Fergus O'Dowd (Louth, Fine Gael)
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I welcome the opportunity to discuss with the sub-committee the water services component of the 2013 Estimate. The Estimate demonstrates the high priority given to water services despite the financial constraints. A provision of nearly €326 million is being made available for this purpose. Of this, over €286 million is allocated to implementing the Water Services Investment Programme 2010-13. This investment is required to expand infrastructural capacity, upgrade the water supply distribution network, tackle uneconomic levels of leakage and improve operational efficiency.

Good progress is being made on implementation of the investment programme, with some 208 contracts completed and a further 77 currently under way. Funding in 2013 will allow for some 40 to 50 additional major public water services contracts to commence and the replacement or rehabilitation of some 200 km of water mains under the water conservation programme. The competitive tendering market assists in achieving this high level of activity.

In the case of the rural water programme, the 2013 allocation is nearly €40 million. The main objective is to address drinking water quality issues in the group water sector and on smaller public schemes.

Work continues apace on fundamental reform of the way water services operate. We need to generate economies of scale in the provision of services, create a greater link between usage and funding and ensure that necessary extra infrastructural investment is secured. The water services sector needs a new financial and operational model. Consequently, the Government has embarked on the ambitious reform programme. There are three essential components: the establishment of Irish Water as an independent State-owned company within Bord Gáis, based on a public utility model; the introduction of a sustainable funding model to support much needed investment in the sector, which will include the introduction of water charges for domestic users; and the establishment of an independent economic regulator for water services. This function is being assigned to the Commission for Energy Regulation, CER. Delivery of this programme is in line with our commitments under the EU-IMF programme of assistance and the programme for Government.

Water is becoming an increasingly precious and important resource. These reforms will guarantee security of quality supply for citizens and businesses, both now and in the future, and will increase our economic competitiveness by making Ireland an attractive location for water-intensive industries such as ICT, chemicals and agrifood. Economic regulation will drive cost efficiencies, while environmental regulation will protect our water quality.

The Department of the Environment, Community and Local Government is working with project partners - Irish Water-Uisce Éireann, local authorities, the CER, the Environmental Protection Agency, EPA, and others - to implement these reforms, which were outlined in the water sector reform implementation strategy, published last October. Progress has been steady. In March, the President signed into law the Water Services Act 2013, which provides for the establishment of Irish Water-Uisce Éireann as a subsidiary of Bord Gáis, the installation of meters in domestic properties and the conferring of certain powers on the CER in respect of the economic regulation of water. Local authorities and Irish Water are conducting preparatory work ahead of Uisce Éireann's metering programme. Commencing later this month, this ambitious undertaking will see some 27,000 meters installed per month. Local authority staff are currently conducting a survey of all connections to the public water supply. The procurement processes for the metering programme are well advanced.

Within Irish Water, key appointments have been made. Dr. John Tierney has been appointed as managing director. He has a long history in local government management and will play a key role in ensuring a smooth transition of responsibility for services from local authorities to Uisce Éireann. The reform programme partners are working on a range of reform programme work streams and progressing major projects, such as a transfer of capital projects, the development of billing capability and the introduction of a financial model for the utility.

Following further comprehensive legislation planned for later this year, Uisce Éireann will become the water services authority from 1 January 2014, responsible for providing water and wastewater services to households and businesses on the public network and for billing and collecting revenue from households when domestic water charges are introduced. Last week, the Government approved the general scheme for the water services (No. 2) Bill, which will provide in the main for the transfer of water services functions, assets and liabilities to Uisce Éireann; powers to allow Uisce Éireann to levy domestic and non-domestic charges; corporate governance arrangements for Uisce Éireann; the preparation of strategic investment plans by Uisce Éireann; assignment of economic regulation of water services to the CER; and clarification of the role of the EPA as regards Irish Water. The legislation will reaffirm the Government's commitment to maintaining water services assets in public ownership. The Department will be working with the Office of the Attorney General on the preparation of the Bill, which will be published in the autumn. This will mark a new departure for water services, creating sustainable organisational and funding models for the future and building on the skills and commitment of local authorities combined with the utility experience of Bord Gáis. Legislation will provide for local authorities to act as agents of Uisce Éireann, providing services by way of service level agreements.

Some of the next milestones in the reform programme include the commencement of the water metering programme, the publication of a second Bill in the autumn, with expected enactment by the end of the year, and consultation by the CER on various aspects of economic regulation, including the regulatory framework and the domestic tariff. The regulator's remit will be based on protecting the customer. The EPA will environmentally regulate the new utility. From 1 January of next year, the newly established Irish Water Uisce Éireann will be fully operational.

I thank the committee for the opportunity to outline the key elements of the considerable activity that is under way in the water sector to ensure delivery of the capital investment programme, provide for its smooth transition to Irish Water and implement the major programme of reform. The water services sector must meet the needs of our citizens and deliver the critical infrastructure required to support economic recovery. When the reform programme is completed, we will have put in place the necessary funding and organisational arrangements to realise those key objectives.