Alan Kelly (Tipperary North, Labour) | Oireachtas source

I thank my colleagues for what I presume are their sincere good wishes. There is a very youthful look on the team on this side of the House.

I thank Deputy Cowen for giving me the opportunity to address the issues associated with the Bill. Many issues were also raised by the four speakers. They might check the Official Report for today as some of those issues were addressed during parliamentary questions. Deputy Cowen could not attend and I do not know the circumstances for that, but a number of questions were addressed, including some of the issues raised by the last speaker.

The provision of safe and wholesome drinking water is of critical importance to the health and well-being of our citizens. Modernising and improving water services delivery in Ireland is a key policy objective in the programme for Government and it is one on which the Government is delivering. Significant reform of water services has already begun and has been delivered through the following measures: the establishment of Irish Water as a State-owned company within the Bord Gáis group, which is now named Ervia; the introduction of a new, sustainable funding model to support much-needed investment in water infrastructure, including the introduction of water meters in households to facilitate equitable water charges based on usage; and the establishment of an independent economic regulator for water services, with a key focus on consumer protection, through the conferral of statutory powers on the Commission for Energy Regulation, CER.

The establishment of Irish Water has been one of the most significant elements among a wide range of public sector reform measures achieved by this Government. The move towards the utility model will deliver major benefits to our people and our economy in a number of ways, notably through providing a more structured and co-ordinated approach to the delivery of water services on a national basis; achieving economies of scale in service delivery and more efficient procurement of materials and services; reducing unacceptable levels of waste from the drinking water distribution system, with an estimated 40% of treated drinking water being unaccounted for prior to the establishment of Irish Water; and reducing the overall costs of delivering water services.

The establishment of Irish Water within Bord Gáis Éireann was an important step in assisting the utility to leverage the existing core expertise available to Bord Gáis as a modern and efficiently-run utility. Bord Gáis employed its internal expertise to establish functions in Irish Water in areas such as asset management, information technology, customer operations, financial management, risk management and corporate governance. Ervia and Irish Water estimate that establishing Irish Water within the BGE group has saved potentially tens of millions of euro. In the longer term, they estimate that it will lead to a saving of over €1 billion over the period to 2021.

It is important to note that the reform of water services is not only important in delivering better value for money for our citizens, but is also critical to support economic development and growth. Worldwide, demand for natural water resources is rising, yet supplies are becoming more vulnerable. Ireland has a potential competitive advantage in having high quality supplies of fresh water available for use. We must make the most of this opportunity and create a world class system of water services delivery. By doing this, Ireland can both support indigenous industry and attract overseas investment in water-intensive industries such as ICT and pharmachemicals.

Already, the metering programme undertaken by Irish Water is delivering an economic dividend through the creation of over 1,200 jobs. This is an incredibly ambitious programme of capital works, with Irish Water planning to install over 1 million meters within a three year period. Since the commencement of the installation programme in August 2013, over 400,000 meters have been installed. Irish Water has committed to completing the installation programme by mid-2016. The metering programme is unparalleled in its scale and ambition. It is a considerable achievement. The introduction of charges based on usage is a cornerstone of the Government's pricing policy. That is the reason the accelerated metering programme is of primary importance to the funding model being put in place.

Water meters facilitate a fair form of charges for users of water services and facilitate the provision of a free allowance to households and families. The Organisation for Economic Co-operation and Development, OECD, has previously stated that metered charges are the fairest form of charging. The OECD has also noted that failure to install water meters would give households zero incentive to save water or to minimise waste in the form of leaking pipes, running taps and other wasteful usage such as unnecessary use of garden hoses. The OECD also advised that the failure to measure water use further perpetuates the public's low awareness of consumption levels and the real cost of water services. A better understanding of costs could, in itself, promote some reduction in consumption.

The OECD went on to observe that water metering will also remove the inequities between households. A household with large gardens or even a swimming pool will pay significantly more than a smaller household with average consumption. When households understand that they can manage their water bills through reducing consumption they are provided with an important incentive to manage their water use responsibly. In Denmark, for example, a reduction of 12.6% in household consumption was achieved in the period 1996 to 2007, following the introduction of water meters along with the promotion of water saving devices.

The Walker report, prepared by the UK Government and published in 2009, estimates that water metering in the UK has the potential to achieve a reduction of approximately 16% of average household demand through reduced personal consumption and reduced customer side leakage. A research project carried out in the greater Dublin area estimated that customer side leakage may be as high as 65 litres per property per day, but more recent studies in Dublin suggest that customer side leakage could in some locations be significantly higher.

The installation of water meters will ensure that these leaks can be identified and fixed. Metering will, therefore, achieve significant reductions in the volume of water that is required to be treated every day and will lead to savings in the operational costs of delivering water services and in deferred capital expenditure as well. Moreover, it will lead to other environmental benefits such as reduced abstractions from rivers and lakes and reduced carbon emissions from lower energy consumption.

There is also evidence from closer to home - from the group water sector. The National Federation of Group Water Schemes has long advocated the introduction of water meters in group schemes throughout the country, and members of these schemes have been accustomed to paying for water based on usage in recent years. The evidence from the group schemes sector provides further proof that very significant savings can be achieved through the introduction of metered charges.

Two comprehensive pieces of legislation approved by the Oireachtas during 2013, the Water Services Act 2013 and the Water Services (No. 2) Act 2013, provided the legislative basis for the programme of reforms. The two Acts addressed a wide range of issues to provide for the establishment of Irish Water and the subsequent transfer of water services from the city and county councils to Irish Water. However, with regard to the topic of the Bill before us, I would like to outline the measures that are set out in the existing legislation regarding the levying of charges by Irish Water and the measures the legislation contains to safeguard the interests of the customers of Irish Water.

The Water Services (No. 2) Act 2013 provides Irish Water with the statutory power to charge customers for the water services provided. Specifically, section 21 of the Act sets out that Irish Water shall charge each customer for the provision by it of water services. Such charges are to be calculated by Irish Water in its water charges plan, which is subject to the approval of the CER. The water charges plan to be prepared by Irish Water is required to specify the manner and method by which charges are to be calculated and the costs likely to be incurred by Irish Water in the performance of its functions under the legislation during the period to which the water charges plan relates.

The water charges plan is also required to set out the requirement to charge for both water supply services and wastewater services. While the majority of Irish Water's customers will receive both water supply services and wastewater services, a proportion may receive only a water supply or a wastewater service. Where a customer receives both water and waste services, the legislation provides that the amount of wastewater discharge from a household or other premises is deemed equal to the amount of water supplied to the premises. This is often referred to as "water in, water out," and is a broadly adopted method for charging for water services internationally. This will apply whether the volume of water supplied was measured by a water meter or assessed based on criteria to be approved by the CER.

In preparing the water charge plan, Irish Water is required to take account of the public utility nature of its functions but also the need to perform its functions in a manner that maintains Irish Water as a commercially viable utility. The CER, in evaluating the plan, may approve the water charges plan submitted by Irish Water with or without modifications, or it may refuse to approve the water charges plan. In addition to approving the water charges plan, the CER has a wider role in overseeing the level of service provided by Irish Water to its customers. In particular, section 32 of the Water Services (No. 2) Act 2013 provides that Irish Water must prepare and submit to the CER a code or codes of practice to address a wide range of customer protection issues. These include: standards in regard to the performance by Irish Water of its functions; billing by Irish Water of persons in respect of water services provided; methods of payment of water charges; the provision of information to customers of Irish Water for the purpose of enabling customers to communicate with Irish Water; the making of complaints to Irish Water by customers in regard to the provision of water services; the standards of such services; the contesting of the charge; and, importantly, any other matter the commission considers necessary and appropriate to secure the interests of customers of Irish Water.

Section 39 of the Act sets out the requirement of the CER in the performance of its functions and, in this regard, the CER is obliged to perform its functions in a manner that best serves the interests of customers of Irish Water. It is worth noting that the CER is required to perform its functions having regard to the need to ensure that the customers of Irish Water are provided with the quality of services provided for in the aforementioned code of practice; that water services are provided by Irish Water in an economic and efficient manner; that Irish Water operates in a commercially viable manner; that there is continuity, safety, security and sustainability of water services; and that due regard is paid to the recovery of costs of water services in accordance with Article 9 of the EU water framework directive, which requires member states to take account of the principle of recovery of the costs of water services.

Section 42 of the Act provides an important role for the Minister for the Environment, Community and Local Government by providing that the Minister may issue a general policy directive direction to the CER. In this regard, my predecessor as Minister, Mr. Phil Hogan, issued such a direction to the CER on 2 July 2014. The policy direction, which took account of decisions made by the Government, addresses a range of matters relating to the water charges plan to be submitted to the CER by Irish Water and relates to the interim regulatory cycle which will cover the period from October 2014 to the end of 2016. In particular, the direction provided for the following: the provision of a free allowance for domestic customers of Irish Water for usage in their primary residence, amounting to 30,000 litres per household on an annual basis; an allowance to cover the normal consumption of both water supplied and wastewater treated per child in primary residence in the State, with the level of this allowance to be verified through consumption data from metering; the requirement for assessed charges applied by Irish Water to be primarily based on occupancy, allowing for provision for other factors to be considered, such as comparison with metered usage; provision for special arrangements for customers with specific medical conditions which require increased water consumption, involving the capping of such charges at the relevant assessed charge; and provision that no standing charge should apply to domestic customers other than provision for the CER to consider a minimum charge for non-primary residences. Of particular relevance given the subject matter of the Bill tabled by Deputy Cowen, the direction also provides that the commission should make provision for circumstances in which the quality of water services provided by Irish Water to customers is impaired or services are reduced or restricted - for example, where there is a boil-water notice in place.

I believe it would be useful to outline the existing legislative provisions dealing with drinking water quality. To ensure the safety of our drinking water supply, the quality of drinking water in Ireland is regulated by the European Union (Drinking Water) Regulations 2014. These regulations specify 48 microbiological, chemical and indicator parameters or standards that water suppliers, including Irish Water and group schemes, are required to monitor to ensure compliance with those standards. Irish Water is now responsible for public water supplies.

The EPA is the statutory body responsible for the provision of drinking water supplies and has been provided with extensive powers by the regulations to ensure that drinking water supplies comply with the parameters contained in the regulations. These include the power to issue a direction to a water supplier to ensure compliance. The regulations provide that it is an offence for a water supplier to fail to comply with such a direction.

As part of the statutory monitoring responsibilities, where Irish Water, in consultation with the Health Service Executive, considers that a water supply is a potential risk to human health, it is required to ensure that the supply of such water is prohibited or the use of such water is restricted, and that consumers are informed promptly and given the necessary advice. This notification and, in particular, the advice provided for consumers will vary depending on the cause of the risk. The main parameters for which restrictions are currently in place are E. coli, cryptosporidium and lead. Boil-water notices are issued in regard to E. coli or cryptosporidium, while water restrictions are issued for lead.

The EPA produces annual reports on the quality of drinking water supplies in Ireland which set out the compliance of drinking water supplies with the mandatory standards set out for the drinking water regulations. The most recent report covers compliance in 2012 and shows that 98.7% of public water supplies were compliant. This shows a high level of compliance, although clearly we want to improve on this and ensure that all supplies meet the necessary standards. Significant progress has been made in improving the quality of drinking water supplies in recent years. Of course, of particular note is the 92% reduction in the detection of E. coli in public water supplies since 2005. At present, there are 978 public water supplies for which Irish Water is now responsible, serving approximately 82% of the population of the State. The remainder of households receive their supply from either private wells or private group schemes.

The EPA has recently reported to my Department that there are currently 31 restrictions in place on public water supplies, including 20 boil-water notices. The restrictions in place affect approximately 26,000 people. Of the schemes affected by the boil-water notices, one is in each of the counties of Cork, Kerry, Leitrim, Longford, Mayo, Sligo, Waterford and Wexford, four are in County Tipperary and eight are in County Roscommon.

A number of restrictions issued under the drinking water regulations relate to exceedances of the limits for lead. These exceedances arise from the solubility of lead in drinking water. In recent years the WHO has been advising on reduction of exposure to lead on the basis that prolonged exposure to lead can result in harmful health effects, particularly in infants and unborn children. This has resulted in reduced limits being set by the European Union in the drinking water directive which has been transposed into Irish legislation by the drinking water regulations. In 2003 the allowable limits for lead in drinking water were reduced from 50 to 25 micrograms per litre. At the end of 2013 the limit was further reduced to 10 micrograms per litre or ten parts per billion. At this lower concentration, there is the risk of exceeding the limit wherever there is lead piping, particularly where the water has been sitting in the pipe overnight. It is possible to treat the water using particular chemicals, but this can only reduce rather than remove the risk. For this reason, the WHO recommends the removal of lead from drinking water systems as the necessary objective to reduce health concerns. There is a negligible amount of lead pipes in the water distribution mains, but Irish Water estimates that approximately 100,000 homes may be connected to lead service pipes. This is the pipe that connects the water main to the household stopcock or water meter. Irish Water has developed a ten-year timeframe to eliminate these service pipes and lead backyard services, which it estimates could involve an additional 30,000 to 40,000 homes. The estimated cost of the work is between €200 million and €300 million. The Water Services Act 2007 provides that the owner of a premises is responsible for the maintenance and renewal of the internal water distribution system and shall ensure it is kept in good order. Responsibility for replacing lead pipes from the main stopcock to the house and within the house rests with the homeowner. Irish Water is also evaluating the problem of lead piping within households. In this regard, it is examining methods of water treatment to reduce and prevent lead being absorbed into household water supplies.

The Water Services (No. 2) Act 2013 requires the EPA and Irish Water to co-operate in a manner that best promotes the interests of consumers and the efficient provision of water services. Irish Water is taking action in this regard by making drinking water quality its top priority. In its interim investment plan which will operate up to 2016 the main focus will be urgent provision of treatment plants to address schemes with boil water notices, eight of which are in County Roscommon; an action plan to address water supply schemes not considered sufficiently robust to ensure the water supply will comply with drinking water standards; and a specific programme of work to address the long-term problem of lead piping in the public supply system. The investment plan will provide for capital spending on new drinking water plants of €133 million, with a further €140 million focusing on drinking water availability and improving quality. A number of schemes are being fast-tracked where there are currently restrictions on supply - six new treatments which are under construction in County Roscommon will be completed between November 2014 and June 2015 and serve over 20,000 people, while a new scheme is to be completed in Tipperary to address boil water notices that have been in place for almost six years. It is clear that a dynamic effort is being made by Irish Water to address as a priority drinking water schemes with impaired supplies.

Water charges for households will commence on 1 October 2014, with the first bills to be issued by Irish Water to households in January 2015. In advance of this and in accordance with the provisions of the legislation, Irish Water has submitted its proposed water charges plan to the CER. In July 2014 the CER published a public consultation document on the proposed water charges plan which has been concluded. In its consultation document the CER set out its initial proposals relating to water charges and, in particular, how the requirements of the policy direction could be achieved. This included the following proposals. Where a water supply is declared unfit for human consumption for a period of less than three months, a 50% discount on the water supply charge should apply. Where the supply is unfit for human consumption for a period of more than three months, a 100% discount on the water supply charge should apply. The CER's proposals are more favourable to the consumer than those submitted by Irish Water which had suggested a 100% discount should only apply where the period involved was over six months rather than three I understand that, following the public consultation process, the CER is considering the approach to compensating households where the water supply is not fit for human consumption. It is important to highlight that all of the households in 18 of the 20 public water supply schemes, including all eight in County Roscommon, affected by a boil water notice that were notified to my Department by the EPA will be eligible to receive a 100% discount on the water supply element of their bill from Irish Water - in other words, as indicated in the documents published by the CER. If confirmed when the water charges plan is published shortly, as such, customers who have been on a boil water or drinking water notice for three months prior to the commencement of water charges on 1 October 2014 will not pay for their water supply. The legislative framework that the Government has put in place to establish Irish Water and the CER as the economic regulator for Irish Water means that there is a robust process for the protection of customer interests and clearly demonstrates that the customer is at the centre of the Government's thinking when framing this legislation.

Moving to specific elements of the Bill tabled by Deputy Barry Cowen, the Bill aims to amend the provisions of section 21 of the Water Services (No. 2) Act to provide that Irish Water should not charge a customer for the provision of water services to his or her dwelling in circumstances where the water being provided to that dwelling is either subject to a boil water notice, contaminated by a negative water condition or both. From the detailed measures I have outlined, it is clear that the legislative and administrative process is already in place to provide the basis for the compensation of customers affected by a water supply and does not comply with the statutory standards. For this reason, the Government cannot support the Bill supported by the Deputy. As I have outlined, the existing legislation provides the basis for addressing this matter with the necessary flexibility, an issue which is not addressed in the Bill. This flexibility is important to ensure equity and proportionality for all customers of Irish Water. The CER is considering the water charges plan, specifically how to deal with those with an impaired water supply. It is proposing to address the level of time for which the supply has been impaired and the issue relating to the water supply element of the charge.

This is an area where the Bill is flawed. An exemption from all water charges is proposed in the Bill, thus ignoring the fact that the provision of a wastewater service by Irish Water is not affected by any issue relating to the water supply. In its own analysis published as part of the public consultation document on the water charges plan, the CER estimates that only 15% to 20% of the water supply to households is typically consumed directly by household occupants or used in food preparation and is, therefore, affected by water that is unfit for human consumption. While a final determination on this matter has not yet been made by the CER, it is proposing discounts that go way beyond this 15% to 20% level. However, to exempt a household from wastewater charges, as well as water supply charges, would be disproportionate. As stated, Irish Water is obliged to charge for the services provided by it and to operate in a commercially viable manner. Compliance with the EU wastewater directive has required extensive capital investment in new treatment plants - investment that will be continued by Irish Water in the coming years.

The CER is due to announce the approved water charges plan for Irish Water towards the end of this month. The approved water charges plan must fully reflect Government policy as outlined in the policy direction issued by the CER in July 2014. The measures I have outlined are a key aspect of creating a sustainable funding model for water services delivery in Ireland. The introduction of regulated water charges creates a fair and equitable funding model for a new approach to water services delivery. The establishment of a new and sustainable funding model will help Irish Water to secure the level of investment required to upgrade public water and wastewater infrastructure and ensure the public receive a high quality drinking water supply and that wastewater is treated to high standards to avoid the pollution of watercourses and the coastline. This is the service citizens expect and deserve and it is what the Government is delivering.

I appreciate the good intentions of Deputy Barry Cowen in bringing forward the Bill, but, as I have outlined, the current policy is robust, there is a robust legislative framework behind it and we have fully addressed the objectives of the Bill in a far more comprehensive manner. Therefore, the Government will be opposing the Bill.

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