Update 1.42pm: Taoiseach Leo Varadkar has confirmed that refunds of water charges will not be deducted to account for the water conservation grant.
It means all households who received the €100 payment two years ago will be allowed to keep it, even after refunds are paid.
Mr Varadkar again confirmed this afternoon that he hopes to have refunds paid to almost every home before Christmas.
But he says it would simply be too difficult to deduct the grant from the refunds people are due.
“When the water conservation grant was paid it was paid on the basis that it was separate to water charges, and indeed people availed of that grant who don’t pay water charges for one reason or another – often people are on group schemes,” he said.
“So yes, I agree it would be extremely difficult, logistically and legally to net off the water grant.”
Update 11.14pm: The Minister for Employment and Social Protection Regina Doherty has admitted that the issue of the refund of all water charges has not yet been discussed in detail by the Cabinet.
Earlier the Minister for Education and Skills Richard Bruton said the money for the refunds will come from within existing resources.
The sum involved is around €170m and consists of water charges paid by householders before the charges were abandoned.
Close to one million customers of Irish Water paid, or partially paid, water charges before they were suspended and eventually discontinued.
Speaking on Today with Sean O'Rourke Minister Doherty says people can look forward to refunds from September onwards.
“I haven't been fully briefed on this and we haven't had a Cabinet meeting to discuss it but from what I gather it’s the ambition of the Taoiseach to give everyone who's paid their bills their money back before Christmas, starting early in the autumn,” she said.
“So you'd be looking forward to maybe people starting to receive their money by September.”
Savings from other government areas will help pay for water charge refunds amounting to over €170m which Taoiseach Leo Varadkar has pledged will be returned to households in the coming weeks, writes Juno McEnroe and Elaine Loughlin.
While the Government must still get EU approval for refunds and pass legislation with support from Fianna Fáil, the Taoiseach has now effectively signalled the end of the water charges saga.
The Irish Examiner understands the system for refunds, amounting to over €300 for some households, will be brought to Cabinet in September with the intention of starting payments then.
In the meantime, officials with Housing Minister Eoghan Murphy and Finance Minister Paschal Donohoe are examining what savings from elsewhere will be used to pay for the refunds.
Mr Varadkar committed in a weekend interview to repay householders by the end of the year.
However, not all water charges will be paid back by then as there are complications for some households, including where payees may have passed away and the issue is settled with their estate.
Irish Water has been tasked with putting together the refunds system, which when it starts, could take up to two months, say senior government sources. The cost of running the new refunds system could also raise upwards the amount needed, bringing it closer to €180m overall, say sources.
“We don’t want to fall foul with a new system. Consultation is ongoing with the [European] Commission and there are still issues to be ironed out with Fianna Fáil and legislation,” explained the senior source.
It is understood Fianna Fáil’s housing spokesman Barry Cowen has yet to meet Mr Murphy about the refunds system.
A Dáil committee and report earlier this year recommended full refunds for homes. But it was also agreed that basic water usage would be paid for by the exchequer and penalties would be applied for excessive use. While some details for this were agreed, areas have still to be finalised.
Junior foreign affairs minister Ciarán Cannon insisted yesterday the money needed for water refunds would not come from next year’s budget but from spending this year.
It is understood this will be decided after the Government’s spending review is finished shortly.
Former housing minister Simon Coveney last night reiterated that the Government would ensure that meters would be introduced in newly built homes in addition to the refunds.