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ALBANIAN WRAACHIEVEMENTS AND CHALLENGES

REGULATORY AUTHORITY OF THE WATER SUPPLY ANDWASTE WATER DISPOSAL AND TREATMENT SECTOR

AVNI DERVISHICHAIR

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ALBANIAN WRA FRAMEWORK

WATER REGULATORY AUTHORITY ACTS IN SUCH A

WAY TO FIND A FAIR BALANCE BETWEEN THE

INTERESTS OF CONSUMERS, THE CENTRAL

GOVERNMENT, THE PUBLIC, INVESTORS AND

STAKEHOLDERS IN THE WATER SECTOR.

REGULATOR

UTILITY

CONSUMER

LAW 8102, DATE 28.03.1996

TO ENSURE FOR ALL CUSTOMERS THAT WATERAND SEWERAGE SERVICE PROVIDERS DELIVER THEHIGHEST ACHIEVABLE QUALITY AT A FAIR PRICEAND IN A FINANCIALLY SUSTAINABLE MANNER.

MISSION

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Water and wastewater sector is characterized by long-lived investments with relatively lowshort-run marginal costs, that's why is often considered a natural monopoly.

WHY A REGULATORY AUTHORITY?

Companies face high risks by investing in the water sector. The nature of the assetsmeans that companies are exposed to government intervention.

Regulation is required to ensure that THE MONOPOLY SERVICE PROVIDER DOES NOT

ABUSE ITS POWER by charging too high prices or providing low quality service.

Sound regulation CAN HELP REDUCE UNNECESSARY RISKS faced by utilities

Regulation is a modern form of intervention to protect the public interest that seeks to guarantee a better balance between the utility and the

consumer interests under transparent processes

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REGULATORY GOVERNANCE PRINCIPLES

Role Clarity – clear objectives with clear linked functions and mechanismsto coordinate with other relevant bodies to achieve the desired outcome.

Prevent undue influence and maintain trust – decisions and functionsconducted with the upmost integrity, to ensure that there is confidence inthe regulatory regime.

Decision making and governing body structure – arrangements to ensureeffective functioning, preserve integrity and deliver objectives of itsmandate.

Accountability and transparency – periodically reports on activities and itsoutcome to the legistrature, transparency on the operational policies, aswell as accountability to the regulated entities and public.

Engagement – interaction with stakeholders and measures to avoidregulatory capture and conflict of interest.

Funding – impartial and efficient to achieve its objectives Performance evaluation – awareness on the impacts of actions and

decisions, by evaluating not only regulated entities but also itsperformance

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REGULATORY INSTRUMENTS

SECTOR DEVELOPMENT

• Licensing

• Service Standards

• Policy Recommendations /Feedback

TARIFF REGULATION

• Tariff Setting Guideline(s)

• Business Planning Guideline

INFORMATION &

CONSUMER PROTECTION

• Customer-Utility Service Contract

• Published Information & Awareness Raising

PERFORMANCE

MONITORING

• Annual Utility Performance Reports

• Inspections

• Sector Analysis

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SECTOR DEVELOPMENT - LICENSING

Any physical or legal person dealing with the

collection, distribution, disposal and treatment of

water for public use is required to hold a license

from the Regulatory Authority.

To date WRA is applying:

Four licensing categories:

Category A – Water collection and distribution for public consumption

Category B – Water treatment for public consumption

Category C – Wastewater disposal

Category D – Wastewater treatment

New Application form and Procedure, new Licensing Format

New Terms and Conditions issued with the License approval.

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SECTOR DEVELOPMENT - STANDARDS

WRA is setting standards for WWW Companies in improving the quality ofthe service:

National Water Supply and Sewerage Services Sector StrategyNational objectives in the sector.Some challenging objectives still far from being achieved

Water Supply and Sewerage CodeTechnical standards for market operators developedCurrently at document stage, not yet introduced as obligatory standards

The Integrity CodeGuidance for current and future generations of WRA officials

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TARIFF REGULATION

Tariffs setting process / main instrument to achieve the WRA mission

KPIs set as objectives

when approving a tariff

Sewerage Coverage

Regulator perception

Water coverage

Collection efficiency

Metering ratio

Non revenue water

Staff efficiency

Drinking water quality

Hours of Supply

Energy efficiency

Tariff methodology logic:

New Structure of Tariffs – Variable

tariff introduced besides the Fixed

tariff.

Key Performance Indicators –

objective to be reached for each

utility precondition of the tariff

approval.

A Regulatory Business Planning

Guideline – for multiannual tariffs

3-5 year WWW operator’s business

plan.

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INFORMATION AND CUSTOMER PROTECTION

An up-to-date WRA Website

Public Hearings as part of the Tariff Adjustment

Process

Customer Issues Research

Regular Reporting

Transparency and public accountability are seen as

useful incentives for service improvement

Sharing information is the basis of a fair and transparent regulatory framework the WRA wants to provide

Open Discussions

A mandatory Service Contract

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PERFORMANCE MONITORING

On yearly basis, WRA examines the WWW operators performance by:

Grouping the utilities per water

connections;

Identifying KPIs to evaluate the

financial, operational and customer

service performance;

Defining good and poor performance

boundaries;

Performing analysis of data per each

KPI;

Ranking of the utilities based on

their individual achievements;

Inspections for data verification.

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WATER SECTOR ANALYSIS

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48 5055

2010 2011 2012 2013

39,33

111,06

44,39 55,06

141,66

107,99

Households Private Business Institutions

2010201120122013

Licensed number of operators Average tariffs [Lek/m3]

80,3

50,0

11,1

66,6

93,4

84,2

9,3

63,2

44,6

80,8

51,0

11,5

84,6

113,8

82,0

9,5

67,4

59,0

2010

2011

2012

2013

Total & OM Cost Coverage improved, mainly due to tariff increase / not because of management;

Very slight improvements on other KPIs;

Still problems in coverage area, collection efficiency, continuity of supply and non revenue water

Key Performance Indicators

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WRA COST EFFECTIVENESS

38%

29%

9%

24%

WRA staff according to profession

- 76% professional staff (16)- 24 % supportive staff (5)

Total WS billings WRA regulatory fee

0.72%

Average yearly payment of each customer is 73 lek ( 52 cent)

Annual WRA cost over total billings

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CHALLENGES FOR FUTURE

Sector challenges affecting regulation in water sector:

Restructuring of sector as a result of Territorial Reforms

Capacities of LGUs (shareholders) and Supervisory Board

Accuracy and reliability of data

Effective coordination between key actors

(CG, LGU, Operators, WRA and Parliament)

No clear guideline on investments (master plan)

Lack of incentives for water operators

Lack of management and/or performance contracts or service

agreements between LGUs (shareholders) / operators and WRA and

Shareholder

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THANK YOU!FALEMINDERIT!

REGULATORY AUTHORITY OF THE WATER SUPPLY ANDWASTE WATER DISPOSAL AND TREATMENT SECTOR