Regionalisation of (drinking) water price setting in Flanders APE water pricing seminar - Brussels December 4th 2014 Ingeborg Limbourg

WaterRegulator General missions (Decree art. 12 § 1) To inventory, assess, advice and report on all matters concerning water intended for human use Specific tasks (Decree art. 12 § 2-7) Providing advice and submit proposals to the Flemish government on: appropriate and effective mechanisms for harmonisation transparency and regulation on the production, the supply, the pricing, the consumption, … of water intended for human use 2

Regionalisation 3 Competence moved to the Flemish Environment Policy area Ministry of Environment, Nature & Energy Price setting of drinking water transferred from Federal / Belgium to Regional / Flanders level 6 th state reform  came into effect on July 1 st 2014 Organisation assigned to the Flemish Environment Agency ‘VMM will organise the tariff regulation for the integral water invoice.’ ‘A uniform tariff structure for the integral water invoice will be introduced.’ Policy statement of the Minister of Environment, Joke Schauvliege

Current Price Setting Integral water invoice Drinking water component (Distribution and supply of drinking water)  Maximum price approved / determined by Federal Minister of Economy  VMM (drinking) WaterRegulator is / was advising the price commission  Topic of the regionalisation Waste water components (2) Supra-Municipal contribution (Waste water treatment = 1 regional tariff) Municipal contribution (Sewerage = maximum regional tariff * 1,4 ) Basic elements for tariff setting are embedded in the water decree  Price (regional tariff) is set by the water suppliers under supervision of  VMM Economic supervisor  Regionalisation creates an opportunity for a holistic approach of the integral water price 4

Challenges in Develop a tariff regulation model 2.Introduce a uniform tariff structure 3.Translate into legislation 5

Goal 01/01/2016 6

Challenges in Develop a tariff regulation model 2.Introduce a uniform tariff structure 3.Translate into legislation 7

Challenge 1 T ariff regulation model Preliminary study to investigate possible methodologies (Completed mid 2014) Research done from the integral point of view in cooperation with our waste water colleagues but with the necessary differentiation between drinking water and waste water Assessed results with a score card based on indicators that supported our goal / principals fair, efficient, equitable and sustainable 8

Tariff regulation model Most promising 9 Best fitting = highest score 2 best fitting: Performance standard Direct price setting Most promising = Merge with ‘extra’ elements

Tariff regulation model Most promising Results of the study in headlines Drafting a business plan by the supplier, including a price path with an ‘average rate’ and indicating the ‘moving’ average for a period of six years Checking annually and index automatically the tariff by the regulatory authorities (possible) Adjusting the price path after a period of three years by the regulatory authorities The outcome of the study will be used for the elaboration of the final solution (which might differ from the results above). 10

Challenges in Develop a tariff regulation model 2.Introduce a uniform tariff structure 3.Translate into legislation 11

Challenge 2 T ariff structure ‘A uniform tariff structure will be introduced for the integral water invoice’ Without (abolish) first 15 m³ drinking water free of charge With sufficient incentives for ‘sustainable water use’ With attention for the vulnerable and ‘protected’ consumers With attention for ‘bulk’ consumers With (introduce) also a subscription fee for the sanitation component 12

Challenge 2 T ariff structure Study investigating the possibility to uniform tariff structures (by WaterRegulator - completed early 2013) Research done for drinking water component only Full cost recovery principle but No more, no less Several criteria (5) used for assessment of the results 13

Challenge 2 T ariff structure  study updated to the current situation Work with the latest consumption and invoice data (2013) Focus on a direct link with tariff regulation Calculate impact for each possible scenario per water supplier per customer type Next step: expand all this to integral water invoice 14

Challenges 1.Develop a tariff regulation model 2.Introduce a uniform tariff structure 3.Translate into legislation 15

Challenge 3 Legislation Already in progress: The transitional period is settled by means of a collective decree Process for the consultation of the stakeholders is started consultation ends early February, results late March Next: Proposal (draft) for the necessarry adaptations to the decree  Probably lay down the procedures of Tariff Regulation and Tariff Structure into ‘Acts of the Flemish government’ and refer to those acts in the decree Goal published regulations and detailed procedures January 1 st

Thank you for your attention For supplementary information please contact WaterRegulator A. Van de Maelestraat Erembodegem Belgium 17