Yet more on water meters

Prime Time last night showed a few clips of me commenting on the establishment of Irish Water. As is usual (given the time constraints) a lot of my interview was not included. There are a few points worth making:

Firstly, water is not free and has not been free (some people still talk about it as if it had always been free). Currently most people are paying for water (and waste water treatment) via general taxation and some pay directly for water (e.g. those with their own supply pay for the well, pump and running costs) and they also subsidise those on the public system through general taxation. There is no incentive to conserve water which has a cost i.e. in the current system tax payers’ money is wasted (by tax payers implying a cross subsidy). Secondly, it still seems to come as a surprise to some people that we have a large budget deficit (approximately €8000 per household this year), which we need to reduce significantly. That can only be achieved by either reducing expenditure or increasing taxes. In so far as we are going to raise taxes, would it not be better to do so in a way that reduces waste? That is why I am broadly in favour of introducing water charges. I also believe that the reorganisation of water services could lead to significant improvements in efficiency and service delivery.

I do however worry that the way this is implemented will not lead to a more efficient outcome, as this is quite a complex task with very many facets that need to be considered carefully.

The meter roll-out alone throws up a multitude of issues. For example, it only makes sense to roll out meters if the benefit of doing so exceeds its costs. The current approach is to install meters at the boundary to the property. This has the advantage that access to a property is not required and it also means that any leakage occurring on the property will be charged to the owner. The disadvantage is that the installation costs of an outside meter is considerably higher and secondly it requires a separate meter reading technology to that used for energy meters (smart energy meters that are read remotely are likely to be rolled out in the near future). So one big question is whether a robust independent cost benefit analysis comparing internal and external installation has been carried out. There are many other issues like regional variation of prices, free allowances, how to deal with poor households….

Another important issue is the institutional set up. Yesterday the Minister for the Environment, Community and Local Government announced that Bord Gais (BGE) is to set up Irish Water as a subsidiary. The advantage of letting an existing utility set up and run Irish Water is that they have existing skills and experience that can be utilised. BGE has a billing system and know about metering. They have also some experience in driving efficiencies. However, the PWC report commissioned by the Department of the Environment recommended against a multi-utility model, citing international experience that suggests that this approach had been unsuccessful elsewhere. It is specifically the experience of the retail side of BGE that sets it apart from other agencies (for example the NRA would have a lot of experience of procuring infrastructure but no experience in retail), yet it is precisely this side of BGE which the Government is seeking to sell. More generally, it is far from trivial to amalgamate and transfer assets and staff from 34 authorities into one new entity.

 

There may have been a misunderstanding on the cost per household I mentioned in the interview. I was referring to the current (2010) cost rather than some hypothetical future costs incorporating some hypothetical efficiency gain that we have yet to see. It is trivial to replicate my number of ‘around €500’ (this is just arithmetic). Dividing the net cost of water and waste water services by the number of households yields €586. If all commercial rates were collected and households that are not on the public mains are excluded the cost per household would be €473. Using some plausible assumptions one can also get a figure for the per housing unit cost – €560. It is also worth noting that I am assuming that the Water Framework Directive is implemented, which requires full cost recovery (that is all costs including capital!). Efficiencies would reduce these figures but the roll-out of meters will increase them (some people seem to have thought that meters were going to be somehow ‘free’).

For anyone interested our submission to the department can be found here.

Author: Edgar Morgenroth

Professor of Economics at Dublin City University Business School

58 thoughts on “Yet more on water meters”

  1. Water does not effect our balance of payments ……… in national economy / monetary terms it does not leak in or leak out.
    There is no coaster leaving from New Ross with a cargo of fake Volvic in its hold.
    Water is not a expensive liquid……….. if I consume 10 times as much water as the next guy because I have a dose of the trots it does not effect the fixed costs of a water treatment installation by very much….which is static at any moment in time unlike oil which is a valuable liquid ( in monetory terms) by itself and thus quoted on exchanges for that very reason ,water is not quoted on the inside pages of the FT but perhaps that will change as we go further down the commodity rabbit hole.

    It follows that water conservation measures that require input costs such as water meters is not a effiecent use of resourses.
    In a rainy country such as Ireland all resourses should be directed towards the construction of new reservoirs etc. and be paid for from general taxation as water is not a scarce resourse in this country
    Planning & the concept of the commons is a scarce resourse in Ireland.

    This tax proposal is a classic rentier tactic……..even more absurd then road tolling on empty motorways.

  2. Has anyone calculated the externalties of people not flushing their toilets to save money ?
    Should the HSE be consulted ?

    This tax proposal will have the same socioeconomic consequences of road taxes on empty motorways.
    I will chose to go on the old road to Mitchelstown rather then use this new resource to cut my fuel / time costs and thus the investment in the new road will not be maximised.

    The commons should not be taxed unless my activities effect the national economy in some obvious fashion.
    Its because we don’t operate withen a rational national economy that these absurdities and pro – waste proposals are tolerated under the guise of saving the envoirment.
    They do nothing of the sort.

  3. @Edgar,

    The Q&A at the end of the statement on DECLG’s site has now been activated:
    environ.ie/en/Environment/Water/WaterSectorReform/News/MainBody,29944,en.htm

    There is no mention of the public consulation process. Usually the economic regulators go through the motions of publishing submission and of responding to them – even if only to dismiss any that are critical of what they propose to do. I though that Government Departments had a similar oblisgation to through these motions, but apparently not. Since ireland is not a signatory of the Aarhus Convention, enforcing its provisions does not seem to be an option.

    As usual all the decisions have been made behind closed doors. The powers the CER, as the CEWR, will have are truly frightening gioven the ways it has exercised its powers in the electricity and gas sectors up to now. For example:
    “The extent of future funding requirements will be determined through engagement with the economic regulator on the level of charges, securing of operational efficiencies and the appropriate level of capital investment and the extent to which Irish Water will be able to access financial markets to fund its investment programmes. The nature and duration of continuing Government funding, including the free allowance, will be determined as part of the budgetary and estimates process. Ensuring excellent customer service will be a top priority for the Regulator.” (Q&A, p4)

    “The regulator will be responsible for determining the cost of water services, the approval of a capital investment programme and the funding of that programme and the framework for levying the charges. My Department will be consulting with the Regulator on these matters before the introduction of water charges.” (p7)

    “The Regulator will be responsible for determining the framework for levying water charges. The Department will be consulting with the Regulator in the coming months. Standing or network charges are a common feature of charges for other utility services here in Ireland and internationally.” (ibid)

    “No decision has been taken on the level of free allowance. My Department will be consulting with Regulator on the approach to the free allowance in advance of the introduction of water charges.” (p8)

    “The economic regulation functions are being assigned to the Commission for Energy Regulation. Legislation will govern the functions and operation of the Economic Regulator. The main role of the Regulator will be to protect the interests of customers. The regulator will be responsible for determining the cost of water services and ensuring that efficiencies are delivered so that the cost of providing the service to the consumer is kept to a minimum. The Regulator will ensure there is a framework where water charges are fair and clear in their implementation and that policies are in place to address affordability issues.” (ibid)

    “The protection of consumers will be the key role of the Regulator and it would be expected that there will be consultation with consumers as is the case in other regulatory systems e.g. OFWAT, the water regulator in the UK regularly consults on issues of concern to the consumer e.g. performance standards, affordability, etc.” (ibid)

    This is an abrogation of policy and shareholder responsibility by Government that already executed for other utilites subject to economic regulation. The intent is to evade even the tiniest bit of democratic accountability as the CEWR will be effectively unaccountable. Yes it may submit reports to the Minister and the Dail and the commissioners and senior offcials may appear before Oireachtas Cttees and seek to bamboozle them, but this is not accountability. The NCA is either unwilling or unable to represent the collective interests of consumers effetcively – and when it is fully folded in to the CA will be less able or willing.

    And as for BGE getting responsibility, this is a straight horse-trade. BGE loses the energy supply business via privatisation, but gains Irish Water – and surplus retail service staff might be deployed to Irish Water as the energy supply business is tarted up before it is sent out to meet the kerb crawlers.

    As I said previously, 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.

  4. Does this mean that houses further away from the source pay more since it costs more to get to them. Or are we facing a community rating. And what about those in the countryside that are dealing with their own waste treatment, will this mean a easement in the bill.
    How is it that no one has gone back to the reason why they halted this type of billing and took it from the exchequer. This will be a nightmare both socially and Constitutionally.

  5. And another thing, Edgar,

    Why do you persist in focusing on meters? The likely full acquisition cost of these will probably be of the order of €400 million (including the embedded labour installation costs). The net asset value of the existing water business (aggregated across the LAs) was estimated by PwC as €11.4 billion at the end of 2010.

    If an annual ‘standing’ charge of €39 per meter (or per household) will be set to recover the meter acquisition and installation costs over 20 years, would you like to estimate the likely average charge per household as a multiple of this standing charge when the CER applies its magic to set the regulatory value and determine the allowed annual depreciation charge, return on net assets and operating expenditures?

  6. @VincentH – I doubt that people can be charged for a service they do not receive (this is going to operate like any other utility e.g. ESB after all).
    The issue of uniform vs regionaly differentiated price is interesting but appears not to have been considered by the Department. Given that abstraction and treatment costs differ – areas with an abundance of clean water, say the Shannon Basin could provide their water at lower cost holding everything else equal. Thus some areas would have a comparative advantage for water intensive industeries. Charging the same price eliminates this. of course it works in the other direction for other utilities like electricity or telecoms. If we are going to be charged the same price everywhere then I would at least expect that the conseuqnces of doing so are considered.

  7. @Paul – you are right. The big issue is the overall effiviency. However, the way the metering appears to be handles is propably symptomatic of the potential problems ahead.

  8. Minister for European Affairs Lucinda Creighton said the plan to charge for water had to be judged against the context that the State was “effectively” bankrupt. “I know that householders are under pressure but so is the Government and we have to deliver a system of water that is fit for purpose,” she said. “We can pretend we have money that we don’t have but it’s a very difficult time in our history.”

    Ms Creighton said she knew from her time as a councillor that some 60 per cent of the water being carried was leaking out of pipes in the Dublin City Council area. “It has to be revamped and renewed and this is the only way it can be done – people will have to pay for water. It’s not an infinite resource and it’s one that has been squandered to a large extent in this country and we have to put in place the sort of infrastructure that is required,” she said.

    There’s a hole in the bucket, Dear Luce_Enda, Luce_Enda
    There’s a hole in the bucket, Luce_Enda, a HOLE.

    FIX THE HOLE.

  9. In response to an earlier article, I suggested setting up Irish Water as a Co-op…

    Why can it not be set up on a commercial basis yet in a way that is will be ran for the benefit of the people of Ireland? e.g. the whole fuss over meters…. why not set it up where a consumer can chose to buy or rent the meter and do the math themselves? Managing what meter is rented or not shouldn’t be a big deal in this day and age…..

  10. @Edgar,

    ‘Overall efficiency’? You must be joking. There isn’t an economic, or democratic or any othe type of principle in sight. The gameplan here is to push this problem out to Tallaght as fast as possible. The horse trade with BGE pre-empts a potentially serious problem with BGE and its unions.

    The long drawn out transition means that BGE, the LAs and the unions will have equally long dranw-out negotiations and slowly developing working arrangements ideally well below the radar. The Government will use the ‘boling frog’ routine, starting with this meter-related standing charge, the use of free alowances, various fixes, fiddles and fudges and the careful application of the limited funds it has earmarked in the public capex budget. The hope is that, if they hold their nerve and generate loads of distracting spin and BS, people will tire of it and the caravan will move on. The media, as usual, don’t have a bull’s notion of what’s going on. The NCA won’t make a peep. And the waters, literally, will close over and a ripple won’t be seen.

    Unless… enough people begin to ask hard questions and those who know what’s going on inform them…

  11. I have yet to see a coherent case that savings from reduced consumption of water arising from metering will exceed the cost of installing, reading and maintaining water meters and of billing households with variable as opposed to fixed amounts. Maybe it’s true, maybe not, but I would have thought that this should be the first question addressed by anyone proposing that domestic metering should be introduced.

  12. @DOD

    ” It’s not an infinite resource and it’s one that has been squandered to a large extent in this country and we have to put in place the sort of infrastructure that is required,” she said.”

    HSJ…we are drowning in the stuff…and we haven’t even drained the Shannon.

  13. Highwater risin’, rising night and day
    All the gold and silver are being stolen away

    Highwater rising the shacks are sliding down
    Folks lose their possessions, the folks are leaving town

    It’s rough out there
    Highwater everywhere

  14. The handing over of the admin/management of Water resources to one existing agency without any Tendering must be unique and probably in breach of EU Competition Law. The fact that it is to a Bloated Semi State makes the decision more incredible. But thats the Irish way to keep Labour happy in Government. The cost to water users will be enormous and we will be held captive to people in the Public Sector who will hold us up to ransom like the ESB workers have down the years. BTW they never mentioned charging for the outflow from houses which commercial premises are currently charged for !!!

    We are truly a Banana Republic controlled by a clique

  15. Plus ca change…….

    So we’re going to just transfer an inefficient local authority system to a new entity with no job losses. That statement alone leads me to believe we’re screwed. It’s for this reason I’ll be voting NO in the referendum. It’s time to turn off the tap (pun intended) of cash from the troika and start to realise that we cannot continue to borrow money to keep the vested interests happy. It’s time to grow up as a nation and live within our means.

  16. Blind Biddy has had enough:

    Text for Minister Noonan:

    Mick – simply kick another PN note into touch next year (try to get it to the 5 yard line this time; ROG will assist on tutorial) and use some of the €3.1 creatively accounted for to FIX DA HOLE IN DA BLEED1N BUCKET – which is the priority according to all savvy engineers.

    And let the next admin worry about meters!

  17. I would also disagree with meters being installed at the boundary, but for a slightly different reason.

    County Councils are lobbying for meters to be installed at the boundary, both for their own ease and also to make the householder responsible for leaks on their property.

    But how useful will it be to make households responsible for leaks on their property? How are householders expected to detect leaks under the soil? It will be the County Councils -and later Irish Water- that have the leak detecting technology and personnel. They are the ones with the technical ability and it seems to make sense to me that leak detection should be left in their hands as much as possible.

    Finally, the current system whereby those connected to the mains are subsidised by those who are not connected is totally indefensible. This must end.

  18. @Ger
    There are neighbourhood meters already. Add meters in the neighbourhood houses, and you roughly know where the leaks are. You can also tell by waterlogging and lushness of vegetation.

  19. @ Ger
    Who was responsible for the pollution of numerous lakes rivers, streams, tributaries in little old Ireland. Why have we 60 boil notices in operation right now? Who destroyed the inland waterways and fishing resources of the country? Was it people travelling out from Dublin or other suburbs for weekends? How many of these group schemes are already contaminated with dirty water? How and why have cancers increased almost exponentially in some rural areas? Pollution, eutrophication, neglect disrespect for the environment have been hall marks of rural Ireland for quite some time.

    We need a fair and equitable system of taxation and if we had that there would be not need to tax peoples roofs or tax water which has already been paid for 10 times over before it reaches our taps.

    @ Richard

    I like lush vegetation.

  20. Eventually our European masters will persuade us our forefathers made a grave mistake naming the Caha (Showery) Mountains.
    “They are as Dry as the Atlas mountains in Summer with little Winter snowmelt to keep the various Tribes below in Gelengarriff and other townlands sustained during those bitter dust storm summer months.”

    What a sureal debate.
    The entire bloody country is a Bog.
    Lush vegetation……..me H………

  21. Ireland’s problems go far beyond water. We have a major problem on our hands if responsibility for water and sewage systems rests solely with the national government. We do not trust the national gov’t, the local councils or the county councils. We do not want property taxes, water charges, sewage charges. We insist on low corporate taxes leaving income taxes and VAT levied by the national gov’t to shoulder most of the tax burden.

    Has nobody noticed that water and sewage pipes run under streets and sidewalks. The local gov’t maintains the streets and sidewalks. It makes sense to make local gov’ts responsible for water and sewage. The whole country is full dysfunction waiting for someone else to fix it. In practice it means steet/sidewalk torn up and blocked off and unusable for weeks and months.

    Someone commented on the Councils wanting meters at the boundary, in normal circumstances the meter is in the residence and there is a stop cock at the boundary that can be used to shut off supply. The home owner is responsible for repairs from the stop cock into the house.

    Meters being installed for the past decade can be read over the electricity supply system and failing that by RFID devices wired to the outside of the house. Gas, electricity, and water is often monitored over the electricity supply system.

    The appropriate role for national governments is to regulate, inspect and supply a testing service to local governments.

    Look up the Walkerton tragedy and notice that nothing was swept under the rug at Chief Justice Dennis O’Connor’s inquiry. The two responsible got one year and 9 months in jail.

    http://en.wikipedia.org/wiki/Walkerton_Tragedy

    http://www.cbc.ca/news/canada/story/2004/12/20/koebels-sentenced041220.html

    The prospect of time in jail along with loss of job concentrates the mind. How do you think this would be handled in Ireland.

  22. This is a little cursory glance of what is coming down the line. Taken from a UK leaflet.

    “Your bill is usually made up of
    • standing charge for water, which is fixed and covers the costs to the company
    of reading, maintaining and replacing meters and administering customers’
    accounts;
    • charge for water, measured in cubic metres (m3);
    • standing charge for used (waste) water, which is fixed and covers the same
    costs as the standing charge outlined above; and
    • charge for collecting and treating your dirty water, measured in cubic metres.
    If you receive your water service and your sewerage service from different
    suppliers, you may receive two bills – one from each company.
    If surface rainwater from your property drains to the public sewer, your sewerage
    company will also charge you to take the water away. This is called the surface
    water drainage charge and it covers the cost of collecting and treating the
    rainwater.
    If the surface water from your property does not drain to the public sewer and you
    are being charged for surface water drainage, you should contact your company.
    You may be entitled to a rebate on your bill.”

    I love the bit,,,,”f surface rainwater from your property drains to the public sewer, your sewerage company will also charge you to take the water away”.

    @ Dork
    Surreal all right!

  23. Intergalactic text from Seven_of_9

    Have you checked the water for SOMA content? You’re all very quiet down there! I heard that The Ferengi sold a few hundred tons of it recently to a few dodgy lookin earthlings.

  24. @Robert

    “@ Ger
    Who was responsible for the pollution of numerous lakes rivers, streams, tributaries in little old Ireland. Why have we 60 boil notices in operation right now?”

    I dont know would having 20-30 old million cows, sheep, horses and pigs pooping our green fields (or their shit being spread over em for fertilisation) in order to feed us and provide exports to the economy have something to do with it. Its organic after all 😉

  25. Oh and I spent 2K last year on water softner system (having the hardest water in the country) and filtration system and UV system (to kill shit)

    Something that the council should be doing (despite paying them 2K in connection fee to a water mains by the road by the house)

    I bet I will still have shit water supplies

  26. Tried ringing Bord Gais the other day on a few occasions as they left a message for me to call them, waste of time:-)

    Speaking of efficient, safe and reliable, having received a voicemail call from Bord Gais to ring them back with mobile message to contact them, caller said they work till 8pm. Needless to say, got the automated, after selecting options, ‘your call is important to us’, that rang off after 10 minutes. That was after 6pm.

    I was multi tasking as I didn’t trust they would answer after 6pm. They would have kept me on hold all night, if they could 🙂 Perhaps a testbed of tests to mark against ‘efficient, safe and reliable’ ? I’m sure my experience there not at all unusual. Following day same waste of time.

  27. @Robert Browne – it is normal outside of Ireland to charge for waste water treatment. In fact those that have installed their own system (commonly referred to as septic tank) have had to pay for the installation and running costs of their system. thos on the public system have been subsidised by those that have their own system.

    It never seizes to amaze me that so many people in this country think that all sorts of things are ‘free’ – meters fall out of the sky or are gifted to us by some benevolent person or agency, drinking water gets purified and pumped to the tap for free and waste water gets pumped and treated for free. Of course for some these things are de facto free as they are happy to sponge off others.
    The next point I keep hearing is that we are already paying for all of this – no we are not – otherwise we would not have a deficit. Collectively we are clearly not paying enough for our public services (or alternatively they cost too much – you choose). This is just logic and simple algebra (I’d say my 6 year old son could do those sums).
    Finally, I often hear that the deficit is due to the banking debt – no its not – and again this is a fact that can be shown with very simple algebra. On useful test is to knock off debt interest payments i.e. assume that all our debt is wiped out overnight and we still have a deficit (remember that the banking debt is only a fraction of the total debt). Unfortunately you find that even if we were able to do this we would still have a deficit.

  28. @Edgar
    We have a defecit because we do not have enough money to tax.
    When or if we produce more base money the true input costs of our suburban lives (liquid fuel) will be factored into the equation.
    When you tax a non optimum amount of currency you transfer a surplus to wasteful activities.
    We have been doing this since at least 1979.

    PS did anybody catch the VB show last night ?
    I am sure Keen came close to calling a respected financial journalist a Ass.

  29. There is a obsession in Europe with regulated prices driven by cost causation principle that are often misguided. The Dork from Cork makes references to the case of motorways going unused. this is because people place a value on things independent of their costs. Taxation therefore needs to take account of Ramsey Pricing ideology where prices (taxes) are set at levels inverse to their elasticity of demand – in this way taxes are from a externality point of view, over recovered in some quarters and under recovered in others – but ultimately for society as a whole it can be socially optimal……this EU regualtory agenda and niche economists love can make theoretical cases for costing/taxation on a service by service or sector by sector basis that takes no account of the bigger picture. With the example of the motorway – the individual is better off avoiding the motorway – but the social cost may be more accidents on back roads, higher costs of maintaining back roads etc….these may easily outweigh the benefits of charging for tolls AT cost.

  30. @Dork

    very interesting idea`s from Steve Keen and backed up by Constintin G that left Dan O Brien and Laura Noonan floundering which leaves the question do they have any idea are understanding of where we are and how deep we are in this debt spiril looks like the whole of the irish establishment has been captured

  31. I think priorities are mixed up here. The priority for the initial installation of meters should be to do it as cheaply as possible, using low-grade meters. It does not really matter much at this stage where the meters are installed. I think outside the boundary is best, but at this stage it does not matter.

    The reason for doing the whole metering job as cheaply as possible is that:

    1. meter accuracy and frequency of reading does not really matter that much. Lower grade (BS 5927 class A and B meters, which cost less than GBP20 retail) are fine.

    2. As much money as possible should be reserved for fixing leaks and upgrading the system.

    In 20 years, when the meters need to be renewed, we can see about putting in fancier meters. Boundary boxes will have been fitted to practically all homes by then, as part of the gradual upgrade.

    I would also charge for water on a flat rate. Any ‘standing charge’ or free water will penalize the most frugal users (who, generally speaking, are the least well off people).

    We need to change the discussion from ‘how do we measure and charge?’ to ‘how do we track down leaks and upgrade the system?’

  32. @Edgar,

    Oh dear. It appears you have become totally exasperated by some of the nonsense you have to read and listen to.

    The problem is that we have no forum where these issues may be thrashed out based on facts, evidence and analysis. The media either sensationalises or trivialises issues. Most of the available expertise is either locked in to or beholden to the government-machine – or deployed by sectional economic interests. Anyone outside of these ‘charmed circles’ is easily dismissed as a ‘person of no standing’ – irrespective of their knowledge and competence. Citizens – and their public representatives – are deprived of the information they require to give their informed consent.

    In this instance the abuse of proper process by the Government and the Department should provoke considerable public outrage. The period for submissions in response to the Department’s initial proposals closed on 24th February. Normally one would expect the Department to publish these submissions and its response to them. Then these submissions would be taken in to account, to some extent or other, to inform the final decision by Government. But we’ve jumped from the deadline for submissions to the Government’s decision as if the public consultation never existed. This is a total and despicable abuse of proper process. But is there any public outrage? Are the media up in arms? Are TDs communicating the annoyance of their constituents? What? You must be joking? This is Ireland. We do things differently here.

    And that’s why the country is in the mess it’s in.

  33. @David
    A classic.
    Laura wonders where money comes from…..
    The ECB created money at 1% to bail out the banks which has created a deflationary atomic bomb.
    Where did that money come from ?
    So they will destroy the economy by reducing the medium of exchange to peserve a idea about money , bank credit money.
    When the commercial banks hold fiscal debt they must subtract from your deposit so as to recapitalise.
    Me thinks this is the banks last throw of the dice , become part of the state again via LTRO.
    This is a renationalisation of the respective european debt economies with the commercial banks and their failed investments with their money power preserved for future generations of little bankers.

  34. @David
    I would be as well if you did not tax waste also.
    Buts thats how a fiat system should work…………issue / tax issue / tax

    Credit every citizen over 18 with 10,000 euros and tax the shit out of oil waste and you will see people buying those wood gas stoves by the thousand.

  35. Can I suggest that some or all of the posters on this and similar threads make contact with the National Federation of Group Water Schemes, and thereby acquaint themselves with realities and daily practicalities of supplying and metering water in an Irish context?

    Metering reduces waste. Without metering waste is, to the individual, immeasurable and effectively unimportant – it may be a visibly leaking tap, or it may be pipe fracture underground, and utterly invisible. The existence of such leaks can be determined, in an unmetered system, by measuring “unaccounted-for water”, usually measured off a mains meter between 2am and 4am but, unfortunately, cannot be pinpointed.

    (Richard Tol’s point about “lush vegetation” indicating leak location doesn’t, I regret to say, hold. I’ve known daily leaks of 100 cubic metres plus, that have taken frustrating years to locate).

    As much incentive as can be given, by carrot or stick, to householders to remedy leaks the better. If people want to know what, practically, the best (as in easiest applied and least resisted, while still making economic sense) charging system is, ask the NFGWS. They have more examples than you could shake a stick at, be it of “free” allowance, full charge-out, or whatever.

    While being a mainly rural phenomenon, some of the issues arising won’t necessarily fall within their area of expertise/experience (apartment block metering, for example), but there is sufficient data and knowledge residing in the organisation and its employees to improve immeasurably the quality of discussion on the whole issue.

    Disclaimer: I don’t work there, never did, and have no rellies working there. Just a staisfied customer, is all.

  36. Me thinks micro managing leaks is not cost effective.
    Sometimes bigger is better when you truely scale up……when you are dealing with truely large amounts of water , leaks don’t matter.

    As I have said…..water is not expensive ……..its the fixed costs that are…………so therefore you scale up baby.
    It beats drinking from the Clyde anyhow.

    Glasgows catchment area for 150 years……
    http://www.youtube.com/watch?v=6ue3ojY71-Y

    We lack that Victorian vision thing me thinks.

  37. I don’t buy this ‘meters reduce waste’ argument.

    If you didn’t switch a tap on in the house, water would still be leaking (wasted) from the sieve that passes for a delivery system in Ireland. Are we just trying to put the blame for the waste on householders when in fact it should be squarely with those that are supposed to be operating the service?

    Anyway, I’ve had enough of property taxes and water metering. Let’s call a spade a spade and admit it’s just a revenue raising exercise to pay our creditors. “Let’s get every drop of blood out of Ireland as quickly as possible, before it’s too late,” I hear them cry.

  38. @PR Guy,

    Since you never seem to associate with the swivel-eyed faction here I’m a little surprised you see property taxes and water charges as “just a revenue raising exercise to pay our creditors”.

    I don’t think there’s any other advanced economy where local services and water-related services are funded predominantly on a pay-as-you-go (PAYG) basis from general taxation. Irrespective of what our creditors might desire, there simply isn’t enough general taxation to keep paying as we go to this extent. There are two options: raise additional taxation to maintain the status quo or levy charges for services to replace these allocations from central funds.

    The Government has opted for the latter, but it has made an absolute dog’s dinner of how it has gone about it and it is facing an enormous institutional deficit where bodies delivering efficient services and levying appropriate charges for these services subject to voter consent and satisfaction should be.

    It’s like trying to repair a thatched roof in force 10 gale. We have a totally emasculated parliament and local governance has been progressively hollowed out. Following the Mahon report, which was mild and limited about local governance in relation to what most people know from their own experiences or suspect, local governance is even lower in public esteem – if this were possible. So a centralised, hubristic government, in hock to vested interests, is confronting increasingly irate hordes of voters.

    In a better governed polity it might have been able to expalin to voters that it was no longer possible to pay for local services largely from central funds and that they would have to pay directly for local services. But cowardice and fear gripped thier entrails and they opted for this half-arsed property charge. It’s going to get a lot worse for them before it gets better becasue the anger they have aroused is probably much greater than would have aroused if they’d be honest and accompanied it by a clean up of local authorities and an eventaual and conditional increase in their powers and resources.

    But on the water-services front they’ve tried to limit the damage by gifting the technical and commercial activities to Bord Gais – as compensation for the planned disposal of its energy supply business – and handing almost all policy and regulatory responsibility to the CER – so as to avoid any effective democratic scrutiny or accountability.

    But based on its previous record for the electricity and gas networks, the CER is totally unfit to regulate networks and most certainly should not be granted regulatory responsibility for water and waste-water services until economic regulation generally and in the case of the CER in particular is subject to the thorough review and reform recommended by the State Asset Review Group whose report was published one year ag today.

  39. @PRGuy – it doesn’t really matter whether you buy the argument. The problems in water supply exist significantly in both mains and, to use the phrase, meter-side. If individuals are being metered, they will spot a leak in jig-time. Household leaks range from the leaky tap/faulty toilet ballcock types (all small, but ignorable when unmetered, but cumulatively significant) to external pipe fractures (maybe after putting down a new patio or whatever), where they often go unnoticed.

    Metering improves behaviour, and reduces usage – not by cutting down on baths and showers, or cups of tea – both among suppliers and users. Ask the NFGWS. They have the numbers.

  40. I think behind it all Paul Hunt, PR guy has it figured out….

    All the official reasons for policy are bullshit…

    Wasnt Bord Gais one of the companies to be sold off… And what is the impact of giving Irish Water to them given their impending sale? Theres plenty of deadwood in Bord Gais that can be moved to Irish Water to quietly get paid while subcontractors do all the work for another few years….

  41. Considering that this is a forum where the focus is ostensibly on rationality and economics it is quite remarkable how entrenched views are

    No wonder reform is so difficult to push through when confronted with the beast that is populist politics

  42. @Garry,

    That’s a recipe for total despair. Behind all these policy initiatives there is genuine good intent in the public interest. I’m not denying that for a moment. I would never, ever accuse Ministers or their officials or those running other government agencies or those who advise them of being fools or charlatans – well, at least, not all of them all of the time.

    But they believe – and it has become custom and practice to such an extent – that they have to coat these good intentions in layers of bullshit to some how make them palatable to ordinary citizens. The layers of bullshit are often required to conceal the extent to which their proposed or actual decisions have been influenced by whatever sectional economic interest is affected.

    The problem for government is that the vast majority of citizens are all ‘growed up’ now. Their bullshit filters are well refined. But a further problem for government is that they are so refined that governments, dealing with a legacy of fixes, fudges and fiddles, are starting from square minus one (or even two) and layer on even more bullshit so that citizens, trying to wade though the bullshit, ofetn lose sight of the underlying good intent and possibly sensible policy initiative.

    People could well manage, and would welcome, a bit more honesty from the political classes, from the media and from their ‘public intellectuals’. It’ll come, but it’ll be hard-won.

  43. Water meters also help track down losses in the distribution network. You take a reading for the bulk meter which serves the whole neighborhood, and subtract the total usage from all the house meters from that. This will tell you the leakage in the neighborhood. You can then use information to prioritize fixing the area with the most leaky pipes.

  44. Pr Guy

    alas, that’s just not true.

    A few years ago they started charging schools water rates. Caused a fuss at the time. Our local school was landed with a huge bill and in jig time set about diagnosing their water usage. A leak was discovered and repaired and leaky taps also sorted out. If they hadn’t been billed they would never have known or cared they were wasting significant amounts of water through leaks.

    It’s like plastic bags and rubbish disposal. Until you start charging people for what they use, there is no incentive to reduce usage.

    Of course the LA’s have to work as well, but that does not absolve end users from their obligations.

  45. @Sarah/Paul

    Clarification: I’m not getting my point across very well. What I’m trying to say is that I think the primary motivation for these water rates is to raise revenue but the spin is the waste argument – it’s just the usual, avoiding calling a spade a spade. You could well be correct that once they are introduced, it changes behaviours (I will take your evidence as read as you’re both sane individuals).

    But I really don’t need some moronic politician with the IQ of a rocking horse telling me that it’s being brought in for one reason (because they think it ‘sounds better’) when it’s for another. They haven’t even been able to get their story straight for most of the week, looking at the various comments made by different politicians in the same coalition.

  46. @PR Guy – of course the charges are about bringing in money, but rather than simply raising general taxation introducing a price on water should have a behavioural effect that improves efficiency (there is lots of robust evidence on the impact of prices on water consumptions). While the introduction of a prise should lead to eficciency gains, the way the pricing/charging is implemented will determine how efficient the outcome will be.
    Importantly, the debate about charges misses the point that the provision of water and waste water services as currently organised is likely to be inefficient too. Major changes to the organisation of that provision are being introduced and these will determine the costs that will need to be recovered (under the Water Framework Directive). The nature of these changes is very important in determining the ultimate efficiency and will have a long term impact.

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