The Case For Water Metering

Some have questioned the expenditure on installing water meters and argued that better use of the money would be to fix leaky pipes.

What is the case for water metering ?

With Metering

1. Those who use most pay most.

Fairness goes out the window if there are no meters. Without meters, we can’t charge based on how much we use. And this means that those who use most (often the richest of us) can be subsidised by those who use the least (often the poorest of us). And those hundreds of thousands who have funded the capital and operating costs of their own water supplies with wells and their waste disposal with septic tanks, and those in group water schemes, are subsidising the rest of us.

No Meters – those who waste water are rewarded

Yes Meters – it’s fairer – we pay in proportion to our use

2. Helps find the leaks.

In the case of group water schemes, where leaks occur on the user’s property, they tend to get fixed right away – to do otherwise costs money. Metering helps find out exactly where the leaks are, so they can be fixed.

No Meters – finding leaks is difficult, inaccurate and slow

Yes Meters – finding leaks is easier, quicker and cheaper, and it provides an evidence base for setting priorities

3. Save on capital investment.

Without the ability to manage demand using prices, we will need to invest in new supplies sooner than is necessary, and this costs. If we can postpone this investment, we save money.
Dublin is a case in point. At current rates of consumption, we will soon need to add to supplies, with the favoured option being to pipe and pump water from the Shannon to Dublin. But we have made minimal efforts to manage the demand for water in Dublin. The most effective conservation measures are a combination of carrot and stick; an increasing block pricing scheme, where the price of water per litre increases in steps as consumption per unit time rises, combined with a subsidy scheme that supports owners to invest in water conservation systems.
In Dublin, the worst case scenario would be where we have no pricing and therefore can’t effectively conserve, and at the same time the opposition in the Shannon region proves so intense that extra supply from there is not delivered, or it proves to be hugely expensive to do so and is delayed. In this situation, we would end up with water supply interruptions, rationing, and all the reputational damage, costs to households and business, and inconvenience that can arise.

No Meters – waste scarce capital create environmental and political issues that are involved in increasing supply

Yes meters – conservation is rewarded, and the necessity to add to supplies is deferred or eliminated

4. Penalizes the behaviour of those people who run their water 24 hours a day to prevent their pipes from freezing.

No Meters – they waste your water and your money

Yes Meters – the 24 hour a day water users may do it once, but they are not likely to do it twice

5. Helps us to manage droughts and water shortages

Climate change makes it more likely that we will experience more extreme weather events – more flooding and more droughts. Pricing helps us to manage droughts so that the reservoirs do not run dry, and so that, even in adversity, we can continue to meet the essential needs of households and businesses.

No meters – supply interruption , rationing, disruption to health, households and business

Yes meters – crises will be avoided, and those who are very efficient in their use of water can be rewarded.

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Frank Convery

Chairman, Publicpolicy.ie

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9 Comments

  1. Vera Toal 12 Nov 2014 at 11:56 am

    Hi Frank and all

    I fully agree with your points above outlining the case for water metering.

    Only metering will ensure that we as a population reduce our usage of precious drinking water.
    The same rule applied to the overuse of plastic bags until the bag levy was brought in, and to the limited amount of recycling before bin charges.

    Once metering has been brought in however, money has to be spent on fixing leeks and upgrading the system overall.

    Regards,
    Vera Toal

  2. Dave 12 Nov 2014 at 12:14 pm

    There would be no opposition to water charges if they weren’t just another burdensome tax in a long line of taxes. Everyone is asking why the taxes we were already paying towards water weren’t used for what they were supposed to be used for – fixing the pipes and keeping a degradation of the system from occurring. We already pay stamp duty, property tax, universal social charges (and in my case a whopping €1000 a year “maintenance fees” for my apartment – which surely includes some of what these other taxes are charging me for.

    Plus, no one trusts the government any more, so there’s no point in saying they won’t sell off the private company. Fact is, they are so out of touch with how horrible life is becoming in Ireland that they don’t know or don’t care what effects all these austerity measures are having.

    They even changed legislation to make it legal that the people of Ireland have to be customers of Irish Water. Definition of a customer: A party that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers.” Care to point out the different suppliers we can choose from?

    €150M would have gone a a long way to fixing the pipes that needed fixing. And now Irish Water state they will charge a €180 call out fee. If the system was fixed up, why even start talking about a call out fee?

    I kept questioning the fact that the government seemed so hell bent on having a private company in charge, that they could borrow against. The fact has now come to light that they need to borrow against Irish Water to pay more money to the german banks.

    We’ve paid enough to those people, and banks in general. There should have been jail time for the people responsible for bringing this situation about.

    I particularly have to laugh at “Penalizes the behaviour of those people who run their water 24 hours a day to prevent their pipes from freezing.” Do you know anyone who does that? I don’t. And it reminds me of Vincent Brown tackling the same idea on TV recently when a Fianna Dail/Gael representative (can’t remember which, but they are all the same) wouldn’t answer his question: “Do you know anyone who goes to bed and leaves their taps on all night?”

    The only sideways answer he would give was that maybe kids might. Yeah, right.

    Stop trying to hoodwink the public into thinking this is about water. It’s about too much taxation on an already overburdened country and you know it. If it were about water, Enda Kenny wouldn’t have said he’d just take the money he needs from our taxes. It was all “we need money for water conservation,” then it turned into “okay, we won’t charge you for water but we’ll find another way to drive you into poverty.”

  3. Vincent 13 Nov 2014 at 7:31 am

    It might make sense if a] the stuff wasn’t falling from the sky in volumes that makes piping water redundant 95% of the time. b] If we didn’t have to run taps for ages to rid the taint of sitting chemical. I was told to do this when I complained about the waft of Chlorine to the county engineers. So I’ve been buying bottled water for the last 10 years. c] The whole darn bunch employed weren’t on packages that would put the royal family to shame. And will continue to be paid like well got cardinals princes forever. d] Nobody believes for one moment the preservation story. And stories about people running taps in winter are pure BS. But even if true, this was advise handed down by CoCo’s and not because they were worried about burst pipes in people’s homes but the freezing of shallow mains if the water inside old iron pipes was still. e] Everybody thinks -Note, not believes- this is simply a nasty vicious tax dreamt up by an extreme rightwing government hell bent on keeping tax low for their own members.

  4. Eoin 13 Nov 2014 at 11:08 am

    It’s basically been put in to allow privatisation of water,nothing else . Announced today only six per reduction will be achieved per household. So 520 million wasted putting them in instead of fixing leaking pipes and a waste in set up costs of a company no one asked for or wants.

  5. Patrick 13 Nov 2014 at 11:54 am

    This is an interesting set off points but it fails to create a compelling case for metering as it only compares a yes or no investment scenario to meters. I offer further comments about the policy logic underlying some of your comments as well.

    On the first point, “Those who use most pay most” assumes that usage is the bases for the current costs. That is incorrect, variable costs are only about 20% of the total costs. Therefore, fair would be that 80% of the household average bill would be based on a flat connection charge. Oddly, the Government decided against this approach and has decided that more weighting would be given to volume. In principle, of course this means that larger families with say four people which use one pipe (the cost driver) will pay the same as four houses of a single person (NB preliminary data analysed by Edgar Morgenroth, ESRI available on CER site shows some per capita reductions in larger households).

    Ok, so we need meters cause we’ve made a strategic decision to go with variable costs. Then of course “Without meters, we can’t charge based on how much we use”, but we’ve decided/accepted that some people are not going to pay. So there is no chance of a return on the investment costs for such meters. Retro fitting meters in through the approach decide is costly (Richard Tol in a piece from 2012 estimated a cost of at least €500 per meter) so installing them where they will not make a return means that other users will pay the cost of their own meter and those that can’t. Leaving those costs to the side, just paying down the annual interest (assuming 4%) is an extra €20 on each annual household bill (to pay down the capital & interest in a ten year period your looking at over €60 per annum).

    You state that “And this means that those who use most (often the richest of us) can be subsidised by those who use the least (often the poorest of us)” – I’ve not seen any Irish data that supports this. If anything you look at the CSO’s Household Budget Survey it indicates that those in the 1st decile (lowest income group) have the lowest household size, coupled with the aforementioned analysis by Morgenroth that those living alone consume more per capita. This might be a reason to support the Government decision to favour a volume based model but not metering.

    On the second point, it “Helps find the leaks” is true. Is it the most cost effective way to determine this. If for example you have a meter on for an estate or neighbourhood, you should statistically be able to determine if there is a major leak. Given the analysis by Irish Water that private leakage is a major problem (“Across the network, leakage is now estimated to be in the region of 49%, as opposed to the originally estimated 41%”), the €500 meter investment might have been better spent on fixing the network. The meter maybe a cost effective way to do this; however, given the decision was taken before Irish Water was really in place I don’t think this was part of the cost-benefit analysis more the rationalisation for a policy decision.

    On the third point, “Save on capital investment” the question is really how do we modify behavior in the long term. The research seems to be clear that short-term impact reduces consumption, which supports this approach. But the medium to long term impact seems to be conflict in the studies, which so say sees continued sustained reductions in consumption and others saying previous levels of consumption are returned to after initial shock of paying for water wears off.

    I’ll leave it there in terms of the point by point analysis.

    The problem with the points presented in this article is that they look at the issue of meter and not metering. Not metering vs another policy or investment. This needs to be done in a more methodical way.
    – What is the immediate capital costs of metering?
    – What are the cost savings (as a net cash flow and in the context of the discount rate or cost of capital -eg interest rate)?
    – What are the operation costs of metering?

    Your points set out the areas of cost saving but not comparing them against an alternative investment – only yes or no to metering – fails to make a truly compelling case for metering.

  6. Eoin 13 Nov 2014 at 12:53 pm

    I see tyou didn’t publish my comment, you are a disgrace

  7. David Hickie 13 Nov 2014 at 2:35 pm

    Very sensible, Frank, and I agree with all of this – in principle!

    However, if the current situation persists, we could end up with the most expensive treated water in Europe and the least efficient water provider. It appears, that, from reading your earlier papers on this subject, the Government has not learnt the lessons that you emphasised in those submissions.

    I would be interested to read your analysis of how Irish Water is set up, in the light of the recent demonstrations and revelations. Are the accusations of over-staffing correct? How do we prevent costs spiralling and being transferred on to the consumer in the future? Is there sufficient governmental oversight, and if not, what is the best way of protecting consumers? Is Irish Water an expensive, bloated organisation with insufficient safeguards for consumers? We need to dispel the myths but also highlight the inadequacies.

    Please forgive me if I’ve missed any recent papers you may have written which address the above!

    Kind regards,

    David

    P.S. I hope all is good with you and yours.

  8. Peter Quigley 14 Nov 2014 at 10:34 am

    Not impressed with this article, arguments are tissue thin,

    Not helpful, sorry

  9. John dunne 17 Nov 2014 at 2:00 pm

    Frank,
    Many people who are against the current charges like me are realistic and realise investment is required and we need to pay. The problem is the bloated inefficiency of the public monolith that has been created. We are paying for over-staffing, guaranteed pensions and a public sector type corporate structures. People should be protesting against this sheer waste of tax payers money rather than the concept of water conservation.
    The trade unions are very quiet of course. No doubt they are representing the 1,000s of staff and managers that have been employed by Irish Water. And now we have a campaign to keep Irish Water in the public sector when private sector efficiency is exactly what is required. The LUAS is a good model of an efficient modern and profitable body that has been set up from scratch in recent years. Instead we have set up something more akin to Irish Rail than LUAS! Very frustrating!
    The PR expenditure has been the biggest waste of money. In my opinion the entire board and senior management should be sacked for incompetence. No compensation, just sacked. A high profile private sector outsider should be brought in and given a mandate to control costs and promise that charges wont increase above a certain level over the next 10 years. That is the only way that ordinary law-abiding people like me will ever sign up to this fiasco.
    Regards
    John Dunne
    Dublin

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