Comment: This is the thin end of the wedge
Published 17/04/2014 | 02:30
THIS is only the beginning. The average water bill of €240 per household is the thin edge of the wedge, and charges are more likely to increase than be reduced.
No one should believe they have escaped draconian fees. The water tariff announced by the Government after months of speculation is only expected to remain in place for two years before being revisited.
This is because the Government subsidy of almost €540m a year to fund water services will not remain in place forever. Without it, average bills would be closer to €580 a year, Taoiseach Enda Kenny has said.
Bridging the gap will more than likely fall on homeowners, and sooner rather than later.
The figures stack up as follows – the State spends about €720m a year operating the water network. In addition, about €330m is being invested in new plants and treatment facilities – a combined bill of just over €1bn a year.
If 1.65 million households pay an "average" charge of €240 each, that yields some €400m. Businesses are supposed to pay some €310m a year, but just over half actually stump up.
Therefore, assuming everybody pays – they won't – Irish Water can expect to generate some €710m a year from its customers. A shortfall of €300m exists, which will have to be made up, and that's before the big capital investment programme of up to €600m a year to bring our network up to standard begins.
We may be heaving a sigh of relief that the average bill appears so low, but not until later this year – after the local elections – will customers have the data needed to calculate how much less income they will have in 2015.
It will be the job of the Commission for Energy Regulation (CER) to direct how much money Irish Water can take from its customers. Whether they will be forced to borrow the shortfall remains to be seen. Whatever the outcome, householders are unlikely to escape additional charges.