ALBANIAN WRA ACHIEVEMENTS AND CHALLENGES
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1 REGULATORY AUTHORITY OF THE WATER SUPPLY AND WASTE WATER DISPOSAL AND TREATMENT SECTOR ALBANIAN WRA ACHIEVEMENTS AND CHALLENGES AVNI DERVISHI CHAIR 0
2 ALBANIAN WRA FRAMEWORK LAW 8102, DATE 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. UTILITY MISSION REGULATOR TO ENSURE FOR ALL CUSTOMERS THAT WATER AND SEWERAGE SERVICE PROVIDERS DELIVER THE HIGHEST ACHIEVABLE QUALITY AT A FAIR PRICE AND IN A FINANCIALLY SUSTAINABLE MANNER. CONSUMER 1
3 WHY A REGULATORY AUTHORITY? Water and wastewater sector is characterized by long-lived investments with relatively low short-run marginal costs, that's why is often considered a natural monopoly. 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. Companies face high risks by investing in the water sector. The nature of the assets means that companies are exposed to government intervention. 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 2
4 REGULATORY GOVERNANCE PRINCIPLES Role Clarity clear objectives with clear linked functions and mechanisms to coordinate with other relevant bodies to achieve the desired outcome. Prevent undue influence and maintain trust decisions and functions conducted with the upmost integrity, to ensure that there is confidence in the regulatory regime. Decision making and governing body structure arrangements to ensure effective functioning, preserve integrity and deliver objectives of its mandate. Accountability and transparency periodically reports on activities and its outcome to the legistrature, transparency on the operational policies, as well as accountability to the regulated entities and public. Engagement interaction with stakeholders and measures to avoid regulatory 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 its performance 3
5 REGULATORY INSTRUMENTS SECTOR DEVELOPMENT Licensing Service Standards TARIFF REGULATION Tariff Setting Guideline(s) Business Planning Guideline Policy Recommendations /Feedback INFORMATION & CONSUMER PROTECTION PERFORMANCE MONITORING Customer-Utility Service Contract Published Information & Awareness Raising Annual Utility Performance Reports Inspections Sector Analysis 4
6 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. 5
7 SECTOR DEVELOPMENT - STANDARDS WRA is setting standards for WWW Companies in improving the quality of the service: National Water Supply and Sewerage Services Sector Strategy National objectives in the sector. Some challenging objectives still far from being achieved Water Supply and Sewerage Code Technical standards for market operators developed Currently at document stage, not yet introduced as obligatory standards The Integrity Code Guidance for current and future generations of WRA officials 6
8 TARIFF REGULATION Tariffs setting process / main instrument to achieve the WRA mission 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. Non revenue water Water coverage Metering ratio Energy efficiency KPIs set as objectives when approving a tariff Sewerage Coverage Collection efficiency Regulator perception Staff efficiency Drinking water quality Hours of Supply 7
9 INFORMATION AND CUSTOMER PROTECTION Sharing information is the basis of a fair and transparent regulatory framework the WRA wants to provide An up-to-date WRA Website A mandatory Service Contract Public Hearings as part of the Tariff Adjustment Process Customer Issues Research Transparency and public accountability are seen as useful incentives for service improvement Regular Reporting Open Discussions 8
10 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. 9
11 WATER SECTOR ANALYSIS Licensed number of operators Average tariffs [Lek/m 3 ] ,06 141,66 107,99 39,33 55,06 44, Households Private Business Institutions Key Performance Indicators 80,3 80,8 84,6 113,8 93,4 84,2 66,6 50,0 51,0 11,1 11,5 82,0 9,3 9,5 63,2 67,4 44,6 59, 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 10
12 WRA COST EFFECTIVENESS WRA staff according to profession Annual WRA cost over total billings 24% 38% 9% 29% 0.72% - 76% professional staff (16) - 24 % supportive staff (5) Total WS billings WRA regulatory fee Average yearly payment of each customer is 73 lek ( 52 cent) 11
13 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 12
14 REGULATORY AUTHORITY OF THE WATER SUPPLY AND WASTE WATER DISPOSAL AND TREATMENT SECTOR THANK YOU! FALEMINDERIT! 13
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