Tim O'Malley (Limerick East, Progressive Democrats)

I thank the Deputy for raising this matter. The national water services pricing policy framework provides for the recovery by sanitary authorities of the cost of providing water services from the users of those services while respecting the statutory prohibition on charging for water services provided to householders. The framework also requires full recovery of the cost of providing water services to the non-domestic sector by means of a meter-based volumetric charge and the metering of this sector.

The pricing policy framework has been fully and successfully applied in respect of all schemes in the water services investment programme since 2000. The capital contribution for non-domestic use is related only to the marginal cost of providing additional capacity. The major part of the capital cost element of water services schemes is therefore domestic and is funded in full by the Exchequer through the water services investment programme. The marginal capital costs are then recovered from non-domestic users on a consolidated county-wide basis over a period of up to 20 years.

A fair and transparent mechanism is used in determining the appropriate level of non-domestic capital costs to be applied to water services projects. This is identified by sanitary authorities scheme by scheme with the methodology used and the resultant outcome closely monitored by the Department of the Environment, Heritage and Local Government to ensure equity in the application of this element of the policy nationally. The determination of marginal capital costs is a matter for agreement between the Department and the local authority and the Department will continue to facilitate and assist authorities in agreeing these costs.

With regard to County Mayo schemes in the water services investment programme, I cannot accept the Deputy's assertion that the water services pricing policy treats rural communities unfairly or discriminately. We should ensure equity in the treatment of all water services projects and non-domestic marginal capital costs should be applied evenly on all projects and to all sanitary authorities in the national programme. There seems to be a mistaken impression that local businesses must pay directly for the capital costs of new water services projects in their area. This is not the case. Marginal capital costs will be recovered from all non-domestic users in County Mayo as part of a county-wide, consolidated, metered charge that includes capital, operational and administrative costs and not as a ring-fenced charge on local businesses served by a particular scheme.

I do not believe that the pricing policy is having an adverse effect on the buyers of new homes, especially given that up to 40% of the cost of providing water services infrastructure for future housing development is provided under the strategic land initiative of the water services investment programme. I acknowledge that there has been some contention about the unit cost of certain schemes in planning. A balance must be struck between the environmental benefits, economic benefits and unit costs on all water services schemes. However, it would be wrong to approve water services projects with an inordinately high unit cost for domestic water services provision that cannot achieve reasonable value for money criteria. Any such projects should be reviewed and sanitary authorities should consider the option for their reconfiguration or modification. The water services pricing policy is designed to achieve equity, fairness and transparency and the Department of the Environment, Heritage and Local Government will continue to ensure that these objectives are maintained.

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