Minister for the Environment Phil Hogan has announced that a new water utility company is to be established as a subsidiary of Bord Gáis.
Irish Water is to assume responsibility for the operation of water systems and the delivery of water supply to homes across the State from the local authorities.
Mr Hogan said there would be no upfront charge for homes when a water metering programme is introduced and that a newly appointed water regulator would ultimately decide on the funding model.
“The overarching objective of the Government’s water reform programme is to put in place structures and funding arrangements that will ensure we have a world class water and waste water infrastructure that meets all environmental and public health standards,” he said.
The operation of water services in the State costs some €1.2 billion annually and the current delivery system is said to be losing up to 40 per cent of the water it carries through leakage. The problem is likely to cost hundreds of millions of euro to rectify.
The Department of the Environment said that, when fully operational, Irish Water would have the capacity to raise funds for capital investments on the financial markets in a similar fashion to the ESB and Bord Gáis.
“Quite simply we are faced with a substantial investment requirement in future years. The present funding model is not sustainable and the current scale of operation is not efficient or effective,” Mr Hogan said.
Semi-State firm Bord na Móna said it was “disappointed” not to have been selected to take on the new utility but that it would be willing to assist Irish Water in the challenges it will face going forward.
“We have also done considerable work on a new strategic water supply for Ireland based on taking peak water from the Shannon. All of these facilities and skills will be available to the new Irish Water utility,” Bord na Móna said in a statement.
It is understood that a loan from the National Pension Reserve Fund will be used to install water meters in one million Irish homes. Households would pay an average of €39 per annum over 20 years to cover the cost.
Government sources confirmed yesterday the cost per household, based on the size of the NPRF loan, would work out at about €780, but that the cost would be levied as a standing charge over a period of two decades, in much the same way as such charges are already imposed by other utilities such as the ESB and Bord Gáis.
However, it was stressed that the ultimate decision on the size of the annual standing charge would be a decision for the Commission for Energy Regulation, which will be dealing with the new water metering service.
Taoiseach Enda Kenny confirmed yesterday that householders would pay for the cost of the meters but that the cost would not be an upfront one. Charges are to become operable in early 2014.
“Obviously when you provide water meters somebody has to pay for them. We’ve made absolutely no decision about this. Any charge will . . . be the absolute minimum because of the difficulties that are involved here,” Mr Kenny said.
The Taoiseach said yesterday that as many as 2,000 jobs would be created through the installation of water meters in the State. He also set out what will be a key plank of the Government’s strategy in its efforts to persuade the public of the need for efficient water management systems by saying “water was one of the most precious commodities”.
Fianna Fáil environment spokesman Niall Collins described the handling of water metering as the “latest fiasco” at the Department of the Environment.
“The lack of any clear answer from Ministers over the last 24 hours on the question of whether or not households will be asked to pay for a water meter proves one thing: this Government has no meaningful strategy on water reform.”
“Already we are seeing worrying similarities with the communications disaster that surrounded the household charge,” he said.
Sinn Féin’s Aengus Ó Snodaigh and Brian Stanley criticised the handling of the issue, as well as the potential costs for householders. The party is opposed to the charge.
Ryanair chief executive Michael O’Leary separately said Irish Water would turn out to be “another bloody Nama”.
Speaking Newstalk, he said the body would be "run by the same useless bureaucrats who have been in the Department of Environment for recent years and we’ll have another layer of bureaucracy on it. We need to cut all that wasted spending".
Mr O'Leary said water companies from across Europe should tender to manage Irish Water for a five-year term, and that at the end of every five years the company would be replaced or the contract put up for tender again.