Tuesday 27 September 2016

Customer payments crucial for upgrades

Published 16/07/2015 | 02:30

Irish Water faces an enormous challenge ahead
Irish Water faces an enormous challenge ahead

Crucial to the success of Irish Water will be its ability to upgrade the network, which will require at least €600m a year for the foreseeable future.

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Given that the Government has only committed to funding the utility until the end of 2016, it will be reliant on international lenders to provide the necessary financing.

To secure that money at the best possible rates, the markets will look at the company's revenue streams.

Key to that is customer payment rates, which currently stand at 45pc.

Irish Water is correct in pointing out that this is a new charge and that people have to get used to paying an additional household bill.

However, there's also no doubt that the utility has an enormous job in convincing the public that paying for water is a reasonable prospect, particularly those opposed to charges in any form.

While it has already secured €500m in financing, this is only a tiny fraction of what is required. It is also obliged by the regulator to collect €271m from householders this year.

Experts note that anything less than an 80pc payment rate could present problems in securing the money needed over the longer term.

That funding is crucial to make the kind of investment needed to bring the network up to a world-class standard, which includes repairing leaks and removing dangerous lead piping, not to mention the requirement for new treatment facilities to foster economic growth.

Given that it is owned by the State, no one believes that the company will default on any debt it accrues. However, customer payment rates will dictate how much it pays in interest and how much it can borrow.

Irish Water faces an enormous challenge ahead. It must convince some 525,000 non-paying customers that paying for water is in the long-term interests of the country and their own health and well-being.

By any metric, the fact that fewer than half its customers have paid their bills is not a success. In academic terms it's a D2, and few parents across the country ever congratulated their child on barely passing an exam.

Their prayer has, in part, been answered, with the formation of no fewer than three new political entities, including Renua led by former Fine Gael junior minister Lucinda Creighton and the Independent Alliance led by prominent Independent TD Shane Ross.

Three new parties give voters real alternatives

In the wake of the near collapse of the Irish economy, voters cried out for alternative political choices.

Their prayer has, in part, been answered, with the formation of no fewer than three new political entities, including Renua led by former Fine Gael junior minister Lucinda Creighton and the Independent Alliance led by prominent Independent TD Shane Ross.

Yesterday saw the formal launch of the Social Democrats, founded by first-time Independent TDs Catherine Murphy and Stephen Donnelly with Roisin Shortall, another Independent who defected from the Labour party three years ago.

There is no doubt that the growing electoral support for Independent TDs will have an impact on the composition of the next Dáil and possibly the formation of the next Government.

But it remains to be seen whether these new disparate parties can overcome entrenched barriers, such as financing, that permanently favour large parties or form cohesive policy positions to capture critical mass.

Their presence is, however, to be welcomed: it is up to the electorate to decide if we really want reform.

Irish Independent

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