Irish Water is too political and its charges don't meet best practice, says Eurostat

The mood has soured by the time Irish Water commuinications head Elizabeth Arnett, Environment Minister Alan Kelly, and John Tierney address the media at Irish Water HQ in November 2014

John Downing and Donal O'Donovan

Irish Water's charging structure was not in line with "best commercial practices" despite its structures being designed to meet EU rules, the European statistics agency has said.

Eurostat rejected the Coalition's bid to keep the utility off the national balance sheet, and repeated how the Government exerts too much control over the controversial company.

The failure of Irish Water to pass the so-called Market Corporation Test has prompted a cross-party group of opposition senators to seek to have the Seanad recalled during the summer break to for an emergency debate.

Pressure

The Central Statistics Office (CSO), which compiled the figures for the Eurostat test, has also insisted there was no pressure from Government to deliver a decision that Irish Water should be kept off the State balance sheet.

Jennifer Banim said that the European decision will be reviewed next year and that her agency and Eurostat are working through technical aspects of the decision.

In a detailed decision paper, Eurostat said that revenue collection from domestic customers was "uncertain", although targets supplied to it by the company for a five-year period insist that the bills will be paid.

While Irish Water has provided projections on how much it expects to collect in each year, and that most unpaid amounts can be recovered "within five years", the Department of the Environment has refused to release the figures, saying they are commercially sensitive.

Eurostat also criticised the Government for the charging structure, saying it was designed to meet Eurostat rules and not in line with "best commercial practices".

It also says the Government exerts too much control on the utility.

Each board member of Irish Water can only serve for one year, "which de facto gives significant control to ministers".

There is also an "impressive list" of ministerial functions which put a "legitimate question mark" as to whether the company is independent.

Any borrowings the utility draws down must be held on the national balance sheet.

Impact

In its decision, Eurostat said the Government had admitted that opposition to water charges would have an impact on Irish Water's ability to generate revenues. Less than half of all domestic customers currently pay.

Funding the "massive" investment programme, costed at €5.5bn out to 2021, will be borne "to a large extent" by the State, Eurostat added.

It was also not clear if payment of the €100 so-called water conservation grant would result in less water being consumed, as the grant will be paid merely by registering with the utility.