Dublin, Ireland — (METERING.COM) — September 15, 2009 – Ireland’s Commission for Taxation has issued a call for water metering and volumetric charging in order to encourage water conservation and to generate the funds needed to ensure that water supply and quality and per capita consumption levels are up to international norms.
The newly established Commission in its review of the Irish taxation system, says that Ireland is investing heavily in the development and operation of water supply and waste treatment systems, and must continue to do so, both to ensure that water of high quality is available where and when it is needed, and to meet requirements of the EU Drinking Water and Wastewater Directives.
However, with the exception of the contributions of the business and commercial sector, on which water charges are imposed by local authorities, these very substantial costs are funded from general taxation as households do not pay for water. Furthermore, there is no incentive to conserve, so that per capita consumption is about 30 percent more than in jurisdictions that do charge based on use.
As it is unlikely that Ireland will be able to maintain this level of expenditure indefinitely from general taxation – over €680 million in 2007 – and the outcome will be inadequacies in the quantity and quality of supply, the Commissions says it recommends that domestic water charges should be phased in over a five year period, commencing with a flat rate charge and moving to volumetric billing once meters are put in place.
Water meters should be provided for all domestic and non-domestic users, and the early installation of meters should be incentivized, for example by a reduction or exemption from water charges in the year in which the meter is installed. However, waivers should be made available to domestic users who are unable to pay water charges.
The Commission also recommends that measures should be put in place immediately to ensure that the costs of water services provided are fully recovered from the non-domestic sector. A metering program is under way but currently the cost recovery ratio is at 73 percent, resulting in a shortfall of about €58 million in 2008, as only the marginal cost of the capital services is applied to commercial water charges. The application of the proportionate capital costs to the commercial sector would result in water charges that would more closely approximate the EU average.
The Commission also notes that the levels of unaccounted for water in the 34 local authorities range from 18 percent to 65 percent, with an average 44 percent in 2008. While the local authorities have set themselves medium and long term targets for unaccounted for water, its reduction must continue to be aggressively pursued. Water gains that accrue from reducing unaccounted for water to acceptable limits will help provide for a more cost efficient delivery of water services to consumers in the future.