A DRAFT DOCUMENT prepared by the European Commission has revealed the Irish government’s fears of a popular boycott of the incoming water charges, long before meters have been installed throughout the country.

The draft document, seen by TheJournal.ie, also reveals that Ireland’s delays in determining the level of the new water charges – which will be introduced in 2014 – and in ordering new water meters could mean the final installation of meters may be years behind schedule.

The report says that while the process of setting up the new Irish Water body to take control of billing and metering is continuing, it is advancing only “at a slow pace.”

It also confirms that the new water charges will have been “generalised to all consumers” – including business premises as well as homes – by the end of this year.

The document says there are significant “implementation risks” in ploughing ahead with water charges, largely as a result of the delays in finding suppliers for the water meters which are to be fitted to hundreds of thousands of homes nationwide, and adds:

The authorities are concerned that there might be resistance to introduce charges ahead of a full roll-out of meters.

There is no comment on whether the Troika shares this fear, which may be prompted by the relatively low rate of compliance with the Household Charge, the now-defunct €100 fee which was intended as an interim combined property and water charge.

Deep dissatisfaction with delay in bringing in charges

The document, which is broadly critical of Ireland’s failure to move more quickly in bringing in the new charges, which are necessary in order to “foster an efficient and rational use of a scarce and valuable resource”.

The Commission also believes the roll-out of new charges is urgently needed “to ensure the viability of the sector’s business model” and to fund other investments such as a programme to repair leakages and improve the water transmission network.

Although the Commission says introducing full water charges will generate a major saving for the Exchequer – which currently spends €1.2 billion each year on providing water services, but makes back only €200 million in charges to commercial users – it expresses deep dissatisfaction with the government’s slow progress in introducing them.

“Among other things, progress towards the installation of water meters has lagged,” it complains, before adding:

The procurement processes for the supply of boundary boxes and the installation contracts are yet to be completed, and the authorities recognise that actual installation of boundary boxes and meters will not start until the third quarter of 2013.

The full roll-out of meters is likely to take years and extend well beyond the scheduled date for the introduction of water charges, which will create additional difficulties regarding the pricing mechanism.

‘Landmark decisions’ needed – and fast

The document says the delays experienced so far mean the Irish government – and in particular, environment minister Phil Hogan – needs to make a series of “landmark decisions” in the coming months, without which changes will not be in place by the end of 2013 as had previously been agreed.

These include:

• The introduction of new laws to give the Commission for Energy Regulation the legal power to oversee and regulate the water industry;
• The introduction of a comprehensive Water Services Bill, which was listed as a government ‘priority’ for the autumn Dáil term but which was only formally published on Thursday;
• Setting up Irish Water as a full legal entity, initially on an interim basis before giving it full form under the ownership of Bord Gais;
• Beginning the installation of water meters around the country;
• Deciding on a pricing structure for domestic and business consumers; and
• Deciding on how much public money will be put into Irish Water in the coming years until its revenues reach a point where the body is fiscally independent of the central government.

The report outlines, however, that the most recent Memorandum of Understanding – published in November – contains commitments by the Irish government to carry through on its plans for water charges.

That memorandum includes a commitment whereby the Commission for Energy Regulation will hold public consultations in the second quarter of 2013 to determine approximate levels for water charges, while the government also hopes to legally establish Irish Water by the end of June.

This is, according to the memorandum – the official ‘terms and conditions’ of Ireland’s bailout loans – “with a view to start charging by the end of the EU-IMF programme period” (that is, by the end of 2013).

“The authorities are committed to engage with the European Commission in developing the new legislative arrangements for the sector,” the report says.

Previous leaked report: Water charges to kick in from January 2014

In full: More of TheJournal.ie‘s coverage on the leaked European documents >