Mr. John Dempsey:

Under the service level agreements Irish Water has or will have with local authorities, we essentially pay three different costs. The first two of these will be long-term costs, namely, the cost of the staff who are involved in providing services under the service level agreement and the cost of any associated overheads. These are the first two components of costs that we will recoup to or repay the local authority because they were incurred on our behalf.

The third category of cost is procurement-related expenditure. Until the end of last year, local authorities were fully responsible for paying suppliers for any goods or services supplied. As Irish Water has been responsible for the assets since 1 January, it is technically responsible for the procurement related expenditure. There is, however, a transitional period during which local authorities start using our procurement systems. Mr. Cowhig or Mr. Tierney referred to the use of our procurement systems by eight local authorities. Eight local authorities are currently using our procurement systems. This means they raise the purchase requisition on our system, which means we pay the cost and it is not incurred by the local authority. The payment comes out of Irish Water's bank account, if one likes. The other local authorities will move over to our procurement systems on a phased basis. Until such time as they do so, they will incur the operational-related expenditure for providing water services. They currently pay suppliers for goods and services off their existing systems. They will recharge Irish Water for these and we will pay them for it.