will answer telephone calls, deal with complaints, respond to call-out requests and conduct work on a customer's property, including complete reinstatement and so forth. All of these will become published standards and harmonised in the sense that the same standards will apply nationally to all customers of Irish Water. We will deliver this over time and do so in the context of being a regulated utility. The CER will consult on all of these standards and set them out publicly. They will then be published on websites, in brochures and leaflets in order that the public will be aware of them. I do not doubt that, as with other utilities, the CER will then move to impose penalties and provide compensation where we fail to meet the required standards. If we make a public promise and it is evident that we have failed to achieve it, the public will have the right to receive compensation for not being provided with the service promised to them.

Mr. John Barry

A question was asked about the number of man days involved in the project. I have just checked our documentation and while I am broadly happy with the numbers, with the permission of the Chairman, I will revert on that detail because the figure looks to be a little low. I will gladly come back with the accurate number. We have an estimate which appears to be low. Rather than give that figure now, I will revert back, if that is acceptable.

The second question concerned the savings made as a result of the contract being awarded to Bord Gáis. As I said, in the context of contingency funds and the additional money that it might have cost, we made an original estimate of approximately €29 million against a 20% and a 35% contingency figure, given the unknowns. Savings were made in the area of software licences in the order of €58 million. The most important point is that the value one puts on what the Bord Gáis utility brought to the establishment of Irish Water is very hard to quantify for a number of reasons. First, we have come from a standing start and in 18 months delivered the utility on time and within budget. I think, without fear of being challenged, this has never been done before anywhere. At the heart of this was the core expertise Bord Gáis had brought, but putting a value on it is very difficult. If I had to put a value on it, it could easily be tens, if not hundreds, of millions, if one went to the market and tried to bid for what has been achieved. Second, the utility expertise we brought in in terms of picking the systems and dictating the contracts for the service providers to do what they did was fundamental to what we had been doing as a utility for many years. It is difficult to quantify it and it is not covered in the numbers I have outlined. The savings, therefore, are far greater than I have outlined.

Deputy Marcella Corcoran Kennedy

Can the delegates answer the question on potential fines by the European Union?

Mr. John Tierney

There is interaction between Ireland and the EU with regard to the European Court of Justice case. I will come back to the Deputy on that figure.

Chairman

I will now call the Senators and Deputies who are not members of the committee and thank them for their patience.

Senator Fidelma Healy Eames

I thank the Chairman for chairing this marathon session and the delegates for their thoroughness in answering the questions posed.

Does Mr. Tierney accept how bad it looks in putting all of this very useful information that we are getting today into the public domain after the Bill has passed? In his presentation he said the approach taken by Irish Water was in line with a modern, new utility, but the information I have suggests that is not necessarily the case. We are talking about value for money and I would like Mr. Tierney to defend some of the utility's actions. Irish Water is using drive-by meters, for example. Why, when the rest of the world is migrating away from such meters to smart meters, is Irish Water installing an older, out-of-date system at huge cost? Mr. Tierney has said that in July 2013 a letter from the Department gave Irish Water consent on a figure of €250 million for the metering project. Is that the total cost? How can he defend the decision to install an older, out-of-date system when countries such as Malta, which was praised by IBM, are using a smart metering system? Why was this decision made? What consultant recommended this course of action? Was it recommended by a consultant?

We have been back and forth on the issue of the expertise Bord Gáis had over and above that of Bord na Móna, which is why it won the contract. Mr. O'Donoghue said Bord Gáis could not possibly have all of the required expertise in-house, which I accept. That has been verified elsewhere and Mr. O'Donoghue has said Irish Water needed so-called "global nomads" with expertise. Did Irish Water consider secondments, as was done in Northern Ireland? I heard the CEO of Northern Ireland Water who retired recently speak about that issue recently. He made the point that hiring permanent staff would have been too costly and that hiring consultants would have been very costly, too. In that context, considering secondments was the wisest choice. Why was it not considered, or was it? That approach is used in Government Departments all of the time.

I ask the delegates to clarify an issue reported in some newspapers today that four contracts were awarded without going through the public procurement process, even though they had met an EU regulation guideline. Is that true? What will the overall spend on consultants be by April 2015?

My final question relates to those consumers who are members of group water schemes and those who have their own wells. Will they have any relationship with Irish Water? Will they have to pay any charges to it?

Deputy Robert Dowds

I welcome Mr. Tierney and his team and hope their presence is indicative of a generally open approach to what is the most important and vital service we require in the country.

The witnesses are in charge of the most important service we require because we all need water in our daily lives and it is vital, along with electricity, for industry. I am very conscious of that and that it is very important the witnesses be given every opportunity to deliver an excellent service. The complexity of it is such that I have concerns on the delivery, governance, the technology involved, etc. On the way into this meeting I gave the witnesses a list of 18 technical questions for which I requested written replies. I can read them but the Chairman would probably prefer me not to. I would very much appreciate if the witnesses could reply to me and the committee on those technical questions on the delivery of IT systems, etc., as soon as possible.

I will be interested to hear the witnesses' comments on how they intend to interact generally with local authorities, particularly when problems arise, and what their legal obligations are to do so. Could they comment on an issue that arose in the media yesterday on the provision of a water provision facility in Cloghran in Fingal? The allegation on the radio was that they cannot go ahead with this because it was not ready to go to tender before the end of December. There may be more such issues. Will the witnesses be able to deal with them?

Chairman

That is not really germane to the service provision but perhaps at the meeting of 11 February Irish Water might reply on that.

Deputy Robert Dowds

That is fair enough.

Deputy Richard Boyd Barrett

The context for this hearing is the sense of outrage people who have been hit with property taxes and are soon to be hit with water charges feel when they hear money they would expect to go to fix leaking water pipes, provide reservoirs and improve water quality, may be going to line the pockets of highly-paid consultants and executives in Irish Water. Furthermore, our Government was trying to cover up that fact over the last year. Having listened to the Irish Water representatives, my fears are not allayed on any of those questions.

Who knew what, when and where? Did Mr. Tierney know parliamentary questions had been asked when they were asked, along the lines of what has been asked today and on which we finally got answers today? Is he surprised that last week, Government representatives, including the line Minister, Deputy O'Dowd, and the Tánaiste, expressed surprise about the amount that was spent on consultants, while he is telling us they knew? Ordinary members of the public, and I as a public representative, are confused at how Mr. Tierney can tell us they knew while last week they said they were surprised. We need clarity. Mr. Tierney has given us the answer, that they knew but were not telling us. Therefore, their expressions of surprise last week were fake. They were fooling the public last week when they said they were surprised. They were not surprised because they knew. That appears to be what Mr. Tierney is telling us.

Is all the money that is being pumped into Irish Water in the form of home taxes, and soon to be water charges, going to line the pockets of consultants and highly-paid executives? The figures are extraordinary: €44 million to IBM. The Irish Water representatives have tried today to convince us that this is money well spent. They would want to do something special to justify €44 million to IBM or €17 million to KPMG. How many pipes were fixed for this money? What is the percentage improvement in the amount of water leaking out of the system for the money that was given to IBM, Accenture, KPMG and Ernst and Young? Not one iota of water has been saved as a result of that expenditure.

Chairman

Could the Deputy ask his question?

Deputy Richard Boyd Barrett

That is the question. How much water has been conserved as a result of that expenditure? It all relates to billing and charges. If we did not have water charges, and consequently did not have the requirement to install meters to monitor how much water people are using, how much of this expenditure would have been necessary? Is the vast majority of this expenditure about billing and charging rather than about building reservoirs, fixing water pipes, ensuring water quality, and the issues people are concerned about? Can the Irish Water representatives convince us that there will be real, meaningful savings?

The meters we have installed can inform us on leakages. We do not require constant streaming to identify leakages. The systems about which the Senator is speaking are not universal. It is not the case that water utilities everywhere are switching to fully smart metering systems, with radio feeds or constant data streaming. The nature of the use of the product does not require minute by minute consumption patterns.

Senator Fidelma Healy Eames

Mr. John Tierney

I thought I had referred to it.

Mr. John Barry

While I have the utmost admiration for Bord na Móna as an organisation, at the time we and Bord na Móna made our submissions to establish Irish Water my sense was it did not know the utility business. Bord Gáis runs a utility business and this is the experience we have brought. I have tried to clarify this.

With regard to secondments, people are still speaking on the airwaves about how this could have been delivered and there are many ways. I did not hear all of the interview with the former CEO of Northern Ireland Water, but what was outlined is one method. I suggest there is no way this method could have delivered it in the timeframe in which we were asked to deliver it.

Senator Fidelma Healy Eames

It is not unusual to hire someone on secondment for 18 months if he or she has the right expertise and there was an 18 month timeframe.

Acting Chairman (Deputy Marcella Corcoran Kennedy)

I appreciate that Senator has been here all afternoon, but so have many others. I ask her to allow the delegates to answer her first set of questions rather than interject.

Mr. John Tierney

We did second people from local authorities and Bord Gáis and they are part of the delivery programme. It would not have been possible to second the expertise about which the Senator is speaking to the scale required for the systems involved to deliver what is required of the utility.

The Senator asked about the public procurement process. We gave an answer, but we can repeat it, if the Senator wishes.

Mr. John Barry

I can absolutely declare that we followed all public procurement and EU procurement rules in our procurement of goods and services.

Senator Fidelma Healy Eames

If the Acting Chairman does not mind, I require clarification on the four contracts reported on which were not subject to public procurement and EU procurement rules. Is it true that they were not open to others to tender?

Mr. John Barry

They did go to public tender approximately two years ago under the transformation programme within Bord Gáis. The rules allow one to publish that one wants to use contracts in another context for various reasons. We published the notices in respect of the four the Senator mentioned which gave people who may have bid at the time an opportunity to come back to us. That did not happen and it is entirely within EU procurement rules.

Senator Fidelma Healy Eames

I take this point completely, but Irish Water is being billed for the process, even though the contracts came through Bord Gáis.

Mr. John Barry

As I mentioned, the process we followed has saved substantial amounts of money in licensing. It is completely in accordance with the rules.

Mr. John Tierney

Customers using wells do not come within our remit. Deputy Robert Dowds submitted a list of 18 questions to which we will respond.

Deputy Robert Dowds

The reason I have submitted the questions is I have real concerns about whether Irish Water will be able to be up and running next year because of the huge complexity of what it is undertaking. From what I can find out, it is trying to make this jump in a much shorter time than other organisations such as Northern Ireland Water which has been doing it for a period of 40 years.

Another question I asked was how Irish Water intended to interact with local authorities on water issues.

Mr. John Tierney

Under service level agreements and the annual service plans we have put in place arrangements to deal with all of the processes. The local authorities will deal with us through the management aspect of our service. If the Deputy wishes I can update him on the details another day. We have established a communication system with them that will be in two parts, from 1 January and full implementation from 1 April.

With regard to Deputy Boyd Barrett's question, earlier I outlined to the committee the process by which we engaged with the relevant Departments. I understand that the Departments will respond through their internal processes for approvals and, therefore, it is a matter for them to answer his question.

Deputy Richard Boyd Barrett

That was not quite what I asked. I shall repeat my first question. Was Uisce Éireann aware that parliamentary questions had been asked?

Mr. John Tierney

I have answered the Deputy's first question.

Deputy Richard Boyd Barrett

Sorry.

Mr. John Tierney

In response to his second question, we have a process in place whereby we are notified about parliamentary questions. Therefore, we would be aware that parliamentary questions are asked but we are not responsible for answering them. We wish to be aware of what happens in parliamentary debates and the questions asked.

The Deputy has again asked about expressions. However, I would not comment on procedures beyond Irish Water.

A question was asked about the money for establishment. As I pointed out earlier in the meeting, the money does not, in any way, come out of the allocations for operations and maintenance and capital investment. There is a separate funding line in that regard. In the current year the moneys for both operations and maintenance and the capital investment shall come from a mixture of the Department of the Environment, Community and Local Government and, potentially, some funding to be raised by Irish Water. It is on that basis that the estimated figure for capital investment for 2014 will be €310 million with roughly €240 million provided by the Department and €70 million to come from Irish Water.

Mr. John Tierney

I have already covered the issue of Uisce Éireann's management team, their appointment and where they came from. The person appointed head of asset management is the most experienced water engineer in the country. The person appointed head of communications is a communications expert, a chartered engineer and has serious qualifications in environmental science. We picked the best people for the jobs based on the applications submitted through the open recruitment campaign and that is the way recruitment should be done. The whole management team was picked on that basis.

I have covered the issues that were mentioned earlier. The Deputy asked one other question on the pay model. The differential, in my regard, is €10,000 but that has not been in any way affected by the pay model. Let me explain. When one compares two jobs then the pay model is determined by the sector. My pay is a matter of public record and it was stated from the very first day. The Deputy mentioned my pay but the comparative costs are far lower than comparable utility pay in Ireland and the UK utility sector.

With regard to the pay model generally, I pointed out that the pay model that we have introduced is a factor of difference in terms of levels of pay that are paid, by comparison, in the UK.

Deputy Richard Boyd Barrett

I have one last question.

The difficulty is twofold - a lack of oversight and a lack of access to information. That is a flaw in the legislation brought forward by the Department of the Environment, Community and Local Government and passed by the Oireachtas. I find it hypocritical that many of us are questioning issues raised during Second and Committee Stages in the Seanad and the Dáil and the legislation was voted through. I did not think we would be back this soon. Irish Water and other similar bodies will appear before this and other committees until such time as we take responsibility, ensure oversight is in place and there is access to information. This is what we voted through and we are where we are as a result. Given that businesses do not like paying water charges, Irish Water will have a very difficult task. There are a few things it can do to help itself.

With regard to the legislation and its flaws, it does the public and Irish Water no service. If Mr. Tierney was to request the Minister to make his body subject to parliamentary questions, that would go a long way to addressing the difficulty. I do not think Irish Water has a board of directors. Is their merit in it having a board of directors to act in the public interest and in terms of oversight? With respect to the kernel, I agree with my good colleague, Deputy Richard Boyd Barrett and others, that the public do not have confidence when large sums are spent on consultants because they cannot quantify, as I cannot, how they can be spent on such a service. I will give one example. Some €5.4 million was spent on governance and regulation. If Irish Water gave a commitment to publish on its website an exact breakdown of that amount, rather than the bland €2 million or €3 million for oversight, the nuts and bolts of the actual money, we would be able to adjudicate. If a certain legal practice sent it a letter to pay €2,000 for the advice or the stamp, that would go some way to addressing the difficulty. I am not in a position to say that the €50 million spent on consultants was value for money or that it will save money ultimately. I do not know because the information is not available. I do not believe people will have confidence in Irish Water until such time as the information is available.

I have a few brief questions following earlier contributions. Senator Landy mentioned that the 34 local authorities have assets of €11 billion. The impression I got from the submission was that there was a sloppy response from local authorities. There is a great differentiation. There is an onus on Irish Water to publish the response from the local authorities. It is outrageous that local authorities had assets in the region of €11 billion and they were not sure what they had or what was happening to them. What other assets have local authorities got? I am a strong advocate of reform of local government as I think it is dysfunctional. Many of the members behind me have come from that system. We have €11 billion worth of assets. The terminology I have written down here includes, "differential" and "not in a complete fashion" or something to that effect. Let us see if there was a difference between county councils. Was the submission from Roscommon County Council in order? What councils defaulted? What was the most valuable asset within the €11 billion. In regard to the outstanding bills for water owed by business, I do not know if a figure has been put on them. I see somewhere that it may be €1 billion or €500 million. Does Irish Water have any idea of the outstanding bills? Will it also quantify the actual outstanding loans? If it has not already quantified that figure, perhaps it would do so now or in the future.

The issue of bonus levels was raised. I believe everybody except the CEO can get it. What is the level of the actual bonus? From a political credibility point of view - I used this line in the past - that we are paying for water anyway so we agree with water charges. By a logical, political and fair extension of that, there should be a yearly total of income taken in by Irish Water. The tax take from the public should be reduced by that figure if we are paying for it, rather than paying on the double.

Senator Sean D. Barrett

I welcome the witnesses. They said they keep themselves aware of what happens in Parliament. I submit that what has happened in the Parliament was an absolute shambles. It started with the Water Services Bill. The document refers to an explanatory and financial memorandum. There is no financial memorandum in it. Does the company stand over that? Did the witnesses brief the Minister before he came to the Seanad in the week before Christmas? Given that they follow the parliamentary debates they will be aware that he turned down amendments in respect of local authorities and he turned down any role for the National Consumer Agency and the Competition Authority to see that the organisation was working as a competitive body. He also turned down any role for the Department of Finance in relation to investment appraisals. We are finding out now that €100 million is already gone and we do not know what it was for and we are trying to catch up after the event. He turned down any role for the Department of Public Expenditure and Reform which is supposed to deliver reform.

I live in Kildare. The Minister said we have low water charges. The organisation should not say it is inventing water. I have water. We have paid €1 billion per year for it in taxation. Some €539 million has been spent on meters and €100 million on consultants to charge me for what I was paying for through my income tax. I do not know what are the set up costs. It is simply an amalgamation of 34 local authorities. I hope there are some efficiencies but I have to say the way company and the Department have treated the Parliament is unacceptable. That is why people are so annoyed. The company has made an appalling start and it had better try to get onside pretty quickly if there is to be any public confidence in it.

Why was the electricity regulator chosen to regulate water? They are two completely different fields. The electricity regulator has an electricity price which is 42% above the European average. That is a wonderful start. Are we going to pay 42% more for water as well, under the same regulator? The whole issue has been an absolute shambles from beginning to end. How many of the consultants were associated with the collapse of banking in Ireland? As elected represented, we are trying to get away from that situation. I am disturbed to see that the same people who walked out of Government Buildings with €64 billion in their pockets are now advising Irish Water. That is an appalling situation. Why could it not have slowly amalgamated the 34 local authorities who were doing the job and why is it not open to having its investment plans put before the committee, the Department of Finance, and the Department of Public Expenditure and Reform? Why is it so anti-consumer? What is wrong with the National Consumer Agency? The organisation would not even accept advice on the billing system. It seems to me that the National Consumer Agency would be well advised. If the organisation is running a closed shop as it has done up to now, it will be very difficult to persuade people that this investment is in any way worthwhile. It has been a disastrous start for Irish Water because of that. It should have been open with us, given that it follows the parliamentary debates.

Some 164 amendments were tabled in the Seanad in respect of the legislation, 56 of which were Government amendments, having realised the flaws in the legislation. If the organisation is in consultation with the Department there are many improvements needed to bring it up to an acceptable level so far as Parliament is concerned. It must be accountable. The secrecy we have witnessed heretofore is unacceptable to the public. We are trying to reform this country and what happened to it in 2008. This is more of the old bad stuff so far as I am concerned.

Senator Terry Brennan

I will not go over any old wounds. I have been present for a few hours, I left for an hour and I am back again. The consultancy and PR fees beggar belief. I cannot get my head around it. It cannot be justified. Mr. John Tierney and his colleagues have made an effort to do it but the wider populace, including myself, gets it hard.

Other utilities, for example, Telecom Éireann, ESB, Bord Gáis have annual fixed charges, which they charge on their accounts. For example, the ESB charge in rural areas is based on the size of the house, while in urban areas it is based on the number of rooms in the house. It is an annual fixed charge that it pays the utility concerned and whether it uses a unit, it gets a minimum fixed charge. I forget the terminology. Will Uisce Éireann have a fixed charge? People are being asked to fix their leaks and to conserve water. No doubt we will return to the two or three 40 gallon barrels outside the back door to collect the rainwater running off the roof.

Will the cost of water per unit be more expensive to somebody who tries to conserve it, perhaps by not flushing the toilet as often as one might otherwise do? Will Uisce Éireann have a basic charge irrespective of whether one uses water or not? It is not realistic not to use one's telephone or electricity. Will there be an added charge?

Let me refer to the question of the €539 million. I have rounded this figure off to €540 million. Am I correct in stating 1,700,000 households require meters?

Mr. Paul O'Donoghue

It is 1.05 million.

Senator Terry Brennan

That makes it worse. I divided €540 million by 1.7 million and got a figure of €330 per house. It would have been closer to €500 if my figures had been right. I am not so sure but this figure seems totally excessive.

Will the information be before the committee on that day?

Mr. Paul O'Donoghue

That information will be part of public consultation because the regulator will run a public consultation on tariffs.

Mr. John Tierney

The issues raised by Senator Barrett are more of a commentary on the parliamentary process than the role of the company. The publication of the explanatory memorandum on the Act is not the responsibility of Irish Water, as the Senator is aware, because that has to be done by the Department of the Environment, Community and Local Government. Normally, an initial explanatory memorandum is published by the Department, followed by a version after the legislation is passed. The legislation has been passed for only two and half weeks at this stage.

On the issue of the current payment for the system, there was a contribution from overall taxes because subvention comes from the Government to the sector at present. There were charges previously and they were stopped. They are now being reintroduced. That is Government policy and we are implementing it on the basis of a utility piece that will be about creating efficiency in the system so the money raised in regard to charges is spent as efficiently as possible. With regard to why the Commission for Energy Regulation was chosen, it was a matter of Government decision and policy.

Mr. Barry obviously supports the model that the Government has charged him with the responsibility of implementing. Personally, I do not agree with that model and I do not necessarily agree that he has inherited a series of ad hoc local authority systems throughout the country. I am mindful of the fact that 33% of Irish Water's staff came from the local authority system and almost half of its executive are from the local authority system. That is for another day. We will agree to differ.

There are two or three other points I want to make. On the savings of €2 billion predicted to be achieved by 2021 that have been mentioned, they state there are 4,300 in the local authority system for all of whom, I presume, there are service level agreements for the future and 510 will be employed in Irish Water in the coming months altogether. That brings a total of almost 5,000 employed, directly and indirectly. Can they give an indication of what they expect the staffing levels to be come 2021 and will staffing cost contribute to the savings? Although it is a little far ahead to look at, it does not augur well for a continued service level agreement beyond the 12 years for which it is in place.

In terms of procurement, I am conscious of the efforts the witnesses made to answer the questions from Senator Healy Eames earlier, specifically on the story that was carried in one of the newspapers this morning. Is €400,000 the threshold for public procurement?

Mr. John Barry

Yes.

Deputy Barry Cowen

Does a contract of €380,000 have to be subjected to open competition?

Mr. John Barry

It can do but under the rules, it does not have to.

Deputy Barry Cowen

It does not have to. Have many? The figure is high and excessive. I am interested to know how many contracts under €400,000 have been awarded without open competition and can Mr. Barry furnish the committee with the amount in total that has been awarded in any such contracts. Could it be possible that multiple such contracts were awarded and what is the amount in total; have some of those companies, for example, not entered a public competition at all?

The Government had committed that 80% of the revenue from this year's property tax would be dispersed to local authorities throughout the country. They reneged on that commitment towards the back end of last year and stated that the total proceeds, being €400 million, would be redirected to Irish Water. Can Mr. Tierney inform the committee how that funding is to be spent? Is it to go towards the capital or maintenance programme of the taxpayers' assets throughout the country that were formally held in trust by local authorities or how does Irish Water propose to spend that €400 million? Was there a similar budget proposal put to the Department as to that spend and was it agreed with the Minister, similar to what was agreed previously in relation to €180 million with €30 million contingency included that was obviously agreed with the Department and the Minister with responsibility for it in September or November 2012?

Chairman

We will conclude with Deputies Catherine Murphy and Luke 'Ming' Flanagan.

Deputy Catherine Murphy

I have a number of questions. Going back to the savings to the Exchequer, the witnesses stated there was a hybrid model and some of that includes payments directly from the Exchequer towards the capital works. It is only a saving to the Exchequer if there is an actual saving, through procurement, etc., or through additional charges. That is the relevant point. One could end up with a good billing system and good asset management system but, because there is a finite amount in consumers' pockets, which is the point commentators make repeatedly, it has been exhausted.

Moreover, the credit union analysis shows there is a sizeable number of people with pretty much no scope for discretionary expenditure. Consequently, there will be a limit on the domestic side and Irish Water could end up with a very good billing system and a highly deficient water system. For me, this is not a world-class system and the witnesses might comment on that point.

The location, in most instances, of the meters on public streets means that unlike with gas and electricity, there is a responsibility between the gate and the house. While there obviously will be a first-fix policy, members need to know much more about that. It is likely to be something with which the joint committee must deal at the next meeting.

Another issue with which the joint committee must deal in some detail is that of quality control, because going back would not be desirable. Members need to know exactly what is the oversight in respect of the installation of these meters because there is a range of subcontractors in addition to the main contractor. I deal with issues that arise with regard to such matters all the time and this would be a significant issue. While there was a loan from the National Pensions Reserve Fund regarding the installation of meters, did I hear the witnesses correctly to the effect that the standing charge may well include more than the repayment of that loan? What is Irish Water's thinking in this regard, because the witnesses mentioned reservoirs, as well as the maintenance, electricity and so on, for pumping water? As development contributions vary nationwide, does this mean they will be standardised? Moreover, will there be a standardisation of the price of commercial water? An issue that has been raised with me a number of times pertains to those who make a great deal of effort to conserve water. Last week, members heard that were one to use less, one might be obliged to pay more, which flies in the face of what would be a good culture. I acknowledge that some of these issues must be dealt with when members come back.

Finally, on the issue of consultants and the smaller parcels, as I stated earlier, I have a really serious issue with the number of consultants and the way in which this entire matter has been handled. However, given the manner in which Irish Water packages it, there is a limit on who can apply because the company must be of a particular size. Obviously, this is a Europe-wide process and although the object was to create jobs, Irish Water will end up creating jobs in consultancies in countries outside Ireland. That is an issue that was raised with me as a concern.

Deputy Luke 'Ming' Flanagan

Members attended this meeting to find out whether we are getting good value for money. In a nutshell, Deputy Boyd Barrett put it very well in that, ultimately, it is a question of whether members agree with Mr. Tierney when he tells them he got good value for money. Other than that, if they do not agree with him, it is tough luck. I agree with that and on that basis, members must consider other factors and the point I mentioned earlier has not been addressed.

Members came here today seeking evidence of much more comprehensive oversight and monitoring in controlling expenditure. This is not my sentence but is an old sentence from the Local Government Audit Service and this issue has not been addressed. Were a football team that I follow to take on someone who had been relegated with teams during the previous ten seasons, I would kick up a row about it. That is football but I am talking about water and there is no more important issue than that. Members need to nail this. The public is not happy with the manner in which the money is being spent and there is a public perception problem. How is that helped when it has been stated about the past work of the person who is running this most important service, that there needed to be evidence of much more comprehensive oversight in monitoring and controlling expenditure? If all that members have to go on is trust and if that trust is based on past experience, I for one do not want Mr. Tierney running this company. It is as simple as that. Put it on the record.

Chairman

Mr. Tierney might respond to those comments and we will conclude on that.

Mr. John Tierney

Yes. On the value for money issue, there are two aspects on which to advise in that regard. We have advised the joint committee of the nature of the reporting we provide. There is the entire internal governance process within Bord Gáis and Irish Water itself and there is a further independent process by which all the establishment costs are being assessed by the Commission for Energy Regulation, CER. The commissioner is already is on record in respect of the approach he will take in that regard and with regard to advising the Minister. In response to Deputy Catherine Murphy on the number of consultants and how they are handled, perhaps Mr. John Barry and Mr. Ger Cowhig might respond in respect of the packages and so on. Mr. Paul O'Donoghue might respond regarding some of the other issues pertaining to charges and we will take each one of them.

Mr. Ger Cowhig

As for the consultants, obviously we must package it in such a way that it also brings economies of scale for Irish Water, that is, there is enough work there for us to be able to get a good price for it.

Second, regardless of whether it is IBM or Accenture, a lot of Irish people are working for those companies inside the Irish Water programme. It brings a lot of good experience for those people to continue developing further business in Ireland. These people are Irish people, it sustains jobs in Ireland and that works very well. On the smaller scale, we have a lot of panels that allow a lot of small businesses and single-person enterprises to get work in the Irish Water programme. It has been a fact of the programme that many small businesses have got work from it and have benefited from it. My response to the Deputy is that the manner in which we package the bigger chunks of the work is for economies of scale but we make room for the smaller players and there is room for them in the way we have packaged it.

Deputy Catherine Murphy

What of the oversight of the quality of the work?

Mr. John Barry

This question pertained specifically to the water meters. All told, we have a staff of approximately 100 people representing Irish Water who are supervising the metering programme. Very simply, there are metrics in the metering programme across a wide range of activities, including quality, safety, etc., as one would expect. The bottom line is that if the contractors fail over time to meet those key metrics, they then lose the contract.

Mr. John Tierney

We also did an independent quality assurance piece on it.

Mr. John Barry

Correct. We also have independent oversight to supervise our own people who are supervising the contracts. On quality, if a contractor or members of the contractors' teams do not measure up to the quality standards on which we insist, then they are removed from the project. Moreover, there are sanctions that we take against the contractors if the contractors themselves do not measure up to the quality standards that we apply.

Deputy Luke 'Ming' Flanagan

I have one final question. How does Irish Water enforce that? To give a practical example, let us say that Roscommon County Council does not live up to standards and, consequently, Irish Water takes the contract away from it. With respect, to whom in Roscommon will Irish Water give it? To Lidl? How can Irish Water enforce that? How can Irish Water change the current position in which the fox that killed the chickens gets to investigate the killing? This is what happens at present and I need to know how that will change.

Chairman

Witnesses should also respond to Deputy Cowen's questions, if they have not been answered, and they might conclude on those.

Mr. Paul O'Donoghue

Deputy Catherine Murphy asked a number of questions. I take her point about the cost of introducing billing systems versus the unknown that is collecting the billings later this year. However, I think people would accept that to go about billing 1.6 million domestic customers and a couple of hundred thousand non-domestic customers, one must have a billing system. One must have computers, keep accounts, have good records, take data from meters and get bills out. One must have a billing system.

We have no option other than to take that leap of faith. We must have a billing system in which people have confidence.

I echo Senator Brennan's view on locating meters on the street. We would love to hear more on a first-fix policy. We have been speaking to the Department and keeping track, with the Minister, of developments in this regard. The Minister is pursuing a first-fix policy and we would like one to be introduced.

My colleagues referred to quality control around the installation of meters. We have a high degree of confidence in quality control, an issue on which I can provide some of the metrics. We receive approximately 1.9 complaints per 100 installations, which compares to a complaints rate of between two and three per 100 in Southern Water in the United Kingdom. We currently look good, therefore, relative to other companies which are undertaking universal metering programmes. This does not mean we do not receive any complaints. Given the invasive nature of the work, with holes being opened outside people's properties, mistakes will occasionally occur. It is critical that we do not allow the rate of complaints to increase and we ensure it is maintained at a low level. Of greatest importance is that we ensure that when things go wrong they are resolved to customers' satisfaction. We pride ourselves on that.

On the issue of a standing charge versus a meter charge, as I stated in reply to Senator Brennan, we expect that there will be a standing charge element. We never relate this element to the meter charge. As I noted, the standing charge typically reflects some of the fixed costs in the industry. It is not a line item which reflects a particular cost such as a meter cost. We never stated that a standing charge would be meter related.

On development levies and non-domestic water, we expect that the Commission for Energy Regulation will seek to harmonise tariffs and charges when it has an opportunity to do so. This would result in the application of single charging regimes regardless of where a development is being opened or where a water supply or service is utilised.

Another outstanding issue for members was whether customers who use less will have to pay a higher unit rate. The answer is "No". The unit rate will be struck and customers who use less against that unit rate will pay less.

Senator Terry Brennan

An annual fixed charge will apply on their bills. If one adds and divides the units-----

Chairman

I thank Mr. Tierney, Mr. Dempsey, Mr. O'Donoghue, Mr. Barry and Mr. Cowhig - it can be very lonely around here without hearing a Cork accent - for the robust manner in which they interacted with the committee. They provided information, as would have been the expectation over the weekend, and allayed members' concerns. I look forward to meeting them again on 11 February to answer a further myriad of questions.

Is it agreed that we will meet again on 21 January? Agreed.

The joint committee adjourned at 7.20 p.m. until 2 p.m. on Tuesday, 21 January 2014.

Joint Committee on Environment, Culture and the Gaeltacht debate - Tuesday, 14 Jan 2014

Expenditure Issues: Irish Water - Uisce Éireann

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. Ger Cowhig

Mr. Ger Cowhig

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. John Barry

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Dempsey

Mr. John Tierney

Mr. John Dempsey

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. John Barry

Mr. Ger Cowhig

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Mr. John Barry

Mr. Paul O'Donoghue

Mr. John Tierney

Mr. Paul O'Donoghue

Mr. John Tierney

Mr. John Barry

Mr. John Tierney

Mr. John Tierney

Joint Committee on Environment, Culture and the Gaeltacht debate -
Tuesday, 14 Jan 2014