Household Water Conservation

(Excess Use Charges)

Irish Water submission to the CRU

HWC_IW_001

July 17th 2019

Contents

1. Executive Summary ..................................................................................................................... 1

2. Introduction ................................................................................................................................ 3

3. Legislative Basis ........................................................................................................................... 4

4. Principles Guiding the Proposals ................................................................................................. 6

5. Household Allowances and Exemptions ..................................................................................... 8

6. Derivation of Charges................................................................................................................ 11

7. Customer Journey and Impact Assessment .............................................................................. 16

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1. Executive Summary

The Water Services Act 2014 provided for domestic water charges for water and wastewater services

from January 2015. In 2016, following a decision by the Government, domestic water charges were

suspended and an Expert Commission was established to examine the funding of domestic public

water services in Ireland. The Expert Commission provided its findings for consideration to the Joint

Oireachtas Committee (JOC) on the Future Funding of Domestic Water Services in November 2016.

The JOC recommended that domestic water use should be funded through general taxation, with a

significant water allowance provided to all consumers and only excess or wasteful use of domestic

water services should be charged for. The JOC recommendations were approved by the Houses of the

Oireachtas in April 2017 and reflected in legislation enacted in November 2017. The legislation

provided that Irish Water’s (IW) domestic customers should be granted an annual water allowance

and be charged for the volume of water used over their allowance (considered excess or wasteful use).

Water supply and wastewater tariff arrangements are set out in the Water Charges Plan (WCP). The

current WCP reflects the discontinuation under legislation of liabilities for charges to domestic

customers. The WCP does not include excess use charges, which would require approval by the

Commission for Regulation of Utilities (CRU). In preparation for the application of excess use charges,

a new WCP will be required and the CRU has directed IW to prepare a proposal on excess use charges

for consultation. To progress this, the CRU has provided IW with a suite of tariff principles to guide the

development of excess use charges.

This paper represents IW’s proposals for excess use charges consistent with CRU principles, legislation

and associated regulatory and governmental guidance published to date. Below is a summary of IW’s

excess use charge proposals.

1. Household allowances

As already established1, each household will receive an annual water services allowance of

213,000 litres (or 213m3). Households with more than 4 occupants can apply for an additional

allowance of 25,000 litres (or 25m3) per additional occupant. Households will be charged for

the volume of water services used over their allowance (considered excess or wasteful use).

Households will be notified if they have used in excess of their annual allowance in a prior 12

month period.

On receipt of this notice customers can make an application for additional allowances if more

than 4 occupants normally reside at the household.

Customers who continue to use in excess of their threshold will be liable for charges.

IW may allow additional time before applying charges if a customer engages on receipt of the

notice and satisfies IW that the excess usage was as a result of a leak which has now been

repaired or is in the process of being repaired or awaiting IW’s ‘First Fix Free’ scheme.

1 By the Minister for Housing, Planning and Local Government in the Water Services Act 2007 (Threshold Amount and Allowance Amount) Order 2017, S.I. No. 597 of 2017

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2. Medical exemptions

On receipt of a notice a customer may make an application to IW if a member of the household

requires additional water usage as a result of a medical need. IW will review the application and notify

the applicant of the outcome.

3. Calculating excess use charges

The proposed volumetric unit charges for excess use are set out below.

Volumetric Unit Charges €/ m3 (1,000 litres)

Volumetric unit Water Supply charge 1.85

Volumetric unit Wastewater charge 1.85

Volumetric unit Combined Service charge 3.70

Table 1 Proposed volumetric unit charges for excess use

4. Cap on the maximum annual excess use charge

IW proposes including a cap on the maximum annual excess use charge. The proposed maximum

annual charges for excess use are set out below.

Maximum Excess Use Annual Charge € per year

Maximum Water Supply charge 250

Maximum Wastewater charge 250

Maximum Combined Service charge 500

Table 2 Maximum annual excess use charges (cap)

5. Approach to charging unmetered customers

If an unmetered customer’s property is suspected of excess use, IW will seek to install a meter in order

to establish excess use. Metered excess use charges will be calculated using the proposed volumetric

unit rates (table 1) subject to a cap on the maximum annual charge (table 2).

If an unmetered customer’s property is suspected of excess use and it is not possible to install a meter,

other technology (see section 6.5 for details) will be used to measure use. Excess use for unmetered

customers will be charged the maximum annual excess use charge (table 2).

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2. Introduction

The Water Services Act 20142 provided for domestic water charges for water and wastewater services

from January 2015. Domestic water charges were suspended in 2016, and an Expert Commission was

established to examine the funding of domestic public water services in Ireland. The Expert

Commission provided its report3 for consideration to the Joint Oireachtas Committee on the Future

Funding of Domestic Water Services in November 2016.

The JOC provided4 its recommendations to both Houses of the Oireachtas and recommended that

domestic water use should be funded through general taxation. The JOC also recommended the

following:

i. Excess use of water should be adequately addressed,

ii. The CRU should determine average consumption levels and a threshold set at 1.7 times the

average household use, and

iii. Appropriate additional allowances for medical needs and above average household size

should also apply.

The JOC recommendations were approved by the Houses of the Oireachtas in April 2017 and reflected

in legislation enacted in November 2017. The legislation provided that IW’s domestic customers

should be granted an annual household water allowance and be charged for the volume of water used

in excess of their allowance (considered excess or wasteful use).

The Government’s Water Services Policy Statement 2018-2025 states that the purpose of excess use

charges is “solely to encourage water conservation and not for the purpose of raising revenue”, which

IW fully supports. Water is a precious natural resource and conserving water is necessary for a

sustainable future. The impact assessment in section 7.2 indicates that a relatively low percentage

(10%) of households are excess users but they consume a disproportionately high amount (39%) of

total water services. This suggests excess use charges will be an effective measure in encouraging

household water conservation.

The WCP5 reflects the discontinuation under legislation of liabilities for charges to domestic customers

until excess use charges are approved by the CRU. This paper represents IW’s proposals for excess use

charges consistent with legislation and associated regulatory and governmental guidance published

to date.

2 The Water Service Act 2014 is available here 3 The Expert Commission’s report is available here 4 The Oireachtas Committee’s report is available here 5 The latest WCP is here

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3. Legislative Basis

The Water Services Act 20176 amends the Water Services Act 2007 (the 2007 Act) and the Water

Services (No.2) Act 2013 (the 2013 Act).

Part of this amendment includes the insertion of new sections 53A – 53F into the 2007 Act which

provides the basis for the introduction of excess use charges, specifically:

Section 53A of the 2007 Act provides for regular review by the CRU of the average annual rate

of demand for water services provided to dwellings7 (or households).

Section 53B of the 2007 Act provides for the Minister to set a threshold amount and

(additional) allowance amount.

Section 53C of the 2007 Act provides that IW shall not charge domestic customers for water

services provided to their dwelling (household) over a 12 month period unless the water

services provided exceed the threshold amount .

Section 53D of the 2007 Act provides that IW shall give legal notice to domestic customers if

water services provided to their dwelling (household) exceed the threshold amount over a 12

month period. The notice shall:

i. Identify the 12 month period concerned;

ii. Inform the customer that the threshold amount has been exceeded in that 12 month

period; and

iii. Inform the customer that charges will apply if the threshold amount continues to be

exceeded.

Section 53D further provides that a customer whose dwelling continues to receive water

services in excess of the threshold amount over the 6 month period commencing on the day

of giving of the notice becomes liable for the payment of a charge.

Section 53E of the 2007 Act provides that a customer may apply to IW for additional

allowances to be applied where the number of individuals who normally reside in the dwelling

(or household) exceeds 4 (i.e. a higher threshold amount will apply based on the occupancy

of the dwelling or household), and

Section 53F of the 2007 Act provides that a customer may apply for and IW may grant an

exemption from a liability to pay a charge in dwellings (or households) where a household

occupant has a medical need requiring water services in excess of the threshold amount.

The CRU published8 its findings on the average rate of demand in accordance with section 53A of the

2007 Act in December 2017. The Minister then set9 a threshold amount and (additional) allowance

amount as follows, in accordance with section 53B of the 2007 Act:

The threshold amount is 213,000 litres per year, and

The (additional) allowance amount is 25,000 litres per year.

6 The Water Services Act 2017 is available here 7 A dwelling is defined as a premises occupied by a person as his or her place of private residence (whether or not as his or her principal private residence). 8 The CRU’s report is available here 9 Water Services Act 2007 (threshold amount and allowance amount) Order 2017, S.I. No. 597, 2017

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The Minister is required to prescribe certain matters on how additional allowances for household size

and medical need exemptions should be claimed and approved in accordance with sections 53E and

53F of the 2007 Act. The regulations to be signed by the Minister are currently being prepared and are

expected to be finalised later in 2019.

The charge for excess use of water services beyond the threshold amount (excess use) will be levied

by IW under Section 21 of the Water Services (No. 2) Act 201310 (the 2013 Act). Section 21(6A) of the

2013 Act provides that IW shall charge for the provision of water services to a dwelling (or household)

that exceed the threshold amount and in respect of which a customer is liable to make payment under

Section 53D of the 2007 Act. Section 21 of the 2013 Act is the legislative basis upon which Irish Water

levies charges for the provision of water services. Section 21 (2) of the 2013 Act sets out that the

amount of an excess use charge shall be calculated by IW in accordance with the approved WCP.

Section 22 of the 2013 Act gives the CRU power to approve charges for customers whose demand

exceeds the threshold by approving the WCP.

Under section 22 (4) (a) of the 2013 Act the WCP may, where the quantity of water supplied to a

premises is measurable by a meter, make provision for charges to be calculated by reference to the

quantity of water supplied to, and the quantity of waste water discharged from, that premises.

Section 22 (4) (b) of the 2013 Act provides that the WCP may, where the quantity of water supplied

to a premises is not measurable by a meter, make provision for charges to be calculated by reference

to an assessment by IW of:

i. the quantity of water supplied to the premises concerned, and

ii. the quantity of wastewater discharged from the premises concerned

This is to be determined in such manner and by the application of such formula as is specified in the

WCP.

Section 22(6) of the 2013 Act provides that the WCP may specify different methods of calculating

charges and different excess use charges can apply to different classes of customer.

It is IW’s intent to include its proposed excess use charges (as set out in section 6) for approval by the

CRU in an updated WCP.

10 The Water Services (No. 2) Act 2013 is available here

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4. Principles Guiding the Proposals

On 28th September 2018 the CRU provided IW with the following principles to guide the development

of proposed charges in respect of customers who exceed the threshold amount.

A. Cost Reflectivity

Charges should be broadly reflective of the costs associated with the provision of water services. The

principle of cost reflectivity aims to ensure that charges to customers for the provision of water

services beyond the threshold amount is reflective of the overall cost placed on IW in its provision of

water services to these customers.

B. Equity and Fairness

Charges should be equitable and fair and should not unduly discriminate between customers, for

example metered and unmetered customers, or lead to undue cross subsidisation.

C. Stability

Charges should be stable and designed to ensure minimal volatility over time. This aims to protect

customers from significant changes in charges from one year to the next, relative to their usage

beyond the threshold amount.

D. Simplicity

Charging policy and the proposed charges should be transparent and easy to understand. Customers

should be able to understand how charges are calculated and the costs underlying those charges.

Processes by which customers can check their usage, apply for an additional allowance based on

household size or an exemption for medical needs should also be accessible, clear and easy to

understand.

E. Customer Protection

Measures should be considered to ensure that customers who exceed the threshold amount are

protected from unreasonably high charges.

The tariff principles are not in order of priority. The CRU’s letter acknowledged that ‘conflict and trade-

offs can exist between charging principles and it may be necessary for IW to strike an appropriate

balance between the different principle objectives as necessary’.

In this paper, we describe the key issues to be considered in determining the appropriate proposal for

the charging of customers who exceed the allowance threshold amount, and we set out our proposal

in section 6. We use a ‘Harvey Ball’ style11 graphic to summarise our evaluation of each option against

the CRU principles. The extent to which each ‘Harvey Ball’ is shaded reflects the extent to which we

11 ‘Harvey Balls’ are a useful tool for summarising qualitative information. We use them throughout this paper in comparison tables to indicate the degree to which a particular tariff design option meets a particular tariff principle.

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consider a potential charging option meets a tariff principle. No shading means that, in our view, a

potential charging option does not meet a principle, partial shading means a potential charging option

partially meets a tariff principle, and full shading means a potential charging option fully meets a tariff

principle.

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5. Household Allowances and Exemptions

Each household will receive an annual allowance and no charges will apply for all water services used

up to the allowance threshold amount. The ‘default’ annual allowance is 213,000 litres (or 213m3) for

households with 0 to 4 occupants. All water services used above the allowance threshold amount are

considered excess use and will be liable for excess use charges.

Households with occupancy greater than 4 will be allowed an extra 25,000 litres (or 25m3) per

additional occupant ‘ordinarily resident’ in the household. The below table summarises the annual

allowance threshold for households with 0 to 12 occupants.

Household Occupancy

Usage Allowance (litres p.a.)

Additional Usage Allowance (litres p.a.)

0 213,000 - 1 213,000 - 2 213,000 - 3 213,000 - 4 213,000 - 5 238,000 25,000 6 263,000 50,000 7 288,000 75,000 8 313,000 100,000 9 338,000 125,000

10 363,000 150,000 11 388,000 175,000 12 413,000 200,000

Table 3 Allowances per household

IW may approve an application by a customer for a medical need exemption or an additional

allowance amount, for the provision of water services exceeding the allowance threshold amount,

where:

An individual who ‘ordinarily resides’ in the household has a medical need which requires the

provision of water services exceeding the threshold amount, or

Additional occupants (over 4) are ordinarily resident at the premises (or in the household),

and

The registered account holder makes an application to IW.

It is expected12 that ‘ordinarily resident’ for the purposes of additional allowances and medical need

exemptions will be prescribed to mean that a concerned individual has resided, at the household in

question for 183 days or more during the twelve month period in question and is expected to continue

to do so. Period absences for medical treatment or related purposes would be reckonable as residence

12 Ministerial guidance including the definition of ordinarily resident for the purposes of additional allowances and medical use exemptions

is expected to be confirmed later in 2019.

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at the household in question. This is consistent with treatment of the concept of ordinary residence

more generally in an Irish context.

5.1 Proposed application process for Additional Allowances and Medical Need

Exemptions

Households will be notified (see section 7 for further details), if they have used in excess of the

threshold allowance in a prior 12 month period. A ‘default’ allowance of 213m3 per premise (or

household) will be assumed by IW. Any water services used above the ‘default’ allowance will be

charged unless a customer (the registered account holder) makes an application for:

i. Additional allowance(s) for any additional occupant(s) (over 4) ordinarily resident at the

premises (or in the household), or

ii. An exemption from excess use charges where an individual ordinarily resident in the

household has a medical need requiring water services in excess of the threshold amount.

In accordance with sections 53E and 53F of the 2007 Act, IW proposes the following application

processes (and conditions), to be followed once a notice has been issued.

Figure 1 Household size allowance and medical need exemption application process

IW issues a notice of excess use (in accordance with 53D of the 2007 Act).

A customer must make an application for additional allowance(s) or medical need exemptions

for a person or persons ordinarily resident in their household.

On receipt of the application, IW may approve, seek additional information or decline the

application and advise the customer in writing.

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Following receipt of the additional information, IW may approve or decline the application

and will advise the customer in writing.

Customers must advise IW through a new application form of any changes in household

occupancy and/or medical need exemptions. IW will approve, seek additional information or

decline the new application in the same way as the original application and will advise in

writing.

Applications must be signed by the registered IW account holder.

Applications will be declined if not fully completed or if the account information provided does

not correspond with IW data.

IW may seek additional information pertaining to the named occupants on applications before

confirming approval.

Approved applications will be effective from the date of notice.

The Water Services Act 2007 (as amended) already makes provision for dealing with customer

complaints and appeals against decisions made by IW that adversely impact on customers. In such

cases it would not be proposed to determine liability for excess use charges pending the outcome of

any appeal. Where an appeal succeeds liability for excess use charges will be reduced or eliminated.

Where an appeal fails, liability will apply as intended from the date of the letter of notice originally

issued.

Customers must ensure that they notify IW of any changes in household occupancy and/or medical

need exemptions.

IW may allow additional time before charging for excess usage if a customer engages with IW on

receipt of their notice and is awaiting a ‘First Fix Free’ or provides IW with required information that

an internal leak has been repaired or is in the process of getting repaired. These exceptions will be

managed on a case by case basis.

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6. Derivation of Charges

This section sets out IW’s proposals for deriving excess use charges consistent with the 2013 Act.

Section 6.1 considers the options for calculating excess use charges. Section 6.2 assesses these

charging options against the CRU’s principles. Sections 6.3 and 6.4 set out IW’s proposed approach to

charging metered and unmetered customers for excess use of water services.

6.1 Options for calculating excess use unit charges

IW has considered two options for setting unit charges to be applied to units of water services used

above the annual allowance threshold.

I. Option 1 - Use 2015/16 domestic unit rates

IW could use the unit rates used to calculate domestic water charges during the period 1st January

2015 until 31st March 2016. The following unit charges were set by the Water Services Act 201413 and

included in an approved WCP14.

Volumetric Unit Charges €/ m3 (1,000 litres)

Volumetric unit Water Supply charge 1.85

Volumetric unit Wastewater charge 1.85

Volumetric unit Combined Service charge 3.70

Table 4 Option 1 - Volumetric unit charges for excess use

II. Option 2 – Use domestic unit rates from IW’s cost allocation model analysis

IW and the CRU have undertaken a process to establish a new Non-Domestic Tariff Framework15. The

development of this Framework provided the first opportunity to evaluate, on a national basis, the

costs of providing water and wastewater services to each of the domestic and non-domestic customer

bases.

IW has undertaken a cost allocation exercise that examines the costs of providing water and

wastewater services to both the domestic and non-domestic customer bases, and also to each

individual non-domestic tariff class. Domestic unit rates can be calculated based on the cost allocation

exercise16. The cost allocation exercise uses the total level of revenue approved by the CRU to cover

Irish Water’s efficiently incurred costs in 201917 and produces the following indicative domestic unit

rates as of 17th July 2019.

Volumetric Unit Charges €/ m3

Volumetric unit Water Supply charge 2.03

Volumetric unit Wastewater charge 2.02

Volumetric unit Combined Service charge 4.05

13 The Water Services Act 2014 is available here 14 WCP approved by the CRU on 3rd March 2015 is available here 15 The CRU decision paper on Irish Water’s Non-Domestic Tariff Framework (CRU/19/074) is available here 16 Domestic allocated costs / Domestic volume 17 The CRU’s decision on Irish Water’s Revenue Control 2019 is here

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Table 5 Option 2 – Indicative domestic unit rates from IW’s cost allocation exercise

The domestic unit rates in table 5 are taken from IW’s cost allocation exercise carried out as part of

the process to establish new non-domestic tariff rates. On 3rd July 2019 the CRU published its decision

on Irish Water’s Non-Domestic Tariff Framework which will apply to Irish Water’s non-domestic

customers18.

6.2 Assessment of options

IW has used ‘Harvey Balls’20 to summarise the evaluation of both options against the CRU principles.

Figure 2 Option 1 and 2 excess charge unit rates – summary evaluation against principles

Option 1 scores better against the principles of ‘Stability’ and ‘Simplicity’. Using 2015/16 unit rates to

calculate excess use charges is a simple and quick approach for IW to implement and will provide

continuity with the previous charging regime. It is also simple and clear for customers to understand.

Option 2 scores better against the ‘Cost Reflectivity’ principle. The 2015/16 unit rates were set against

previous CRU approved allowed revenues for the 2014 to 2016 period. Domestic charges from the

cost allocation model will be set against IW’s current cost base, 2017-2019 CRU approved allowed

revenues. However, the cost allocation approach had not been approved by the CRU at the time IW

submitted these proposals to the CRU (February 2019).

Both options score relatively well against ‘Equity and Fairness’. The 2015/16 domestic charges provide

equity with the previous domestic charging regime but not with enduring non-domestic charges.

18 The CRU decision paper on Irish Water’s Non-Domestic Tariff Framework (CRU/19/074) is available here 20 20 ‘Harvey Balls’ are a useful tool for summarising qualitative information. We use them in this section to indicate the degree to which a particular tariff design option meets a particular tariff principle.

CRU PrinciplesOption 1

2015/16 Domestic Charges

Option 2

Charges from Cost Allocation

Model

A Cost Reflectivity

B Equity and Fairness

C Stability

D Simplicity

F Customer Protection

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‘Equity and Fairness’ with enduring non-domestic charges may be fully achieved in future by using

domestic charges from the cost allocation model. However at the time IW submitted these proposals

to the CRU (February 2019) the cost allocation approach had not been approved by the CRU.

Neither option fully meets the ‘Customer Protection’ principle unless accompanied by a

complementary protection measure such as a cap on the maximum charge. Such a measure would

protect customers exceeding their annual allowance threshold in an annual period against

unreasonably high charges21.

IW proposes applying the 2015/16 domestic charges to units of water services used by households

above their annual allowance. This option can be implemented simply and quickly by IW thereby

satisfying legislative requirements regarding excess use timelines22. A later review may be carried out

when the new non-domestic charges are implemented23 and the approved cost allocation model can

be used as the approach (i.e. option 2) to establish excess use charges.

IW proposes applying the 2015/16 domestic charges to units of water used by households above

their annual allowance.

6.3 Setting a cap on the maximum annual charge

IW proposes including a cap on the maximum charge in order to fully meet the CRU’s ‘Customer

Protection’ principle. IW has used ‘Harvey Balls’ to summarise the evaluation of ‘Cap’ and ‘No Cap’

options against the ‘Customer Protection’ principle.

Figure 3 Cap on the maximum charge – summary evaluation against principle F

IW considers that a cap on the maximum charge performs well against the ‘Customer Protection’

principle by protecting customers against unreasonably high charges.

In the interests of ‘Equity and Fairness’ it is proposed that the unmetered charge should equal the

capped maximum annual charge as excess use charges should not unduly discriminate between

metered and unmetered customers.

21 A customer using 1,000m3 could be liable for a €2,912 charge (1000m3-213m3*€3.70) if there is no protective measure 22 A notice informing a customer that their household has exceeded its allowance over a monitoring period should specify the annual charge that will apply if excess use continues. The first monitoring period was from 1st April 2018 to 31st March 2019. 23 The new non-domestic tariffs will be implemented (and applied to customer’s bills) on 1st May 2020.

CRU Principle Cap No Cap

F Customer Protection

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The maximum excess use annual charges level should strike an appropriate balance between

encouraging household water conservation while also ensuring that customers are protected from

unreasonably high charges. IW proposes the following capped excess use annual charges as they strike

a sensible balance between different objectives.

Maximum Excess Use Annual Charge € per year

Maximum Water Supply charge 250

Maximum Wastewater charge 250

Maximum Combined Service charge 500

Table 6 Maximum annual excess use charges

IW proposes including a cap of €250 (single service) and €500 (combined service) on the maximum

annual excess use charge.

6.4 Approach to metered customers

Water services unit rates (as set out in table 4) will be applied to excess use to derive a household’s

excess use charge if:

a) A meter is installed at the domestic customer’s premises by IW, and

b) Water consumption warrants a lower charge than the maximum annual charge.

Customers in households with annual metered water use of up to 135.1m3 in excess of their annual

allowance will be calculated on the excess volume consumed, using 2015/16 domestic charges24.

Customers in households with annual metered water use over 135.1m3 in excess of their annual

allowance will be charged the maximum charge25.

Table 7 sets out a number of metered excess use charge worked examples reflecting IW’s proposals.

Customer Occupants Services Annual

Usage Allowance

Billable Usage

Rate (p/m3)

Excess Charge

Capped (Y/N/NA)

1 0-1 Water 125m3 213m3 0m3 €0 €0 NA 2 4 Water 250m3 213m3 37m3 €1.85 €68.45 N 3 5 Combined 600m3 238m3 362m3 €3.70 €500 Y 4 6 Water 450m3 263m3 187m3 €1.85 €250 Y 5 12 Water 438m3 413m3 25m3 €1.85 €46.25 N 6 7 Combined 209m3 288m3 0m3 €0 €0 NA

Table 7 Metered excess use charges - worked examples

6.5 Approach to unmetered customers

IW must establish usage by measuring consumption in order to charge customers under the 2013 Act.

IW will therefore seek to install a meter in order to establish actual use if an unmetered customer’s

property appears to be using excess water. If a meter is fitted IW proposes applying the volumetric

24 For example charges for excess use between 213m3 and 348.1m3 will be calculated using 2015/16 domestic charges 25 For example all customers with metered use over 348.1m3 will be charged the maximum capped charge (example assumes a 213m3 allowance)

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unit charges (see table 4) to any excess use subject to the maximum charge (see table 6) in order to

derive excess use charges.

If an unmetered customer’s property appears to be using excess water, and it is not possible to install

a meter, IW will use alternative technology to measure consumption. IW will connect a data logger

sensor to a service pipe of such an unmetered property. The data logger will be used to monitor water

services use at that premises. If excess use is confirmed at the premises, the customer will receive a

formal notification and the data logger will remain in place to ascertain if the customer is liable for

excess use charges. Unmetered customers can avail of additional allowances for additional occupants

and medical use exemptions.

Excess use charges (if applicable) for unmetered customers will be set at the maximum annual excess

use charge to incentivise the uptake of meters among unmetered customers26. These properties may

also avail of the ‘First Fix Free’ scheme where a qualifying leak is established.

Unmetered Excess Use Annual Charge € per year

Unmetered Excess Use Water Supply charge 250

Unmetered Excess Use Wastewater charge 250

Unmetered Excess Use Combined Service charge 500

Table 8 Unmetered annual excess use charges

If excess use is not confirmed at the premises, the customer will not receive a formal notification.

26 In support of the recommendations in section 7 of the JOC’s report. In particular section 7.3 and incentivising voluntary metering for water conservation purposes. The JOC report is available here.

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7. Customer Journey and Impact Assessment

The Government’s Water Services Policy Statement 2018-2025 states that the purpose of excess use

charges is “solely to encourage water conservation and not for the purpose of raising revenue”, which

IW fully supports. Water is a precious natural resource and conserving water is necessary for a

sustainable future. The impact assessment in section 7.2 demonstrates that domestic excess users

consume a high proportion of total water services27.

Domestic household water usage will be monitored annually. Any household with usage above their

annual allowance over a 12 month period will enter into the “Household Water Conservation” process

as outlined and illustrated in the figures below.

Figure 4: Customer journey

There are three phases in the customer journey for Household Water Conservation associated with

excess use charges, which are explained in more detail in this section:

• Phase 1: Excess Usage Identification

• Phase 2: Notification and Monitoring

• Phase 3: Billing

Metered and unmetered customers will be allowed the same opportunity to reduce usage and/or

repair leaks, both will incur charges if by the end of their 12 month monitoring period they have used

in excess of their threshold. It is also possible for both metered and unmetered customers to submit

an application for additional allowances or medical need exemptions.

27 For example a relatively high proportion of water services (39%) are used by a relatively low proportion of excess users (10%).

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1. Excess Usage Identification Phase

The following are the key steps of the Excess Usage Identification phase for both metered and

unmetered properties.

Figure 5: Metered and unmetered excess usage identification phase

Metered Customers

Meter reads over a 12 month period will be used to identify properties that use in excess of their

annual allowance.

Unmetered Customers

Through the analysis of water balances, campaigns, leak alarms and event management, IW are able

to monitor and identify District Meter Areas (DMAs) where there appears to be excess use or

unaccounted for water within an area. If a DMA shows greater usage of water services than expected

for the area, a leakage and pressure investigation crew is dispatched.

Through listening and measuring supply at different points, investigation crews are able to determine

the properties suspected of excess use or leaks. Where possible IW will install a meter, therefore

metered approach will apply (i.e. section 6.4). If a meter install is not viable, IW will connect a data

logger to the service pipe to measure consumption, thereby the unmetered approach will apply (i.e.

section 6.5).

Where a leak is established customers can avail of IW’s ‘First Fix Free’ scheme.

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2. Notification and Monitoring Phase

The following are the key steps of the Notification and Monitoring phase for both metered and

unmetered properties.

Figure 6: Metered and unmetered notification and monitoring phase

I. Call to action letter – first communication

All customers who exceed their household allowance in a prior 12 month period (commencing no

earlier than 1st January 2018) will receive a letter from IW advising them that they have exceeded their

‘default’ annual allowance amount of 213m3. This letter will contain information on the IW ‘First Fix

Free’ scheme, how to conserve water, the availability of additional allowances for households greater

than 4 people and exemptions for medical needs. This letter will also advise that a notice will be issued

if excess use continues and encourage customers to fix any leaks now rather than be liable for excess

use charges in the future.

II. The legal notice

The notice, as prescribed by section 53D of the Act, will be issued to customers who have continued

to exceed their household allowance in a more recent 12 month period. The notice will inform

customers that they will be liable for excess use charges if they continue to exceed their household

allowance into the future. Specifically, excess use charges will apply if:

i. half the household allowance is exceeded over the following 6 months; and

ii. the full household allowance is exceeded over the following 12 months

from the date of the notice.

The notice will also contain information on how customers can apply for additional allowances and

medical exemptions.

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III. Applications for additional allowances and medical exemptions

Application forms will be available online or can be posted out by IW upon request. The application

form must be completed in full and signed by the customer (the IW registered account holder).

Following review of the application, IW will inform the customer in writing if their application has been

approved or declined or if further information is required. Incomplete applications will be held and

IW may seek further information in some cases, to satisfy that the application is valid.

Allowance approval letters will inform customers of their new household allowance threshold

amount. Exemption approval letters will inform customers that their household is exempt from excess

use charges. The obligation remains with the customers to advise IW of any subsequent changes to

their circumstances.

IV. Confirmation / Reminder letter - 6 months review correspondence

A customer’s household usage will be monitored for 6 months from the date of the notice. Following

the 6 month monitoring period, customers will receive either:

a) A confirmation letter informing them that usage has reduced and they will not be liable for

excess use charges if usage continues below the applicable allowance threshold. The

confirmation letter will be sent to customers whose household usage over the 6 month notice

period is less than half their applicable annual allowance, or

b) A reminder letter informing them that if excess use continues they will be liable for excess use

charges. The reminder letter will be sent to customers whose household usage over the 6

month notice period is more than half their applicable annual allowance.

3. Billing Phase

The following is the key step of the Billing phase for both metered and unmetered properties.

Figure 7: Metered and unmetered billing phase

V. Bill – 12 months from date of issue of Legal notice

Customers whose household continues to use:

(a) more than half of their allowance within 6 months from issue of the Legal notice, and

(b) more than their annual allowance within 12 months from issue of the Legal notice

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will be issued an excess use charges bill, covering the 12 month period from the date of the notice, by

IW.

7.1 Data Issues and anomalies

IW will contact customers using the existing customer data that is available to IW. As domestic billing

was suspended in 2016, IW may not have been advised of subsequent changes to household

occupancy. Some correspondence in relation to certain households may be addressed to previous

customers. When advised by customers, IW will update its information and will monitor returned post

and use all available means to identify the correct person regarding communication and notification

of the excess use process.

7.2 Customer Impact Assessment

IW has analysed annual usage for the period (1st September 2017 to 31st August 2018) for c.880,000

metered customers. The analysis is summarised in figure 6. The leak alert row in the figure refers to

the numbers of meters where a constant flow alarm (CFA) was triggered at some time during the

observed period (i.e. 1st September 2017 until 31st August 2018). A constant flow of water, (that is 6

litres per hour over a 48 hour period), found on the water supply pipe triggers a CFA on the meter,

indicating a potential leak.

The purpose of the analysis in figure 6 is to examine the potential magnitude of excess use and to

consider its relevance for household water conservation and excess use charges.

i. The potential magnitude of excess use:

10% of domestic customers used in excess of 213m3 over 12 months (excess users);

These excess users accounted for 39% of total water services used over 12 months;

50% of excess users used between 213m3 and 288m3, the annual allowance threshold for a 7

occupant household;

C.59% of all excess users have a leak or had a leak at some stage during the observed period;

and

C.76% of the largest excess users (indicated by annual usage greater than 288m3 in IW’s

analysis) have a leak or had a leak at some stage during the observed period.

ii. The relevance for household water conservation and excess use charges

A relatively high proportion of water services (39%) are used by a relatively low proportion of

excess users (10%). This suggests excess use charges will be an effective measure in

encouraging household water conservation;

The analysis suggests that a large proportion of excess use is due to leaks. Water conservation

will be greatly enhanced if leak repair is better incentivised by the prospect of excess use

charges; and

Many customers will be able to avoid excess use charges by engaging with IW on its ‘First Fix

Free’ process (if applicable) or getting an internal household leak repaired.

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Figure 6 Excess use contribution to metered water use from 1st September 2017 until 31st August 2018

Please note the water usage blocks in Figure 6 (i.e. 213m3 to 238m3, 238m3 to 263m3, 263m3 to 288m3)

reflect the additional allowances available for 5,6 and 7 occupant households i.e. an additional (25m3)

allowance for each additional occupant (over 4).

7.3 Supporting customers to use water wisely

IW proactively collects data on water leakages across the water network. This is through IW

operations, customer reactive work and planned leak detection programmes including the ‘First Fix

Free’ and ‘Find and Fix’ schemes.

IW is committed to the reduction of water wastage caused by leaks or excess use. The Household

Water Conservation process is a means of reaching out to customers to make them aware of their

water usage. Eligible customers should seek to avail of the IW ‘First Fix Free’ scheme. This scheme

involves IW arranging for the repair of leaks which are identified on a customer’s external supply pipe.

Where a leak is detected inside the boundary of a customer’s property he/she should arrange for the

necessary repairs to be carried out as soon as possible to avoid becoming liable for excess use charges.

Rather than applying excess use charges, Irish Water’s primary aim is to support the public to conserve

water. Water is a precious natural resource and conserving water is necessary for a sustainable future

for all of us.