Water may be dearer in 2016

Water may be dearer in 2016
The Commission for Energy Regulation has published its proposed water charges. A four week consultation process has begun though Irish Water say they are confident that its proposals will be implemented.

The Commission for Energy Regulation has published its proposed water charges. A four week consultation process has begun though Irish Water say they are confident that its proposals will be implemented.

Here are the main proposals that will affect most households.

Every household will receive 30,000 litres of free water annually.

Children under 18 (if still in full education, otherwise to age 16) will not be charged for water until 2016. The average amount of water children use, says the Regulator, is 21,000 litres per annum.

All households, whether metered already or not, will be charged an “average, assessed” charge of €176 for a single adult and in multi-person households, €176 for the first adult and €102 for every extra adult. This average, assessed charge will last for six months after the household’s meter is installed.

If your household has already been metered, you will be charged the average assessed rate (above) for six months from next October, or until March 2015.

Six months

Once the six months period after your meter has been installed is over – for some, that will be from next March, consumption will be charged at €4.88 per every 1000 litres of water used over and above the free household allocation of 30,000 litres.

People with septic tanks and only use incoming water (and not wastewater) will pay half the above average, assessed rates.

The half rate will also apply to households that have their own wells but do not have a septic tank.)

No free allocation is expected to apply to holiday homes.

The bills

So what bills can households of varying sizes expect to pay?

For at least six months after the installation of a meter, households with a single occupant will pay €176 (€88 if they only use water or wastewater) for a 12 month period.

A household with two adults will pay €278, three will pay €380, four, €482 and five, €584, etc. (Divide by two if the household only uses water or just has wastewater.)

Those households that are metered will enjoy their six months at the above capped rates starting next October when the system goes live.

Once the six months, post-meter grace period is over (at the average, assessed rates of €176 and €102 per 1,000 litres rate) the €4.88 for every 1000 litres of water consumed by adults begins.

The Regulator estimates that the average adult consumes 52,000 litres of water per year. If this is correct, a single householder, will only be charged for 22,000 litres (every household gets 30,000 litres of free water). At €4.88 per thousand litres (€4.88 x 22) the single adult will pay €107.36.

A two person household that uses 52,000 litres each (104,000 litres), will pay €361 when their 30,000 free litres is discounted. (€4.88 x 74) Using the same formula, a household with three adults, will pay €615; a household of four, €868; a household of five; €1,122, etc.

Given these potentially large bills, all households should be highly incentivised to make sure that every adult uses a lot less than this estimated average 52,000 litres of water.

If the free allocation for children is revoked from 2016, annual costs could rise further if adult consumption doesn’t fall.

At the moment, with the real cost of water - €4.88 per 1000 litres – not kicking in until six months after a household is metered, is it clearly in a person’s interest to hope that their property is at the end of the installation queue as the lower flat charges will apply until then or until 2016, whichever comes first.

Meanwhile, Irish Water claims that all properties will be metered by then, presumably even those housing estates that have so far refused entry to the meter installers.

The other problem with the flat rate charge system, however temporary, is that it does nothing to encourage households to change their water usage habits right now.

The six month, post-meter grace period of average assessed charges was brought in to “ease” people into eventually paying the full €4.88 per 1000 litre cost of water, said the Regulator. But it means until that date, it won’t matter if the household adults use 4,333 litres of water every month (ie 52,000 per annum) or 433 litres. The same charge will apply.

Finally, if you are the head of a large household of adults (or near adults) you may want to at least check out suggestions on how to cut consumption usage and even capture free rainwater. (See MoneyTimes January 21)

It’s a topic to which we’ll return.

Contact Jill

If you have a personal finance question for Jill, please email her at jill@jillkerby.ie or write to her c/o this paper.