The average family is likely to pay €1 a day for domestic water -- plus a €40 annual standing charge -- as the 'politically acceptable' revenue target for the new metering regime, the Sunday Independent has learned.
This translates into an annual bill of around €400.
The Government has ignored a specially commissioned report -- which cost the taxpayer €130,000 -- on the best way to establish the new water authority structure.
Consultants PricewaterhouseCoopers (PwC) had recommended a new stand-alone authority set up from scratch. But there were fears in both government parties that this would be politically difficult -- and leave the coalition open to the accusation that it was setting up yet another quango. The Programme for Government committed both parties to reducing the number of State bodies.
Labour also had fears that a stand-alone separate structure would be easier to privatise.
When the Government decided to ignore the PwC recommendation and opted instead to imbed the new water agency in an existing State agency, Bord Na Mona was firm favourite until the final presentations.
But crucially Bord Na Mona does not have a national billing system already in place -- unlike Bord Gais, which was eventually awarded the business.
Only one Bord Na Mona concern, AES Waste Management, has online and automated payment systems and its direct debit service is confined to the midland counties.
Tanaiste Eamon Gilmore moved last week to quell fears regarding privatisation.
"The Government's decision is on the basis that water will remain in public hands.
"Water is not being privatised," he said.
While the charges that will apply to customers have not been directly discussed by Cabinet, it is understood that €1 a day plus a standing charge of €40 for families is considered 'politically acceptable'.
This would mean families with average domestic use would face an annual bill of around €400 a year for water.
PwC was against the imbedding of the new water body in an existing State agency. "While our analysis has indicated that there would be a number of potential advantages, in our view these are outweighed by the disadvantages," it said.
The consultants pointed to the potential impact on the borrowing power of both Irish Water and the existing State agency.
They also pointed to the constraints on integration and sharing imposed by the requirement to ring-fence the water service from other regulated businesses -- as well as the need to keep separate networks and supply businesses in some of the State agencies.
They also questioned the ability of an existing agency to have a "fully focused management team to drive through the establishment of Irish Water over the next six years, managing the transition of activities from 34 local authorities to Irish Water, implementing water charges, and managing an evolving regulatory regime".
Another factor was the potential problems for Irish Water caused by the existence of ESOPs -- Employee Share Ownership Plans -- and ESOTs -- Employee Share Ownership Trusts -- in existing semi-states when it came to the transfer of water assets.
"It is our recommendation that Irish Water should be established as a separate company in its own right," it said.
Fianna Fail environment spokesman Niall Collins told the Sunday Independent: "As each day passes, the questions around the decision of the Government to gift responsibility for water services to Bord Gais grow."
Meanwhile, a spokeswoman for the Minister for the Environment last night rejected a claim that one-third of households were not suitable for water meters.
The executive manager with Dublin City Council, Tom Leahy, was quoted in the Irish Times yesterday as saying that one third of homes will always be on a standing charge and will never have water meters installed.
A spokeswoman for Phil Hogan said that, according to the department's figures, a maximum of 300,000 households were likely to be without water meters after the initial stage of the metering process.
She said the quickest and easiest homes would receive meters first, and the figure of 300,000 would come down as the process continued.