Irish Water now needs another €1.1bn to make its network safe
The cost of upgrading the water network to eliminate health hazards and provide clean and safe drinking water has risen by more than €1bn.
Irish Water has told the regulator that the original budget of €5.5bn needed to be spent between 2015 and 2021 will be "insufficient", and that an additional €1.1bn is required.
The figure comes as the special Dáil committee on the Future Funding of Domestic Water Service meets today to begin a three-month process aimed at deciding how the network is funded.
The Commission for Energy Regulation (CER) has approved total spending of just over €1.8bn in 2017 and 2018. The figure is €165m less than the amount sought by the utility.
The CER said the lower figure was approved to drive efficiency, help reduce costs and ensure customers were protected. However, the Dáil committee is likely to ask why the projected cost of upgrades has risen by 20pc despite the lower figure of €5.5bn being decided upon just last year.
In its decision on funding for the next two years, the CER said Irish Water had been "prudent" in delivery of its capital investment programme. But as the utility had learned more about the scale and state of repair of the infrastructure - coupled with emerging priorities and higher environmental standards - it was "now of the view" that more money was required.
Two projects alone - the new supply for Dublin and the Midlands and drainage project for the Greater Dublin Area - will cost €1.2bn. The CER said Irish Water could defer only projects if there was a need to accelerate delivery of one with a higher priority. The regulator also said while the utility was "on track" to remain within the spending framework allocated from October 2014 to the end of this year, it warned about the high cost of service-level agreements.
These oblige the utility to pay city and county councils to operate the network on a day-to-day basis, and were demanded by the previous government.
But they are adding "significantly" to overall expenditure - the cost of providing drinking water is between 60pc and 80pc higher compared with other utilities, and between 80pc and 90pc higher for waste water.
The CER also noted that changes under the Water Services Act 2014 "drove cost increases" for Irish Water because they changed timelines and capped domestic charges.
On metering, it said some 884,000 will be in the ground at a cost of €500m by year end. The budget was €615m and just over one million were expected.
Some €46m was budgeted for first-fix free, where external leaks in homes were repaired to conserve water, but just €19m has been spent due to a lower uptake than expected.
Overall, Irish Water is saving 65 million litres of water a day through the first-fix-free programme and pipe replacement. The target was 60 million litres.