Irish Water has claimed it will limit the waste of two billion euro on unnecessary staff through early and standard retirement and voluntary redundancy.
It said it would reduce its 4,000-plus workforce naturally over time following a damning report by the Economic and Social Research Institute (ESRI) which claimed the new utility only needs 1,700 employees.
The think-tank's top economist John FitzGerald said all other problems with Irish Water pale into insignificance compared to the waste of money on over-staffing.
Irish Water said there are 4,300 people employed in the 34 local authorities dealing with water supply.
"While this number will reduce over time, the actual headcount requirement is intrinsically linked to the levels of investment within the sector in automation, rationalisation and infrastructure and operational upgrades," the state body said.
"Given the demographics within the local authority sector with over 50% of workers aged over 50, it can be expected that there will be significant natural attrition over the coming years. Provision will also be made for voluntary redundancy schemes."
The ESRI suggested household bills will be about 65 euro higher than necessary because of the additional staff at Irish Water.
Under the terms of agreements with local authorities which run until 2025, Irish Water has agreed to take on all staff who were employed in the management of water supplies.
Irish Water compared its staffing levels to that of S cottish Water - which serves 2.4 million households and 159,000 businesses - has 3,540 staff. It employed 5,650 in 2002.
The new utility claims it will save the state two billion euro by 2021 through increased efficiencies, but the ESRI has warned its staffing levels over the next 10 years will wipe that out.
The Commission for Energy Regulation, which will regulate water rates for consumers, said the charges will be in place from October 1.
A public consultation is planned in April to determine the structure of charges for Irish Water bills such as whether there will be a flat or fixed-rate for the service and how variable rates for usage will kick in.
In June, a second consultation is planned to determine the actual meter-based rates to be charged for the use of water. A final decision is due in August.
It is understood that Irish Water is working on the basis that consumers will be asked to pay a flat-rate fee for the service as well as metered charges. The level of free allowances for some consumers is to be set by the Government.