SENIOR officials at Bord Gais questioned the need to install more than 1,000,000 water meters nationwide over two years ago.
Bord Gais told the department it "didn't necessarily see the link between metering and charging initially" for domestic water use.
The semi-state company's concerns were recorded in a memo of a 2012 meeting between Bord Gais and the Department of the Environment.
The documents were revealed by the RTE This Week programme yesterday.
Bord Gais, which was tasked with setting up Irish Water, suggested that "revenue and billing generation" as well as the establishment of a customer database "could potentially" have been viewed a priority.
Department officials told the company that it was the "government's wishes" to have metered charges rather than a flat or assessed charge.
Fianna Fail leader Micheal Martin called for "greater clarity and information" in regard to how Irish Water was set up adding that the project "has been clouded in secrecy from day one".
"The cost of these meters that the Government insisted on, in my view without due diligence or cost benefit analysis, that I have seen is about €539m, so it is an extraordinary sum of money and these meters will not now be used," he said.
"We have an extraordinary situation where we have the Irish Water project costing enormous sums of money and the net revenue that will accrue to the state at the end of it all on an annual basis is about €25m a year, which is farcical and I think it is a scandal," Mr Martin said.
A spokesman for Irish Water said water metering is proving to be "hugely beneficial" and will "generate savings that may on their own pay for the entire metering programme".
"The belief is that there will be huge amounts of savings made over the coming period simply through the detection of leaks on the customer side of the meter," he said.
A spokesman for the Department of the Environment said it was reasonable for Bord Gais to "interrogate all aspects" of the reform programme in developing their plans for Irish Water.
He said the department "was simply pointing out agreed government policy [which] was that metering was to be introduced as the basis of fair charging".