Barry Cowen
Question:627. Deputy Barry Cowen asked the Minister for the Environment, Community and Local Government the cost of the abolition of water charges; and if he will make a statement on the matter. [46095/15]
View answerThursday, 17 December 2015
Questions (627)
Written answers
The abolishment of water charges is not simply an issue of financing Irish Water on an annual basis. There are a number of funding, investment and legal issues which would have to be addressed.
Firstly, Article 9 of the Water Framework Directive requires member states to take account of the “polluter pays” principle. As part of the first round of River Basin Management Plans, the Government of the day indicated to the European Commission that this would be addressed through the introduction of water charges.
Secondly, the costings below, which outline the annual financial impact of abolition of water charges, do not take account of possible longer term effects outside of the period to 2016. The stream of income from domestic customers is a key tool in driving additional investment into the sector and underpins a utility model based on quality customer service and the regulated model delivering greater efficiencies. New revenue from domestic charges underpins the access to commercial borrowing for the sector.
Thirdly, charging for water based on usage leads to a reduction in overall demand for water over time with consequential impacts on required capital investment for capacity increases and operational costs.
If domestic water charges were abolished, Irish Water and the Group Water sector would require additional funding to substitute for the loss of revenue from domestic customers. The estimated additional revenue requirement in 2016 would be €210.5m, allowing for some reduced customer operation costs and working capital loans in the case of Irish Water, but not factoring in the costs, if any, of dismantling any relevant contracts.