herald

Friday 24 May 2019

Why have we the most expensive water in Europe?

The Government has made a complete mess of Irish Water.

As things currently stand, we can expect to pay €4.88 per 1,000 litres when metered bills kick in later next year - in practice the Government is now likely to postpone metered water bills until after the next general election.

The cost per litre is way, way higher than in most other European countries.

A 2011 survey of water prices found that water consumers in Milan paid just 40 cent for 1,000 litres.

Water prices in Paris (€2.15 per 1,000 litres) and London (€1.63 per 1,000 litres) were also much, much lower than those planned by Irish Water for its unfortunate customers.

Only the Danish capital Copenhagen, at €6.21 per 1,000 litres, has more expensive water than Ireland.

So why is Irish Water proposing to charge Irish households far more for water than most of its European counterparts?

The answer to this question is that the Government made a complete mess of creating Irish Water.

Before Irish Water came into existence, each of the country's 33 city and county councils had its own water department.

These have all been subsumed into Irish Water. Combining 33 municipal water departments into one national utility should have created the opportunity for enormous cost savings.

But no, everyone who already had a water job with the local authorities transferred automatically to Irish Water.

To make matters worse, an expensive senior management tier, complete with bonuses - sorry performance-related pay - was placed at the head of Irish Water.

This was a repeat of what happened when the HSE was carved out of the old health boards way back in 2005, only worse. When will we learn?

Having started off on the wrong foot with the creation of Irish Water, the Government then proceeded to make an even bigger hash of the introduction of water charges.

As opposition to the charges mounted, the Government promised that there would be no standing charges.

As the vast majority of any water utility's costs are generated by its network of pipes and reservoirs, this was an absurd decision. The only rational way to pay for these network costs is to have all water customers pay a standing charge. The additional cost of supplying any customer with extra water is tiny.

By not imposing a standing charge, customers end up paying on the basis of how much water they use instead.

PRESSURE

This means that the price per 1,000 litres is much, much higher than it would otherwise be. By bowing to pressure and scrapping the standing charge the Government has instead chosen to clobber families with adult children, who don't qualify for a free water allowance.

To the anti-water charge protesters, I have some bad news. Water charges are coming no matter how long they protest.

This will almost certainly be a repeat of what happened with bin charges.

However, that doesn't absolve the Government from responsibility of the mess it has made of Irish Water. Water customers are entitled to expect that it fixes this mess as quickly as possible.

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