Barry Cowen (Laois-Offaly, Fianna Fail)
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38. To ask the Minister for Environment, Community and Local Government the level of spending on set up costs for Irish Water signed off on 22 October 2013; and if he will make a statement on the matter. [34333/14]

Alan Kelly (Tipperary North, Labour)
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I refer to the reply to Question No. 1 on today’s Order Paper.

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 relation to the water sector, but did have powers to provide advice to 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 establishing 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 relation to the establishment costs, the request included broad headings for expenditure of €150m plus a contingency of €31m, but did not distinguish between in-house and external provision.

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 upfront costs in order to secure these benefits. The CER has reviewed the establishment costs and in their proposals published in July 2014, they have indicated that they propose to allow Irish Water the vast bulk - some €172.8 million - of the costs proposed.