Alan Kelly (Tipperary North, Labour) | Oireachtas source

In advance of the enactment of the Water Services (No. 2) Act 2013, the Commission for Energy Regulation, CER, did not have full economic regulatory powers in regard to the water sector, but did have powers to advise the Minister. In that context, on 22 October 2013, my predecessor approved a request from the Department to seek advice from CER on new costs arising in the establishment of Irish Water. The purpose in seeking this advice was to ensure that the costs were of benefit to customers in the long term and that forecast expenditure was reasonable. In regard to the establishment costs, the request included broad headings for expenditure of €150 million plus a contingency of €31 million, but did not distinguish between in-house and external provision. The Deputy will appreciate that, for Cabinet confidentiality reasons, I cannot divulge details of discussions at the Economic Management Council, which has the status of a Cabinet committee.

The establishment of Irish Water is an integral component of the Government’s water sector reform strategy and involves major organisational change. The establishment of a high-performance utility will lead to lower costs and improved services in the future, providing much better outcomes for customers and the environment. There is a need to incur up-front costs in order to secure these benefits. The CER has reviewed the establishment costs and in its proposals, published in July 2014, it has indicated that it proposes to allow Irish Water the vast bulk - some €172.8 million - of the costs proposed.

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