Mr. John Mullins:

In respect of the ownership of Irish Water, it is a subsidiary company, and in any engagement we have had, there has never been any discussion of water assets being available for privatisation, either partially or fully. The network assets of Bord Gáis Éireann throughout the country are not for privatisation. Effectively, Bord Gáis group will end up being an infrastructure and retail Irish water company with a gas networks business. Clearly there will be shared services that are appropriate to both in terms of efficiency, provision of IT systems and other support systems. It is not envisaged that Irish Water or any of its assets will be sold by the State. I am thinking here in terms of pylons, pipelines and water pipelines. This policy is very clear and there is universal agreement across all parties on that.

With regard to resources, Bord Gáis Energy is being sold. The billing system we use in Bord Gáis Energy is already being adapted for Irish Water and the design for the Irish Water billing system is in progress. The billing system will be ready by 1 January 2014 and we have already seconded resources from our energy retail business into Irish Water, transferring those who are proficient in the establishment of billing and customer service. Therefore, this expertise will not be lost with the privatisation. We have had to backfill some positions to replace those people, which means more employment within Bord Gáis for people from other customer service and billing organisations. This is already happening. We put forward the view that we would leverage and clearly we have already started that process. I can therefore assure the committee that we will have the billing system up and running by 1 January 2014.

With regard to our work and asset management system, we do not use paper-based job cards. All of the metering roll-out in this country will be done digitally and in a smart fashion.

All contractors will be trained in how to use hand-held devices. They will get their job cards and schedule their work which they will complete digitally. They will use a centralised work and asset management system to send the information to a central base. The system in question is a Bord Gáis system which we are adapting for water use. At any point in time the utilities would certainly question the change from a legacy system to these two significant systems. They will mean that we will operate on an efficient basis from the word go. These resources in terms of leverage are not being lost in any way. We are making sure that will happen in advance of the process of selling Bord Gáis Energy, which is an issue for 2013 and 2014. Our business is organised into an Irish Water division, an energy division and a networks division. We are moving towards a situation where we will fundamentally have a shared infrastructure company that will devote centralised systems and processes to water use and the gas network business.

I wish to respond to what has been said about the cost of metering and charges. Various numbers have been bandied about when estimates have been of the cost of metering. Our guesstimate is that the cost will be approximately €450 million. We hope to be able to reduce that number on a tendered basis in the current climate. It is clear that there will be no upfront costs for any customer as a result of the introduction of water meters. These costs will not be borne by local authorities either. We are in conversations with the National Pensions Reserve Fund about the facilities needed to attract seed investment in these meters. Our chief financial officer is discussing the commercial arrangements with the National Pensions Reserve Fund. When these arrangements are in place, we hope to come back to the committee to give it more detail on them. We will come back with a specific number for the cost of metering when we have gone through the full tender process involving boundary boxes, contractors, meters and data requirements.

I wish to speak about tariffs. This is unique. We are migrating from a system that is based in local authorities to an economic regulatory system that will take some time to be financially independent in its own right. We are talking about a significant level of assets. Some valuations are set out in the committee's documentation and the report published in June. The asset base of the new entity will be bigger than that of any other State entity. That is exactly what is being created. We are talking about assets worth between €11 billion and €19 billion. Clearly, the manner in which that will be economically regulated will be a matter for the Commission for Energy Regulation. We will see a progressive reduction of the Exchequer commitment. In effect, the domestic, industrial and commercial charges already in place will give Irish Water the financial wherewithal it needs to move forward. There will be significant Exchequer investment in Irish Water for many years to come. It is not the objective of the Government or Irish Water to put the total loading of cost on the country's domestic customers. It is clear that the hybrid model to be used will be similar to the Network Rail regulatory model in Britain, of which I have some experience from my time in that country. Essentially, the Government will be involved in and make contributions towards the capital programme. Operating costs of €600 per customer have been cited in the cases of some counties mentioned. Nobody is suggesting all of these costs will be borne by domestic customers. Certainly, €600 would be way above any expected tariff applied in any jurisdiction within the OECD. There is an issue regarding the consultation process that will be needed to move towards an economic tariff that - most importantly - will be acceptable in the current economic climate.

I wish to respond to what has been said about local authority workers. I have made it clear that we want to put programmes and service level agreements in place up to 2017 and it is clear they will be adjusted over time. We need to appreciate that the operation and maintenance of the country's patchwork quilt of assets involve local authority and private sector workers. There are many examples of privately tendered projects across the country, including the Dublin Bay wastewater treatment works in Deputy Kevin Humphreys's constituency. Clearly, these assets and contracts will have to be honoured by Irish Water. I assure the committee that there is no expectation that Irish Water will impose compulsory redundancies in the local authority sector. The objective of the consultative group led by Mr. Kevin Foley is to ensure we will have change management. We have experience of this in our own company because we have had to do it progressively during the years, for example, in the cases of Dublin Gas and Cork Gas, etc. We will have to do it over a period of time in agreement with the local authority workers on an industrial relations basis. I assure Deputy Barry Cowen that we would like to second to Irish Water local authority staff who have specific engineering and technical expertise and knowledge of the assets on a national or regional level. We must respect the fact that capable people are working in the local authorities and adding value to those services on a regular basis.

I ask my colleague, Mr. O'Sullivan, to comment on the issue of financing.