PowerPoint bemutat

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Hot topics an interactive session David
Zetland, Assistant professor of economics at
Leiden University College, The Netherlands
Training Course Introduction to Water Utility
Regulation February 16-20, 2015 Budapest, Hungary
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Compliance

• GH What if regulatee does not comply?
• Penalize or fire manager?
• Other industries?

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Efficiency

• LV Benchmarking tariffs
• unique systems result in unique costs
• Inputs (staffing) vs outputs (m3/facility) vs
  outcomes (m3/capita, leakage, etc.)
• IBNET, VEWIN
• DK No mergers b/c new company cannot set a price
  higher than the lower of the two merging
  companies prices
• Start with two prices, or a blended (weighted)
  price
• Or

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Leakage

• GE How much is appropriate?
• (S)ELL (Sustainable) economic level of leakage
  depends on value/cost of water, i.e., lots of
  water lots of leaks

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Regulated Asset Base

• LT How to estimate RAB value? Rate of return?
• DK How to allow returns on CapEx?
• RAB important for investors (not performance)
• Incentive to inflate (Averch-Johnson effect
  gold plating)
• Value on paper but worthless in use?
• Set RAB return on long term govt bonds

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RAB some ideas

• Capital belongs to municipality, so returns to
  RAB repay (open-bid) construction costs
• Set tariff on outcomes, i.e., bronze/silver/gold
  service quality. Managers choose mix of CapEx and
  OpEx
• Benchmark lower prices after all hit gold?

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Resources and externalities

• LT How to set extraction charges
• Consider alternatives tax less attractive
• LT How to avoid pollution
• Set acceptable levels for ALL users (e.g., ag)

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Service charges

• RU Connection fee to water supply and sanitation
  system, i.e., how to share costs when the
  connection is made between interrelated
  organizations (organizations having mutual
  connection points when being connected to the
  same system)? and do you include in the
  connection fee the compensation cost of the
  regulated entity for paying the income tax?
• MC vs AC

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Shortage

• SA Demand increasing faster than supply (both
  capacity and renewable groundwater reserves)
• Reducing demand (shift v slide)
• Benefit reliability

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Subsidies

• MD Unwinding cross-subsidies among consumers
  classes (e.g., enterprises pay 4x residential
  tariff)
• Different fixed but same variable charges?
• Direct subsidy for poor? (SG, CL)
• GH Subsidy to multifamily
• Via fixed charges (no submeters?)

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Tariffs

• LT customer classes, affordability and block
  rates
• As few classes as possible (Singapore)
• Uniform rates simplest (politicians hate)
• Affordability (better to subsidize poor than sell
  them cheaper water) micro/macro?

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Wastewater

• AE Developing a cost-based tariff for
  recycled water (treated wastewater). Moving
  from subsidy to sale in competition with drinking
  water
• Cost pricing vs market pricing (e.g., auction)

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Water Quality

• AE Increasing the bromate (Br) limit/decrease
  bromate levels in drinking water