The Energy Regulatory Commission of North Macedonia (ERC)

ERC is the multi-sector independent Regulatory Authority of the Republic of North Macedonia. It commenced its activities in 2003 and employs ~ 42 people with an annual Budget of ~2,68 M€.

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The Energy Regulatory Commission of North Macedonia (ERC)

ERC is the multi-sector independent Regulatory Authority of the Republic of North Macedonia. It commenced its activities in 2003 and employs ~ 42 people with an annual Budget of ~2,68 M€.

You can find this data and the country profiles of all the 25 WAREG Members in our Water Governance Report (2021).

As the Regulatory Authority for water, ERC’s main responsibilities are:

  • setting cost-reflective tariffs;
  • improving service delivery of the operators following the developed performance indicators;
  • improving the effectiveness of water management in the Republic of North Macedonia.

Legal Framework

The main legislation on the water sector of North Macedonia is the following:

  • The Law amending the Law on Energy (Official Gazette of the Republic of
  • North Macedonia No. 94/02);
  • The Law on Waters (Official Gazette No.87/08, 6/09, 161/09, 83/10, 51/11, 44/12, 23/13, 163/13, 180/14, 146/15, 52/16);
  • The Law on Drinking Water Supply and Urban Wastewater Drainage (Official Gazette No. 68/04, 28/06, 103/08, 17/11, 54/11, 163/13, 10/15, 147/15, 31/16);
  • The Law on Water Economy (Official Gazette No. 51/15, 193/15, 189/16);
  • The Law on Setting the Price of Water Services (Official Gazette No.7/16);
  • The Rulebook on the manner and procedure for setting water services tariffs and regulatory tariffs; and
  • The methodology for the setting of water service tariffs.

Institutional Framework

The Ministry of Environment and Physical Planning is the competent water resource management authority in North Macedonia.
Municipalities are responsible for managing the water services and the coordination at the local level.

Country profile

  • Area: 25.713 Km2
  • Population: 2,06 million
  • Population density: 106, 56 inh/Km2
  • GDP per capita: 5.888 (Current US$ 2020)
  • Water and sanitation services
  • Number of operators of drinking water and/or sanitation services: 77
  • Percentage of households served: varies from 100% to 65%
  • Abstracted water volume (in 2020): 258.346.783 m³
  • Wastewater volume collected (in 2020): 98.317.464 m³
  • Average per capita consumption: 100-120 person/liter/day
  • Sector Turnover: approximately 70.000.000 $
  • Average service price by m3  (in 2020):
    • Domestic:  0,44 $/ m3
    • Non-domestic: 0,74 $/ m3

Tariff Setting

Who approves tariffs and at which level (regulator/local/regional/State-Ministry/company/etc.)?

Water service tariffs are set with a Decision and adopted by the Energy Regulatory Commission. The water service provider is obliged to submit it to its management body of the water service provider for the purpose of making a decision for setting water service tariffs.

The management body of the water service provider is obliged to harmonize its decisions with the decision made by the Energy and Water Services Regulatory Commission.

What is the methodology used to set tariffs (ex. which are the variables to take into consideration)?

The methodology used to set tariffs is in accordance with the Law on Setting the Price of Water Services.

The water service tariff amount depends on the costs for water service provision and they are calculated in accordance with this Methodology.

The basis for calculation of the water service tariff is based on the following expenditures:

  • operating costs, including maintenance costs,
  • costs for capital investments, and
  • taxes, charges and other fees as prescribed by the law.

For the tariff amount for each water service, except in the case of setting regulatory tariffs, minimum and maximum range is set, expressed in percentages of the set value of the tariff, within the frames of which it is allowed for the provider to make a decision on the setting of the water service tariff amount, that is applied in the regulated period.

The variables to take into consideration:

  • the total price of household water services to be affordable having in mind the average income per household in the area in which the water service is being provided;
  • sustainable use of the infrastructure for the execution of water services;
  • water service quality improvement, so as to enable uninterrupted service provision in accordance with the best available practices;
  • creating conditions with the required investments in the water supplying system so as to secure sustainable functioning thereof;
  • secure gradual, and ultimately full, application of the polluter pays principle, the user pays principle, the principle of equity, and the cost resource principle;
  • environment protection and development;
  • improving the water service efficiency through the provision of the best quality water services with the least expenses of the resource;
  • stable and predictable operating conditions for the water service providers; and
  • protection of customers and users against abuse of the dominant position of the water service providers.