2nd Seminar on

WATER SECTOR REGULATION in EUROPE

Proceedings of the seminar Florence, 28th and 29th November 2013 December 2013

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The French national agency for water and aquatic environments (Onema) Established in 2007, Onema is a national agency active in the field of public environmental service. It organises and produces high-level science and technology advice to assist in formulating, implementing and evaluating public water policy. Its mission is to contribute to the overall and sustainable management of water resources and aquatic ecosystems, with a view to restoring water quality and reaching good chemical and ecological status by 2015, the goal set by the European Water framework directive. The Economics of Public Private Partnerships Chair The Economics of Public Private Partnerships Chair is a research group that gathers academics and practitioners from various institutions. Its aim is to promote the development of a network of researchers and decision-makers interested in issues related to public services reforms. For two decades, the procurement of public services (like water supply, public transportation, waste disposal, and beyond, education, research and health, etc.) has been engaged in a process of intensive changes, both in developed and less-developed countries. Both at the local and national levels, public authorities have been willing to introduce new regulatory regimes and modify the procurement procedures to allow private sector participation and improve performances. At the same time, it has also generated a new stream of both theoretical and empirical research, which redefines our understanding of the limits between the public and the private spheres. The Florence School of Regulation The Florence School of Regulation (FSR) works closely with the European Commission. The FSR objective is to expose the European dimension to regulatory topics and to contribute to the safeguarding of the common good of Europe by ensuring high-level and independent debate and research on economically and socially sound regulation.

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SEMINAR ON

"WATER SECTOR REGULATION

IN EUROPE"

Paving the way for a European working group on regulation of water & sanitation services

Correspondents Economics of Public Private Partnerships Chair – Sorbonne Business School Stéphane Saussier, Sorbonne Business School, saussier.iae@univ-paris1.fr Maria Salvetti, Sorbonne Business School, maria.salvetti@univ-paris1.fr

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Context reminder of “Water Reg” project: Setting up a European working group on water sector regulation issues The Florence School of Regulation (FSR) 1 and the Economics of public-private partnerships (EPPP) Chair2 have a joint project of setting up a European working group focussing on issues related to water sector regulation in Europe (“Water-Reg” project). Presently the FSR focuses on regulation issues for the following three sectors: energy, transport, communications and media. The new working group on “water sector regulation in Europe” will gather researchers, regulators and operators from countries across Europe.

1The Florence School of Regulation is a European forum dedicated to economic regulation where policy and business decision-makers, regulators, regulated companies and academics from different countries who are involved in regulation can meet, allowing the development of cross-country issues as well as the comparison of national experiences and country specific regulatory problems. The FSR works closely with the European Commission. 2The Economics of public-private partnerships Chair is part of the Sorbonne Graduate Business School from Paris. It is a research group that gathers academics and practitioners from various institutions. Its aim is to promote the development of a network of researchers and decision-makers interested in issues related to governance and regulation of public services.

Florence School of Regulation

Energy sector

Transport sector

Communication & media sector

Water sector

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First step: 1st seminar on “smart regulation & governance for water services in Europe” In order to launch their common project, the FSR and the EPPP Chair organised a first seminar on “Smart governance & regulation of water and sanitation services in Europe” in February 2013. This seminar gathered researchers, regulators and operators from across Europe. It aimed at: ü identifying the main topics and key issues which will be the core subject of the working

group on water sector regulation ü identifying and gathering the key persons, competence and knowledge from across Europe

on “water sector regulation”. The following hot topics were identified and were listed as part of the roadmap of the working group. Competition Regulation Governance Tariffs How to generate competition?

Investigate the influence of the environment surrounding the regulator. The effectiveness of regulators depends upon the political, economic and social environment in which they operate.

What optimal scale for water & sanitation services operation? What is the efficient scope to operate water & sanitation services?

Private operators’ revenues depending on volumes sold: how to change this incentive?

Incentive to invest?

What governance works well for regulation? Principles of good internal governance for regulators.

Local public services are organised through multi-utilities at multi-levels (from municipalities to local public bodies). Given this context, what governance would be the most relevant and efficient in the water sector?

What objectives for tariff setting: "polluter pays principle" compliance, cost recovery, internalisation of externalities, performance incentive?

Transparency & accountability issues

Incentive regulation - what water price cap for the water industry.

Normalisation & standardisation of tariffs to allow easy international comparisons

Exploring & addressing lock-in issues during renewal stages

Long term reflexion on technical, social, environmental and economic sustainability of infrastructures.

Addressing "access to water" issues through tariff setting?

National regulator along with contract regulation?

Regulation through benchmark?

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Second step: 2nd seminar on “water sector regulation in Europe” In the continuous implementation process of “Water-Reg” project, a second seminar on “water sector regulation in Europe” was organised on November 28th and 29th 2013. During this second seminar, the architecture of the “Water Reg” project was presented. It is composed of two complementary pillars:

– Research area – Capacity building area.

Research area at FSR Some working teams from different European countries have been identified, set up and gathered. These working teams are composed of the water & sanitation services national regulator, key researchers and key operators. These teams represent the core basis of the research work which will be done by Water Reg project. Indeed, researchers will work on issues and topics jointly defined with regulators and operators at the scale of their national water sector. They will use data from regulators and operators.

Key Operator

Regulator

Key Researcher

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The map below shows the five European countries for which a three part working team has already been identified and gathered.

During the session n°2 of the 2nd seminar, some research avenues have been discussed and identified (see page 19). They should be explored in the near future by the working teams. The research roadmap of “Water Reg” project will derive from these research avenues. It still needs to be specified and detailed according to the data available. Capacity building area at FSR The capacity building area main activities will be to:

• Propose training courses on regulation in the water sector: Efficiency of regulation models, feed-back & experience sharing from regulators & operators, sector fragmentation/concentration & adequate regulation models, national institutional framework & regulation models, price cap, cost plus & hybrid tariff regulation…

• Organise European seminars specifically dedicated to « Water Reg » project • Organise European multi-sector workshops & experience sharing with other network

industry sectors (energy, railway sector etc…) • Promote and facilitate networking

Moreover, some possible collaboration and synergies with IGOs should be explored:

• Danube Water programme from the World Bank • Water Governance Initiative, (WG2 on performance) from the OECD • Network of economic regulators (NER) from the OECD • IWA – perspective of 2014 Congress with a focus on services regulation

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Session 1 - Researchers perspective Water economics, past research work and future projects Stéphane Saussier – Sorbonne Business School Water regulation issues The French national water agency (Onema) asked us to work on the following issues:

1. What are the driving factors of water prices? 2. Is the governance choice a driving factor? 3. Are local authorities rational? Do they use the renewal times of public private contracts

in order to penalize inefficient private partners by not renewing them? Using a data set coming from the French Environment Institute (IFEN) and Insee (SOeS), complemented with political data, we worked on a panel of 5000 municipalities, representing 75% of the French water consumers, with observations for the years 1998, 2001, 2004 and 2008. List of data used • Technical differences

– network length, – water consumption, – population growth, – network renewal, – leakage, – complexity of water treatments performed by the operator prior to water distribution – origin of raw water (surface/ground water), – water imports, – touristic area.

• Contractual choices – contract duration – date of signature – identity of the contracting partners

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Using the above mentioned data, the number of renewed contracts for private management of water services was assessed for the period 1998-2008.

Looking at the public/private contracts, only 13% of switches between public and private operators were observed during the period 1998-2008 from private to public or from a private operator to another one.

13%

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The following price difference between private and public management (all things being equal) are being observed, according to the municipality size. Price is 27% higher on average when the water service is managed by a private operator in cities supplying less than 10.000 inhabitants. However 21% of this price difference can be explained through exogenous characteristics of the service. But a difference of 8% still remained unexplained. Price is 23% higher on average when the water service is managed by a private operator in cities supplying more than 10.000 inhabitants. However the total price difference can be explained through exogenous characteristics of the service (treatment complexity, raw water quality...).

Cities w/less than 10.000 inhab. Cities w/more than 10.000 inhab.

Several results were drawn form these research. Municipalities with fewer than 10,000 residents pay a significant price premium for water provided by private franchisees compared to publicly provided water, ceteris paribus. Small cities appear to suffer from problems described by Williamson (1976) – i.e. 8% price difference between private and public governance & no rationality in observed switches. In contrast, larger municipalities do not pay a premium. Larger municipalities are significantly less likely to renew incumbent franchisee that charges an “excessive” price of water, while small municipalities’ renewal patterns are not influenced by franchisees’ excessive pricing. Big cities in France appear to have sufficient bargaining power to prevent water companies from extracting significant quasi-rents i.e. No price difference between private and public governance & cities switch when it is efficient to do so.

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Moreover, we have observed that governance structure is not the main driver of water prices. Hence there are other possible drivers to explore such as regulation issues. Other topics should also be touched upon such as accountability issues.

Some open issues for future research projects remain:

• How to practically regulation through benchmark? Using which methodology and which rules of the game (Pollitt & Haney 2013)?

• What should be the strategy regarding performance indicators: use a limited (standard)

or comprehensive (advanced) set? Data definition and collection issues. • Tariffs setting: fixed & variable blocks, progressive blocks, addressing social issues as

well as environmental externalities…

• Optimal scale: “there is no way for a regulator with 700 people staff to regulate 300 services”. What about the French water sector counting more than 14.000 water services? Looking for an optimal scale to operate water services? Need for a French “Galli” law and the definition of Optimal Territory Areas (ATO)?

• Bundling: help regulation and also increases competition (Desrieux-Chong-Saussier

2012)?

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Paola Valbonesi – University of Padova Water sector regulation in Europe: the Italian case In 1994, a new law, the Galli law, was passed in Italy. Its aim was to design a new framework for the Italian water sector. It defined Integrated Water Service (IWS) which supply, transport and distribute water and collect and treat wastewater. It also defined 91 catchment areas over the country, called Optimal Territorial Basins (OTB), taking into account hydrographical, political, administrative criteria. A new tariff system based on full cost recovery principle was designed. A National Committee, with no independent regulatory power, was created as well as OTB Authorities bearing some local functions (regulation/programming/monitoring of the IWS) and the infrastructure ownership. The management of IWS was held by a single and independent operator, contracted out by the OTB Authority. The reform aimed at favoring new investments and improving both scale and managerial efficiency, assigning main functions at local level (Muraro and Valbonesi, 2003). A “fairly” price-cap mechanism was implemented based on a pre-specified parametric formula, used to define the “modeled” costs for each OTB according to the local service characteristics. Each OTB Authority should compare its own planned operating costs – computing the Average Real Tariff – with the modeled costs (called Limit Tariff) and, according to defined rules, fix minimum efficiency improvement rates. Limit Tariff: Tn=(C+A+R)n-1 * ((1+∏+K)/ m3) Average Real Tariff: ART = (C + A + R) / m3 � C = operation costs � A = amortization costs � R = capital remuneration component � ∏ = inflation rate expected for the current year � K = price cap, i.e. max rate of increase over planned inflation � m3 = volume of water provided

Those operators who succeed in delivering the service at a lower cost than the one assumed by the OTB Authority kept the benefits as in price-cap methodology. However, differently from traditional price-cap used in yardstick competition, the Italian regulatory model was organized according to a decentralized pattern. Hence a lot of exceptions and differences with regard to regulatory designs (governance, tariff structure…) were observed at local level. Moreover, OTB Authorities were often not able to give the right incentives to the operating firms (i.e. local regulatory capture). In 2002, the National Committee proposed a re-formulation of the water tariff setting rules which have never been implemented (D’Alpaos and Valbonesi, 2006). In such a system, cost efficiency was not well monitored and no effective incentives were provided to IWS. The level of investments remained very low, in particular for wastewater collection and treatment; and in the network maintenance. Moreover, the quality of service provided showed a large heterogeneity in different areas.

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Investments needs by geographical area

On May 2011, “Decreto Sviluppo” implemented a reform of the Italian water sector. A new National Water Authority with independent regulatory power (AEEG) was created. It has to set new rules to provide incentives for investments in order to increase efficiency in the service provision (i.e. reduce leakages, promote innovation, etc.) and to increase IWS performance. Within two years, AEEG has to set a new tariff system to connect service quality with tariff level and to make water affordable for “vulnerable consumers”. With this reform, OTB, in their previous form & role, will disappear. Different catchment areas, “Basin”, will be set up and governed by “Basin Councils”. Some open issues remain: Institutional setting � design water basin borders in order to exploit all advantages from economies of scale

and scope in the local management of water resource � increase efficient coordination in a multilevel governance scheme � reduce regulatory risk , uncertainty and the number of existing rules � organise a national Task Force to support local actors/institutions involved � adopt a “more economic approach” using tax, tariff or intake prices to create incentive

for agents’ behaviour Increase efficiency, investment & service quality � data collection over different years for panel analysis � AEEG should have the economic resources to implement benchmarking analysis

regularly � on top of standards for different water uses, design incentive system to increase

investment for environmental protection and process innovation � design a new regulatory framework - short and long run - to foster investments in the

sector, along with new financial tools Tariff and affordability � new rules to design a tariff structure to define transparent and comparable tariffs � how to relate tariff level to the service quality provided � design a system of incentives to foster virtuous agents’ behaviour (i.e. resource saving) � design a policy to support vulnerable consumers

The Italian water sector is characterised by a lot of heterogeneity, often inherited from past implementation of different rules at local level.

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Marian Garcia Valinas – University of Oviedo Water economics: some empirical contributions in the Spanish residential sector Urban water supply is considered a service of general interest in the European Union (EU, 2001). Residential water consumption is mainly urban and it accounts for 70% of urban water uses. Hence supplying domestic urban water users a priority for most water services. In Spain, residential water demand is heterogeneous depending on the territory studied. Moreover, different public institutions are in charge of designing water public policies. Residential water consumption according to the Spanish region (litres per capita and day; INE, 2011)

Residential water consumption evolution (litres per capita and day; INE, 2011)

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Before studying urban water pricing, it is important to characterize the residential water demand. The general framework for such a characterization is described below (Arbués, F., García-Valiñas, M.A. and Martínez-Espiñeira, R. (2003), “Estimation of residential water demand: a state of the art review”, Journal of Socio-Economics, 32(1), 81-102)

Usually, price elasticity is low (<1) but it gets higher in the long run. Building upon this general framework, some research was undergone to extend this standard approach. For instance, using a Stone-Geary utility function, the amount of water not sensitive to price or income changes (minimum threshold) was assessed. Latent-class models were also used to identify different kinds of consumers showing different responses to price changes. Some experimental economics research is presently being conducted jointly with the Queensland University of Technology (Brisbane, Australia) to apply and test the response on water demand of different incentive patterns (education; moral suasion; monetary rewards). Some interesting empirical findings were achieved. The Stone-Geary functional form helped identify the minimum threshold for the average household in:

– Andalusia, Spain (301 municipalities; 2005), 112 l/person/day – France (5,510 local communities; 1998, 2001, 2004), 123 l/person/day – Australia (2,141 households, Brisbane, 2009-2010), from 92 to 103 l/person/day

However, sometimes this minimum threshold can be reduced by the adoption of efficient technologies and habits which can lead to water savings (from 2 to 20 l/person/day). Additionally both habits and low-consumption appliances are strongly related (Garcia-Valiñas, M.A. and Martínez-Espiñeira, R. (2013), “Adopting versus adapting”: adoption of water-saving technology versus water conservation habits in Spain”, International Journal of Water Resources Development).

Regulation/policy variables: water restrictions, regulation on households’ technologies, educational campaigns,

etc…

Climatic variables: temperatures, rainfall, etc.

Households’ socio-economics: income, age composition, characteristics of

housing, etc.

),( ZPfQ ww =

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Residential water pricing can be designed taking into account different criteria (OECD, 2003, 2009):

§ Efficiency: resources allocation § Equity: affordability/access § Cost recovery: budgetary constrain § Environmental aims: increasing blocks/peak-load pricing

The efficiency criterion relates mainly to marginal cost and elasticity. Sometimes, efficiency objectives lead to equity problems. Equity is linked to political aims and there is no consensus on equity pricing as it induces efficiency losses and does not always comply with cost recovery. Household affordability can be approached in two different ways: – either as an ability to pay issue focussing on vouchers, arrears forgiveness, income assistance – or as a size of the bill issue focussing on tariff structure and cross-subsidies.

Residential water tariffs were studied in Andalusia on a sample of 301 municipalities. The tariff is made of: § a fixed charge § a variable charge with increasing blocks, in average, 3-4 blocks (García-Valiñas et al., 2010) There are no free allowances of water. The average water “value” is expressed per m3 (INE). Average water price Total Supply Sanitation/sewerage Spain 1.42 0.88 0.54 Andalusia 1.25 0.80 0.45

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Residential water tariff structures in Andalusia (2005)

Half of the municipalities from the sample applied discounts to water tariffs and half did not. Among the municipalities applying discounts, social discounts represent 61% of the discount devices implemented, efficient consumption discounts 1% and both efficient and social discounts 38%. Within a broader reflection on affordability issues, several affordability measures have been proposed. For instance, dividing water expenses by an index of purchasing power (OECD, 2003; Reynaud, 2008): AI = WB/Y § According to World Bank or OECD, households’ water bills should not exceed 3-5% of

their income. Reynaud (2008) define “water-poor” household as “a household spending 3% or more of its income for paying water charges”.

§ However, according to OECD (2003, p.37): “The percentage of income spent on water for luxury purposes should be of no particular concern to those interested in social and affordability policies (…)”

§ In such a context, it becomes very important to distinguish between basic needs and “luxury” or “superfluous” water consumption.

Affordability ratio

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Some open issues for future research projects remain: § Economic analysis in the design of water prices:

extending the standard approach on water demand marginal costs estimation welfare and affordability issued

§ In the short/medium-run:

analyzing the impact of non-pricing instruments on water demand fiscal illusion designing optimal social IBT

§ Data availability and collection

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Session 2 - Regulators perspective Issues at stake in the water sector and applied research expectations – AEEG, Italy – Eleonora Bettenzoli – National regulation commission, Bulgaria – Daniela Stoilova – Ministère de l’écologie, du développement durable et de l’énergie, France – Camille

Meunier – ERSAR, Portugal – Alvaro Carvalho – Water regulation authority, Albania – Arjan Jovani The different presentations from the European regulators listed above helped identified research avenues which should be explored during the first three year cycle of the Water Regulation project. These research avenues are summed up below. Investments Because of technical and economic characteristics of network industries, infrastructure represent up to 80-90 % of the services costs. These costs are fixed and weigh on service charges regardless of volumes sold. Substantial investments are required not only to create water and sanitation services (WSS), but also to maintain the service quality and renew the equipment. The ability to invest in services is thus a major issue for good economic regulation of services. Regulators want to develop and implement incentive mechanisms favoring investment and long-term planning in order to maintain and improve the technical and environmental performance of services. Given the different situations and characteristics of water and sanitation services in Europe, the issues identified may however differ somewhat from one European country to another. Indeed, in Eastern European countries, the issue of investment focuses more on the financial capacity of services to upgrade their infrastructure and to ensure a satisfactory service quality to users. Methods of price-cap and cost-plus have shown their limits, particularly due to significant information asymmetries or limited ability to reduce inefficiency. Hybrid models must be developed in order to reduce information asymmetries with operators or to promote, for example, opex savings which could be redeployed to fund capex needs. In Western Europe, the investment issue is more about equipment renewal and sustainable asset management policy implementation. Thus, the challenge is to implement efficient and reliable asset management policy and tools to help services adopt long-term planning of investments. All these reflections on investments are ultimately linked to the issue of permanent and sustainable financing of services. If in Western Europe maintaining an affordable but sustainable water price is a central objective, the need to increase water tariffs in Eastern European countries is a crucial issue. Thus, thinking about investments inevitably leads to the issue of cost recovery which is an important economic element of the Water Framework Directive.

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Regionalisation, optimal scale Because of their techno-economic characteristics already mentioned above, water and sanitation services, as natural monopolies, are more efficient when managed at a level enabling a maximum of scale economies. Thus the optimum size for the organization and management of water and sanitation services is at the heart of the concerns of economic regulation. How to determine this optimal size? What are the main sources of economies of scale? Is regionalization of services economically and technically efficient? This reflection on optimal scale also concerns regulation itself: is it more effective and efficient to promote multi-utility regulation? Does multi-utility regulation helps achieving economies of scale and gains in terms of learning? What is the maximum number of services that a regulator can regulate effectively and efficiently? Soft versus hard regulation The OECD is currently completing a study that examines the role of WSS regulators and describes their position in the overall regulatory scheme as well as their mode of internal and external governance arrangements. On the basis of this study, ideas have been discussed regarding the functions and powers which must be assigned to regulators so that they fulfill their mission. How to effectively define the coordination mechanisms between the different levels and bodies of regulation? How to ensure the strict complementarity of regulatory institutions if regulation is fragmented? To what extent do the national characteristics of the water sector (in terms of concentration/fragmentation, management and contractual arrangements, institutional organization) affect the nature of the regulation and its effectiveness? In a situation of "sunshine" or "yardstick" regulation, which minimum mandatory functions and powers should be assigned to the regulatory authority? Is it possible to benchmark regulation authorities and regulatory functions and powers? In this case, what tools should be implemented to assess whether the regulatory objectives set ex-ante are achieved ex-post? How to identify and flag key regulatory functions which bear the major risks of regulation failure? Data collection Data collection is a key function of WSS regulation authorities. Indeed, regulators need to gather relevant information to determine, check or validate tariff setting and appropriate level of investments and to deliver information on service quality and performance. In a context of information asymmetries between regulators and operators, what could be the incentive for operators to transmit truthful information in the short and long run? Which transparency targets or quality performance indicators (not only metric ones) could be set? In this field, some behavioural economics and new institutional experiments could be conducted.

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Multi-sector analysis Network industries share some common techno-economic characteristics. Hence could it be possible to learn from other regulated services such as energy, transport… across Europe? What are the economic regulation methodologies implemented in energy or transport? What is the tariff structure and how affordability issues are taken into account? In other regulated sectors, how do regulators ensure sufficient investments? How do regulators collect relevant data from operators? What is the optimal operation size in other regulated sectors? All these questions represent innovative research avenues that regulators, operators and European researchers should explore in the coming years within the framework of the Water Reg project at the FSR.

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Session 3: Possible synergies with IGOs Danube water programme, World Bank – David MICHAUD The Danube Water Program supports policy dialogue and capacity development to achieve Smart Policies, Strong Utilities, Sustainable Services in the water supply and wastewater sector in the Danube Region.

The Program is jointly run by the World Bank and IAWD, the International Association of Water Supply Companies in the Danube River Catchment Area, with seed financing from the Government of Austria. The Program works with regional, national and local stakeholders to: – promote an informed policy dialogue around the core challenges facing the sector; – strengthen technical and managerial capacity of the sector’s utilities and institutions.

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Why this Program? In the wake of the EU accession and harmonization process, the countries in the Danube Region are undergoing a process of rapid modernization that has a major impact on the status and organization of the water utility sector. Large water and wastewater capital investments and infrastructure upgrading are taking place, often with significant external financial support. However, these investments have not been matched consistently with regulatory, organizational, managerial and technical modernization in the sector’s institutions, and many utilities in the region suffer from chronic problems of overstaffing, poor financial performance, insufficient service quality, and tariff structures that fail to recover costs. To address these challenges, new skills and knowledge are required to ensure high-quality, cost-efficient delivery of water supply and wastewater services, mobilize additional sources for investment funding, and provide incentives for better performance. Countries need to define and implement policies on topics such as reforming utility management, better targeting subsidies to low income groups, restructuring tariffs, improving regulation, professionalizing staff, and improving cost recovery, which are key ingredients for sustainable water supply and wastewater service provision. The Program seeks to facilitate this process. What does the program do? The program develops activities for both policy support (Component 1) and capacity development (Component 2) in the water supply and sanitation sector, at two levels: – At the Danube region’s level, through regional events and activities, as well as targeted

analytical work; – At national level for customized policy advice activities and knowledge support. The Program is developed through five pillars covering topics ranging from strategic policy options all the way to utility operational matters. Some pillars are more directly targeted to institutional actors, and others to utility-level actors, but involvement is fundamentally driven by the participants’ own engagement and motivation. The table below describes in further details the type of activities supported by the Program. The list is not exhaustive, and further activities that contribute to the Program’s objective, can also be considered.

The programme was launched in May 2013 and will last three years.

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Water work of the OECD network of economic regulators, OECD – Céline KAUFFMANN OECD is presently finalising a comparative analysis of water regulators and their evolution over time. This study focuses on the role of dedicated regulatory bodies for water and wastewater services, their position in regulatory framework, their external and internal governance arrangements and the use of tools to ensure regulatory quality. It aims at understanding the role of regulators in their national regulatory framework and their coordination with other levels / bodies of regulation. A survey was conducted according to the structure described in the chart below, and 21 answers were collected.

Some first descriptive results were presented. For instance, most of regulation agencies have been set up in the decades 1990-1999 and 2000-2009.

Date of creation of the different water regulation agencies

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Most regulators are multi-sector regulating bodies. A minority of the regulators interviewed in the survey are water specific regulators.

The different functions and powers of water regulators were recorded and described.

All regulators interviewed in the survey bear the tariff regulation function. Most of them also monitor service delivery performance and analyse utilities investments/business plans. On the opposite, very few of them are in charge of quality standards for drinking water or for wastewater treatment.

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Most regulators have a compulsory power to collect information from the regulated entities.

The analytical report based on the survey will be issued by end of 2014. It will be discussed during meetings of the Network of Economic Regulators (NEC), Water Governance Initiative (WGI) and IWA/ERSAR Forum of Water Regulators (within the IWA Congress).

Some areas of synergies with the Water regulation project were highlighted. The FSR offers a valuable interface with academics. Water regulation project could be the appropriate place to adapt key academic findings to policy making and explore new areas of policy making. This could be done through gathering of research evidence on innovative regulatory approaches: policy application of behavioral economics, performance-based/ incentive regulation, risk based regulation. The project could also explore approaches on measuring performance of public services and of various regulatory frameworks and arrangements for WSS.

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IWA World Water Congress – Alvaro CARVALHO The International Water Association (IWA) organises the high-profile IWA World Water Congress and Exhibition every two years. The 9th IWA Congress will be held in Lisbon, Portugal in September 2014. During this event, various sessions will give the opportunity to participants to present and discuss different themes such as global best practice, advances in fundamental science, innovative research, policy developments and solutions to challenges faced by water professionals worldwide. A specific attention will be given to presentations focussing on the dynamic interactions between water and urbanisation; water, food and energy; and water and climate change. Among the IWA Congress themes listed below, regulation will be given an important focus as a Forum will be specifically dedicated to this topic. Cities and basins of the future Integrated water management for water-sensitive cities; optimising the water– energy–food nexus; managing river basins for environmental benefits. Water policy, governance and regulation in a changing world Policies and strategies promoting innovation in water management; new governance and regulatory arrangements; planning for climate variation, floods and drought; water management responses to demographic change and economic development. Utility management, assets and customers Optimising utility performance; public and private operator responses to the financial crisis; human resources management; stakeholder engagement; customer care and services. Protecting human and environmental health Detecting and tackling microbiological and chemical hazards; micropollutants and emerging contaminants; water and toxicology; public health and sanitation; risk assessment and epidemiology. Water reuse and resource recovery Recovering water, nutrients, energy and materials; new sources for potable and non-potable water; biosolids treatment and beneficial reuse. Information and communication technology for water ICT transforming water management; smart networks, decision-support systems; remote sensing; using big data in water management; mobile technologies for professionals and public engagement; social media for water innovations. Breakthrough science and technology for the water cycle New developments in fundamental research; disruptive technologies that offer radical improvements in the treatment of water and wastewater; improved environmental management.

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Innovative water supply and wastewater technologies and processes Latest developments in technologies and processes used in urban water and wastewater; biological and physico-chemical treatments, membranes, nature-based (waste)water systems and solutions. New industrial water management, technologies and processes Innovative water treatment and wastewater management in key industrial sectors: oil and gas, mining, chemicals, pharmaceuticals, aquaculture, food and beverage, pulp and paper, and textiles.

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Detailed programme – Thursday November 28th

· 14h – Welcome session Speakers: Jean-Michel GLACHANT – Director of the Florence School of Regulation, Maria SALVETTI – Sorbonne Business School

· 14h30 – 16h30

Session 1 - Researchers perspective Water economics, past research work and future projects Chair: Maria SALVETTI (Sorbonne Business School)

Time Speaker 14h30 – 15h Stéphane SAUSSIER – Sorbonne Business School 15h – 15h30 Paola VALBONESI – University of Padova 15h30 – 16h Marian Garcia VALINAS – University of Oviedo 16h – 16h30 Questions & Answers

· 16h30 – 16h45 Coffee break

· 16h45 – 18h30

Session 2 - Regulators perspective Issues at stake in the water sector and applied research expectations Chair: Stéphane SAUSSIER (Sorbonne Business School)

Time Speaker 16h45 – 17h AEEG, Italy – Eleonora Bettenzoli 17h – 17h15 National regulation commission, Bulgaria – Daniela Stoilova 17h15 – 17h30 Ministry of ecology, France – Camille Meunier 17h30 – 17h45 ERSAR, Portugal – Alvaro Carvalho 17h45 – 18h Water regulation authority, Albania – Arjan Jovani 18h – 18h30 Questions & Answers

· 18h30 Cocktail

19h30 Dinner

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Detailed programme – Friday November 29th 2013

· 9h30 – 11h

Session 3: Possible synergies with IGOs Chair: Stéphane SAUSSIER

Time Speaker 9h30 – 10h Danube water programme, World Bank – David MICHAUD 10h – 10h30 Water work of the OECD network of economic regulators,

OECD – Céline KAUFFMANN 10h30 – 11h IWA World Water Congress – Alvaro CARVALHO 11h – 11h30 Questions & Answers

· 11h30 – 12h Coffee break

· 12h – 13h

Session 4: Presentation of Water Reg Project Time Speaker 12h – 12h20 Research area – Stéphane SAUSSIER (Sorbonne Business

School) 12h20 – 12h40 Capacity building area (training, workshop, experience

sharing) – Maria SALVETTI (Sorbonne Business School) 12h40 – 13h Questions & Answers

· 13h – 14h Lunch

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List of participants NAME ORGANISATION COUNTRY ALFIERI Mauro Acque toscane Italy ARLACHOV Dmytro National Commission of the State Public Utilities regulation Ukraine AUDOUIN Christophe Lyonnaise des eaux France BALEV Stoyan Stara Zagora Water Sanitation operator Bulgaria BARDELLI Lorenzo Italian Regulatory Authority for Electricity and Gas (Aeeg) Italy BETTENZOLI Eleonora Italian Regulatory Authority for Electricity and Gas (Aeeg) Italy BIANCARDI Alberto the Italian Regulatory Authority for Electricity and Gas Italy BONDARENKO Olena National Commission of the State Public Utilities regulation Ukraine CARVALHO Alvaro Ersar Portugal COLARULLO Giordano Oxera UK COLELLA Viviana Acea Spa Italy COLOMBI Matteo Publiacqua Italy DERVISHI AVNI Water Regulatory Authority (WRA) Albania ATANASOVA Donika Stara Zagora Water Sanitation operator Bulgaria GABRIC Stjepan World Bank GARCIA VALINAS Marian University of Oviedo Spain GATEL Dominique Veolia France GATZVILLER Espen Brader Danva Danemark GEGA Daniela Water Regulatory Authority (WRA) Albania GLACHANT Jean-Michel Florence School of Regulation HASANI Sami Water and Wates Regulatory Office (WWRO) Kosovo HOMMANN Kirsten World Bank IRACE Alberto Publiacqua Italy JOVANI Arjan WRA of Albania - National commission of water regulation Albania KAUFFMAN Céline OCDE KLIEN Michael Sorbonne Business School France KOZLOVSKA Agnese Public Utilities Commission of Latvia Latvia LE LANNIER Aude Sorbonne Business School France MAITREROBERT Xavier AquaFed - International Federation of Private Water Operators France MARTINSEN Gunnar Advokatfirmaet Thommessen AS Norway MASSARUTTO Antonio University of Udine Italy MATHIEU Tristan FP2E France MEUNIER Camille Ministry of ecology, sustainable development and energy France MICHAUD David World Bank MILENO Rita Utilitatis Italy MOCHUROVA Milkana Institute of Economics at the Bulgarian Academy of Sciences Bulgaria MUSA Qamil Water and Wates Regulatory Office (WWRO) Kosovo NAAS-BIBOW Jens Advokatfirmaet Thommessen AS Norway PANAGOPOULOU Aikaterini Athens Water and Sanitation Company Greece PANDIELLO Javier Suárez University of Oviedo Spain PARISIO Vera University of Brescia Italy RIPA di MEANA Andrea Cassa Conguaglio per il Settore Elettrico Italy SALVETTI Maria Sorbonne Business School France SAUSSIER Stéphane Sorbonne Business School France SHEGAY Anstasia World Bank STERN Jon City University London UK STOILOVA Daniela SEWRC Bulgaria TRIBUZI Giuseppe Cassa Conguaglio per il Settore Elettrico Italy VALBONESI Paola University of Padova Italy VASILEVA Vanya SEWRC Bulgaria

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