Middle-income families to pay more for water
Govt decision to scrap €50 standing charge will drive up bills
Published 03/05/2014 | 02:30
Middle-income families will pay more for their water after the Government agreed to scrap the €50 standing charge.
Fine Gael dramatically gave in to Labour Party demands to abolish the controversial charge – amid growing concern that it could prove an election timebomb for the junior coalition partner.
However, government sources have admitted that scrapping the standing charge will mean an increase in the per litre cost for water, once a household's free allowance has been exhausted.
It also poses a fresh headache for Irish Water chiefs who have now lost the guaranteed, steady revenue stream a standing charge would have brought.
Environment Minister Phil Hogan was known to favour the inclusion of a standing charge, which is the norm in the electricity and gas sectors, but has relented in a bid to defuse the row between the coalition parties.
A Labour source last night said: "We wanted a usage-based system, not just a revenue raising scheme.
"We have agreed that the standing charge be eliminated."
Labour was particularly concerned at the lack of emphasis being placed on ensuring that low-income families can afford the water charges when they are billed for the first time in January next year.
While the significant decision on standing charges was finalised last night, some of the finer details of water bills still have to be hammered out.
Sources from both coalition parties confirmed that no overall agreement has been reached yet on the package of charges facing homeowners.
And the fraught issue is once again on the cabinet agenda for next Tuesday's government meeting, with final overall agreement expected to be reached before then.
Taoiseach Enda Kenny, speaking in Cork, reiterated the
Government's intention of informing the public of the tariff rate before the local and European elections are held on May 23. He said the annual average metre charge would be about €240, or €60 a quarter.
Tanaiste Eamon Gilmore said the Government "was close to an agreement" on water charges.
"What we put in place is an arrangement which will last probably for the next two decades, and it's important that we get it right.
"We are closer to getting an agreement on it and I don't expect it will take a great deal longer," he said.
Labour TDs and candidates in the forthcoming local and European elections will be hugely relieved at the standing charge concession.
However, it means that the overall 'usage charge' for water, measured per litre of consumption, is likely to increase.
Low-income families are set to get a waiver or increased welfare benefits to help offset the cost of these charges.
However, middle and higher income families will not qualify for any exemption or off-setting of the charges – and will ultimately pay more per litre.
There are also fears the absence of such a steady revenue stream will affect business at Irish Water.
"The absence of a guaranteed revenue stream which a standing charge gives you means Irish Water would be less attractive to international investors, pushing up the cost of borrowing," one Irish Water source said.
The source also claimed the lack of such a guaranteed revenue stream would mean the timetable for improving the country's dilapidated pipe network would be slowed down significantly and made the need for a longer-term government subvention of Irish Water more likely.
However, Labour sources last night insisted their emphasis was on delivering a charging regime that encouraged water conservation to reduce bills.
"We want to incentivise the individual family, the individual householder, to reduce their bill," one Labour source said.
The parties have not yet reached agreement on exactly how poorer families will be spared the impact of the introduction of water charges from October 1.
But it is now almost certain they will be compensated by way of additional welfare payments to cover the cost of the charges.
The issue of the level of free allowance given to each household also remains unresolved.
Labour demands that Irish Water speed up the pace of metering remain unsatisfied.
Irish Water expects to install 1.05 million meters in homes by the end of 2016.
But because of a lack of meters, some 300,000 people living in terraced houses or apartments will be forced to pay an assessed charge because a meter cannot be fitted in the short-term.
The first of the water meters was installed in August 2013 in Kildare, and Irish Water has been installing meters at a rate of 27,000 a month since then.
So far, 185,000 meters are in place.
Publicly, both Fine Gael and Labour were keen to emphasise that progress on the water charges was being made and that a full announcement was due shortly.
It came as as the Commission for Energy Regulation (CER) said it would ensure there was a "credible regulatory framework to facilitate low-cost funding from capital markets".
In its strategic plan document 2014-2018, released yesterday, the CER said it would work to ensure that efficiencies were made that would minimise the cost of water.
"We will do this by requiring Irish Water to make necessary reductions in cost," the plan said.