23 September 2022 – Will water tariffs increase as a consequence of the continuing rise in energy costs in the drinking water and wastewater industry? Will investment by water companies on climate resilience, carbon neutrality and circular economy be offset by increasing operational costs? Can water regulators take measures to mitigate the impact of the current energy crisis on water customers?
These and other similar questions were addressed today by Water Regulators in Turin, Italy, at the 25th General Assembly (GA) of WAREG the Association of European Water Regulators. In the midst of the current storm on energy prices, WAREG Members exchanged experiences and recommendations on possible regulatory measures to recover the rising energy through tariffs paid by the customers. In fact, regulators may decide to review tariff methodologies and include extraordinary energy costs, if their impact on final water bills is considered affordable for customers.
Regulators stressed that there should be a clear differentiation between long and short-term measures, and that the energy crisis should not hinder the European Green transition, but rather promote it. There are trade-offs between planned investment, service quality obligations and reduced operational margins due to the current energy crisis.
In Eastern Europe the situation is tough. Energy costs account for 20-25% of the total operational costs for companies, and they may skyrocket to 40-45%. If this trend continues without any direct aid from governments, tariffs will have to increase and customers will be penalized.
The 4 regulators of the Western Balkans (i.e. Albania, Kosovo, Montenegro, North Macedonia) promised to strengthen their regional cooperation on affordability measures to protect water customers, following the Memorandum of Understanding that they signed in May 2022. WAREG will help them to get closer to EU water standards, by leveraging on EU funds and programmes.
In the next 4 years WAREG will manage Euro 230.000,00 to deliver 3 projects awarded by EU Horizon Europe funds and by the European Central Initiative, to promote compliance with the EU Urban Water and Waste Water Treatment Directive in EU Members and Candidate Member Countries.
The Horizon Europe WATERUN project will develop an innovative methodology to implement Urban Water Runoff (UWR) management plans in cities. The Horizon Europe INNWATER project will define a methodology to assess the good governance of drinking water and wastewater regulated services in Europe.
The Catalan Water Agency from the Autonomous Region of Catalonia (Spain) joined WAREG, bring to 31 the total number of Members and Observers.