The Commission for Regulation of Utilities (CRU) has today, published a decision on Irish Water’s Non-Domestic Tariff Framework which will apply to Irish Water’s non-domestic customers. The Framework sets out the ‘rules’ for how tariffs are designed and how customers will be transitioned to their new tariffs over time, as well as the new non-domestic tariff rates.
Currently there are a wide range of non-domestic tariff levels, tariff categories, methodologies, applications, billing arrangements and billing cycles across the country. This evolved under the previous water industry structure, overseen by 34 different Local Authorities and 10 Town Councils.
This has resulted in over 500 separate charges for the provision of water and wastewater services to non-domestic customers of Irish Water across the country. These charges are complex, not transparent and potentially inequitable.
Creating a new national harmonised charging regime is consistent with the principle set out in the Government’s Water Services Policy Statement 2018-2025, that water and wastewater services should be delivered fairly and efficiently with a customer focus and designed to encourage conservation.
New Tariff Principles and Objectives
The objective of creating new harmonised charging arrangements and tariff structures is to bring benefits to customers by providing:
- A simpler charging structure compared to what exists today.
- Improved transparency – set out what price is charged for water and wastewater services across the country, what tariff category applies to customers, and how the charges are calculated and applied to customers.
- Equitable charging – tariffs that result in ‘similar’ customers across the country, in terms of consumption characteristics, being charged the same amount for using the same service.
- Greater price stability – tariffs designed to ensure that customer bill volatility is kept to a minimum.
- Cost Reflectivity – designed to reflect only the costs that customer groups impose on the system, and thereby provide efficient signals for water use.
- Greater price certainty – Changes to the non-domestic tariffs approved under the Framework in the future will be subject to public consultation and regulatory approval.
Consultation and Customer Impact
The CRU consulted on Irish Water’s proposals and sought the views of the water industry, non-domestic customers and all other interested parties on Irish Water’s tariff design and transitional arrangements proposals.
The summary results show that if the new tariffs are applied to all 183,479 metered and unmetered connections with no transition arrangements in place, 85,088 connections experience bill decreases, with 98,391 connections experiencing a bill increase. The CRU recognised that price, and hence bill, changes are a key concern for customers.
On this basis the CRU has decided that Irish Water will be required to put in place transitional arrangements to mitigate the impact on customers. This will include a three-year transition period for customers experiencing bill increases above €250. A cap of 10% on annual bill increases will apply for those connections who experience a bill increase above €750.
As a result of the CRU’s decision on the tariff design and transitional arrangements connections will see the following bill Impacts:
- 85,088 (46.4%) Connections will see decreases to their bills (and will move to the enduring tariffs straight away)
- 67,088 (36.6%) Connections will see bill increases of less than €250 (and will move to the enduring tariffs straight away)
- 19,268 (10.5%) Connections will see bill increases of between €250 and €750 (and will be eligible for a transition tariff)
- 12,035 (6.5%) Connections will see bill increases of €750 or greater (and will be eligible for a transition tariff and 10% cap on their annual bill increase)
The new non-domestic charges will take effect on 1 May 2020. This will provide customers with a period of approximately 10 months to plan and prepare for the change to their charges.
The full decision can be found here
Commenting on the decision, Laura Brien, Director, Water and Compliance, said;
“The CRU welcomes the introduction of national tariffs for non-domestic customers. This is a significant step in the transformation of Irish Water into a single public utility. These cost reflective tariffs will play an important role in encouraging water conservation”.