Energy and Water Regulatory Commission (EWRC) Regulatory Framework in Bulgaria 11th Assembly Meeting 15thMarch 2017,Grand Hotel Sofia, Sofia, Bulgaria

Energy and Water Regulatory Commission Multi-Sector regulator: Energy (Electricity, Central Heating, Gas): since 1999 Water: since 2006 Since March 2015: Commission of 9 members Chosen by the Parliament Sub-panel for Electricity: Chairman, Lawyer, Economist, 4 Members with energy expertise Sub-panel for Water: Chairman, Lawyer, Economist, 2 Members with water expertise No of staff: 166 people (members + administration), not all appointed Water and Sanitation Directorate: 26 people, not all appointed 2 departments: Prices and Business plans, Control and Dispute Resolution 2 regional units, not appointed

General Framework for Water and Sanitation (WS) Sector 2000: Water Act 2005: Regulation of Water and Sanitation Services Act 2006: WS Services Quality and WS Services Price Regulation Ordinances 2009: Changes in Water Act (Water reform beginning) 2014: WS Sector Strategy 2014-2023 2016: NEW WS Services Quality and Price Regulation Ordinances 1st regulatory period: 2006-2008 (3 years length, Cost Plus price regulation). 2nd regulatory period: 2009-2013 (5 years length, Price Cap regulation). Extension of the 2nd regulatory period: 2014-2016 due to reform. 3rd regulatory period: 2017-2021 (based on the new ordinances). Population: 7 364 570 people (2011) 28 administrative regions 265 local municipalities 51 water companies (29 state-owned, 21 municipal-owned, 1 PPP) Other public or private companies operate 2000 – Law on Waters; 2001 - Law on Spatial Planning; 2005 – Law on Regulation Water Supply and Sewerage Services; 2006 – Ordinance on long-term rates, terms and conditions for the formation of the annual target levels for quality of water supply and sewerage services; 2006 - Ordinance on regulation the prices of water supply and sewerage services; 2006 – Regulator's Guidelines for the implementation of both stated ordinances; General terms and conditions for the provision of water and sewerage services by WSS –operators; **Ordinance № 4/2004 on the conditions and procedure for connecting consumers and use of WSS systems Ordinance № 9/2001 on the quality of water for drinking and domestic purposes etc.

KEY STAKEHOLDERS IN WS SECTOR Ministry of Environment and Water (MOEW) Water management on national level, National water strategy (2012), EU operational programs management, licenses for water taken and discharge, control on wastewater quality Ministry of Regional Development and Public Works (MRDPW) Legislation framework for the WS sector, WS sector strategy (2014), coordination of water system management and planning and WA work, principal of the state-owned WSOs Ministry of Health (MH) Control on the potable water quality Water Associations (WA) WA manage the WS public assets in areas of more than 1 local municipality, assign contract with WSO, prepare investment programs and approve WSO business plan Local Municipalities (LM) LM manage the WS public assets in areas of only 1 municipality, assign contract with WSO, prepare investment programs and approve WSO business plan Energy and Water Regulatory Commission (EWRC) EWRC regulates quality and prices of WS services Water and Sanitation Operators (WSOs) WSOs operate the WS assets and supply WS services

KEY STAKEHOLDERS IN WS SECTOR

WS Sector Reform OP “Environment 2007-2013”: Project Beneficiaries – Local Municipalities Water Act Changes from 2009: Transfer of WS assets from balance-sheet of the WSOs to the State/Municipalities (public assets); Definition of discrete areas of 51 WSOs (29 state-owned, 21 municipal-owned, 1 PPP) Other municipal or private WSOs still exists Establishment of Water Association for the discrete areas of WSOs, that include more than one municipality for WS asset management Contract between WA and WSO – 2 options: Water Act / Concession Act May 2014: New WS Sector Strategy (2014-2023), prepared by World Bank: Investment achieved: < 200 MLN BGN/year, needed > 800 MLN BGN/year Investment needs for 10 years: 11,7 BLN BGN Consolidation of WSOs OP “Environment 2014-2020”: Project Beneficiaries: Regional WSOs Only regional projects will be financed Waste water collection and treatment – only for agglomerations > 10,000 e.p. Energy and Water Regulatory Commission of Bulgaria, Regulators` Conference EXPO-APA, Bucharest, Romania, 16.06.2015

Regulatory Regime Regulation of Water and Sanitation Services Act: No licensing regime. Only business plans approval 15 main KPIs (developed in the ordinance), long-term levels EWRC can either approve BP, or to require its change by the WSO Price regulation: Cost Plus for first period, Price Cap/Revenue Cap for 5-years periods BP approval: requirement for price approval NEW WS Services Quality Regulation Ordinance KPIs: reduced to 30 from 76 Long-term levels of KPIs set individual for each WSO Separation of WSOs in 4 groups: large, middle, small, micro Assessment of quality of information provided by WSOs Assessment of performance on the levels of KPIs Annual report from EWRC for BP implementation of each WSO and WS sector analysis NEW WS Services Price Regulation Ordinance Consolidation of BP and Tariff approval in one procedure Approval of the BP and approval of price for the 1st year Setting prices for the next 4 years, corrected +I – X (Price Cap / Revenue Cap) Financial stimulus / corrections if KPIs not achieved (pre-defined 5 KPIs for the regulatory period) Option to apply coefficients in X after 3rd year if no investments are made / KPIs not achieved Clear definition when BP/Tariffs can be updated during the regulatory period.

Current status, medium and long-term goals

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