HOMEOWNERS can expect to start paying for water from 2015, a year after the EU/IMF deadline for charges to be introduced.
The Government yesterday announced that installing meters in 1.3 million homes across the State would commence next October, and that charging would begin by 2015.
But annual bills for families have not been decided, and will not be known until later this year when an independent regulator sets the prices.
However, families will have to pay an annual standing charge of €40 a year until at least 2034. This is to pay back the €450m cost of installing the meters.
Details of a new state utility company were also announced yesterday. Irish Water will be responsible for delivering drinking water and treating wastewater from homes.
It will be a subsidiary of Bord Gais and will take over control of the water network from local authorities on a phased basis from next year. The process will be completed in 2017.
The Government said that among countries with water charges, most imposed an annual levy on bills to help fund maintenance and investment in the network. The State currently pays for maintenance in the Irish network, spending €1.2bn last year.
Environment Minister Phil Hogan said by the time billing started, up to 95pc of households would have meters installed.
However, 300,000 people living in apartments and terraced houses will pay on the basis of average use.
Management companies in apartment blocks will be billed for all water used in a particular development, and the charge split between residents.
People with private wells or on group water schemes will not pay.
"Quite simply we are faced with a substantial investment requirement in future years," Mr Hogan said. "The present funding model is not sustainable and the current scale of operation is not efficient or effective."
He said there would be no option to pay the €40 annual meter charge upfront, and said it would "naturally be" his view that people who didn't pay their water bills would have their supply cut off.
Admitting that water charges would be a "burden" on homeowners, he said they would play a "key role" in economic recovery.
"People will start paying for their water when the full roll-out is complete in 2014 or 2015. This is probably the biggest decision any government has made since the establishment of the ESB (in 1927).
"We don't want to cut social welfare payments or hike income taxes. To close the funding gap, we need to broaden and reform the tax system."
The cost of installing the meters will be financed by a €450m loan from the National Pension Reserve Fund on commercial terms. The annual standing charge will be used to pay back the loan over 20 years.
Private companies will be asked to bid to install the meters, and between 150 and 200 installation contracts will be tendered with up to 6,000 properties in each. This is designed to allow smaller construction companies win contracts. Up to 100 companies will install the meters, creating up to 2,000 jobs.
So-called 'boundary boxes' will be installed on the footpath or grass verges outside homes. The meter is placed into the box, and connected to the public mains. Installation will begin from October.
The boundary boxes will last up to 50 years, but meters will have to be replaced every seven. Households will not have to pay the replacement costs, and can check their usage online or by examining the counter on the meter. Payment methods and frequency of payment will be decided by the regulator who will keep charges "as low as possible", Mr Hogan added.
He also claimed that nobody was to blame for the communications fiasco surrounding water charges in recent days, when Taoiseach Enda Kenny, Tanaiste Eamon Gilmore and the Department of the Environment gave differing views.
Mr Hogan instead blamed newspaper reports which he claimed were wrong and created confusion.