I spoke last week at an excellent conference in Dublin organized by CMG Events. In the course of my presentation I tried to put a spotlight on the status of water charges in Ireland in the context of the IMF programme for Ireland.
My basic premise is that the IMF will not allow Ireland to wait four or five years on a promise to install water meters before we get around to charging directly for water. We will be required to come up with a technical and political way of introducing water charges in 2012 or 2013. Water meters will not be installed nationally before 2015, and the IMF is fully aware that many countries manage to have water charges without water meters.
Should we rush to get water meters installed more quickly? Intuitively, water meters would be a fairer way to calculate water charges; however, intuition can fail us some times. Most reasonable people are willing to pay for the water they use, but are reluctant to pay for the wastage of others. But how much extra are you willing to pay for fairness? Let me explain.
If you and your neighbour both had a fixed monthly (unmetered) water bill of €50 each. One day you look over your garden wall and see your neighbour filling his new swimming pool with ornamental fountain and wave machine. You think to yourself, how can it be fair that I don’t waste water and yet I have to pay the same as him. So meters are installed on both properties and sure enough the measured amount of water that your neighbour uses is now €85 a month and yours has dropped to €45 a month – a saving of €5? However, you have to pay the standing charge of €10 a month for the rental of the meter and the meter reading system. So you end up €5 worse off then you were. Your sole comfort is that your neighbour is paying twice as much as you.
So, fairness comes at a price. But, water meters will encourage less consumption. People will be more careful about what they consume. Curiously, studies in the UK have suggested that the difference in consumption between a typical customer on a meter and a customer that is not on a meter is only about 10%. In Irish terms that might be about €15m of water saved each year; which is not a lot for an expenditure of €550m on water meters.
At this point you might think that I have made an argument against water meters. That is not so. I am certain that Ireland needs universal water metering more than most other countries in Europe. Most people will be aware that about half of the water produced is unaccounted for, i.e. missing in action before it reaches the kitchen tap. While much of this is lost through our public water mains that need replacement; probably half of the losses are through leaks in private property. Domestic water metering will capture these leaks and probably save more than €50m of water losses nationally each year. We need water metering as part of our water network management in Ireland.
So, if water metering is so important, we can’t afford to get it wrong just because there is a false target of “metering before charging”. We must make sure that we have selected the right metering technologies and that we have the right structures in place. We must ensure that water metering and water conservation projects are coordinated so that we get the maximum value for both. If water metering is worth doing (and I believe it is) then it is worth doing right. It is worth having a national water metering programme with a strong emphasis on customer service at the heart of the metering programme.
Furthermore, while the National Pension Reserve Fund (NPRF) may have agreed to release €550m for water metering, it will only do so on commercial terms. What pension fund would lend money to install water meters if there is no certainty that water charges can be levied once the water meters are installed? Ireland will have a much better chance of getting good commercial terms for the installation of water meters if it can be shown that there is a revenue stream already, i.e. people are already paying for water.
However, how will the customer respond to being told that water charges may have to be introduced before water meters are installed? Not well; but our options are limited. This is where the customer needs to see that somebody independent of government is in place to defend the rights of the consumer. This is why the government must appoint an independent Water Regulator for Ireland as soon as possible.
The Water Regulator must set the service levels that customers can expect from water services in Ireland. The Water Regulator must set the price that can be charged to the customer, based on an independent assessment of the costs of water supply.
So, irrespective of the programme for government, our options are narrowing quickly. We may already have passed the point where it is feasible to argue for water meters in advance of water charges. Indeed, water meters may be too important for Ireland’s overall water management to rush into installation simply to meet a perceived condition for water charges.
[I hope to write another Blog about introducing fixed water charges later this week.]
Kevin Murray is a Chartered Civil & Structural Engineer with more than 20 years experience as a consultant in Ireland and the UK.
Hi Kevin,
In general I too agree that we need water meters and I also thoroughly agree that an independent Water Regulator needs to be appointed, if for no other reason than transparency. For years I have been harping onto my friends than water is liquid gold and it was only during and after the last cold spell have my friends started to agree with my views on water conservation.
You have raised some valid points and I’d like to put a question of two to you as I see you have blogged quiet a bit on water charges and implementation of water meters. Perhaps you can shed some light on a query I have.
The question that keeps arising is what charge will the home-owner incur due to water rates.
When water rates are introduced will there be a:-
a) Fee incurred for every drop that enters the house
b) Set allocation (cu.m) per house and everything over that amount will incur a fee.
c) Standing charge and if so what will the standing charge be.
If the answer for (a) is Yes then fair enough. Everyone is on a level playing field. Consumption = Cost.
But if (b) is the chosen option then I personally can’t wait to see how they implement this. Let me expand and look at your analogy above with the 2 neighbours.
My neighbour has a 3 double bed house and I have built an extension a few years ago during the Celtic tiger because as we all knew the Celtic tiger would never end!
For the next part I am going to put my SiteAssessor hat on and refer to calculations we use when sizing percolation areas and wastewater units. The EPA Code of Practice allocates each person in a house 150L daily usage. The total consumption in a house is based on the number of double and single rooms.
So the consumption of my neighbour’s house is now 900L per day and my house has a daily output of 1200L.
If the regulator/gov allows an allocation/allowance of water per house how will they regulate this? Surely they will have to consider the number of bedrooms? They already consider this when calculating wastewater plants and percolation areas so SURELY this will also have to play a major role in their allowance calculations.
For the sake of argument let’s choose an allocation of 30% based on the no. of rooms. My neighbour then will have 270L “free water” per day before the rates kick in and I will have 360L “free water” before the rate kicks in.
Here is where I see the problem. My neighbour who has a smaller house is being penalised again. The reason I say penalised is based on the average family size of *2.7. (CSO 2007).
If my neighbour has a family of 2.7 persons then this equates to 405L. per day and his “free allowance” is 270L so every day he will have to pay rates on 135L.
As for my house I will only have to pay for 45L per day i.e. (405-360).
I for one can’t wait to see how they approach the water metering calculations.
Out of curiosity I rang my brother who lives in France and pays for water and I asked him how they tackle the water metering and he said it is very simple. €3 a cu.m (1000L) and an annual standing charge of
Personally I think perhaps the fairest way to approach it is something along the lines of:
Charge 0.75cent per cu.m. Have an annual standing charge of €200. This fee is made up of a non refundable €50 fee (meter rental!) and the remaining €150 will be credited or debited against any costs incurred through annual water usage. In this scenario the National Pension Reserve Fund get their payback and we the end-user can cut over showers in the evening from 6min to 1 min!!
* http://www.cso.ie/newsevents/pr_census2006vol3.htm
Tim
Thank you for commenting on my Blog. I agree that it will be very difficult (and costly) to give a free allocation of water as part of a metered water billing system.
In the past I have looked at the domestic allowance that is already made available to non-domestic customers that have a domestic component (e.g. an apartment above a shop on a common water supply, or a farmhouse on a working farm). The typical domestic allowance is 225m3/annum/property, which assumes a 5-person occupancy. That is far too large when you consider that almost 50% of Irish properties have two or less occupants. However authorities have found it difficult to apply any other system so have erred on the side of generosity. When I looked at this I found that the only fair way to apply an allowance was on the basis of occupancy, not the number of bedrooms. However, that needs very good (and intrusive) data and a high level of auditing; all of which is costly and open to abuse.
So, I think that the best way to apply charges in Ireland will be similar to the way non-domestic customers are charged, i.e. a standing charge and a metered volumetric charge. The standing charge across the 34 local authorities varies from €100 to €200 at the moment (from memory) and the average volumetric charge is €2.30 (for water and wastewater). I think the standing charge has to be kept as low as possible to encourage consumers to use less water. If the standing charge is too high then there is less incentive to save water. If the standing charge is too low it will not cover the costs of the metering service (which is independent of the volume of water used).
Kevin
Kevin,
I agree with your view on the introduction of the non domestic metering approach for domestic customers. It is the only fairest way. What will be interesting is the formula that they use.
Without stating the obvious it does make sense to have a fee for the metering service. Now what is entailed in the metering service is a topic which I’d love to hear your thoughts on and is probably a blog all on its own.
In a previous job I have made quiet a few presentations on rain water harvesting to both private companies and local authorities. The one thing that I could never understand or get my head around was the fact that there is no uniform set fee for non domestic water rates. i.e. Tralee 1.05 cent and Nass was 2.85 cent per cubic meter. If domestic charges are to be implemented then I feel it should be a set fee across the country. (Again after speaking to my brother in France he tells me that there are different rates across the regions of France and his friend in Germany was paying €9 per cu.m. YES €9 euro.
I have a question for you that I was thinking about today. Are we not ENTITLED to water? Surely it is a RIGHT and not a privilege? What I’m trying to say is If my neighbour cant afford to pay for his water bill surely he wont be cut off?
Goodman
Tim
Tim
At the moment the local authorities are entitled to charge the non-domestic sector (including schools, hospitals and farms) for water, but they are not entilted to charge any more than to cover their costs.
However, the costs of water production and supply can vary depending on the condition of the raw water, the level of treatment provided and the extent of pumping required. Therefore, you can begin to see how the costs can vary between local authorities. A Water Regulator might wish to interrogate the cost base of the water authorities more rigorously.
Water charges in some parts of Europe are higher than Ireland and that is where they seek to achieve full cost recovery. At the moment the price paid by the non-domestic sector is partly subsidised by government, in that full cost recovery is not attained.
Finally, the UN has said that access to clean water (at a reasonable price) is a human right. There is not a right to free water. Where there has been debate about free amounts of water it has been less than 20 litres per head per day; and has been in the context of the developing world. I think it is slightly obscene of people in Ireland (when we have so much) to be expecting a right to free water.
Furthermore, it will make it impossible for the water authority to collect water charges if there is no right to disconnect for non payment; and it is too easy for those that won’t pay to make a statement at the expense of those who accept that it is fair to pay for water.
You must also think about those that do not have access to a public water supply today. If they have a private well and they fail to pay their electricity bill then they will be disconnected from water when their electricity is disconnected.
Saying all of that, for those that can’t afford to pay for water in Ireland, the social welfare system is the proper way to help them to pay for water and ensure that they are not disconnected from the supply.
Regards
Kevin