Brian Lenihan Jnr (Dublin West, Fianna Fail)

I thank Senator Paddy Burke for raising this matter on the Adjournment. I am making this reply on behalf of the Minister for the Environment, Heritage and Local Government, Deputy Roche. The Government's water services pricing policy framework requires the full recovery of the cost of water services provision from non-domestic users on the basis of average operational and marginal capital costs, and the universal metering of all such users by 2006. The policy is being progressively advanced and implemented by local authorities. Marginal capital cost is the cost of providing water services capacity for non-domestic users over and above the cost of meeting the needs of domestic customers. Capital contributions are systematically applied on the basis of marginal capital costs and these contributions are recovered from non-domestic users on all water services projects procured under the Department's water services investment programme.

A fair and transparent mechanism is used in determining the appropriate level of non-domestic capital cost of be applied to water services projects. This is identified by the relevant sanitary authority on a scheme-by-scheme basis. The methodology used, and the resultant outcome, are closely monitored by the Department to ensure equity in the application of this element of the policy nationally.

The main capital cost element of schemes is domestic. Domestic schemes are funded by the Exchequer through the water services investment programme. The marginal capital costs recovered from non-domestic users are consolidated on a countrywide basis over a period of up to 20 years.

The percentage of marginal capital costs varies from scheme to scheme depending on the general design parameters, the overall capacity of a scheme and the breakdown of domestic and non-domestic demand. This has ranged from 0.2% to 45% for schemes in planning.

Each scheme is unique in this regard. As I have outlined, it is subject to extensive review and verification by the relevant local authority and by officials of the Department of the Environment, Heritage and Local Government. The methodology is applied equally to all schemes with the percentage of marginal capital costs on large urban waste water schemes ranging from up to 26.9% in Dublin to 6.8% in Galway and 4.4% in Limerick. The amount of marginal capital costs is reviewed throughout the planning and construction phase of each water services project with a final figure established following completion.

Design, build and operate arrangements are the preferred procurement option for waste water treatment plants in the water services investment programme. This facilitates the use of more technically innovative and lower cost solutions for infrastructure components, and offers greater efficiency, accountability and cost effectiveness in the operation of such projects over the longer term. This approach encourages competition, which in turn increases innovation and drives down costs. It also helps accelerate the delivery of infrastructure projects and improves the standard of service. Many of the 700 plus schemes included in the current water services investment programme with an associated investment value of some €5 billion are expected to progress as design, build and operate projects. All of these projects will, however, be subject to the application of water services pricing policy, will have marginal capital costs applied for non-domestic demand and will be fully funded by the Exchequer in respect of their domestic capacity requirements.

I understand that the officials of the Department are in the process of updating data on capital contributions by non-domestic consumers under the water services pricing policy framework. The Department will forward this additional information to the Senator as soon as possible.