Water Charges Plan Non-Domestic Water and Wastewater Charges, New Connection Charges

Transcription

1 Water Charges Plan Non-Domestic Water and Wastewater Charges, New Connection Charges DOCUMENT TYPE: REFERENCE: Response to Comments and Decision Paper CER/14/453 DATE PUBLISHED: 8th October 2014 QUERIES TO: The Commission for Energy Regulation, The Exchange, Belgard Square North, Tallaght, Dublin 24.

2 Information Page Abstract This paper sets out the CER s responses to comments received to the Section 4 of the CER s Water Charges Plan Consultation Paper (CER/14/366) regarding Irish Water s interim non-domestic water and wastewater charges, additional services and new connection charges. It also sets out decisions arising which apply from 1 st October 2014 to 31 st December These decisions are included in the CER s decision paper regarding the Water Charges Plan (CER/14/746) and reflected in Irish Water s approved Water Charges Plan (CER/14/747). Both of these documents are published on the CER s website. Further consultation on an enduring tariff framework for non-domestic water and/or wastewater customers of Irish Water will take place in due course. The CER will publish a timeline for the development of an enduring tariff framework by the end of Target Audience This response to comments received and decision paper is for the attention of members of the public and of the business community connected to the public water and or waste water network, the water industry and other interested parties. Related Documents Interim and Enduring Non-Domestic Tariff Proposals (CER/14/084) Interim and Enduring Non-Domestic Tariff Proposals Irish Water Submission to the CER (CER/14/085) CER Response to Comments and CER Views on Interim and Enduring Non-Domestic Water and Wastewater Tariff Proposals (CER/14/368) Water Charges Policy Direction 2014 (available at Water Charges Plan Consultation (CER/14/366a) Irish Water Charges Plan Proposed scheme of charges applicable from 1st October 2014 to 31st December 2016 (CER/14/407) CER Letter to Irish Water of 17 th September 2014 (CER/14/570C) Water Charges Plan Decision Paper: Executive Summary (CER/14/746) Irish Water Charges Plan (CER/14/747) Water Charges Plan: Domestic Water and Wastewater Charges - Response to Comments and Decision Paper (CER/14/452) Water Charges Plan: Irish Water s Interim Revenue Review (CER/14/454) CER Letter Approving Irish Water s Water Charges Plan (CER/14/570F) For further information on this paper, please contact the water team (waterchargesplan@cer.ie) at the CER. i

3 Executive Summary On 31 st July 2014, the CER published its Water Charges Plan Consultation (CER/14/366). The consultation paper addressed a number of issues, including Irish Water s proposed non-domestic water and wastewater charges, non-domestic additional services charges and non-domestic connection charges for the period from 1 st October 2014 to 31 st December 2016, the interim review period. 1 Responses were received from 15 associations, businesses and members of the public on the above issues. This paper summarises the comments received to Irish Water s proposals, the CER s responses to those comments and the CER s decision on Irish Water s proposals. The topics covered in this paper are as follows: Interim non-domestic arrangements Groups Water Schemes Mixed use customers Discounts for water unfit for human consumption New connections for domestic and non-domestic customers Additional services for non-domestic customers Interim Non-Domestic Arrangements The following decisions have been made in relation to interim non-domestic arrangements: 1. Existing charges for non-domestic water and/or wastewater customers as determined under relevant Government policy and applied by Local Authorities prior to 1 st January 2014 will necessarily by default continue to apply for the foreseeable future, until the CER is presented with the necessary information so that it is in a position to consider the manner and method by which charges are calculated. 2. Non-domestic customers will retain their current payment options and terms unless alternatively, they decide to opt in to Irish Water s payment options once they have migrated onto Irish Water s system. 3. The CER will not be in a position to make determinations on disputes regarding the actual non-domestic tariff levels and/or their basis until the enduring tariff framework has been established. 4. Given the information available, the CER is not in a position to consider individual agreements at this time. In the interim, there will be a moratorium on individual agreements. 5. All new non-domestic contracts will include a provision to provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate date as determined by the CER. 6. The CER will publish a timeline for the establishment of an enduring tariff framework by the end of Q This timeline will include CER milestones and what is required of Irish Water. 7. The CER will publish Irish Water s data migration plan once received (expected end Q4 2014) and will monitor Irish Water s progress against this plan. 8. The CER will publish Irish Water s plan for engagement with non-domestic stakeholders by the end of Q Please refer to sections 4.19,4.24 and 4.25 of CER/14/366 which is available here: ii

4 9. The CER will establish a Large Water Users Group in Q4 of Groups Water Schemes The following decisions have been made in relation to Group Water Schemes (GWS) that are customers of Irish Water: 1. GWSs should continue to be treated as non-domestic customers as this is considered pragmatic in light of the information currently available to the CER. 2. All measure that apply to non-domestic customers will therefore extend to GWSs 3. GWSs will not be covered under the Irish Water Customer Handbook at this point. The CER will be guided by the Department for the Environment, Community and Local Government regarding the treatment of such schemes, and the CER will update the Handbook accordingly, as appropriate. Mixed Use Customers The following decisions have been made in relation to mixed use customers: 1. The non-domestic component of mixed use customers should continue to be billed for their non-domestic consumption as of 31 st December This includes the retention of the provision of the Local Authority Domestic Allowance. 2. The domestic component of mixed use customers should be billed as unmetered domestic customers based on the number of adults in the dwelling and subject to all applicable Irish Water domestic allowances i.e. 30,000 litres per household and 21,000 litres per child. 3. Where a mixed use customer has metered evidence that their overall consumption is lower than their assessed domestic consumption, or where the Local Authority Domestic Allowance provided to the non-domestic bill is lower than the assessed domestic consumption for that household, then customers are eligible for a rebate at the appropriate domestic unit rate. 4. Where a customer has a precautionary connection to the public water system and normally uses a private water supply, the customer should pay the assessed charge once their consumption exceeds their applicable allowances. 5. Rebates to mixed use customers should be applied automatically once their Local Authority has been migrated on to the Irish Water system. Where a customer s Local Authority has not migrated by 1 st October 2015, that customer may request a rebate subject to verification. Discounts for Water Unfit for Human Consumption The following decisions have been made in relation to discounts for water unfit for human consumption: 1. Where water is unfit for human consumption for more than 24 hours, Irish Water should apply a 40% discount to the customers water services charge. 2. Large Water Users, defined as those that consume in excess of 50,000,000 litres per annum, may be dealt with on a case by case basis and may be assigned a discount up to 40% on their water service bill. 3. A document for the CER s approval that sets out the process for assessing the consumption of a Large Water User, the timeline for the carrying out of this assessment and the basis for iii

5 the relevant discount to apply will be submitted by Irish Water by 31 st October The scope and timeline for the micro-component study of non-domestic customers water consumption should be submitted to the CER for approval no later than 31 st October The definition of Force Majeure shall apply to discounts for non-domestic customers as it does for domestic customers. New Connections for Non-Domestic and Domestic Customers The following decisions have been made in relation to new connection for Non-Domestic and Domestic Customers: 1. The CER will publish the timeline for the consultation on new connection charges with its decision paper on the Water Charges Plan. 2. Until the CER receives and reaches decisions on proposals from Irish Water for a new connection charging policy Irish Water should, by default, apply the arrangements that are in place in each Local Authority as on 31 st December The CER acknowledges that the arrangements in place in the Local Authorities may not be appropriate in all cases given the advent of Irish Water. Therefore, the CER will consult on interim arrangements regarding the following in October 2014: Interim Financial Security Policy; Interim General Conditions for a Water and Wastewater Connection Agreement; Pro Forma Agreement(s). 4. In the period from 1 st October 2014 to the approval of such interim arrangements, the CER notes that Irish Water has advised that it may continue to engage with customers on these issues as it has done to date, by default. 5. The CER is not in a position to resolve disputes on the actual connection charge (levels and/or basis). 6. The CER will not be in a position to consider individual agreements at this time. Additional Services for Non-Domestic Customers The following decisions have been made in relation to additional services for non-domestic customers: 1. The current arrangements for additional services will be retained for non-domestic customers by default. These charges will be reviewed as part of the development of an enduring tariff framework for non-domestic customers. 2. Where provision does not exist for a specific additional service, Irish Water will apply the approved domestic charge for that service by default. iv

6 Table of Contents Executive Summary... ii Table of Contents... v 1 Introduction Background Information Non-Domestic Water and Wastewater Charges New Connections for Domestic and Non-Domestic Customers Additional Services for Non-Domestic Customers Next Steps v

7 1 Introduction 1.1 The Commission for Energy Regulation The Commission for Energy Regulation (CER) is Ireland s independent energy and water regulator. The CER was established in 1999 and now has a wide range of economic, customer protection and safety responsibilities in energy. The CER is also the regulator of Ireland s public water and wastewater system. The CER s primary economic responsibilities in energy cover electricity generation, electricity and gas networks, and electricity and gas supply activities. The overall aim of the CER s economic role is to protect the interests of energy customers. The CER has an important related function in customer protection by resolving complaints that customers have with energy companies. The CER s core focus in safety is to protect lives and property across a range of areas in the energy sector. This includes safety regulation of electrical contractors, gas installers and gas pipelines. In addition the CER is the safety regulator of upstream petroleum safety extraction and exploration activities, including on-shore and off-shore gas and oil. In 2014 the CER was appointed as Ireland's economic regulator of the Irish public water and wastewater sector. The CER s role is to protect the interests of water customers, ensure water services are delivered in a safe, secure and sustainable manner and that Irish Water operates in an economic and efficient manner. Further information on the CER s role and relevant legislation can be found on the CER s website at The Water Charges Plan On 31 st July 2014, the CER published its Water Charges Plan Consultation (CER/14/366). The consultation paper addressed a number of issues, including Irish Water s proposed non-domestic water and wastewater charges non-domestic additional services charges and non-domestic connection charges for the period from 1 st October 2014 to 31 st December 2016, the interim review period. 2 This paper summarises the comments received to Irish Water s proposals, the CER s responses to those comments and the CER s decision on Irish Water s proposals. The CER has responded separately to other matters consulted on in CER/14/366, namely the revenue being allowed to Irish Water for the interim review period and domestic tariff arrangements for that period, alongside this response paper. 1.3 Comments Received The CER received 345 written responses and queries were received further to the consultation. In total, 15 related to non-domestic customer tariff arrangements and/or new connection charging policy. Submissions were received from the following organisations and representatives: Cllr. Andy Moloney Cllr. Ronan McKenna Department of Jobs Enterprise and Innovation/Enterprise Ireland/IDA Ireland Dublin Chamber of Commerce Early Childhood Ireland 2 Please refer to sections 4.19,4.24 and 4.25 of CER/14/366 which is available here: 1

8 Focus Ireland Irish Creamery Milk Suppliers Association National Consumer Agency National Federation of Group Water Schemes Saint Vincent de Paul Vintners Association Four members of the general public As outlined in the consultation paper, the CER operates a policy of transparency and is committed to publishing responses to all consultations unless otherwise requested. In the context of this consultation, the CER has received a number of submissions providing detailed sensitive information. The CER is concerned that some members of the public may not want the sensitive information they provided to be attributed to them as individuals. In order to protect members of the public while still publishing their responses, the CER has taken a consistent approach of redacting all identifying information from public responses. This includes names, addresses, phone numbers, addresses, dates of birth and towns of residence. Only information which could directly identify an individual has been redacted. All responses to the non-domestic and/or new connections aspects of the consultation paper have been published alongside this paper and can be accessed at Structure of this Paper This paper is structured in the following manner: Section 2 contains background information on the development of the CER s consultation on Irish Water s proposed Water Charges Plan. Section 3 outlines the non-domestic tariff issues upon which the CER consulted, the responses submitted to these issues and the CER s response to the comments made and the CER s decision on each issue. Section 4 outlines the non-domestic additional service charges upon which the CER consulted, the responses submitted to these issues and the CER s response to the comments made and the CER s decision. Section 5 outlines the domestic and non-domestic connection charges upon which the CER consulted, the responses submitted to these issues and the CER s response to the comments made and the CER s decision. Section 6 outlines the CER s next steps regarding implementation of the approved Water Charges Plan. 2

9 2 Background Information On the 31 st July 2014, the CER published its consultation on Irish Water s proposed Water Charges Plan and on Irish Water s revenue requirement (CER/14/366). The process to develop the Water Charges Plan began in February 2014, with engagement between Irish Water and the CER on the level of revenue necessary for Irish Water to fund its operations for the interim revenue period, i.e. the period from 1 st October 2014 to 31 st December This process is summarised as follows: In April 2014, the CER undertook consultations on Irish Water s proposals for the principles and structure of domestic tariffs (Domestic Water Tariff Principles and Proposals (CER/14/082)) and non-domestic tariffs (Interim and Enduring Non-domestic Tariff Proposals (CER/14/086)). The CER received 166 responses to these consultations. On 2 nd July 2014, the Minister for Environment, Community and Local Government issued a letter to the CER regarding to the final Water Charges Policy Direction to the CER. This letter included direction on allowances, the structure of domestic tariffs, rebates and minimum charges for non-primary residents, discounts for water services impairment and provision for customers with medical conditions. The Water Charges Policy Direction was the subject of public consultation from the 16 th May to 16 th June On 30 th June 2014, the CER issued its formal request to Irish Water for a proposed Water Charges Plan. This letter took into account the Minister s Water Charges Policy Direction to the CER 3 and the responses received from the CER consultations on domestic and nondomestic tariffs by outlining elements of the Water Charges Plan that the CER would expect Irish Water to comply with. Subsequently, Irish Water made its Water Charges Plan submission to the CER on 21 st July The consultation on Irish Water s proposed Water Charges Plan closed on 28 th August The CER has now reviewed and considered the responses received to the consultation on Irish Water s proposed Water Charges Plan. Further to this review, the CER has reached decisions regarding the matters covered by the Water Charges Plan. These decisions have been communicated to Irish Water in letter dated 17 th September in order to facilitate the submission of a final Water Charges Plan to the CER for approval and publication in advance of the commencement of the interim review period. This document sets out the proposals, a summary of the responses received, the CER s view and the CER s associated decision on each question. In total, seven questions were presented for consultation. The topics covered in this paper are as follows: Interim non-domestic arrangements Groups Water Schemes Mixed use customers Discounts for water unfit for human consumption New connections for domestic and non-domestic customers Additional services for non-domestic customers 3 In order to comply with its timeline, the CER issued its formal request to Irish Water prior to receiving a letter from the Minister for Environment, Community and Local Government on the final Water Charges Policy Direction to the CER. However, the CER did have access to the final Water Charges Policy Direction to the CER and ensured that all aspects of this Direction were included in its request to Irish Water. 4 Please see CER/14/570C which is available at A clarification to the appendix of the letter was issued on 24 th September 2014 and is published under the same number. 3

10 3 Non-Domestic Water and Wastewater Charges 3.1 Interim Non-Domestic Arrangements The proposals consulted on in the Water Charges Plan Consultation (CER/14/366) regarding interim non-domestic arrangements are as follows: 1. Non-domestic tariff arrangements as set by the Local Authorities prior to 1 st January 2014 will be retained by default until the CER approves and enduring tariff framework. 2. Non-domestic customers may retain their current payment options unless they chose to opt in to Irish Water s payment options once they have migrated on to Irish Water s system. 3. The CER is not in a position to make determinations regarding disputes raised by nondomestic customers on their tariff levels and/or their basis. The CER will deal with disputes where the matter is covered in the Codes of Practice or the Water Charges Plan. 4. The CER is not in a position to approve individual agreements at this time. 5. All new contracts must include a provision to provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate date as determined by the CER. 6. The CER will publish a timeline for the establishment of a non-domestic enduring tariff framework by the end of In CER/14/366 the CER asked two questions - no.s 34 and 35 - regarding the proposed interim nondomestic arrangements. Below, each of these questions, the applicable responses, the CER s views and decisions arising are set out. Question Posed in CER/14/366 Q34. Do you agree with Irish Water s proposals regarding non-domestic water and wastewater charges? If not, please set out reasons for your position and propose alternatives where possible. Responses Received Three responses were received in relation to this question. The first respondent stated their support of the proposal to retain the existing non-domestic tariff arrangements until at least the end of 2015 as it would not be advisable to design the new tariff framework in the absence of full information on existing arrangements across the local authorities. The second respondent stated that in the absence of verifiable data to support the determination of charges for non-domestic water and wastewater it would seem to be reasonable to retain the existing charging structure. The third respondent expressed their concern that the timeline proposed for the data migration process (January 2015) is unrealistic. The first respondent stated that one of the key issues for enterprise is to ensure that businesses have access to competitively priced water and wastewater services. From an enterprise perspective, the respondent suggested that the key principles that should underpin water pricing policy are: All users should pay for water services i.e. the user pays principle should be central to water pricing policy; Water and waste water charges should be fully cost reflective and passed on to all customers in a fair and transparent manner; Irish Water needs to drive for efficiencies in the delivery of water services in particular, it needs to ensure that operating, maintenance and capital expenditure in Ireland are brought into line with international best practice; 4

11 In line with the EU Water Framework Directive and the Water Services (No.2 ) Act 2013 on the recovery of costs, there should be no cross-subsidisation of domestic water charges by non-domestic users, and vice versa; It will be important that while the Government sets water pricing policy, the regulator is independent in the performance of its duties; Regulatory independence is fundamental to regulatory certainty. Regulatory uncertainty leads to higher investor risk, more expensive capital and ultimately higher costs for end users; and A range of indicators to benchmark Ireland s water services performance against competitor/comparator countries needs to be developed to ensure that cost competitiveness is embedded as a core objective by Irish Water. With regard to Irish Water s proposal for payment options, one respondent agreed with the proposal that payment options and terms for non-domestic water customers should remain unchanged until the new tariff framework is in place unless a non-domestic customer requests to move onto Irish Water's proposed payment terms and conditions when it migrates to its billing system CER View The CER acknowledges the respondents support for retaining the current non-domestic tariff framework. As stated in the CER Water Charges Plan Consultation (CER/14/366), the CER considers that in the absence of robust comprehensive information regarding the non-domestic water sector, it is not possible to consider the manner and method by which current tariff arrangements or proposed new tariff arrangements for non-domestic customers of Irish Water are or shall be calculated. Therefore, existing charges for non-domestic water and/or wastewater customers as determined under relevant Government policy and applied by Local Authorities prior to 1 st January 2014 will necessarily by default continue to apply for the foreseeable future, until the CER is presented with the necessary information so that it is in a position to consider the manner and method by which charges are calculated. The CER has commenced monthly engagement with Irish Water regarding the progression of the work on the migration of data regarding non-domestic customers from Local Authorities to Irish Water. Through these meetings, the CER has recently learnt that Irish Water do not expect to have the data migration project complete by January The CER has requested that Irish Water submit the data migration plan to the CER for publication by the end of In that context the CER expects Irish Water to submit the historical non-domestic customer consumption data as soon as possible so that it may be analysed by the CER. In addition, the CER expects that Irish will use this data, once available, to begin its work on the non-domestic enduring tariff framework, in consultation with the non-domestic water customer community. The CER acknowledges the submission expressing agreement that current payment options should be retained unless the non-domestic customer choses to opt in to Irish Water s payment options. The CER has decided that the current non-domestic arrangements should be retained and this would extend to the payment options in place. The CER considers it acceptable that a non-domestic customer may opt in to the Irish Water payment options, once they have migrated onto Irish Water s system and if they chose to. The CER acknowledges the respondents submission in relation to the principles that should underpin the enduring tariff framework. The CER will share the respondent s views with Irish Water and will take them into account when considering the enduring tariff framework in due course. 5

12 Question Posed in CER/14/366 Q35. Do you agree with the CER s views regarding Irish Water s proposals? If not, please set out the reasons for your position and propose alternatives where possible. Responses Received Three responses were received regarding this question. Two respondents commented on the timeline for the establishment of an enduring tariff framework. One respondent stated that they strongly believe that the transition from the existing arrangements for non-domestic customers to the enduring tariff framework should be done over a sufficiently long period of time to minimise the impact of any potentially negative changes on businesses' water bills. They added that the CER needs to give non-domestic customers significant advance notice of the changes before they come into effect and minimise volatility in changes to their water bills and provide clarity on the expected trends over a 3-5 year timeframe. The respondent felt that it is critical that certainty is provided sooner rather than later on when the consultation on the enduring tariff framework will take place. They recommended that the CER publishes the timelines for consultation on the enduring tariff framework no later than the end of 2014 as it is critical that non-domestic users get significant advance notice of the timelines to develop the tariff framework. They also strongly recommended that the CER allows time for significantly longer consultation periods than was possible for this consultation and earlier ones in April/May of The second respondent stated that they support the CER in its decision to refrain from developing an enduring tariff framework for non-domestic customers in the absence of the relevant data. However, the respondent added that the CER must provide certainty on how long the current charging system will apply. The respondent explained that businesses require sufficient time before a new charging system is introduced in order to make any necessary adjustments to their financial planning and ensure the smoothest possible transition. They stated that this timeline should be published as soon as possible to provide businesses with the maximum amount of notice and a degree of certainty on the timing of the introduction of the new charging arrangements. The respondent urged that the timeframe established would be realistic and transparent including detail of progress achieved to date. The respondent noted Irish Water originally proposed to retain non-domestic charging arrangements "until at least the end of 2015". The respondent welcomes the CER's proposal to amend this timeframe to "the foreseeable future", which would seem to indicate a longer period. However, the respondent felt that it is worth clarifying this point for businesses as certainty on future costs is the cornerstone of good financial planning, and companies must have sufficient notice regarding changes to their cost base. Two of the respondents commented on the CER s view on dispute handling. One respondent requested that the CER revisit the complaint handling and dispute resolution measures in place for non-domestic customers during the interim review period to ensure that business needs are adequately met in the immediate term. In particular, the respondent felt that the CER and Irish Water need to clearly set out the process for dealing with non-domestic customers tariff related disputes from 1 st October The second respondent suggested that interim arrangements for dispute resolution should be put in place as the CER is not in a position to make determinations regarding the actual tariff levels. The respondent stated that given that the same charges are to apply (as have been charged by the Local Authorities) there should be an interim dispute resolution procedure around this structure or, at the 6

13 very least, a rebate structure available retrospectively. The respondent understands that the CER cannot make specific proposals in the absence of information provided by Irish Water to them. However, they are concerned that there is no specific dispute resolution procedure available in the interim and believe that retrospective rebates should be available. On respondent stated that they are not in favour of the introduction of a moratorium on individual contracts in the interim as they are concerned that it would make Ireland less attractive for new mobile investment in water intensive sectors like food and drink, life sciences, ICT, construction materials and other manufacturing sectors. They strongly recommend that the CER retains the existing approach until the new tariff arrangements are put in place. They noted that this would be consistent with the CER's policy to maintain existing arrangements for non-domestic tariffs and connection charges until the new arrangements are in place. Another respondent noted that the CER has proposed that any new non-domestic contracts entered into from 1 st October 2014 shall provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate date as determined by the CER". The respondent noted that under such contracts, businesses would be subject to price changes at any time. The respondent suggests that a sufficient period of time should be provided in price adjustments (i.e. 'glidepath') and this must be recognised in the revised proposal. One respondent noted that Irish Water's stakeholder engagement plan was not published for consultation as planned as part of this consultation process and that the CER intends to publish it for information in due course. They recommended that it is published for consultation as originally planned to ensure that the stakeholder engagement is meaningful. In particular, they state that it is important from an enterprise and job creation perspective that Irish Water consults a cross-section of business users in terms of water usage, sector and geographical location. CER View The CER has committed to publishing a timeline for the establishment of a non-domestic enduring tariff framework by the end of The CER acknowledges that it is important for non-domestic customers to be informed of any changes to their tariff as far in advance as possible and will therefore ensure that the timeline is as descriptive as possible. The CER intends to provide for a glidepath period for non-domestic customers to transition from their existing tariffs to the enduring tariff framework. The CER agrees that the development of an enduring tariff framework should not be undertaken without the relevant data. The CER will not approve Irish Water s proposed enduring tariff framework without adequate and robust background information. In response to the respondent s referral to the CER s determination of the length of time that the current tariff framework would endure for the foreseeable future, the CER is committed to establishing an enduring tariff framework as efficiently as possible. The CER understands the impact of tariff uncertainty on businesses. Until Irish Water can provide the CER with a clear indication of when necessary data will be available, the CER cannot determine the date upon which the enduring tariff framework will commence. The CER will publish Irish Water s data migration plan once received (expected end Q4 2014) and will monitor Irish Water s progress against this plan. The CER acknowledges that respondents felt that the CER should establish dispute resolution measures. The CER is not in a position to deal with disputes in relation to non-domestic water and wastewater tariffs. This is because the CER has not been provided with the necessary information to examine the basis for the tariffs that have been set. However, the CER will be in a position to deal with disputes in relation to non-domestic water and wastewater tariffs where the matter is covered 7

14 in the Codes of Practice (available on the Irish Water website at or where the dispute relates to Irish Water s conformity with the CER approved Water Charges Plan. In both cases, these documents will have been reviewed and approved by the CER. The CER notes the respondent s suggestion of using a rebate system once the CER is in a position to determine disputes. The CER can only approve rebates on tariffs that it has reviewed and approved. The CER was not involved in the setting of the Local Authority tariff arrangements and does not have an understanding of the basis for those tariff arrangements. During the approval process for Irish Water s non-domestic enduring tariff framework, the CER will consider dispute resolution measures and payments, if any, that should be available to non-domestic customer within the Irish Water framework. The CER notes the respondents comments in relation to individual agreements. Currently, the CER does not have an understanding of the costs that non-domestic customers impose on the system and does not have the information to understand the manner and method by which the existing non-domestic tariffs have been set. Without this information the CER cannot approve an individual agreement at this time. New non-domestic customers may be offered the current standard tariffs published by each Local Authority. All new contracts must include a provision to provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate data as determined by the CER. The CER acknowledges the respondent s concern that such a provision in new contracts opens that business up to an abrupt change in tariff. In order to address this issue, the CER will apply a glidepath to non-domestic customers that are moving to a higher tariff regardless of when their contract was established. The CER has requested that Irish Water submit an engagement plan for the period prior to the commencement of work on the enduring tariff framework with its final Water Charges Plan. Based on feedback received from the non-domestic sector, non-domestic customers are seeking clarity on the process and timeline for non-domestic tariffs. The CER considers that it is Irish Water s remit to communicate with their non-domestic customers to ensure that they have adequate and timely information in relation to this process. The CER expects that Irish Water will engage with nondomestic customers to collect information and opinions from the non-domestic sector in the period prior to commencing work on the enduring tariff framework in order to inform the process for the development of the enduring tariff framework. The CER will publish Irish Water s plan for engagement with non-domestic stakeholders upon receipt. Irish Water has advised that it is not in a position to submit such a plan until a timeline for the development establishment of an enduring tariff framework has been agreed and Irish Water has had the opportunity to discuss same at its stakeholder forum. In addition, the CER considers that the suggestion that Large Water Users Group be established has merit and the CER will progress this in Q The CER will publish a timeline for the establishment of an enduring tariff framework by the end of Q This timeline will include CER milestones and what is required of Irish Water. 8

15 CER Decision Existing charges for non-domestic water and/or wastewater customers as determined under relevant Government policy and applied by Local Authorities prior to 1 st January 2014 will necessarily by default continue to apply for the foreseeable future, until the CER is presented with the necessary information so that it is in a position to consider the manner and method by which charges are calculated. Payment options and terms for non-domestic water and wastewater customers should also remain unchanged for the foreseeable future unless a non-domestic customer upon migration onto Irish Water s billing system requests to move onto Irish Water s payment terms and conditions as set out in Section 8.1 of Irish Water s Water Charges Plan. Should non-domestic customers raise disputes regarding their tariffs and/or associated arrangements during the interim period to the introduction of enduring tariffs, the CER will not be in a position to make determinations regarding the actual tariff levels and/or their basis. The CER will only be in a position to deal with disputes in relation to non-domestic water and wastewater tariffs where the matter is covered in the Codes of Practice approved by the Commission under Section 32 of the Water Services Act (No.2) 2013 or where the dispute relates to Irish Water s conformity with the CER approved Water Charges Plan. Given the information available, the CER is not in a position to consider individual agreements with non-domestic customers by Irish Water as provided for in Section 23 of the Water Services (No. 2) Act 2013 in advance of approval of non-domestic tariff arrangements proposed by Irish Water in due course for the reasons outlined above. In the interim, there will be a moratorium on individual agreements. The CER has requested that Irish Water modify its Water Charges Plan from that submitted to reflect the fact that contracts entered into from October 1 st 2014 shall include provision to provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate date as determined by the CER. The CER will publish a timeline for the establishment of an enduring tariff framework by the end of Q This timeline will include CER milestones and what is required of Irish Water. The CER will publish Irish Water s data migration plan once received (expected end Q4 2014) and will monitor Irish Water s progress against this plan. The CER will publish Irish Water s plan for engagement with non-domestic stakeholders upon receipt (expected end Q4 2014). The CER will establish a Large Water Users Group in Q4 of

16 3.2 Public Group Water Schemes The proposals consulted on in the Water Charges Plan Consultation (CER/14/366) regarding public Group Water Schemes (GWSs) are as follows: 1. Public GWSs should continue to be treated as non-domestic customers. 2. The CER views regarding disputes, new contracts, individual agreements and all other measures that extend to non-domestic customers would apply to public GWSs. 3. GWSs will not be covered under the Irish Water Customer Handbook at this point. In CER/14/366 the CER asked one question - no regarding the proposed treatment of GWSs. Below, the question, the applicable responses, the CER s views and decisions arising are set out. Question Posed in CER/14/366 Q36. Please advise of your views in relation to the matters set out above regarding group water schemes. Responses Received Two responses were received in relation to this question. The first respondent stated that they believe that the proposals around GWSs are reasonable in the circumstances. The second respondent welcomed the recognition by the CER and Irish Water of the publicly sourced GWSs, receiving a bulk supply of water and distributing this onward to their members, as a particular class of non-domestic customer of Irish Water. They noted that, for the foreseeable future, these GWSs will continue to be dealt with on the same basis, from a tariff perspective, as they have been up to 31 st December The respondent also noted that as privately sourced GWSs do not receive their water supply from Irish Water they are, correctly, not included in the CER consultation document. The respondent expressed their assumption that this will mean that these GWSs will continue to be provided with a Local Authority Domestic Allowance in respect of each domestic connection on the GWS. They noted that in recent years a variation in the level of Local Authority Domestic Allowances being provided has been introduced in some Local Authorities. The respondent is strongly of the opinion that, in the interests of equality and as a token of goodwill to this sector generally, the higher Local Authority Domestic Allowance of 227 m 3 per household per annum be applied in all such cases until an enduring non-domestic tariff structure is agreed and introduced. The respondent questioned how allowance will be made for the significant additional distribution costs the GWSs incur in safely delivering the water from the bulk meter to their members' taps. They noted that these additional costs (which include expenditure on additional/supplemental treatment, pumping, network maintenance, quality assurance and monitoring, insurances, managements and administration, member relations etc.) must be taken into consideration when deciding the rate per m 3 that will be charged. The respondent highlighted the fact that in many instances a number of these schemes are supplied by Irish Water through other similar schemes ("the daisy chain"). The respondent feels that these situations need particular attention in the context of any tariff and billing arrangements and their situation in general. It was noted that every effort must be made to ensure that the transition to Irish Water does not impact on these schemes in a way that will leave them unsustainable as community owned and operated water supply services. The respondent noted that legislation continues to provide for the "taking in charge" of Group Water Schemes. However, the respondent feels that there is an immediate and urgent need to develop definite policies and procedures around this important element of drinking water services provision. The respondent identified a need to outline the roles and responsibilities of the various entities (Department of Environment, Community and Local Government, Local Authorities (DECLG), 10

17 Health Service Executive (HSE), the Environmental Protection Agency (the EPA), Irish Water, CER, GWSs, National Federation of Group Water Schemes) regarding this function and how they should interact in order to ensure timely and efficient take-overs when the need arises. The respondent highlighted that there appears to be many of these schemes with no (or dormant or disinterested) "trustees" or committees of management. The respondent noted that these schemes, for all intents and purposes, have been managed and maintained by the Local Authority. The respondent suggested that it may be necessary to consider putting in place some statutory system for taking into public/irish Water ownership of such schemes. The respondent notes that many of these schemes have formally requested to be taken in charge and so the respondent feels that this must now be fast-tracked and a system put in place to fund any necessary infrastructural upgrading. CER View The CER acknowledges that respondents support the proposal that GWSs should be treated as nondomestic customers in the interim. This means that all arrangements that were in place with the Local Authorities on 31 st December 2013, including free allowances, will remain in place until the CER has approved an enduring tariff framework. The Local Authority Domestic Allowance was set by each Local Authority under Government Policy. In line with the CER s decision regarding the continuation of non-domestic charges by default, the applicable Local Authority Domestic Allowance, as of the 31 st December 2013 will apply. As the CER has decided that non-domestic arrangements should be retained by default, and in light of the absence of relevant data, the CER does not have the remit to alter this allowance for any group of customers at this time. Furthermore, all measures that are in place for non-domestic customers e.g. dispute handling, individual arrangements, discounts, as outlined in the CER s decision in Section 3.1 will extend to GWSs as an entity billed by Irish Water. At this time, the CER does not have a full understanding of the tariff arrangements for GWSs. Upon completion by Irish Water of the data migration project, the CER will analyse the existing arrangements between GWSs and Local Authorities. Furthermore, the CER is committed to working with representative groups to understand the specific nature of GWSs. The CER notes reference to additional costs and daisy chain schemes. These aspects of GWSs will be taken into consideration when the CER is reviewing Irish Water s proposals for a non-domestic enduring tariff framework. The CER will publish a timeline for the establishment of a non-domestic enduring tariff framework by the end of In relation to taking in charge, the Water Services (No. 2) Act 2013 provides for the transfer of water services functions from the 34 water services authorities to Irish Water. Under the legislation, Irish Water now has the powers previously held by local authorities in relation to the takeover of GWS and this means that Irish Water may acquire by agreement a waterworks or waste water works, but, as before, subject generally to not fewer than two thirds of those entitled to dispose of it (typically the members of a group water services scheme) giving their consent. Where local authorities had, at the request of Group Water Schemes, already taken them into charge before 31 st December 2013, the schemes networks now form part of the public water supply network being transferred to Irish Water. IW has taken over this responsibility from the LA s since 1 st January 2014 and continues to engage with DECLG and the local authorities to agree the mechanisms for making applications and sign-off of upgrade works undertaken for takeover purposes by way of DECLG grants. The funding of any necessary upgrade works to meet takeover requirements remains a matter for DECLG. Funding is currently provided for the takeover of quality deficient GWSs by the DECLG. 11

18 CER Decision The CER agrees that public group water schemes should continue to be treated as non-domestic customers, as these seems pragmatic in light of the information currently available to the CER. This means that current tariff arrangements as determined under Government Policy and applied by Local Authorities prior to 1 st January 2014 will necessarily by default continue to apply for the foreseeable future, until the CER is presented with the necessary information so that it is in a position to consider the manner and method by which charges are calculated. As GWSs will be treated as non-domestic customers of Irish Water, the CER decision set out in Section 3.1 regarding disputes, individual agreements and modification of the Water Charges Plan to provide for the fact that new tariff arrangements shall be approved by the CER in due course and shall apply from the appropriate date as determined by the CER apply here also. Group Water Schemes will not be covered under the Irish Water Customer Handbook at this point. The CER will be guided by the DECLG regarding the treatment of such schemes, and the CER will update the Handbook accordingly, as appropriate. 12

19 3.3 Mixed Use Customers The proposals regarding mixed use customers that were consulted upon in the Water Charges Plan Consultation (CER/14/366) are as follows: 1. The non-domestic component of mixed use customers will continue to be charged as set out by the Local Authorities prior to 1 st January All measures in relation to non-domestic customers will apply to this component of the mixed use customer. 2. The domestic component of mixed use customers will be charged as unmetered domestic customers based on the number of adults occupants in the household. All measures in relation to domestic customers will apply to this component of the mixed use customer. In CER/14/366 the CER asked one question - no regarding the proposed treatment of mixed use customers. Below, the question, the applicable responses, the CER s views and decisions arising are set out. Question Posed in CER/14/366 Q37. Do you agree with Irish Water s proposal in relation to the treatment of mixed use customers? Please note Irish Water s proposals and the CER s views on the same in relation to domestic customers as set out in section 4.3 of this paper apply to the domestic use of mixed use customers as appropriate. Those relating to non-domestic customers as set out in section of this paper apply to the non-domestic use of mixed use customers as appropriate. Responses Received Four responses were received to this question. While respondents generally agreed with the proposals made by Irish Water with regard to mixed use customers, a number of issues were highlighted. On respondent did not agree with the unit rates for domestic customers which are far in excess of the rates currently being charged to non-domestic customers by Local Authorities. They explained that in many instances the proposed unit rate is double what is currently being charged by Local Authorities and they cannot accept a situation whereby farmers as mixed use customers are effectively being charged double for the exact same water that is being used in the family home compared to the portion being used for the farm business. The respondent believes that the facility should be available for non-domestic (mixed use) customers to have the domestic portion of their water use metered if the mixed use customer requests same. The respondent expressed concerns that mixed use customers will be subject to additional and unnecessary costs for the domestic portion of their water as a result of being billed on an assessed basis. They believe it is essential the CER ensure non-domestic water charging policy is addressed as a matter of urgency. Similarly, another respondent noted that the proposals in relation to mixed use customers appear to be acceptable but should be subject to review as soon as further information is available in relation to non-domestic water charges and around domestic water usage data. One respondent questioned how mixed use customers with an overall metered consumption lower than their assessed domestic consumption will be charged. Another respondent requested that consideration be given to families with farms which include animals. They noted that cows in particular are heavy users of water and it is unfair to penalise farmers with small holdings. They stated that most farm houses and farm buildings are on the same meter, indeed it would be too costly to separate them and as such any family free allowance would be used up rapidly by keeping animals alive. 13