Alan Kelly (Tipperary North, Labour) | Oireachtas source

In fairness, I am used to this House. In the area of electricity supply, a major cost in the production of water, Irish Water’s current renewable and efficient energy initiatives aim to reduce costs by 33% by 2020. In April, Irish Water became the main contact point for customer queries and reports regarding water supply outages and water quality, through its customer call centre. This development was another milestone along the road to achieving a single, standardised national service throughout the country, with a greater focus on those who use the public services. Such progress would not have been possible without strong co-operation between Irish Water and local authorities, which have decades of experience of providing water and wastewater services with great care and dedication.

The 12-year service level agreements, now almost a year in existence, have proven to be a strong partnership between the local authorities’ expertise in operations and the considerable network and utility management experience within the Ervia Group. This was most evident during Storm Darwin in February this year, when the two parties collaborated effectively to address emergency situations and maintain clear lines of communication with each other and with the public during a time of pressure on the public water system. The service level agreements between the local authorities and Irish Water contain specific measures to support the move to a utility model by the end of 2017, and towards continuous improvement in the system. An example of this is the new, digital approach towards work and asset management, procurement and inventory management capability. Irish Water and the Water Services Transition Office, which represents the interests of local authorities in the reform programme, recently agreed on a 2014-2017 transformation plan. The plan contains initiatives and measures to standardise and improve operations, asset management, customer service, procurement improvement, and assets data intelligence. This, too, marks progress.

A key component of domestic water charges, which is central to the new funding model, is metering. Without metering, one cannot have usage-based charging, which the OECD, among others, has agreed is the fairest form of charging. As well as facilitating usage-based charging, the metering programme is detecting customer side leakage. Irish Water estimates that up to 49% of the water produced is lost in leakage, of which 5% to 6% is on the customer side. The presence of meters is helping Irish Water identify leakage that can be fixed through the "first fix free" scheme, which will cover leaks from the boundary of the property to a point as close as possible to the dwelling. Meters will help customers to identify leaks for which they are responsible and will help Irish Water identify leakage in the water network. Over time, metering will help to reduce domestic usage significantly, providing both environmental benefit and a reduction in national water demand, allowing variations in capital expenditure as a result because there will be no need to upgrade other systems due to the savings that are made.

The scale of the roll-out of the metering programme has been particularly impressive, despite everything. By any measurement, the domestic metering programme has been a success. Unparalleled anywhere in scale or ambition, Irish Water has installed approximately 533,000 meters in just over 16 months, with on average a meter being installed somewhere in Ireland every 30 seconds. The utility has already surpassed its end of year target six weeks ahead of schedule, and is delivering a programme that is sustaining approximately 1,300 jobs throughout the country, providing the kind of economic stimulus we need. I am sure everybody in the House agrees with that. It is also worth noting that about 84% of these jobs have gone to people in one of three social inclusion categories, namely, the unemployed; employees of SMEs; or graduates, school leavers or apprentices. This far exceeds the Government’s original target of 25%.

I have made much commentary on this issue and have spoken much on Irish Water and I am not trying to suggest that Irish Water has not had its problems, far from it. I will return to those. I accept mistakes were made. I accept mistakes were made by this Government. I accept mistakes were made by Irish Water. I hold my hands up and have admitted to that in the past. However, it is only fair that we should acknowledge what it has achieved and what it has done well in such a short period. These achievements should set the bar for the other parts of the company which, dare I say it, may not yet have matched the same public expectations. That has to change.

The new funding model for water services, including the introduction of domestic water charges, has also seen progress through Irish Water’s moves towards accessing third party funding, as well as the Government’s decisions on subvention, designed to ensure Irish Water is classified as a market corporation, thereby allowing the utility’s expenditure to be classified as off-balance sheet. This is critical in ensuring Irish Water accesses the level of third party funding needed to increase investment in water infrastructure from circa €300 million invested last year to the €600 million per annum that is required. Access to external funding from capital markets will help pave the way for sustainable investment in our public water system. This is very important for addressing the deficiencies concerning leakage, quality, supply and wastewater treatment that I mentioned.

Independent, economic regulation is central to a well-functioning public utility model and is essential if we are to ensure water customers are protected and that the new utility delivers value for money. The Commission for Energy Regulation has already made a number of major decisions in relation to the regulation of Irish Water, decisions underpinned by public consultation. We have got to respect the independence of the Commission for Energy Regulation and the decisions it has made. In September, the CER approved an overall allowed revenue for Irish Water for the period from 1 October 2014 to the end of 2016. This reflected a reduction in proposed operational costs by the end of 2016 through a 7% annual efficiency challenge, as well as a 7% annual capital efficiency challenge to non-committed capital costs, excluding capital maintenance.

The Government package to make charges more affordable and certain has not impacted on either the level of controllable operational costs or the capital spending approved by the CER. This is a very important point, as the independent review of Irish Water costs is at the heart of regulating our water sector and giving customers and taxpayers comfort that only efficient costs are being funded. The Government has made an adjustment to the manner in which commercial rates are treated, which I will come to shortly, but this is considered as a pass-through cost by the CER. These expenditure controls and efficiency targets are essential if we are to reduce the cost of delivering water services. Beyond the first interim revenue control period of 2014 to 2016, Irish Water will continue to submit its costs and capital plans to the CER in the future in order that the regulator sets the overall allowed revenue and approved capital investment levels.

The regulator has also made decisions about customer protections through publication of the customer handbook, and is due to announce a timeline for the establishment of an enduring tariff framework for non-domestic customers before the end of the year. This will provide greater clarity to the non-domestic sector on the future of tariffs.

There has been substantial progress towards creating a modern, fit-for-purpose water sector. This Bill marks another step along the journey to a full utility model and a sustainable financial model for water services.

I will now move on to the contents of the Bill, before summarising at the end. Before I set out the provisions of the Bill, I would like to address some matters which are not provided for in this Bill. The Government package announced last month also referred to a suite of measures which would apply if households did not pay. These will be brought forward in separate legislation in the new year, and will the subject of stakeholder engagement.

I will now outline the purpose and operation of each section of the Bill. Section 1 sets out the definitions of terms used in the Bill. Section 2 provides for a plebiscite on the ownership of Irish Water. It provides that where a Government proposes to initiate legislation which amends the existing legislation setting out the ownership of shares in Irish Water, such a proposal cannot be initiated without a resolution from both Houses of the Oireachtas. Subject to such resolutions being passed, the Government would then be required to submit the proposal to a plebiscite of all people eligible to vote on at a referendum on a proposal for an amendment to the Constitution. This Government is committed to retaining Irish Water in public ownership and has already provided a statutory prohibition on its disposal. This section will ensure that the people will have to be consulted if there is, at some time in the future, a Government that is minded to try to dispose of Irish Water, which is highly unlikely.

Section 3 provides for amendments to the charges applying to domestic customers of Irish Water and the requirement for Irish Water to amend its water charges plan to address these amendments. This section also provides that Irish Water may not commence charges for water services to domestic customers before 1 January 2015. Arrangements for the charging for non-domestic customers and charges for connections as reflected in the water charges plan approved by the Commission for Energy Regulation are not impacted by this change. The provisions of this section will be deemed to be part of the water charges plan approved by the Commission for Energy Regulation on 30 September 2014. The section also provides for Irish Water to submit any consequential amendments, such as the reflection of provisions in quarterly bills, to the Commission for Energy Regulation for approval.

The main aspects of the amendments to charges are as follows: a capped maximum charge of €160 for a dwelling occupied by not more than one adult; a capped maximum charge of €260 for an unoccupied dwelling or a dwelling occupied by two or more adults; provision that only 50% of the maximum charges may be applied where a dwelling receives only one service from Irish Water, that is, only a water supply or sewage service; the automatic application of a charge of €260 for any dwelling that has not registered as a customer of Irish Water by a prescribed date; the setting of a maximum volumetric charge of not more than €1.85 per 1,000 litres of water or €3.70 for each 1,000 litres of water and sewage services provided – these volumetric charges will apply up to the capped maximum charges I outlined earlier; in the light of the approach of reduced volumetric charge and maximum charges, the removal of the household water allowance previously provided for; and confirmation that the child allowance provided under the approved water charges plan shall apply to all persons under the age of 18. This section provides that the amended charges shall apply for the period 1 January 2015 to 31 December 2018. It also provides that the Minister may, following consultation with the Minister for Public Expenditure and Reform, by order, set maximum charges for periods after 31 December 2018. That is a very important component.

Section 4 provides that where a customer has not paid their water charges and has not entered into a payment plan with Irish Water, Irish Water shall charge a late payment fee for each year the arrears remain unpaid. The late payment fees that will apply are of €30 for a dwelling occupied by not more than one adult or €60 for an unoccupied dwelling or a dwelling occupied by two or more adults. These fees will apply for each year that arrears remain unpaid.

Section 5 provides for eligible householders to be paid an annual water conservation grant, which they can use to assist with water conservation in their homes. The Government has decided that the annual grant should be €100 per household. The estimated cost of this grant in 2015 is €130 million, and will not be incurred by Irish Water or be funded by domestic water charges, but is a completely independent measure, to be funded by the Exchequer. The section provides that in 2015, to be eligible for a grant, a household shall have provided information on the water supply to their dwelling to Irish Water and any necessary information required by the Minister for Social Protection. The section provides for the Minister for the Environment, Community and Local Government to prescribe a date by which householders should register with Irish Water details of their water supply and wastewater treatment. The section also provides that a person resident in a nursing home or other residential care facility would be eligible to claim the grant in respect of his or her own house, provided the house is not rented to another person.

Section 6 provides for the prohibition on the reduction of a supply to a domestic dwelling. This is an amendment to the Water Services (No. 2) Act 2013 and provides that Irish Water shall be prohibited from either disconnecting or reducing the supply of water to a dwelling because of an unpaid bill. I announced this in Cork a few weeks ago and everyone in the House should welcome it. I wanted, when I took this job, to ensure that was announced as quickly as possible.

Section 7 provides for the establishment of a public water forum by the Commission for Energy Regulation. It is proposed that the forum would have at least 12 and not more than 60 members, who would be representative of the interests of all customers of Irish Water. The forum would have a broad role in reviewing and commenting on the various strategies and plans for Irish Water, including investment plans and water charges plans. There is provision for the Minister to make regulations in respect of the composition of this forum, but I will be taking on other views.

Section 8 provides for statutory powers for the Commission for Energy Regulation to provide a dispute resolution service for unresolved complaints of customers of Irish Water. The service would be similar to that operated by the commission for customers in the energy sector. It also provides that the commission would prepare an annual report on the number and types of complaints made under the section and, more generally, the service levels provided by Irish Water.

Section 9 provides for a number of technical amendments to the superannuation provisions contained in the Water Services (No. 2) Act 2013 and the Gas Act 1976. These amendments are technical and they are necessary to clarify that Irish Water does not have financial liability for the past service of officers of the Minister or local authorities, other than the net effect of any increase in pensionable remuneration due to service with Irish Water. A separate scheme will cover the past service of such employees and this will remain funded by the State. It is something that the workers and the unions in Irish Water need as soon as possible.

Section 10 deals with loans taken out by local authorities to fund capital investment in water services. Intensive work has been under way during 2014 on preparing for asset and liability transfer and through this process the need for flexibility on some of the arrangements set out in the Water Services (No. 2) Act were highlighted. It is important to stress that the local authorities will not be left to carry any liabilities as a result of the proposals in this section. This section provides that where the Minister makes an order to provide that water services property is transferred from a local authority to Irish Water, any financial loans associated with the property are not automatically transferred to Irish Water. Section 14 of the Water Services (No. 2) Act 2013 allows for any liabilities to be separately transferred. This simply allows for the two processes to be handled separately. For example, it is not proposed to transfer some of these loans issued by the Housing Finance Agency to Irish Water as they are already part of the Government debt and to do so would impact on Irish Water’s debt-raising capacity for new investment and would also potentially increase customer charges. However, to ensure that the liability is not left with local authorities, subsection (3) of this section provides a mechanism to unwind the debt from a local authority perspective, by providing for the payment of up to €460 million from the Central Fund to local authorities for the purpose of repaying such loans to the Housing Finance Agency. It is really just moving money from one side of the State to the other. The section also provides that any transfer of property by the Minister shall not be treated as a disposal of property by a local authority. This is to ensure that there is no adverse impact on the financial standing of local authorities from the transfer of assets to Irish Water.

Section 11 provides for the abolition of the power of Irish Water to require the PPS numbers of its customers. The purpose of this section is to provide that Irish Water shall no longer have the power to request details of PPS numbers. The section, which makes amendments to the Social Welfare Consolidation Act 2005 and the Social Welfare and Pensions Act 2014, will be commenced by the Minister for Social Protection following consultation with the Minister for the Environment, Community and Local Government. This deferred commencement is necessary to ensure Irish Water can complete the work of deleting any PPS information that it had previously been provided with. This exercise is under way and is being carried out in accordance with a protocol Irish Water developed in consultation with the Office of the Data Protection Commissioner. It is very necessary.

Section 12 provides that public water services property shall not be rateable. This section provides that land used for the provision of public water services is not rateable for the purposes of the Valuation Act 2001.

This exemption will apply to Irish Water for the provision of water supply and waste water treatment and, importantly, to group water supplies. From a financial perspective the changes arising from the provisions in this Bill will involve a reduction in revenue for Irish Water of €21 million in 2015 and €56 million in 2016. However, Irish Water's costs will also be reduced as a result of the approach to the treatment of water infrastructure for commercial rates purposes, such that the subvention does not need to be paid to Irish Water to fund this cost. Equivalent support, of approximately €59 million, will be given directly to the local authorities through the Local Government Fund.

Section 13 provides for an increase in membership of the board of Ervia. The purpose of this section is to provide for an increase in the maximum number of members who may be appointed to the board of Ervia. The measure is part of a reorganisation of the corporate governance structures of Ervia and of Irish Water. A single non­executive board at Ervia level will be responsible for the governance of both companies. The increase in the maximum number of members will ensure that the board has adequate water services experience and expertise. I feel this is absolutely necessary. We need to bring in experts with experience in this area across a wide range of issues. That process is under way.

Section 14 is a standard provision that provides that the Minister may make regulations to prescribe any matter referred to in the Act as "prescribed" or "to be prescribed". Section 15 is a standard provision providing that any expenses incurred by the Minister in the administration of the Act shall be paid out of moneys provided by the Oireachtas, subject to the sanction of the Minister of Public Expenditure and Reform.

Section 16 is a standard provision to provide for the Short Title and provide that the Water Services Acts 2007 to 2014 may be cited as such and construed together as one.

Significant progress has been achieved. The structures that have been put in place to date will serve to ensure we have clean, reliable water supplies for our communities and our economy, and adequate wastewater treatment to protect public health and our environment for the long term. The next step is the introduction of a fair and affordable system of water charges and a more robust governance structure for the company that we have entrusted with delivering such a vital public service. The Government recognises that charges must be simple, fair and affordable. People are entitled to clarity on how much their charges will be for the coming years while being given an incentive to conserve water. The package legislated for in the Bill achieves these objectives.

Over 950,000 households have responded to Irish Water's customer application campaign so far. The Government has sought to address the concerns of those who have registered and those who have yet to do so. We are simplifying the level and structure of domestic water charges and addressing the genuine public concerns about the governance, ownership and operations of Irish Water. I look forward to a valuable debate on this legislation.

I respect this House and the decisions it must make in the coming days on this Bill. I would not concur with any comments of others who have said the Seanad has to make a certain defined decision or ensure this legislation is passed. We have to have a robust debate, including in this House, and I am here to take part in it. I respect the House and the decision it must make. Everyone in here has a mandate or has served his time here and I respect the fact that everyone has individual decisions to make as part of the process. As a result, we will have a robust debate and come to our conclusions in a fair manner. I look forward to the debate and will obviously be talking to the Senators later.