Mike McKimm BBC NI environment correspondent

Northern Ireland consumers have taken a step closer to water rates with the publication of an interim report on the future of the Water Service.

Ruling out privatisation, the government has now set suggested dates when consumers might expect a bill for their water and sewerage services.

The charges are expected to begin in April 2006.

The cost of running the Water Service, a government agency, is paid for out of the annual budget from Westminster.

Water rates are expected to be introduced in 2006

Part of this cost used to come directly from the domestic rating system, but that link was broken a few years ago.

As a result, water and sewage services in Northern Ireland currently cost consumers a lot less than in the rest of the UK.

They pay on average �473 a year for their rates while Scottish consumers pay �1300 for their water and property tax.

The Treasury has now signalled that similar charges must be brought into Northern Ireland.

However, Regional Development Minister John Spellar has agreed that there will be no privatisation and no flat-rate charges.

Instead, some form of government company or corporation will be formed to run the new, thinned-down service and the bills will be some form of hybrid with a standing charge plus a top-up charge to reflect to property value.

Metering of supplies has also been ruled out in the short.

Apart from the many years it would take to fit water meters in 700,000 homes, it is estimated the cost would be extremely high, running up to as much as �120m.

The introduction of domestic water charges was never going to be a popular policy John Spellar Regional Development Minister

While the changes would bring Northern Ireland into line with the rest of the UK, the main reason is to raise some of the �3bn required over 20 years to bring the water and sewerage system up to date.

More than one third of all sewage treatment plants fall below European standards, with many of them simply pumping raw sewage into the sea.

The investment to replace them will have to be raised from the consumer.

Mr Spellar said he recognised water reform presented many difficult issues.

"The introduction of domestic water charges was never going to be a popular policy," he said.

"However, arguing, that 'the Treasury should pay' would mean that we would be asking taxpayers in Great Britain to pay more when we are already paying much less than they do in Council Tax and water charges."

The minister's announcement confirms that it is only a question of how charges are introduced and what the initial level will be Bumper Graham Water Service Trade Unions Secretary

The imminent arrival of water charges has angered a lot of people, including some trade unions.

The Water Service is facing a cut in staff to make it more efficient, which has gone down badly with its unions.

Their secretary, Bumper Graham, has described the latest report as a "cop-out".

He said the public consultation process on the Water Service's future had showed an "overwhelming" rejection of water charges.

"The minister's announcement confirms that it is only a question of how charges are introduced and what the initial level will be," said Mr Graham.

"Furthermore, he has confirmed his intention to dismantle the Water Service and in doing so destroy hundreds of our members' jobs."

Possible jail penalties

Over the last year or so, the European Commission has been making warning noises over poor water treatment standards in Northern Ireland.

However, if the service is turned into a government company, it will lose it Crown Immunity from prosecution.

Rather than have to just worry about the European Commission, the directors could also find themselves in the High Court for pollution in rivers as well as failure to meet to compulsory standards.

One of the penalties they could face is jail.

This is hardly an invitation to attract industry leaders.