Irish Water’s Tariff Application Rules Proposals
Important note on new charges
Irish Water's new non-domestic tariff framework for business customers was due to come into effect on 1 May 2020. This is to be deferred as a result of the current COVID-19 emergency. This decision has been taken by Irish Water with the support of their economic regulator, the Commission for Regulation of Utilities (CRU) and the Department of Housing, Planning and Local Government. The new non-domestic tariff framework for Irish Water was approved by the CRU, and published in July 2019. We will publish further updates in due course.
Tariff Applications Rules Proposal
On 3 July 2019 the Commission for Regulation of Utilities (CRU) published its decision on the Non-Domestic Tariff Framework providing for harmonised charging arrangements to replace the current wide range of charging arrangements on 1 May 2020. This date was deferred as a result of Covid-19 and a new date is yet to be determined. The new non domestic Framework sets out the ‘rules’ for how tariffs are designed and how non-domestic customers will be transitioned to their new tariffs over time, as well as the new non-domestic tariff rates.
The purpose of the Tariff Applications Rules Proposal is to present Irish Water’s proposals for tariff policy issues not covered by the CRU’s Framework decision, but which should ideally be addressed before it takes effect.
They relate to:
- Irish Water’s current leak allowance policy and changes to how it is applied
- Rules for assigning a tariff class
Irish Water has developed three proposed Tariff Application Rules (TARs) which can be applied to those connections affected by these issues in a consistent and fair manner.
The Consultation was run by the Commission for Regulation of Utilities and was open for eight weeks from 21 February to 17 April 2020. For full details on the consultation and the paper, please visit the please visit the CRU website.
For more information on the changes to business charges, visit our Business Charges page.
The three areas addressed include the following:
- Additional changes to Irish Water’s current leak allowance policy and how it is applied.
- How to charge connections that move tariff class during transition – a connection on transition may change their usage over the transition period, resulting in a different AQ (Annual Quantity). This change in AQ may result in the connection on transition being assigned to a different tariff class. The change in tariff class means that a connection’s transition tariffs will result in the connection transitioning to an incorrect enduring tariff.
- How to deal with connections experiencing boundary impacts – every year a connection will be assigned an AQ and corresponding tariff class which will apply in the next tariff year. The AQ which is assigned may not reflect a customer’s expectations of usage over the next 12 months and could impact on the customer’s bill.
Irish Water is not proposing to change how leak allowance amounts are applied to customer accounts. Customers will still have the leak allowance applied as a credit to their account as they do currently. Irish Water is, however, proposing two changes to the policy itself:
- The first relates to the time limits for non-domestic customers to notify Irish Water of a leak and to fix a leak. Currently there are no time limits on when a customer can notify Irish Water of a leak (provided it occurred since 1st January 2014), or on when they need to fix it.
It is proposed that a customer must notify Irish Water within 6 months of the issue date of the bill where the leak is first evident, and that the customer must fix the leak within 6 weeks of notifying Irish Water. The six week period to fix the leak can be extended by Irish Water in extenuating circumstances e.g. if a road opening license is required. The benefit of this approach is to encourage water conservation by incentivising customers to act promptly in dealing with leaks on their property.
- The second is the leak allowance policy eligibility criteria – under the current leak allowance policy there is no specific criterion relating to a customer’s financial history when applying for a leak allowance. Irish Water is now proposing that only customers whose accounts are not in arrears will be granted a leak allowance, to both encourage water conservation and payments.
If a customer’s usage changes from one year to the next during the transition period, then the customer may move tariff class. For example a band 1 customer on transition uses 850m³ of water services in 2020. If their usage increases to 1,200m³ in 2021 the customer would then be assigned to band 2.
For more detail on bands and charges, visit our Business Charges page.
Irish Water proposes that in cases where the customer would be better off or would be charged only marginally more (no more than €100 per annum) by moving to the enduring tariffs of the new tariff class, then the enduring tariffs should apply. Otherwise customers should retain their transitional tariffs until the end of the transition period. This proposal supports customers as the most financially optimal tariffs will be applied. If a customer would be significantly worse off on the new enduring tariffs, they will be protected by remaining on the lower transition tariffs. This provides greater stability to customers, while moving customers to the enduring tariffs where possible simplifies the charging framework.
A connection with an AQ that is close to a tariff class boundary has a much higher likelihood of changing tariff class from one year to the next as only a small change in usage is required. A connection that moves to another tariff class will be charged the rates from their newly assigned tariff class. This may result in an increase in bills for only a small change in usage. The impact of the change in tariff class will depend on a number of factors, including the proximity of the connection’s AQ to the tariff class boundary, the particular tariff class in question and the connection type (i.e. water only , wastewater only, combined).
Irish Water's customer data shows that only a small number (0.28%) of eligible non-transitioning customers have an AQ within 20% of a tariff class boundary. Of these customers, those within 5% are considered the most likely to cross the tariff boundary, and they also would be the most financially impacted by the change in tariff class. Irish Waters proposal allows affected customers the opportunity to challenge and change their AQ. This benefits affected customers by allowing them to remain on their tariff class if they think it would be financially beneficial to do so. Irish Water will communicate directly every year with Non-Domestic Customers that have a connection(s) which will change tariff class in the next tariff year. All connections changing tariff class will be afforded the opportunity to query their AQ during a review period.