• Bord Gais to operate Irish Water, Minister announces no up-front charge for water metering

    Photo by Tom Raftery via Flickr
    The Government has this afternoon announced that Irish Water will be operated as an independent State owned subsidiary within Bord Gáis Eireann. The Government says that the water utility company will remain in public ownership and there will be no up-front charge for metering. Full PR from the Department of the Environment is below the fold.

    Reforming Water Services to Meet Ireland’s Future Economic and Environmental Needs – Hogan

    Irish Water will be an independent state owned subsidiary of Bord Gais Eireann

    No up-front charge for the water metering programme


    In deciding on the establishment of Irish Water, the Government asked that detailed analysis be undertaken as to whether the public utility should be established as a new State agency or under the stewardship of an existing State agency. On foot of this analysis, the Government has today (17 April) agreed to establish Irish Water as an independent State owned subsidiary within the Bord Gáis Eireann (BGE) group. Irish Water will be established as a wholly owned public water utility and will remain in public ownership.

    Welcoming this decision, the Minister for the Environment, Community and Local Government, Phil Hogan T.D. stated “the overarching objective of the Government’s water reform programme is to put in place structures and funding arrangements that will ensure we have a world class water and waste water infrastructure that meets all environmental and public health standards. A good quality and plentiful supply of water is needed to attract foreign direct investment and support job creation and maintenance in key sectors such as pharma-chem, IT and food and drink. Today’s decision is a very positive step forward and will allow the water reforms progress with renewed momentum”.

    In just twenty years, global demand for water will be forty percent higher than it is today so Ireland’s valuable water resources play a vital role in enhancing Ireland’s competitiveness and supporting water-dependent sectors critical to economic recovery. It is essential, however, that key organisational and funding issues are addressed to achieve this goal. The decision to transfer water services functions from local authorities was based on a comprehensive independent assessment which examined the current system, considered international experience and best practice and took account of stakeholder soundings. This assessment concluded that a public water utility offers the best opportunity to improve the efficiency and effectiveness of water services delivery, provide access to new funding sources, and improve strategic planning and accountability.

    Reform of the existing model is necessary to:
    • Develop a sustainable funding model to meet the ongoing operational and capital costs which currently amount to about €1.2 billion per annum;
    • Reduce levels of leakage which are a very significant problem. Average water leakage levels of more than 40% in Ireland are well above international standards;
    • Support the development of strategically important national water services projects which will be delayed due to funding constraints if a new delivery structure and funding mechanism is not established;
    • Ensure ongoing compliance with public health and environmental standards;
    • Address fragmentation in the existing structures and achieve real economies of scale in delivery and operation, leading to significant reductions in the overheads in the management of water services;
    • Exploit the full potential for industry standard IT systems for management of water services;
    • Introduce independent economic regulation of the sector.
    • As the value of water increases due to global shortages, ensure that we can use our rich water resources as a strategic asset to the Irish economy.
    The Minister said “Quite simply, we are faced with a substantial investment requirement in future years. The present funding model that is not sustainable, and the current scale of operation is not efficient or effective.”

    It is important to note that there will be no up-front charge for the water metering progamme and that the Regulator, who will have the best interest of the consumer in mind, will ultimately decide on the funding model.

    The benefits which will accrue from establishing Irish Water include:
    • The capacity to build on the expertise and commitment within the sector, but achieve a scale of operation which is more efficient and can leverage greater investment;
    • The creation of 2,000 long-term construction jobs by being able to secure additional capital investment in the sector;
    • Introducing a specific focus on fixing the current leaks in the system;
    • Attracting foreign investment and job creation by funding the major investments in water and sewerage services needed to support new businesses, industries and jobs;
    • An ongoing focus on protecting the environment and public health.
    BGE has key capabilities that can be brought to bear in the establishment of Irish Water - a track record in raising finance, experience in operating as a utility in a regulated environment, and has specific skills from its own experience of transformation, customer relations, network management, metering and utility operation that can be quickly deployed to assist in the successful establishment and operation of Irish Water.

    When fully operational, Irish Water will have the capacity to raise funds on financial markets for capital investment in the same way as other Semi States such as the ESB and BGE. Other funding will come from income from domestic and non-domestic charges, as well as funding from central Government. The funds will be used to meet Irish Waters costs including operational costs, capital costs for future investment on new infrastructure/leak repair and the repayment of borrowings. The level of capital investment, the operational cost reductions to be achieved, the level of charges and the nature, level and duration of continuing Government funding will be determined, as part of the regulatory and budgetary process.

    “The skills within the Bord Gáis Group will be paired with the talent, experience, and commitment to service in local authorities and the specific water and waste water capabilities and expertise that exist in local government to build the new organisation. The overall water reform programme will bring real benefits to people and communities right around the country including through investment in new water and sewerage infrastructure which is vital to support jobs and businesses and ensure high levels of compliance with environmental and public health standards” said Fergus O’Dowd, T.D., Minister of State with responsibility for NewERA.

    An implementation plan is being developed by the Department of the Environment, Community and Local Government in collaboration with other relevant Government Departments, the local authorities and NewERA and will be finalised in the coming weeks with BGE. The plan will cover the legal, governance, organisational, human resources, financial, operations, regulatory and other issues that will need to be addressed in the establishment of Irish Water. The relationship between the public water utility and the local authorities across the range of related functions for which local government is responsible such as planning, emergency management, etc will also be dealt with in the plan.
    Log in or sign up to leave a comment

    Comments 189 Comments
    1. deepness's Avatar
      deepness -
      why Bord Gais? Should this not have gone to tender or did it already?
    1. MacCoise2's Avatar
      MacCoise2 -
      Brings to mind an old joke from some BBC show about paying the water bill at the electricity company and the electricity bill at the gas company and the gas bill at the water company
    1. KongMing's Avatar
      KongMing -
      Makes sense that An Bord Gais would handle such an explosive issue.
    1. Mackers's Avatar
      Mackers -
      If they are going into fracking this would be a good move as the water, and gas will be coming out of the same tap. More than likely at the same time though.
    1. LamportsEdge's Avatar
      LamportsEdge -
      Hmm. Wheels within wheels. Noting the Greek experience with extra taxes being loaded onto utility bills with the obvious threat of losing access to water or power if you don't pay the Goldman Sachs tax then it would seem to me that there is a possibility that the Government in Ireland may be looking to combine utility bills and have a new route to demanding money with menaces.

      Of course they can also sell the right to do this to a private company. So there's more than one way of gathering extra revenue and charging extra taxes under a new form of compulsion like in Greece if this goes ahead.
    1. Aindriu's Avatar
      Aindriu -
      This country is a joke! has Fine Gael/Labour not heard of due process or tendering process? Someone please show me they followed due process on this.
    1. Astral Peaks's Avatar
      Astral Peaks -
      Quote Originally Posted by LamportsEdge View Post
      Hmm. Wheels within wheels. Noting the Greek experience with extra taxes being loaded onto utility bills with the obvious threat of losing access to water or power if you don't pay the Goldman Sachs tax then it would seem to me that there is a possibility that the Government in Ireland may be looking to combine utility bills and have a new route to demanding money with menaces.

      Of course they can also sell the right to do this to a private company. So there's more than one way of gathering extra revenue and charging extra taxes under a new form of compulsion like in Greece if this goes ahead.
      Paranoid much?
    1. Keith-M's Avatar
      Keith-M -
      I'm reminded of the line used by a rather stressed lady on "Dinnerladies"; "I've got water retention and high blod pressure, do you know what that gives me?" Reply... "Boiling Water?".
    1. Mackers's Avatar
      Mackers -
      Quote Originally Posted by Aindriu View Post
      This country is a joke! has Fine Gael/Labour not heard of due process or tendering process? Someone please show me they followed due process on this.
      They duly phoned up their mates in An Bord Gais and give them the gig.
    1. poolfan81's Avatar
      poolfan81 -
      Quote Originally Posted by deepness View Post
      why Bord Gais? Should this not have gone to tender or did it already?
      maybe so that when we sell part of bord gais off in the future it will be more lucarative to have this attached
    1. ShoutingIsLeadership's Avatar
      ShoutingIsLeadership -
      Quote Originally Posted by Aindriu View Post
      This country is a joke! has Fine Gael/Labour not heard of due process or tendering process? Someone please show me they followed due process on this.
      Apparently they couldn't let An Post accept payments for the household charge because they would need to go through a tendering process (I thought it was bullsh1t then and I think it is now), but they can just award this business to Bord Gais?
    1. Peter Farrahy's Avatar
      Peter Farrahy -
      Regretfully you used the term "The Government says", as assurances go this ranks a little behind "All our banks are healthy" and "We will not pay the unsecured bondholders" .
    1. jacko's Avatar
      jacko -
      the CEO of Bord Gais, John Mullins is a former president of Young Fine Gael

      Presidents of YFG
    1. Aindriu's Avatar
      Aindriu -
      Now it all makes sense, jacko
    1. tokkie's Avatar
      tokkie -
      Quote Originally Posted by Aindriu View Post
      This country is a joke! has Fine Gael/Labour not heard of due process or tendering process? Someone please show me they followed due process on this.
      I'm not fully sure but I think that because "Irish Water will be an independent state owned subsidiary of Bord Gais Eireann"
      then the tendering process is not applicable. Open to correction though.....
    1. Nemesiscorporation's Avatar
      Nemesiscorporation -
      Quote Originally Posted by David Cochrane View Post
      Which translates as, if you don't pay new taxes, your water and gas get cut off at the same time.
    1. Macy's Avatar
      Macy -
      Why would you need a tendering process to set up a new, totally state owned, semi state?
    1. Kitty O'Shea's Avatar
      Kitty O'Shea -
      So will it be named an Bord Gais agus Uisce?
    1. grainne whale's Avatar
      grainne whale -
      A conflict of interest already, a Bord Gais know f.... all about water, neither treatment nor distribution.
    1. tokkie's Avatar
      tokkie -
      Quote Originally Posted by grainne whale View Post
      A conflict of interest already, a Bord Gais know f.... all about water, neither treatment nor distribution.
      Who currently treats and distributes??
    Register to Comment