Water meters (ctd)

This post was written by Richard Tol

Would you rather

Apparently, only Bord Gais and Bord na Mona are still in the running for Irish Water. One has lost focus, the other is in search of a mission. Not an easy choice.

This follows on yesterday’s post.

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53 Responses to “Water meters (ctd)”

  1. paulr Says:

    Great, Charlie took some of our taxes each year and created the NPRF. So that means we will be lending to ourselves so we can be charged for our water use and government waste.

    Will they charge us VAT on this also?

  2. Colm Brazel Says:

    Its all such a mess, isn’t it? This weekend Enda said we would not have to pay for the installation? Apparently, he’s got it wrong again, we do! But is the charge payable a total to be factored in over 20 years to cover the meter and installation, or installation alone, probably both? Are they taking inflation into account, maintenance, repairs, replacements and further watercock ups? One thing we know they are not taking into account is future increases to the charge; one thing you can be sure of, its a mighty mess they’ll expect you to pay for, if they don’t give the money to the banks first :-)

  3. Paul Hunt Says:

    This gets better all the time. If one assumes, for example, a real weighted average cost of capital (WACC) of 5% real and that 10% of the annual charge is opex-related (it’s not clear if the charge is totally capex related), one gets an inital meter cost of €437. A bit higher than the €60-150 range indicated in the linked comment.

    (The 5% real WACC is around 1% below what the CER applied to the ESB’s networks just over a year ago. It wanted to set the WACC at around 5%, but the ESB kicked up such a racket that it was forced to increase it to 5.95% - the ESB needed the extra cash flow to pay for its acquisition of the Northern Ireland electricity networks, don’t you know.)

    This is bad enough but let’s keep things in perspective. If this annual meter charge is applied to the 1.35 million households reported in the Indo, it will generate €52.65 million a year. I’m more interested in how the annual bill of the order of €1.3 billion will be recovered.

  4. Richard Tol Says:

    @Paul
    Sure.

    As they plan to give the first N liters away for free, the price of water may well be rather steep.

  5. Georg R. Baumann Says:

    It also can – and indeed I believe it must – point out the drama of democratic states being turned into debt collecting agencies on behalf of a global oligarchy of investors compared to which C. Wright Mills’ “power elite” (1956) must appear like a shining example of liberal pluralism.

    Dr. Dr. h.c. Streek is MD at Max Planck Institute for the Study of Societies, Cologne, and Professor of Sociology, Faculty of Economics and Social Science, University of Köln.

    Democratic Capitalism and Its Contradictions
    http://www.mpifg.de/pu/mpifg_dp/dp11-15.pdf

  6. Jagdip Singh Says:

    @Richard,

    The “chore” to be completed by 31 Mar 2012 in the Troika memorandum of understanding was

    “In light of the results of a public consultation process, the authorities will provide programme partners with an update on progress toward the transfer of water service provision from local authorities to a regulated water utility and plans for the roll-out of a domestic water metering programme with a view to starting charging by the end of the EU –IMF Programme period”

    Did we miss this “public consultation process”?

  7. Paul Hunt Says:

    @Jagdip,

    This farcical public consultation process was open for public submission up to 24th Feb last. I and, I expect, a number of others made submissions. Some such as the ESRI’s and the Academy of Engineers’, are in the public domain. The Department has a duty to publish these and respond to them. But nothing has been heard about it since. I wrote to the DECLG recently inquiring about its status, but, not surprisingly, got no response.

    These ‘public consultations’ are purely for the ‘optics’.

  8. Sean Lyons Says:

    @ Jagdip,

    The consultation period closed in February: http://www.environ.ie/en/Environment/Water/WaterSectorReform/

  9. Richard Tol Says:

    @Jagdip
    There was a consultation period, but only for those members of the public who paid close attention and were really fast.

  10. Georg R. Baumann Says:

    I experienced a public consultation process first hand with reference to Wind Turbines, I agree with Paul Hunt.

  11. zhou_enlai Says:

    People are falling for the oldest swizz in the book here. The real story is an effective renege on the promise not to charge for waterbelow a given allotment.

    For clarity (in the spirit of Gil Scott Heron):

    - The standing charge will not be used solelty to pay for the meter.

    - The standing charge will not cease or decrease if savings are made on the cost of installing meters or the amount is repaid in full.

    - The standing charge will not be statutorily linked solely to installation costs.

    - The standing charge will increase over the years.

    - The standing charge will be applied to other costs beyond the installaton of meters and may even be used to book a profit disguised as a sinking fund.

    My hypothesis as to the week’s events is as follows:

    The Irish Government were told they would have to charge for water.
    They got on the blower to Sir Humphrey and a plan was hatched behind Eamonn Gilmore’s back.
    First, Enda “Paddy likes to know what’s going on” Kenny frightened us with the suggestion we would have to pay for the meters up front.
    The media take the bait and make a fuss out of an unconfirmed story.
    Gilmore acts up suggesting it should be a cabinet decision.
    Then Big Phil put it out that we could spread that payment over years to make us chillax.
    Kenny, Hogan and Noonan will stand behind the Troika when Eamonn Gilmore comes storming through the doors of the Cabinet room.
    The people will miss the point and think they have got away lightly whereas they have lost out significantly in the long run.
    Gilmore will be humiliated.

  12. Georg R. Baumann Says:

    @ zhou_enlai

    The people will miss the point and think they have got away lightly whereas they have lost out significantly in the long run.

    This very much describes a lot of the divide and conquer tactics applied since 2008.

  13. Paul Hunt Says:

    @Zhou,

    You may think you are being cynically astute - or astutely cynical - in your diagnosis of events, but this is far, far worse than you describe.

    Even with the inflated cost of meter installation, the total annual cost is much less than 5% of the total annual bill. Making a bit of a fuss about meters is intended to distract people’s attention from how the renmaining 95%+ will be calculated and levied. And it’s working. Just note the title of this post.

    The CER, which is going to be given regulatory responsibility is totally unfit to regulate networks. It already has been doubly captured. First, by government, ’subcontracting’ its direct policy and shareholder responsbilities to avoid any political accountability and, secondly, by the ESB and BGE networks.

    And it looks like BGE will administer Irish Water. Since its energy supply business is slated for privatisation - which is really dumb anyway, but let’s pass on that - there will be scope to re-deploy surplus customer service people to Irish Water. Everybody wins, except, of course, final consumers, who, in this instance, will literally get hosed.

  14. zhou_enlai Says:

    @Georg R. Baumann

    It actually describes a major problem with politics in the EU.

    Politicians are unwilling to take a stand and sell unpleasant decisions to people. They do not respect people enough to tell them the truth of the situation. This has been endemic in Ireland for years, and it appears we are no worse than the rest of them.

    Where this is really causing serious damage is in relation to the Euro. Politicians are not willing to tell populations the real causes of the problem, the real long term outlook or to sell the measures which are really necessary to solve it.

    The difference in the relation to the Euro crisis is that the politicians inability to understand what is happening or to properly communicate what is necessary has left them unable to generate the political support they need to make really big decisions.

  15. Georg R. Baumann Says:

    @ Zhou

    Thanks. We might differ in our views of what is really needed, then again perhaps we do not, in my world we need to bring back the financial industry on a leash, that should have happened as early as 2009. In this context Dr. Steerck’s paper I linked to above - Think Frankfurt school - is very eloquent.

    Yes, major problem in EU landscape!

  16. Georg R. Baumann Says:

    As for Richard’s posted two options… Absurdistan it is… really!

  17. zhou_enlai Says:

    @Paul Hunt

    That is 100% how I see it.

    People are being duped because they don’t appreciate the difference between a “standing charge” on the one hand and a “service charge” on the other hand.

    Home owners in managed estates or apartment blocks are familiar with the idea of a “service charge”. Your service charge goes towards providing defined services to the estate. If you pay too much you get a discount the next year, and if you pay too little you have to top it up. you can get the audited accounts each year if you want to scrutinise matters and you have a legal agreement which you can enforce directly if things are not done correctly. Your service charge does not include any profit for the management company.

    A standing charge is different. It is generally totally opaque as to how it is calculated and you do not have any right to question it if you are being fleeced beyond what is contained in the relevant statute. Will this statute provide a mechanism to allow people to sue the service provider if they charge them for more than the cost of meter installation through the standing charge? No it won’t.

  18. Ahura Mazda Says:

    I view water charges as just another tax. I don’t like this ‘precious resource’ nonsense. If I’m confronted with a floater, I don’t want economic concerns to muddy the waters (so to speak ;)).

    Being another tax, there will be a target amount to raise. If consumption reduces and tax collected falls short of target, either the free allowance will be reduced or price per litre will increase. The appalling vista of a downward hygiene spiral raises its ugly head.

  19. Yields or Bust Says:

    @Richard

    “..There was a consultation period, but only for those members of the public who paid close attention and were really fast.”

    On the night of 28th or 29th Sept 2008 (I can never remember) one would have to have been at near warp speed to make a submission in relation to the bank guarantee decision. Doesn’t it seem odd that a decision which has us effectively by the balls for the next decade was made with zero consultation and yet decisions on €40 here and €100 there have the country in a serious tizzy.

    There is something very strange in a country when a decision to guarantee the liabilities of the banks to the tune of €400bn happens with not as much as ‘what do ya think lads and lassies ?’ and we’re now left debating the merits of paying or not for effectively the cost of putting holes in the ground.

  20. paulr Says:

    @ zhou-enlai

    I live in an estate with a management company. They have been over charging the homeowners since at least 2006. The agent of the management company will not answer your questions re the charges they levy, instead they make you out to be the baddy for questioning them. The over charge is meant to be in the accounts of the estate at the end of each year. They say the bill is based on a budget, so not all services charged for will be provided, it a list of hopes and dreams. No reduction is given if they do not spend the money. They play games with the figures each year so that they basically end up with the same amount each year.
    Most new estates build in Dublin since early 2000 had management companies imposed as part of the planning permission. Local councils used these as a way to negate their responsibility to maintain the open public spaces. These are the same properties that are in massively under water and with government introducing household and water charges will be next to impossible to sell because no one will be able to afford the mortgage due to all the ‘extra’ charges that the banks will have to take into account when giving a mortgage.
    Managment companies just like the government depend on the busy lives of the people affected to pull the wool over their eyes and when that does not work they throw in a large dose of fear.

  21. John Corcoran Says:

    @Richard Tol
    Yesterday Ireland’s oldest environmental charity An Taisce produced a report ” State of the Nation A view of Ireland’s Planning System”. Would you consider running this report as a sepatate thread.

  22. BeeCeeTee Says:

    Sinking a well for ground water in the back garden is starting to look attractive.

  23. zhou_enlai Says:

    @paulr

    You are right that they use the fact that people are busy to pull the wool over their eyes. You have rights but you would almost want to be a solicitor to enforce them. Even then it is not worth the money to go to court.

    The key things are to get a copy of your lease/deed and to read the provisions re service charges, request the audited accounts certified by a proper accountant and to require that a proper agreement between the managing company and the managing agents is in place.

    All this should be done in writing and you should build a file with replies. If you eventually do withhold your money then you will have the file to back up your case. you could also look at the multi-units developments act.

    At the end of the day however the big power you have is for the management company to fire the managing agents. To do this you need a functioning management company board. Homeowners in an estate need to get together to organise these matters.

  24. Paul Hunt Says:

    @Zhou,

    I don’t think you’re as 100% with me as you seem to think. This standing charge is a red herring. Even if the implicit meter cost is 3 times the private installation cost, this projected standing charge will recover less than 5% of the likely total cost recovery requirement.

    People need to focus on the make-up of this 95%+. Two-thirds of this could be capital costs - return on assets and depreciation. These will depend on the regulatory asset value - and this is where the CER has hosed electricity and gas consumers (and benefitted the ESB and BGE) by overvaluing this.

    The Department refused point blank to release the financial analysis performed by PwC. It’s pretty clear why.

    People should demand clear sight of the calculations and a transparent process when they are finally decided - and not be distracted by this metering nonsense. There’ll be time then to see how charges are levied.

  25. Georg R. Baumann Says:

    re John Corcoran…here:

    http://www.antaisce.ie/Portals/0/Reports/20120416StateoftheNation_PlanningSystem.pdf

  26. Brian Woods Snr Says:

    @BeeCeeTee: “Sinking a well for ground water in the back garden ….”

    Yep. But you need good access for the rig. Else its picks and shovels.

    Most pre 1870 houses in urban areas would (maybe) have had a hand-dug well, which may have been in-filled later on. Mine survived, complete with mahogany pipework. In active use for non-drinking water needs.

    Get rainwater collectors deployed ASAP. If you are into any sort of major domestic re-plumbing, then rig a dual system to supply your cisterns and fit a two-way isolator on your rising main. Might work in some locations.

  27. paulr Says:

    @zhou

    ‘At the end of the day however the big power you have is for the management company to fire the managing agents. To do this you need a functioning management company board.’

    problem is, like in many estates, even after the introduction of the MUD act the developer and agent are in buddies and use each other to protect themselves.
    Again they depend on the busy lives of the homeowners and the fact that many units are owned by absentee landlords and the developer :-(

    I wrote to them four months ago stating my case and refusing to pay the charges. Still waiting.

  28. zhou_enlai Says:

    @paulr

    At a certain point the “busy lives of the homeowners” are no longer an excuse. The homeowners have the rights so they should get together and use them.

  29. PR Guy Says:

    €780 over 20 years?

    This brings a whole new meaning to ‘buying something on the drip.’

    @BeeCeeTee

    “Sinking a well for ground water in the back garden is starting to look attractive.”

    You obviously didn’t spot the €8,000 p.a. well-sinking licence to be introduced in 2012 as part of the MOU!

  30. David O'Donnell Says:

    @Georg R. Baumann

    Ta for link to Wolfgang Streeck paper. I will get to it.

    I rate him very highly.

  31. zhou_enlai Says:

    @Paul Hunt

    Are you saying that they will rig the maths to increase the charge?

    I didn’t think they would even bother with that. I see no relationship between the installation costs/meter costs and the standing charge.

    The standing charge will be set at a level which makes the system profitable, subsidises a few nice fat salaries and generates a tax return to the exchequer which will be treated as fungible on the basis that the exchequer may have to invest in the systems in the future. the

    It would be polite if they were to pretend there was some kind of mathematical basis for the charge. But I don’t think anyone would take it seriously.

  32. zhou_enlai Says:

    @Paul Hunt

    Apologies. I think you are saying that the projected standing charge is grossly insufficient and we will have to pay 20 times as much.

    The projected standing charge is only a PR stunt as per my first post. The actual standing charge will be adjusted as needs be. There may well also be a low water allowance.

  33. Paul Hunt Says:

    @Zhou,

    (Re your last comment)

    There will be this standing charge and a volumetric charge that eventaully will recover, say, 95% of the costs. Combine all this with the, as yet undefined, free water allowance, and the volumetric charges, as Richard uncharacteristically put in such a euphemistic and under-stated manner, ‘may well be rather steep’.

    Putting the CER in charge of this would be a disaster. It has shown itself to be totally unfit to regulate networks. The notion that the CER protects the interests of final consumers of gas and electricity - and would proect the interests of household waters, is a sick and, for final consumers, excessively expensive joke.

    I note you advocating ‘collective action’ by homeowners on managed estates. The requirement here is for statutory advocacy and representation of the collective interests of final consumers of all utility services.

  34. Paul Hunt Says:

    Oh for an edit function….

  35. The Dork of Cork Says:

    Impressive rentier mischief , if it was raining crude these guys could somehow convince people there was a Gasoline shortage because of energy overuse rather then a lack of basic investment.

    If water was somehow like oil we would be sending water tankers to the Gulf ….. we don’t for some funny reason.

    Question ?
    If we cannot invest in the most basic of Utilities what hope is there for civilisation, no matter how basic.
    I am always reminded about the Fall of Rome when I read Richard Toll.

    PS can’t find water on our exports or imports data……………….
    Maybe a coaster is leaving from New Ross tomorrow with a mother load of fake Volvic for South east England….must check the martime data again to be sure like.
    http://www.marinetraffic.com

    Obscene.

  36. David O'Donnell Says:

    Michael Taft on the Regressive Season

    Following on from the Household Charge debacle the Government intends to introduce (a) water meter installation charges, (b) water metering charges, (c) residential property charges. This is a heavy agenda of new charges and taxes. Here I just want to explore how ‘fair’ these charges and taxes are likely to be, with what little information we have at hand. By ‘fair’, I mean how progressive they are likely to be. Early indications are that they will not be progressive, that they will disproportionately hit those on low and average incomes.

    http://www.irishleftreview.org/2012/04/17/regressive-season/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+irishleftreview%2Ffeed+%28Irish+Left+Review%29

    Useful graphics. & a little counterpoint re most recent IMF Fiscal Monitor

  37. grumpy Says:

    @Paul H

    How come you haven’t put forward a proposal to have bullsh1t metering fitted to politicians? Surely funding could be effectively free via deduction from allowances - say something like €200 per cow pat equivalent? I think you and the troika have missed a trick there.

  38. zhou_enlai Says:

    @Paul hunt

    Homeowners on manged estates have rights which they could enforce individually but which it is cheaper to fund collectively.

    We will have no such rights re water charges. It is essentially a fait accompli.

    I agree that change which might most benefit householders would be to keep the regulation away from a regulatory body with a proven track record of failure.

  39. tullmcadoo Says:

    Lads,

    You are all missing the point here. If the bottom 80% of households are not making a contribution to the state in terms of the net of income deductions and transfers and there is an unwillingness to reduce tax credits to bring them into the net then other ways will have to be invoked to fund the state. the pressure to go down this route will be compounded by the need to reduce the top rate of tax+USC etc on the grounds of tax competition with our nearest labour markets.

    The other options are i) is to revoke the Croke Park agreement and go at public secotr salaries again ii) to cut transfers to the public.

  40. Georg R. Baumann Says:

    @DOD,

    you’re welcome. It’s good to know some are left. ;)

  41. The Dork of Cork Says:

    @Tull
    You are mistaken , this is not a state.
    It is a juristiction.
    States can print their own money and then subsequently that money is taxed.

  42. Paul Hunt Says:

    @Grumpy,

    There is no instrument capable of measuring the excessive volume accurately given the wide variety of texture and the range of angles at which it is projected.

    The Troika have been forced to filter and deflect a huge volume since they arrived in Nov. 2010, but I fear their instruments have not been up to the task and they have been inundated in some important areas.

    @Zhou,

    “It is essentially a fait accompli.”

    It will only become one if people allow it.

    And, as a more general comment, I just love this focus, by the naysayers across the entire politcial spectrum, on a ‘tax’ on property and a ‘tax’ on water.

    The first should not be seen as a ‘tax’ on property; it should be a charge for the efficient provision of local services and the maintenance of local amenities.

    The second should not be seen as a ‘tax’ on water; it should be a charge for the provision of efficient, safe and reliable services.

    But, under an excessively centralised regime, both are seen as a ‘tax’ because they are intended to reduce - and eventually eliminate - the central allocation of funds to provide these services generated by general taxation. And because there is no transparent relationship between the level and structure of the charges levied and the level and structure of the economic costs of providing these services, they will be viewed, quite understandably, as arbitrary taxation.

    A perfectly predictable outcome when you have a government exercising excessive executive dominance, an emasculated parliament, an ineffective system of local government, unaccountable and captured economic regulation and totally inadequate representation of the collective interests of consumers.

  43. Tullmcadoo Says:

    PH,
    When you establish a price for a service, even if it a wrong price, people start to band together to try to get better value. There probably won’t be another provider but elections offer the possibility of parties emerging to reduce the cost of provision. Back in the day when we had Rates, Dun Laoghaire had a ratepayers party whole sole interest was keeping the rate down.
    When normal service in politics there will be a debate between the left who just want more money and a right wing party who want low cost provision- a tae party.
    You can be member no 2.

  44. grumpy Says:

    @Paul H

    “There is no instrument capable of measuring the excessive volume accurately given the wide variety of texture and the range of angles at which it is projected.”

    This is typical of your defeatist “what’s the point?”, Marvinesque tendencies. Texture, projection angle and spin are irrelevant to a measurement technique which involves first basic collection followed by methane collection along standard eco-friendly lines. The only downside is that charging has to be in arrears, but the big plus is that the natural intermingling with hot air produces a highly potent post-metering by-product, easily added to the Bord Gais distribution network (not the water one). The synergies are obvious, but like I said you are too busy convincing yourself this sort of thing can’t be done to think of them.

  45. Robert Browne Says:

    @ Richard Tol

    “As they plan to give the first N liters away for free, the price of water may well be rather steep.”

    Is the stuff not being given away free for years by way of leaking pipes? I know we will be told that these will be all fixed… but?

  46. paulr Says:

    €40 x 20years = €800 rip off!

  47. Mickey Hickey Says:

    In most of the developed world potable water and waste water (sewage) are the responsibility of a single entity. Not only a single entity but one that operates in a single contiguous area. Typically the systems are operated by the town/village councils with reservoirs that serve more than one town/village operated by a regional gov’t in our case a County Council. Meters are always owned by the entity distributing the water to the end user and the cost is included in a low connection charge every two or three months. In many cases now the meters are read over the electricity distribution system, with alarms set when consumption exceeds preset levels (major leak).

    I know this is Ireland and allowances have to be made. When will we be able to stop making allowances and do what is proven to work in the real world.

  48. Mickey Hickey Says:

    It gets worse, increasingly sewage treatment and disposal is being charged for based on volume of water as determined by the “meter”. I am looking forward to seeing how the politicians will come up with exemptions and discounts.

  49. Paul Hunt Says:

    @Grumpy,

    You’re having a larf, aren’t you? The only thing that will insert some element of rationality into this evolving debacle are “Events, dear boy. Events.” - not any dispassionate analysis of the nonsense. Hence my “what’s the point?”.

    @Tull,

    I adhere to a key principle of Marxism - that is, Groucho Marx. I wouldn’t join a party that was prepared to accept me as a member.

    But your point is valid. A tax paid in anger is the greatest spur to democratic accountability.

  50. grumpy Says:

    @PH

    “You’re having a larf, aren’t you?”

    No, and I resent the implication as I am busy translating the patent application “Carp-on Capture” machine into Irish and the prior art section is tricky since I cannot find reliable data for the carbon footprint of emissions from politicians. Seems to be the ‘dark matter’ of the global warming jigsaw.

    Moderator -Take Him Away!

  51. Paul Hunt Says:

    For anyone still interested here..

    The Government’s decision yesterday on ‘Irish Water’:
    http://www.environ.ie/en/Environment/Water/WaterSectorReform/News/MainBody,29944,en.htm

    It’s ends with “A comprehensive Q&A is available here.”, but the ‘here’ leads nowhere. This is the most eloquent and most non-contentious statement in the entire piece.

    The way this is being handled should provoke public outrage. Not a single word about this ‘public consultation’. Alsolutely no concrete information available on the financial structure - even though considerable work has been done behind the scenes. All citizens will pay for this either in charges or taxation or both. They should have learned by now that they cannot take anything on trust from a government - not this Government or any government. The first rule is “trust, but verify”.

    If the ECB were trying to pull a stunt like this we’d have the equivalent of a medieval crusade with a horde descending on Frankfurt.

  52. Kieran o Connor Says:

    Water is our most valuable asset ,as a plumber in newyork ,I am amazed how laced back people are about leaking taps in Ireland …..because it is free .water needs to be regulated , here we pay $5 for 100 cubic feet and 7.50 for sewage

  53. Mickey Hickey Says:

    @ Kieran 0 Connor

    +1
    You are living in the real world Kieran.

    Ireland shows no signs of entering the real world where politicians are held accountable and people expect the gov’t to provide services cost effectively. We demand low taxes and even no taxes (property) we want free water, free sewage treatment, subsidies for electricity, petrol, public transit and on and on. Let us not forget free post secondary education, pensions, health care.

    Ireland is now a slow moving wreck headed for receivership with a government that is severely paralysed. Plus an electorate that has demonstrated again and again that cronyism, nepotism, fraud and corruption are viable governance models. Not even five decades of the Rosary, three Our Father and a dozen Glory Bes’ could save us now.

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