Alan Kelly (Tipperary North, Labour) | Oireachtas source

I assure Deputy Cowen that the local authorities will not be at a loss. There are three key elements to the Government's recent decision on water charges - we sought to make them more affordable, as everyone knows; we sought to provide certainty in respect of the charges; and we sought to put in place a more complete charging structure.

In making the charges more affordable, the Government carefully examined Irish Water's operational expenditure. Irish Water's allowed revenue, which was approved by the Commission for Energy Regulation, continues to apply save for the impact of a changed approach to commercial rates for water services infrastructure. Such rates were considered by the regulator to be an uncontrollable or pass-through cost for Irish Water. In other words, they go straight through. By introducing an exemption from rates for any land or infrastructure used for the provision of public water services, the pass-through cost will no longer form part of Irish Water's operational expenditure. Local authorities will not suffer any loss of revenue as my Department will pay equivalent amounts to each authority from the local government fund to replace the anticipated income from rates. The total budgeted amount for rates payments by Irish Water in 2015 is €59 million.

I will shortly bring forward legislation to give effect to the Government decision to provide an exemption from rates for water services infrastructure. While there was no prior engagement with the County and City Management Association or the Local Government Management Agency on this issue, my Department will be engaging with local authorities in relation to the process for payment of the compensating amounts in respect of the rates revenue foregone in 2015. That process is already under way.

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