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Tapped Out - Water Charges, By The Meter
consumer issues |
Tuesday October 24, 2006 16:32 by Elaine O'Sullivan / Seán Ryan
The (Tolled) Road To Privatisation
The country took one step closer to water privatisation recently with the announcement that Celtic Anglian Water have landed the contract for the Waste Water Treatment Plant, part of the Waterford Main Drainage Project. The Irish Examiner described them as ‘the international division of Anglian Water’. However, a quick scan of the company’s website tells a different story, Anglian water have only a 50% stake. ‘Celtic Anglian water’ (CAW), is listed on the NTR (national toll roads) website as a subsidiary company. Along with such shining lights of Irish capitalism as Greenstar, Airtricity, Bioverda, Irish Broadband and National Toll Roads themselves.
According to the NTR website…
“The company currently holds a 20-year contract to operate Dublin's new wastewater treatment plant at Ringsend. With the capacity to treat sewage from a population of 1.7 million, it is the largest and most advanced wastewater treatment plant in Europe.
CAW also operates a new water treatment facility in Sligo and is tendering for further contracts under the government's investment programme for water and sewage services. In 2005, CAW was awarded the Galway Non-Domestic Metering Project Contract.”
With regard to the Galway Non-Domestic Metering Project, The Tuam Herald ran a story on the 24th August last warning its readers about ‘The End Of Cheap Water’. Businesses would bear the brunt, they told us. They would have to pay ‘by the gallon’ from January 1st.
(cut and paste used as password needed to access site)
“Most businesses have been paying fixed charges for water for a number of years, usually referred to as water rates, but many smaller non-domestic users and farms have escaped the net until now.
The last fixed-charge bills are being issued by Celtic Anglian Water in conjunction with Galway Co. Council and this Athenry-based company will be taking charge of all metering and bill services on behalf of Galway Co. Council. The council will continue to be responsible for water supply, pressure and water quality.
Co. Council Director of Service Jim Cullen explained that up to now a non-domestic user such as a hotel would pay a fixed charge for water no matter how much was used. From January 1st next this business will be metered and billed according to the volume used.
This he explained was a fairer method of paying for the service and is in line with EU policy.”
The EU policy he is referring to is called the Water Framework Directive, which requires ‘pricing policies’ to be in place by 2010.
“He (Jim Cullen) added that the metering system was a requirement under an EU directive and it is designed to conserve water by encouraging users to waste less. It is based on the user pays principle and should benefit the environment.”
Very interesting bit of flawed logic in that last sentence as it is not water itself that costs money but rather the infrastructure, which is used by consumers equally. Therefore the costs, if any, should be borne equally by all consumers. I had assumed, wrongly it seems, that that is where our taxes went. Another double taxation anyone?
Schools and Farms, to take two examples, are high users, which under the ‘user pays’ principle would see their costs rocket. The social effect of this policy does not appear to have been a factor in the decision making process. As will become painfully apparent in a few short years when the domestic consumer is expected to pay for their water too, as per the European Water Framework Directive. And you thought the bin tax was unpopular!
Dick Roche seems unlikely to discuss the issue of water privatisation for the domestic consumer before the next election. For a party hanging on by a thread, that is probably a wise move. They have already angered their voter base, the farming community, with these charges. The Roscommon Herald on August 9th carried a story called “IFA meets Minister Roche on water charges issue”. The rocky road ahead for Fianna Fail was apparent in the opening paragraph…
“IFA recently met the Minister for the Environment, Mr Dick Roche, to inform him of the deep anger among farmers in the county at the significant costs which will result from new water charging policies.”
The closing paragraph carried the threat.
“Roscommon IFA County Executive called on all farmers in the county not to pay any water charges until Minister Roche clarified the situation.” And so it begins.
On Tuesday 25th April, in a Dail Debate, Mr. Roche had this to say…
“Mr. Timmins asked the Minister for the Environment, Heritage and Local Government the position on water charges for national schools; if these rates are in line with policy governing this area; the way in which the standard rate is calculated; if the rates increase with the size of the school; and if he will make a statement on the matter?
Minister for the Environment, Heritage and Local Government (Mr. Roche): Local authorities are required to recover the cost of providing water services from the users of these services, with the exception of householders. The cost of providing water services to the non-domestic sector should be fully recovered by local authorities by means of a meter-based volumetric charge. While current arrangements for schools may, as with other non-domestic users, be based on fixed water services charges, local authorities are moving towards the metering of all non-domestic water use.”
These charges will no doubt be passed on to the parents of children attending the school, who will have to foot another bill for ‘free education’.
Just three short days later on the 28th April, IBEC had this to say on the issue of water charges.
“Businesses may be forced to pay higher charges to local authorities if the government fails to reform local government
Business and employers group IBEC issued the warning after Minister for Environment Dick Roche TD refused to implement key recommendations of the Indecon Report into local authority funding published last month - such as introducing domestic water charges and imposing a new tax on non-principal private residences.”
“Many of the services provided by local government were essential to the functioning of all sectors of society, but it was “only business which is picking up the bill”.
Among the major reforms demanded by IBEC were the introduction of water meters into all homes, subjecting the accounts of local authorities spending in excess of €9 billion to review by the Comptroller and Auditor General and the introduction of an efficiency fund to reward Local Authorities that demonstrated high levels of efficiency.
Minister Roche dismissed fears of a shortfall in funding, claiming local authorities “should have adequate resources to meet demands in 2006 and beyond”. He added that he was “fully committed to the pursuit of further efficiency in local government and want to see the bang for every buck that is spent”.
I tend to distrust the use of words like ‘should’ as it implies that maybe they won’t and he knows it and is covering his ass.
So IBEC are spearheading the charge (no pun intended) for domestic water charges on the basis of fairness. It’s damaging to the economy, be afraid be very afraid.
Another incidental, Mr Brian Geoghegan, who is a former chairman of FÁS and was IBEC's director of economic policy until recently, is of course married to the Mammy Harney who just recently got herself out of the line of fire. How unpopular would the PD’s be when Mr Mary Harney’s former group gets its way and you, the ordinary punter, start paying for your water.
Who will you be paying for your water? Most likely a company called Celtic Anglian Water. As mentioned above, they are a joint venture between NTR and Anglian Water.
According to CAW's website ...
"Celtic Anglian Water (CAW) was established in 1998 to participate in the development of Ireland's water and wastewater infrastructure. CAW is a 50/50 joint venture between Celtic Utilities Limited and Anglian Water (Ireland) Ltd. a wholly owned subsidiary of awg plc (formally known as Anglian Water Plc)."
The important information contained on another page in their website tells us that they were
"established to participate in the Government's Capital investment Programme for Water and Sewerage Services"
Back in 2001, NTR acquired the majority shareholding in Celtic Utilities Ltd.
thereby becoming AW's new partner and a 50% stakeholder in CAW.
The Indo's business section has this advice for would be investors... "Well, although Ireland is unique amongst EU countries in that it doesn't charge consumers for domestic water, NTR does have a long-term play through Celtic Anglian Water, its partnership with Anglian Water.
It runs the massive Ringsend Treatment plant on a 20-year contract and, although such a deal is a mere foothold in an embryonic market, it's another reason to snap up NTR shares while you still can.
Stock in the UK water utilities is like hen's teeth at the moment, with a number of them the subject of bidding wars.
Water may forever be free in this fair isle, but if it ever becomes metered, I know which company will be in with a fair chance of doing the billing."
If it ever becomes metered....?
According to the Water Framework Directive Pricing Policies have to be in place by 2010. Article 9, entitled Recovery of costs for water services, reads as follows...
1. Member states shall take account of the principle of recovery of the costs of water services, including environmental and resource costs, having regard to the economic analysis conducted according to Annex III, and in accordance in particular with the polluter pays principle.
Member states shall ensure that by 2010
- that water pricing policies provide adequate incentives for users to use water resources efficiently, and thereby contribute to the environmental objectives of this Directive,
- an adequate contribution to the different water uses, disaggregated into at least industry, households and agriculture, to the recovery of the costs of water services, based on the economic analysis conducted according to Annex III and taking account of the polluter pays principle.
Member states may in so doing have regard to the social, environmental and economic effects of the recovery as well as the geographic and climatic conditions of the region or regions affected.
Annex III, called simply Economic Analysis contains the following...
The economic analysis shall contain enough information in sufficient detail (taking account of the costs associated with collection of the relevant data) in order to:
(a) make the relevant calculations necessary for taking into account under Article 9 the principle of recovery of the costs of water services, taking account of long term forecasts of supply and demand for water in the river basin district and, where necessary:
- estimates of the volume, prices and costs associated with water services, and
- estimates of relevant investment including forecasts of such investments;
(b) make judgements about the most cost-effective combination of measures in respect of water uses to be included in the programme of measures under Article 11 based on estimates of the potential costs of such measures.
The government is currently testing the waters of public reaction to the outrage of water privatisation. The ESRI (The Economic and Social Research Institute), in the last few days have recommended that water charges be introduced.
They've coupled this alongside such ideas as reducing spending on health care. The government may conveniently be forced to choose between the lesser of two evils.
Water privatisation is on the way -
I can feel it in my water!