Mr. John Mullins:

Tá mé an-bhuíoch díobh go léir as an cuireadh teacht anseo inniu chun díospóireacht a bheith againn ar bhunú Uisce Éireann. If the Chairman does not mind, I will deal with the points he raised at the end and read our presentation with the assistance of my colleague, Mr. Michael O'Sullivan, Bord Gáis Éireann's chief financial officer.

On behalf of Bord Gáis Éireann, I thank the committee for the opportunity to address it today on progress concerning the establishment of the new public utility for the provision of public water and waste water services for the people of Ireland. My colleagues and I will seek to update the committee on the developments that have occurred to date, those that are about to get under way and those that will be rolled out to the conclusion of the Irish Water programme. Of course, we will be happy to respond to the comments and questions of the committee, and we will value the input and advice of the committee members as we proceed through the implementation of the programme.

In April, the Government announced a radical reform of how public water services are delivered in this country. There are three key elements to this reform: first, the creation of a new public water utility, Irish Water, which will take over responsibility for delivering public water and waste water services from local authorities; second, the appointment of a new economic regulator for the public water sector - this responsibility has been assigned to the Commission for Energy Regulation, which will be responsible for determining the cost of water services to the consumer and for ensuring that planned efficiencies are delivered; and third, the introduction of a new funding regime based on domestic water charges and the new utility's ability to raise capital on international markets so that in the future Irish Water will be financially self-sustaining. These measures represent one of the most ambitious reform programmes undertaken in the history of the State.

In Ireland water is an abundant natural resource, but it needs to be treated and transported efficiently. We face a challenge to ensure our water infrastructure has the capacity to meet the future demands of a growing population and to enhance our national competitiveness. We must support economic recovery by delivering a water system that will meet the needs of all industrial, commercial and domestic users. At present, that capacity is simply not there. Such a system can only be achieved by increasing the level of investment in our infrastructure, by introducing operational efficiencies into its management and by taking a national strategic approach to planning and investment.

This committee's report into water services in June last outlined many of the constraints in the current system. In summary, the current model of provision is reliant on the State for nearly 90% of its funding. That is simply not sustainable. The lack of access to alternative sources of funding has given rise to significant under-investment in the system, which has led to inefficiencies such as unacceptable and costly leakage rates, high operating costs per connection and severe difficulty in dealing with extreme weather events such as those we have experienced in recent winters. Despite these challenges, it is widely acknowledged that the local authorities have done a proficient job in providing water services to the community.

However, we are at a turning point. The Government has determined that reform is an absolute necessity in order to introduce new sources of funding into the system so that Ireland has a world-class water system for the future. It has given us a mandate to create a new public water utility, while working closely with the Department of the Environment, Community and Local Government, the Commission for Energy Regulation and the local authorities. Once Irish Water has been established, it will operate as a subsidiary company within the Bord Gáis Éireann group. The scale and complexity of the task is immense, but it is achievable. It is a role that we as a company sought, and it is one to which we will apply all our energies in order to succeed. The Government's decision to establish Irish Water within Bord Gáis was made in order to enable the new water utility to have access to the very best skills, experience and capabilities within the utility sector in Ireland. Bord Gáis is a highly successful and performing semi-State utility. Our experience of managing a national network and of operating in a regulated environment, our track record in raising finance and our experience of providing customer service will all be deployed to assist in the successful establishment and operation of Irish Water. In order to create a water utility that builds on the strengths of the existing system, Bord Gáis is committed to working closely with water experts from the local authorities to ensure that their considerable experience, knowledge and dedication to service provide the foundation for Irish Water.

Committee members will be aware that there is concern about how these reforms will affect local authority staff. The Department of the Environment, Community and Local Government, which remains responsible for overall policy and legislation for the sector, in association with local authority management and trade unions representing staff in the local authorities, has established a consultative group which will act as a forum for engagement on all industrial relations issues. The consultative group is chaired by Mr. Kevin Foley of the Labour Relations Commission, and Bord Gáis is also represented on the body. It is envisaged that service level agreements will be developed between Irish Water and the local authorities and that these arrangements will endure to 2017 and, if necessary, beyond.

It is expected that it will take approximately five years for Irish Water to be established. There are several important milestones in the creation of the utility. The Government will introduce legislation in late 2012 to give Bord Gáis/Irish Water an interim legal basis in order to enable it carry out water-related activities, and this will be followed by comprehensive primary legislation in 2013 to give full powers to Irish Water. Irish Water is about to commence the water metering programme. Domestic billing will commence from 2014, as outlined in the EU-IMF-ECB agreement. We will take responsibility for capital planning during 2014. From 2014, Irish Water will enter into service level agreements with the local authorities, which will act as agents of the water utility in their respective geographical areas. By 2015, Irish Water will have taken responsibility for all aspects of the provision of public water services in the country and, subject to a sustainable regulatory model, is expected to be in a position to commence fund-raising on the international capital markets for investment purposes. By the end of 2017, it is envisaged that the utility will have achieved its end state in terms of its organisation and operations.