Mr. Paul McGowan:

It is our intention to bring clarity to everybody on call out charges at the earliest opportunity, but it is important that we benchmark and analyse these costs, as well as put them out for consultation in order to ensure they are at the correct level. When I mentioned other means of income, I was merely referring to the subvention from the Government; I was not referring to anything else.

In terms of costs and the 8% reduction we applied, the Deputy asked us about three specific areas. Irish Water put forward an application for a figure of €181 million in start-up costs. We analysed its figures in detail and the Deputy may recall that we also carried out a previous analysis at a much higher level at the request of the Minister. This time we carried out a more detailed analysis and found that the majority of the €181 million in costs had been efficiently procured in line with proper procurement processes and that the costs had been efficiently incurred, with the exception of a sum of €9.1 million which we did not deem to have been efficiently incurred. As a result, we disallowed €9.1 million of the expenditure. These costs were primarily in the area of project management but there was an element of labour costs.

In regard to operational expenditure, we all accept that Irish Water's cost base is too high. The challenge for us is to put in place a regulatory framework that will bring pressure to bear on its cost base in order that it will be seen to decrease over time. For the initial two year interim revenue control period, we have attached a reduction of 7% per annum in its operating expenditure. In the first full price control process we will expect to be imposing even greater targets on Irish Water in terms of the reductions it will need to make to its cost base in order that the charges to customers will be brought down to as low a level as is reasonably possible. This is not something that can be done overnight; it is a programme. As has been seen across Europe when it comes to utility regulation, these efficiencies are achieved over time. The targets we have set for Irish Water for the interim revenue control period are challenging, but they are also realistic, that is, they are achievable for Irish Water. We will be considering more stringent operational expenditure targets in the future. We do not get into or offer opinions on payment systems for staff.

I ask Ms Mannion to address the question of how we factored in the compliance rate.