The debate on water charges has filled airwaves and newspaper columns in recent weeks and rightly so. It is good the public is debating issues around water as a precious national resource. But there has been a lot of misinformation about the Government’s water reforms.

It’s important to remember why domestic consumers will soon pay for water. Water, just like other utilities such as gas and electricity, is costly to deliver, so the “user-pays” principle must apply. And we also need to radically reform the way we deliver water services.

The public water and waste water systems are not fit for purpose and need fixing. We are dealing with the consequences of years of under investment: 40 per cent of water is lost through leakage; almost one million people have drinking water supplies at risk; 23,500 people are on “boil water” notices; and our waste water infrastructure – vital to keeping coasts, rivers and lakes free from pollution – is inadequate.

Water services can no longer be primarily funded by the exchequer with no link between usage and funding. If we want to protect public health, our environment and provide for sustainable economic growth, we need a secure, long-term funding model to provide investment in water infrastructure into the future.

Water funds ringfenced
Domestic water charges are a necessary component of our reforms. Charging will commence in October, with households receiving their first water bills from January 2015. Water charges will be ring-fenced for water services and will contribute significantly towards increasing infrastructural investment to the levels needed. Last week, Irish Water published its proposed 2014-2016 capital investment plan.

The establishment of Irish Water means services are now delivered through one national utility rather than 34 separate local authorities, resulting in greater efficiencies and economies. Critically, the transition will be seamless, as the partnership with local authorities allows local operations’ experience to be combined with Irish Water’s strategic network and asset management expertise.

There will be independent, economic regulation of the new utility. Protecting consumer interests is the primary responsibility of the Commission for Energy Regulation. The CER will critically examine Irish Water’s operational costs and capital plans, take decisions on a “water charges plan” and exercise its powers regarding Irish Water codes of practice on customer engagement.

The Government has sought to make water charges fair, equitable and affordable and to protect the most vulnerable. Charging will be based on metering, which the OECD says is the fairest form of charging. The assessed charge for those households which won’t have a meter right away, will be based on occupancy and will be a strong proxy for usage.

Fair prices
To increase affordability, the Government is providing a free allowance for every household. It is also providing further supports for groups highlighted as potentially vulnerable: the absence of a standing charge will benefit those living alone; the additional free allowance for children under 18 effectively means children's consumption will be free; people with high water usage due to medical conditions will have their bills capped; and pensioners, people with disabilities and carers who receive the households benefits package will receive €100 a year to assist with bill payment.

The policy decisions taken by Government mean the average charge should be €240; a person living alone will have approximately 40 per cent of their water needs provided and will pay about €138 per annum; and a family of two adults and two children will have over half their water needs provided, and pay about €248 per annum. Irish Water will have flexible payment options.

I have also secured Government agreement to fund a free first fix on leaks identified on the customer side as a major water conservation measure.

Politicians are often accused of short-termism. The objective of the Government’s water reforms is to deliver sustainable investment and long-term improvements to our water and waste water systems.

The difficult decisions we have taken will ensure security of quality water supply for communities and businesses and the protection of our environment in the decades ahead.

We are confident that security of good quality supply will attract more inward investment to Ireland from water-intensive industries such as in the pharmachem, ICT and agrifood sectors.

Phil Hogan is Minister for the Environment