Joint Committee on Future Funding of Domestic Water Services debate -
Tuesday, 14 Feb 2017

Commission for Energy Regulation and Irish Water

Chairman

I wish to draw the witnesses' attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and 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 any person or entity by name or in such a way as to make him, her or it identifiable.

The opening statements submitted to the committee will be published on the committee's website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

At the request of the broadcasting and recording services, witnesses and those in the Public Gallery are requested to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to aeroplane, safe or flight mode, depending on the device, not just silent mode.

Today's meeting will continue our discussion on metering. I am pleased to welcome, from the Commission for Energy Regulation, Dr. Paul McGowan and Ms Sheenagh Rooney and, from Irish Water, Mr. Jerry Grant. I am taking the witnesses' presentation as having been read by members and propose to go straight into discussion. I invite members to make their contributions and ask their questions.

Deputy Kate O'Connell

I thank the witnesses for coming before the committee. I have a few questions. Whoever is most able to answer them can do so. In light of last week's meeting, could they outline why individual metering at people's homes is more beneficial than district meeting? Could they elaborate on whether there are benefits in this regard?

The expert commission recommends a charge for excessive usage.

How can we charge for excessive usage if there is no meter to measure usage?

In light of the commission's recommendations, how can we reduce excessive water usage in apartment blocks? To paraphrase, the report stated it might be easier to meter blocks of apartments rather than individual units. How can the excessive charge element be dealt with if there is a meter for an apartment block but not one for each individual apartment?

In terms of conservation, have we domestic or international data that show metering affects behaviour? Is there evidence that shows measuring usage has a knock-on effect on behaviour and conservation? If householders can receive data on their water usage, does that support the conservation of water?

Let us say nothing had happened with water to date and we were starting at ground zero, would the delegation consider metering to be a good idea? I cannot understand how we can get proper metrics without meters. If Irish Water had a blank sheet, would it still call for meters? My comments have centred on the conservation element of metering and how can we deal with excessive usage if we do not know how much water people use.

Mr. Jerry Grant

The purpose of an individual meter is to measure. When one measures flow to a house, one can use that information for a variety of purposes. The decision to meter in Ireland was obviously a Government decision with the intention of supporting user-based charges to begin with. In the meantime, we have focused on the other benefits from using meters in terms of supporting the operation of our business. An awful lot of the information points to the fact that a relatively small amount of households use a huge amount of water. For example, we now know that 1% of households use over 20% of all of the water supplied to households. We also know that 5% of households use a third of the water supplied to households. Due to having a leak alarm on individual meters, we also know that about 7% of houses have continuous night flows that are very indicative of leaks. We have been able to target the proportion of leakage that is on the household side more directly through the first fix scheme. To date, we have achieved considerable success in terms of saving water on that front.

District meters are a completely different piece of the infrastructure. They are designed to determine the amount of water supplied to a region or area. In rural areas one might have 50 premises on a district meter because of the length of pipes. In towns and cities it tends to be more like 1,000 to 1,500 premises. The Republic of Ireland has 4,407 district meters compared with 3,072 in Scotland. Therefore, we are very well covered in terms of district metering. In 2014, our problem was that about 50% of the district meter infrastructure was not working as it had not been maintained over the previous four or five years. We have got a lot of the problem sorted out. We are installing a leakage management system that will provide headquarters with live data from all of the meters, thus allowing us to plan our district meter programme.

In broad terms, we distribute 1.7 billion litres of water every day with roughly 600 million litres ending up with households, roughly 300 million litres ending up in non-domestic operation and other uses and about 765 million litres or 45% is lost in leakage on the public side.

The big issue with leakage is undoubtedly on the public side. That is where the district meters are crucial and it is where the sustained effort over the next ten to 20 years will be required to bring it down to the levels other countries have achieved. On the domestic side, approximately 170 million litres of the 600 million litres appear to be leakage, based on what the district meters are telling us. That is the distinction between those two.

In terms of what is excessive usage, the guide or the information I can provide to the committee comes back to the fact that approximately 7% of households typically on a read - in other words, approximately 55,000 of a typical 800,000 reads in a quarter - show the leak alarm. The statistics show that 5% are using one third of all the water. Clearly, there is very significant usage at the top end of the usage curve.

On the question about conservation and driving behaviour, that information is telling us that the fundamental gain is around stopping the leakage and encouraging or helping households to fix leaks. The gains that will be made by means of behavioural change in terms of basic consumption are much lower than that, because when we exclude the 7% that are currently showing leaks the other 93% are only using approximately 110 litres per person, which is very comparable with the northern European figures. We are not in a bad place where the vast majority of people are concerned. Conservation is very much about the houses that have leaks, whether inside the house or under the driveway or garden.

In the context of apartment blocks, the most logical and straightforward thing to do would be to have a bulk meter and use some type of aggregate allowance. It is extremely difficult to meter individual apartments. There are some that are constructed in such a way that one could do it, but the vast majority are very difficult and we do not see it being a feasible option anytime soon. Bulk metering certainly would work and that would also catch water that might be used around the site.

Those are the main points I wish to make.

Dr. Paul McGowan

I will add to some of those points. The Deputy asked if the data in general support conservation. Data will always support conservation, whether it is at individual household level, at the aggregate level of the district or at national level. One will always look to data to give the evidence that would support decision-making.

On the final question about whether metering would be a good idea, at ground zero, I cannot give a definitive answer but I can offer a few observations. First, 12 out of 20 Organisation for Economic Co-operation and Development, OECD, countries use metering for water charging, so it is common. Certainly, metering is the norm in our experience of utility regulation when it comes to charging for a utility, bearing in mind that we regulate both energy and water. Typically, however, we would look to a full evidence-based cost-benefit study to make a determination on a question such as that, so it would be premature for me to give the Deputy a direct answer.

Deputy Kate O'Connell

Is the witness saying that if we were starting at ground zero, he could not say whether metering would be good or bad, even though he says that metering promotes conservation?

Dr. Paul McGowan

Of course metering promotes conservation. It provides a basis on which one can charge. However, if one was starting at ground zero and one had a blank sheet, the first thing one would do would be to look at the evidence around conservation, charging and so forth and put a study together based on that evidence.

Deputy Paul Murphy

The key item we heard from Scottish Water and Welsh Water last week was that it is not necessary to have domestic water meters to find leaks in people's homes, which is the perception that existed. Can the witnesses confirm that is the case and that individual leaks in households can be found through district metering and the mechanisms that exist in sonar technology for finding where the water is leaking?

Mr. Jerry Grant

If one does not have individual meters, the process by which excess water use in a domestic house could be located would be through sending operators around the district meter area with sounding sticks to find the leaks. I will put that in context.

We have almost 900,000 meters - 893,000 to be precise - and each reader in a car can read 80,000 meters over two months each quarter. On the basis of current statistics, that will turn up roughly 5,000 to 6,000 leaks. If we were to try to do that with operators with sounding sticks, identifying, locating, contacting and so on, we obviously would not get anywhere close to that figure. In terms of the efficiency of identifying leaks in properties, there is no comparison. The reality of normal leak detection is one would want one's operators to be primarily finding leaks on the public system, which is where the great bulk of leakage exists.

Deputy Paul Murphy

To follow up on that, there is a suggestion that we will have to introduce excessive usage charges to stop people wasting water. However, it is currently illegal for people to allow water to be wasted or to fail to prevent it from being wasted under the Water Services Act 2007. In fact, councils use that legislation to deal with those who blatantly have a leak on their property but have failed to do anything about it despite being repeatedly informed of it.

Mr. Jerry Grant

SI 527, the regulations under the 2007 Act, enacted in 2008, contains provisions for waste notice processes following detection of a leak. Again, if there is no meter, one obviously must first find the house where there is excessive use. Very often councils have identified such houses only on receipt of a complaint from a neighbour who was experiencing low pressure, which is a common side-effect of high leakage in a property. The process then, prior to the establishment of Irish Water, was to issue a series of statutory notices, at the end of which there were enforcement options provided for in the regulations. It was used from time to time, predominantly where high leakage had an adverse impact on a neighbour.

Deputy Paul Murphy

There are currently processes in place, even without an excessive usage charge, to deal with the very top end of the curve to which Mr. Grant refers, in terms of those-----

Mr. Jerry Grant

Yes, but one would have to compare that with the fact that in the last two years, 28,000 houses have had leaks repaired as a result of the meters and the first-fix notification scheme. Nearly 7,000 of those leaks were under gardens and driveways while 21,000 were in homes and the total amount of water that is no longer recorded by those 28,000 meters is 77 million litres per day. There is no comparison, therefore, in terms of scale but the Deputy is right that there was a provision for following up an individual who had a high-level leakage and did nothing about it under the old regulations.

Deputy Paul Murphy

In the past some of the councils, South Dublin County Council in particular, invested significant resources in dealing with leaks, both public leaks and those in peoples' homes and that had a significant impact as I understand it.

Mr. Grant made the point that the vast majority of water is lost in the mains rather than on private land. The figures in his presentation show that 82% of all water lost is in the mains while the remaining 18% is lost on private land. Given that fact, would Mr. Grant agree that it is not cost effective to install domestic water meters at a cost of €500 each, if one's aim is water conservation? Surely that €500 would be far better spent on the provision of water saving mechanisms like dual-flush toilets, rainwater and greywater harvesting systems and so forth.

Mr. Jerry Grant

In term of trying to make a decision on that, one has to determine where the water is going. What is clear is that if one knows there is leakage in domestic houses by virtue of the meters, we can target it and it is probably the cheapest water to recover. Such domestic repairs, even the first-fix repairs funded by Irish Water, are relatively cost effective. Ultimately, none of that takes away from the fact that we have to do a massive amount of work on our public water network, in terms of finding and fixing leaks, replacing pipes, installing pressure management systems and all of the other elements that go into that network. In that sense, one is not an option compared with the other.

In terms of the economics of installing meters, that is not a question that Irish Water has addressed because the decision to install the phase one meters was a Government one made in the context of user-based charges. That said, we have tried to put some estimate on the long-term benefit of metering in terms of economic return. If we take a 40 year return period, for example, and look at the savings in water - assuming that out of the current level of household leakage of approximately 165 to 170 million litres, at least 70% to 80% of that can be saved consistently and retained over time - then we see that there is a long-term benefit in terms of both capital deferred and the marginal cost of producing water.

About one third to a half of household water lost through leakage goes down the sewer. Very little of the water lost through external leakage goes into a sewer but usually into the ground. If one takes this into account, as well as the deferred capital, whether it would fully justify the cost over a 40 year period is marginal, but it is getting there and that is without considering the environmental benefits and so on.

What members heard from representatives of Scottish Water and Welsh Water during the meeting last week was that, in the absence of a Government policy decision on user based charges, the decision to meter water usage was not a priority for them. Welsh Water clearly sees metering as a very attractive option. That is primarily driven by users who want to have their low usage recorded and pay for water on that basis. Their figures suggest the high users are not captured in metering. That is why it is operating on the basis that the householder will come forward and request that a meter be installed. Up to about 50% of households have had meters installed.

It is fundamentally a policy matter. I am identifying for members all of the benefits that flow from having a meter in terms of the way we can manage water supply, account for water usage, target local leakages and understand the level of leakages from the public system. One of the great fallacies prior to metering was that the domestic consumer was using about 145 litres per person. We now know that is not right. We know that if we exclude the top 7% of households, usage is about 110 litres per person. That has forced us to re-evaluate the level of leakages from the public system because we were understating them and assuming more was being lost from households. Whether that is the case in Scotland, I am not sure, but it would be hard to understand a person in Scotland using 20% more water than a person in Ireland.

Deputy Mary Butler

I want to revert to the experience in Scotland and Wales with water meters. Representatives of Scottish Water stated at last week's meeting that it could detect leaks using its district metering system. This clearly is at odds with a previous statement issued by Irish Water. We also learned last week that only half of Welsh Water customers were metered but that this had resulted in a 40% reduction in leakages. Much of the evidence provided by the two companies illustrates that individual meters are not required to reduce water leakages and promote conservation. Has Irish Water or the regulator assessed the use of district metering as the best mechanism to reduce leakage levels? I wonder why Welsh Water was not contacted by Irish Water about its approach to the metering programme?

Mr. Jerry Grant

The policy framework in the three jurisdictions was different. The decision to install domestic meters in Ireland in advance of and as part of the process of bringing in user based charges for water was political. The authorities in Scotland have not gone down that road. There is a charging system which involves a flat charge. Like all of the English water companies, Welsh Water had a flat charging system, or a system related to the rateable valuation. However, all of the companies in England and Wales have gradually started to encourage metering. In Wales the level of household metering of water usage is up to 50%, while Anglian Water is metering the water usage of 80% of its customers, as water is seen as a very critical resource. The water companies are introducing metering on an opportunistic basis for new builds or where they are rehabilitating water mains and so on. Let me repeat that there are significant benefits.

In an urban area the district meter typically meters water usage in 1,000 to 1,500 properties or premises. It tells exactly how much water is going into the district. If one knows the level of domestic and non-domestic consumption, one can calculate with a reasonable degree of accuracy the likely leakages from the public system. If one sends out crews with acoustic devices during the day - it is more efficient to do so at night time - they can find leaks in the public system and also evidence of high flows through a stop cock to a premises. One can follow up with a waste notice process, as I outlined to Deputy Paul Murphy, or one could apply an excess charge. Currently, where they show up on our meters, we write to the customers concerned.

The district meter facilitates the leakage programme. The idea that a substantial part of one's operating resources should be diverted to chase household leaks does not make sense if there are domestic meters. With ten to 12 readers, in any one quarter we can read 800,000 to 900,000 meters and find 50,000 to 60,000 leaks on premises. Nothing like that number could be found if we were using operational crews. We would be lucky to find a number in the hundreds. Crews would be diverted away from the very job we would wish them to do, which is to find leaks in the public system. The two are complementary. It is not a competition between district and domestic metering.

District metering is an imperative for us. Ireland has already invested a lot of money in it. The greater Dublin area was metered in the 1990s. I do not know the exact amount of money that was invested, but it was in the tens of millions of euro. About €130 million was invested in district meters across the country between 2000 and 2010. We now have a substantial infrastructure of district meters, more in fact, per premises, than in Scotland. Irish Water has been bringing them up to scratch because about 50% were not working. A lot of the valves had been breached and we installed a lot of pressure valves. In the past two years we have spent tens of millions of euro in revamping the infrastructure to make it ready and fit for use. We have also installed a pressure management system and this year will install a national leakage management system to collect all of the information. Our primary focus is on identifying leakages in the public system. I am comparing that with what can be done if there are also 900,000 domestic meters which also help to find a lot of leakages.

Deputy Mary Butler

Mr. Grant said at the start of his answer that the provision of meters was a political decision. Was there any weight given to having a district metering system only, as against a domestic metering system which, as we know, caused a great deal of controversy? Did Irish Water stand back at the start and think about whether it should be looked at it from the point of view of having a district metering system or a meter in every household? We know that the district metering system has enjoyed a lot of success, but Mr. Grant said that it was a political decision. Did Irish Water not stand back and look at the pros and cons of a district metering system as against every house being metered?

Mr. Jerry Grant

Irish Water did not exist when the decision to meter was made. It was set up to be the public water utility and part of its remit from the beginning was to implement a decision taken to provide a customer-side, or domestic, metering programme. That decision was taken in the context of establishing Irish Water and introducing water charges, with the intention of having them based primarily on use.

Deputy Mary Butler

To clarify, when Irish Water was established, the decision had already been taken.

Mr. Jerry Grant

Yes.

Deputy Mary Butler

Irish Water was given its brief and went with it.

Mr. Jerry Grant

Part of our job was to implement the phase one metering programme.

Ms Sheenagh Rooney

To clarify the Commission for Energy Regulation's particular role in metering, we also see it as being part of a package. We are overseeing the moneys being spent on metering by Irish Water, both household and domestic metering, and what is being delivered for the customer. The decision was made from a policy point of view to install meters in households. What we look at is how much money is being spent and how many meters are being delivered. We are also assessing the costs to ensure they are being incurred efficiently and then allowing them. We also approve Irish Water's costs for district metering, which complement the moneys being spent on household metering as part of an overall package to address leakages. For example, in the last review we carried out we approved a sum of €118 million for Irish Water to address leakages. There are many aspects to it, one of which is district metering, while another is the work Irish Water is doing on its network. There is a combination of packages, but what we are focused on is what Irish Water is delivering for the money invested. That is where we would set targets for it to reduce leakages over time. That is what it has committed to do with this combination of measures.

Deputy Colm Brophy

My understanding from what the representatives of Scottish Water said last week was that its decision not to have meters had been entirely politically motivated by the SNP Government. From independent surveys, the result seems to be that Scottish Water consumers are paying some of the highest water charges in Europe.

My understanding is the delivery of cost savings to customers, particularly those who want to be able to avail of cheaper water costs through water conservation, is a direct benefit of having a meter. Scottish Water is a fascinating case because the decision that was made backfired when Scottish consumers started to face increased costs. I understand the primary driver behind the provision by Welsh Water of individual meters for its customers - obviously, it is highly in favour of meters and has clearly advocated in favour of such provision - is the need to enable them to monitor their water consumption and achieve lower water bills through such monitoring and to provide for a much more efficient system of billing. I wonder if this fits with Irish Water's experience in Ireland. I think it is fair to say it is probably one of the main things we would like to achieve in Ireland in the use of meters.

I would like to refer to some other issues. Mr. Grant has indicated that approximately 28,000 leaks have been repaired. Under the completely archaic and dysfunctional system that previously applied in Ireland, if a massive complaint was made by neighbours who came across a leak, the relevant local authority would eventually have tried to stop the leak through a substantial and lengthy process using various legal channels. This resulted in the leak continuing for a substantial period. How would Mr. Grant characterise Irish Water's ability to repair a domestic leak for a customer, thereby delivering savings to him or her, from the point of detection to repair?

We heard testimony about a magical system involving a district meter that could be used in Ireland to detect a leak and link it definitively with an individual house in order that it could be repaired. I take it from the answer given by Mr. Grant that not only would it be cumbersome to have to send out staff to define the nature of the problem on a one-on-one basis but also that it would be quite difficult for such a system to detect a smaller leak. Will he indicate on a cost basis how much more expensive such a leak detecting system would be? How efficient does he think it might be for an individual household? Would the use of such a system be possible in Dublin, where large numbers of houses are connected to district meters? As he indicated, this is not the norm in other parts of the country.

I would like to mention a final issue on which I am seeking an update. I understand the introduction in this country of metering with an allowance initially resulted in a reduction in water usage. The reduction that was noted when this system was first announced evaporated, in effect, as the charging system changed. Is my understanding correct?

Mr. Jerry Grant

The Deputy has compared the very different policy positions taken in Scotland and Wales. Meters are not provided for free in Scotland. When householders assess the charges imposed on them in the context of the potential savings in their bills, they can see that it is not economical for them to install meters at their own expense. That is the Scottish scenario. On the other hand, meters are provided for free in Wales on an opt-in basis. Interestingly enough, the authorities in Wales are willing to do repairs on the customer side every two years or so. This is akin to the first-fix scheme here. I suppose this demonstrates that by providing information on leakages and taking a proactive approach to the customer, we can help the customer to identify where the leak is and fix it if it is under the driveway. This is of benefit to the customer and the company in terms of conservation.

The 28,000 repairs mentioned by Deputy Colm Brophy were undertaken as a direct result of the identification through the use of meters of between 50,000 and 60,000 leaks on household properties. We have approximately 50,000 people engaged in that process. It is reasonable to assume that we will continue to gain big benefits from this activity. It is interesting that a leak under a driveway leads, on average, to the loss of approximately 6 tonnes of water per day, which is an enormous amount of water and the equivalent of the figure for 20 houses. It reflects the fact that a reasonably significant leak - it does not need to be a major leak - results in the waste of a lot of water over a 24-hour period. This is where the bigger picture is lost in much of the discussion about conservation. We absolutely encourage the use of water-saving devices in the home. The use of water-saving showers and the employment of rainwater harvesting facilities are good and will result in marginal reductions in water consumption based on standard usage but leaks ultimately dwarf everything else. It is really important to be able to fix leaks and encourage people to do so.

In terms of the powers that exist without the meter, there are clearly legal provisions but they are cumbersome like most legal processes. Their implementation takes an awful lot of resources in terms of following them up, the possibility of appeal to courts by the householder and so on. The provisions in the legislation ultimately provide for a restriction on supply, which was quite a topical matter. It is certainly not something we have done. It has been done by local authorities as a means of trying to help the neighbour who does not have a supply where the householder took no action. None of that makes sense if there are options of helping the customer directly to fix the leak or at least finding the leak for them and enabling them to do so.

Going back to the question of the district meter finding leaks, the district meter tells us what water is flowing into an area. That area could have 500 houses but in a town or city it more typically has 1,000 or so. If we sends crews around at night time, we will find leaks on household properties but that is obviously time consuming. I am contrasting that with the fact that in any quarter, over a two-month period, ten people can read 900,000 meters. That gives us an awful lot of information, not just leakage information but also usage information and information we can use for management purposes. Once we have the meters, using them makes complete sense from an operational point of view and the benefits of that are obvious.

Chairman

Deputy Casey is next and Deputy Pringle is after that.

Deputy Pat Casey

To further expand on the issue of the district metering, Mr. Grant said there are over 4,400 district meters in Ireland. Does that include additional metering that the local authorities put in over the years when leaks were identified in various areas or they are separate meters? On the other question on the metering process and the leakage, am I correct to say that 70% are on the public side or as Deputy Murphy said, 82% is on the public side? Why are we not investing more in district metering if it can identify these leaks, if this is where the significant loss of water is compared to the domestic side because equally €148 million is underspent in the first roll out of the metering programme. Has that capital money been relocated anywhere else or is it just sitting there? Was there ever an option considered by Irish Water for an opt-in to the metering process?

The cost of replacing meters has been raised. Has any provision been made for the maintenance of metering on an ongoing basis and, if so, has that money been spent or is it sitting somewhere to be used for the repair of meters? I do not think there is a charge for the repair and maintenance of metering as there used to be on commercial meters.

Mr. Jerry Grant

There are approximately 4,400 district meter areas. Much of that work was done pre-Irish Water by local authorities under capital funding provision from the Department. We took them over in 2014 and have spent a lot of money on getting them up and running as much of the capability had gone over the previous five years. We are busy now putting in pressure management and other supports to try to make them more effective. Some local authorities had a practice of requiring meters as part of planning permissions for new builds. There are a number of local authority meters in the ground on newer properties throughout the country. I know they were certainly installed by householders in north Tipperary.

In terms of savings, we ended up spending €465 million on meter installation. The other €148 million unspent in that programme has been reallocated with the consent of the Department primarily for the provision of infrastructure and connections to support new development. Some of it is being allocated to revamp non-domestic meters.

They have been installed for 12 to 15 years. There are difficulties with them. Many meters are not working so we will be looking to replace them. We will also be looking to use the same technology to read those more efficiently in future. There will be some investment and that is part of our capital programme.

The opt-in choice is always available to people and it was available during the metering project. We are not putting in any meters at the moment but we were using opt-in because people had contacted us pointing out that we had passed them by, but they wanted a meter. We were picking those up.

Reference was made to maintenance. Leaving aside any charging options, normal day-to-day or year-to-year reading of meters is going on. We have allocated between €2 million and €3 million for the maintenance of the meter stock. This does not include any replacements because replacements will not arise for a long time, except in the case where meters have been damaged. There have been such cases and we have replaced them. A cost arises from reading any meters that do not give a signal at the end of a quarter. The meters are investigated to see if they have failed for some reason. This can turn up a problem. They are being maintained. In the context of the running cost every year, the gain from the exercise is all the savings we are able to get through the first-fix scheme.

Ms Sheenagh Rooney

This question has been covered by Irish Water. Money is being reallocated within the capital investment plan, primarily to investment in housing infrastructure. There is a small budget for meter maintenance. As the Irish Water representatives have confirmed, the budget is approximately €2 million.

Chairman

We will go on to Deputy Pringle and then Senator Coffey.

Deputy Thomas Pringle

Mr. Grant identified the Irish Water programme for refurbishing meters and reducing pressure zones through pressure reduction valves. Do we have any figures on the amount of wastage that has been detected and fixed in respect of the mains side and the associated work? Mr. Grant stated that it cost tens of millions. The cost was probably €30 million or €40 million or whatever. How much water has been saved through that work? Do we have an estimate?

The expert group report recommends an excessive usage charge. Obviously, if we decide on an excessive usage charge, it can only be applied to metered customers. It cannot be applied to customers who are not metered. The question of equity and fairness arises in that regard. Is that something we can decide on? Many people will be wasting water that is not metered and cannot be detected. The Commission for Energy Regulation might be the appropriate body to comment on that aspect.

Reference was made to the fact that we have meters in place. They are useful tools. If we were starting off we probably would have made a decision not to install them in the first place. The views of Welsh Water were telling. That company identified wastage on the side of their customers but it has reduced overall wastage down to 20%. By international standards, that is a positive figure. It is not cost effective for Welsh Water to go after the wastage on the customer side on the basis of a cost benefit analysis undertaken. That is something we need to keep in mind as well.

If the people who have meters were subject to an excessive waste charge, they would be billed for that. If they refused to pay that bill and refuse to fix the leak, Irish Water would have to go down the road of taking the customer to the District Court and recovering that debt as an ordinary commercial debt. The process contrasts with the waste water notice process contained in the 2007 Act. It could be equally as cumbersome to resolve those issues. Can the Irish Water representatives comment on the process in respect of the excessive use?

Mr. Jerry Grant

Let us consider domestic meters and the work being done in that area. We have replaced approximately 800 km of the pipe throughout the country. The best estimates we have suggest that we have saved approximately 70 million to 80 million litres on the public side thus far. We do not know for certain because there is growth in the economy and it is taking up demand, but overall throughout the country demand has not gone up and production has not gone up in the past two years, and that is helpful.

That is only the start of the process. We hope to get intensive find-and-fix programmes under way this year. This is where we should make the gains. We have committed to saving 180 million to 200 million litres between now and 2021. We need to make those savings, especially in the greater Dublin area, if we are to meet demand, but the need applies in other parts of the country as well.

Deputy Thomas Pringle

The organisation has saved 70 million to 80 million litres on the district metering programme and it also saved 70 million litres on the first-fix scheme. It had to expend €460 million to allow the first-fix scheme to be rolled out. The cost benefit of the district metering is way ahead of the metering programme in terms of detecting wastewater.

Mr. Jerry Grant

The Deputy is going back to the initial decision and why it was taken-----

Deputy Thomas Pringle

I accept that the initial decision-----

Mr. Jerry Grant

-----but I am explaining the benefits of it. I would not necessarily claim that 70 megalitres being saved in leakage reduction is sustainable at the level of 70 megalitres because leakage is a bit like washing up in that one has to do it all the time. Part of the difficulty with leakage up to now is we have hit on it sporadically but we have not sustained the effort. That is the real challenge and that is an important point to make.

On the question of excessive usage and of unmetered premises, that is certainly a difficulty. They fall into the category of premises that have to be dealt with through an operational process. We will from time to time find premises that are unmetered that have high usage and there are a number of options that can be taken. If it can be metered, a meter can be installed and that will bring the premises into the loop but sometimes it cannot be metered. Very often it is a complex or a shared service situation, of which we have many throughout the country, both with respect to accessing the backyard and some newer developments where mews buildings and so on have been tied on to one another. The metering programme has identified many of those anomalies. There is an issue around equity and there is no easy solution to it. In the case of apartment blocks, an aggregate allowance could be allocated for the block and the management company could be billed for that.

As far as billing and getting paid are concerned, that is part of the decision making process to be arrived at by the Oireachtas. Clearly, having the means to effectively collect money is crucial. If, for example, we took the 90 percentile figure and 10% were identified as the cohort above the allowance, there would have to be a process whereby they would be notified and given either one quarter or several quarters to respond to it. Based on the first-fix scheme, there is reasonable evidence that a reasonable number would respond to that. It is difficult to say what the final number billed would be but we can surmise that quite a few would take action on foot of a potential liability.

Chairman

Would the regulator like to comment?

Dr. Paul McGowan

I would concur that clearly there is an equity issue if some people have meters and are subject to an excess charge and those without meters would not be subject to it. That is why we suggested that while we were not at this time recommending a full-scale metering programme, it was something that would have to be considered. However, in the meantime there were a number of options that could be pursued, to some of which Mr. Jerry Grant has alluded, such as bulk metering for multi-unit developments or, for example, a requirement for all new builds to have meters installed. There was also the idea that we might have an opt-in scheme where there could be a form of rebate on a notional charge that the Government was paying on the household's behalf. These were ideas that were put forward in the interests of trying to show that the equity issue was being addressed.

Chairman

I call Senator Coffey. Ní dóigh liom go mbeidh am agam ina dhiaidh sin. Tá brón orm. If I can bring Deputy Ó Broin in before 1 p.m. I will, but if not, unfortunately, on this occasion, we will have to move on.

Senator Paudie Coffey

I will try to be as brief as possible. We are learning a good deal here today, including, essentially, that meters, whether they are district or household, are not only in place for charging but for capturing critical data and identifying leaks, as well as to benefit water conservation behaviour.

Some of the questions I intended to ask have already been answered, so I will not go over them again. From listening to public debate on this issue up to now, one would get the impression that there was no district metering but I am glad it has been put on the record that substantial district metering is already in place. It is disappointing that there is still more than 45% leakage from the system even with that in place. Is metering required specifically on connections to drive down a reduction in leakage around the country? Has Irish Water a national monitoring and control system to identify leaks? If it has, does that cover all networks in terms of alarms and all so on? Did that exist prior to Irish Water being established or did local authorities do different things? What has been Irish Water's experience where leaks have been identified on metered households? What has been the response from householders? Did they act on it and stop the leak or did they leave it continue? I would be interested to get a response to that question.

In its recommendations the expert commission advised that, where possible, a charge for excessive use beyond normal usage be introduced. The committee will require advice from the Commission for Energy Regulation, CER, on this issue. In the CER's view, how would this excess charge be implemented without meters? That is a critical and fundamental question the committee needs to have answered.

With regard to value for money for the taxpayer and the cost per consumer for the provision of a public water supply, again the CER plays a critical role in protecting the consumer and ensuring moneys are invested wisely. Irrespective of how it is paid for, whether it is through a charging system or general taxation, what I have heard so far in today's debate is that metering benefits conservation, leakage identification and consumer behaviour. Is there a value put on that from the CER's perspective? If so, is there a provision or a recommendation that metering in the longer term would be more cost effective for the taxpayer because it would identify leaks and encourage conservation?

The CER stated earlier that where new houses are connected to the water supply, it would recommend a meter be installed. As there is network renewal and replacement going on with main services, as well as lead pipe replacement, would it not be more cost efficient when installing new pipework to also install a meter? It would save duplicate visits to a site and provide opportunities to capture data and more network details for management, as well as feeding into conservation behaviour.

Chairman

I will allow Deputy Ó Broin in for a brief question. We need to be tight on questions and answers as we have to continue the meeting after this session and have much to debate.

Deputy Eoin Ó Broin

At the last meeting with Scottish Water, Deputy Brophy raised the question of Scotland's allegedly high average water charges. The representative from Scottish Water said he did not recognise the figures. When I checked it later, I found the average household charge for domestic water in Scotland is €406 a year and it has one of the lowest average household charges of all northern European countries, in some cases by €300 or €400 a year.

We have to make decisions around the excess charge. The more factual information we have on it the better. Current usage according to Irish Water is 111 litres per person per day, when ones takes out the outliers. Even with the outliers, it is 123 litres per person per day. That is substantially below the OECD average. What is the CER's view on that, particularly given the fact that many of those OECD countries already have metering and metered charges? It is more than half the figure for the US or Canada and is significantly lower than many other OECD countries.

Has any modelling been done by the commission or by Irish Water on what an excess charge might look like, how many households it might apply to and on the revenue intake versus the cost of administering the charge? The Department stated on the last day that it is not just about the money it brings in but also about changes in behaviour. There are several longitudinal studies of the way in which meters do or do not affect water consumption behaviour. Has the CER knowledge of that research?

Mr. Jerry Grant said that due to having a leak alarm on individual meters, 7% of houses have a leak while 5% are using a third of all water supplied to households. Knowing what we now know, was €500 million for universal water metering an effective use of that resource or would there have been a better way to target that money, given how small a number of households appear to have domestic household leaks?

Chairman

We will allow the witnesses to answer the questions but we will have to finish at 1.10 p.m. I thought Deputy Ó Broin's questions were going to be short.

Deputy Eoin Ó Broin

That was short for me.

Chairman

I accept that. I call on Mr. Jerry Grant.

Mr. Jerry Grant

In terms of connections and metering, opt-ins are one question, but new build and the rehabilitation of the network make it possible to have a meter box which then makes adding a meter very cost-effective. We would think it is a sensible policy to have meters where one can be installed for €40 or €50 as the marginal cost when there is either a new build or one is replacing the network. That makes sense.

We are putting in place a national control system. There were individual sub-county systems that differed a lot and not everyone had full telemetry on the district metering area. Dublin had a relatively good system and we have taken that into Irish Water as the bulwark of our system.

In terms of acting on leaks, surprisingly it has taken three or four letters to get people to engage on the first fix. We have 50,000 engaged at the moment out of almost 100,000 that we have notified. One of the points is that people do not seem to be aware of the damage that can be caused to their property by very significant leaks.

In Scotland, their position is policy driven to a large extent. On the core point of per capita usage and the comparison internationally, including all the high outliers leaves the figure in the 130s of litres, but omitting them gives about 125 litres as an average figure. If all the 7% is distilled out, as it were, we are down to about 110, which is comparable with Denmark and Germany and countries like that. When we start looking at countries in southern Europe or the USA, we are looking at lifestyle changes and the way people live and it is very hard to make a comparison.

Deputy Eoin Ó Broin

We are, however, at the low end in terms of OECD figures.

Mr. Jerry Grant

Yes, we are, but we do not irrigate, for example.

Dr. Paul McGowan

I wish to add a few points to that. An excess charge would be within the context of the circumstances being dealt with within the particular jurisdiction, for example, lifestyle may change consumption over time. Therefore, whatever decisions are taken, they cannot stand forever. Something like that would always be kept under review because lifestyle changes may change patterns of consumption. That is always looked at within the context of national circumstances.

I agree that one of the options that could be looked at as well as new build is mains replacement, but as with any of these options, coming to the value for money piece, we would look at the evidence, where it exists, as to whether the particular investment was a sound one. That would require gathering whatever evidence was available and conducting a cost-benefit analysis. We would recommend that under any approach.

In terms of charging for excessive usage, the key point is that in the absence of a meter, one cannot charge for excessive usage if one cannot measure the consumption. Therefore, the point that we have made is that in the absence of a full-scale metering roll-out, we should look at alternatives which would allow meters to be rolled out gradually. We must look at each of those options and we have already been through many of those, such as mains replacement, new build, bulk metering of multi-unit developments, opt-in and other such initiatives. A report carried out in 2009 in Great Britain, where charging was and is in place, found that there was an additional 15 litres per person, per day to be gleaned from a charging system based on metering. There are benefits from metering in terms of usage but there are obviously leakage reductions to be achieved through other conservation measures as well.

Chairman

I call Senator Clifford-Lee, Deputy Heydon and Deputy Healy for three short questions. I will wrap this session up at 1.10 p.m.

Senator Lorraine Clifford-Lee

The Commission for Energy Regulation has proposed that householders should be given the option of installing a water meter which would entitle them to a tax rebate if they use less water than average. It has also proposed that grants should be given to people who invest in water saving measures and that the installation of water of meters be mandatory in new builds.

I have two brief questions on that. Are there any international examples of an opt-in tax rebate system? Has CER considered what types of water conservation grants should be given?

Deputy Martin Heydon

We have talked about what the use of metering has achieved in the past, but what can it do in the future? I would like to hear the CER's view on whether there is scope for a rebate for customers in the future where they use their meters to very adequately show consumption has been kept well down. How does the CER see meters being used that way in the future? I know it is a CER recommendation, but what would Irish Water think about a policy in the future of new builds having meters installed as a matter of course in the network as it grows? We are facing into a time when there will be more building in the coming years and everyone would say that water harvesting and everything else are probably sensible approaches now. I would like the view of the panel on that.

Deputy Seamus Healy

I have one question for Mr. Grant. I take the point that the policy decision to install domestic metering was taken prior to the establishment of Irish Water. Irish Water would have operated or rolled out the tendering process. At any stage prior to that process starting, during it, or when it concluded, did Irish Water stand back and ask if that cost was going to be cost-effective and was it a valid way of proceeding? If so, did Irish Water make any views available to the Government of the day on the whole domestic metering process? Would Irish Water have indicated to the Government that this metering process was not a valid or cost-effective process?

Chairman

I ask Mr. Grant to be brief.

Mr. Jerry Grant

That was all done by Bord Gáis prior to Irish Water and prior to my time, so I have no knowledge of any discussions that took place around that, other than that Bord Gáis undertook the project and Irish Water, on its establishment, took over the project and was then faced with the contracts.

On new builds, now that we have infrastructure to read the meters, having an extra 20,000, 30,000 or 40,000 meters is no great burden at all, and it makes total sense to me to put them in new builds because very often plumbing defects will be captured very early on. It would be a very useful benefit from having meters as an integral part of new builds.

Ms Sheenagh Rooney

The options that we put forward in our submission were asked for within the context of the recommendations that came from the expert commission report. That was on excessive charging above an allowance. It was within that context that we suggested that to address the equity issue one might have an opt-in scheme with a tax rebate. It is not something that we were aware of or had seen in any other jurisdiction. It was merely put forward as a suggestion to address what may be there as an equity issue that would need to be resolved over time. Similarly, where money may be available for people for a water conservation grant associated with metering, people can install a mechanism and then see the impact that has on water savings. They were merely options to assist the committee to address the equity issue, not necessarily ones that we had come across in other jurisdictions.

Deputy Seamus Healy

Could we write to Bord Gáis to ascertain the reply to the question I asked? It might be important.

Chairman

Will the Deputy liaise with me on the exact nature of what he wants in the question? We can do that after the meeting to get the wording right.

On behalf of the committee, I thank the witnesses very much for coming in and sharing their knowledge and information. It was very helpful. I thank the Commission for Energy Regulation and Irish Water for their continued assistance and support to the committee this afternoon.

The joint committee went into private session at 1.10 p.m and adjourned at 2 p.m. until 1.30 p.m. on Wednesday, 15 February 2017.