The Government agreed at its weekly Cabinet meeting yesterday to the appointment and members of the commission.
Housing Minister Simon Coveney is expected to announce further details, possibly as early as today, on the role of the commission.
Government sources confirmed last night that former Irish Congress of Trade Unions president Mr O’Toole has been appointed chairman of the commission.
Mr O’Toole is a former senator and was previously a teacher and principal in Dublin.
Comprising eight members, as well as expert advisers, it is expected to start work immediately. Its remit will include examining a future sustainable funding model for provision of water services and methods to improve the quality of water.
Expert advice will be provided on complex areas, including on funding and financing large-scale infrastructure projects as well as on environmental law and water service management.
One of its terms will be to consider how Irish Water, if it remains in State ownership, could borrow money for services.
The Government wants the commission to “take the heat out” of the debate around water charges.
The commission has five months to report and its recommendations will then be considered by an Oireachtas committee for a further three months. These final recommendations will then be considered and voted upon by the Dáil within a further month.
Water charges have been suspended, and water bills will officially stop arriving at households from next week, for a period of nine months.
Meanwhile, Fianna Fáil leader Micheál Martin has said his party will fight the European Commission on water charges.
It comes after the environment commissioner Karmenu Vella said Ireland cannot abolish water charges without breaking European law.
Mr Martin said his party has received a different legal opinion which challenges that of the commission.
Speaking in Brussels yesterday, where he met with members of the ALDE group of leaders to discuss Brexit, Mr Martin said: “First of all we have our legal opinion which we challenge that commission’s opinion. Ireland got a derogation and established practice at the time was we didn’t have charges.”
Ireland could be hit with daily fines which could reach millions of euro if the EU maintains that it is breaking EU law by not imposing water charges.
Mr Martin said: “We have a clear position on this. If they want to take action, that’s their ultimate decision but we’re not seeking permission from the European Commission.
“There’s going to be toing and froing but we’re of a view that in terms of the water charges issue, we have to go back to the drawing board.
“We’ve made commitments before the election. It had to be dealt with before the formation of the government. In terms of what was to happen that is going to happen and we have to proceed on that basis.”