1. WATER REGULATORY AUTHORITY
ROLE OF WRA IN REGULATING AND APPROVING TARIFFS FOR WATER SUPPLY AND SEWERAGE SERVICE
Avni DERVISHI , Chairman of Water Regulatory Authority
WORKSHOP STRUGE, MACEDONIA
02 APRIL 2014

2. NEED FOR A REGULATOR The water supply service is a natural monopoly:
Inadequate incentives for the operators to enhance efficiency;
Risk of a poor quality service and higher prices than required;
Risk of domination of the operators over the consumers.
Therefore, there is a need for a regulator to act upon the parties having interests in the sector;

3. NEED FOR A REGULATOR What is a regulator?
It is a modern form of intervention of the central government, in view of protecting the public interest;
It aims to ensure a better balance between the service operators and consumers’ interest, in providing these services under a transparent process for the parties.
Rregulatori
Konsumatori
Operatori

4. WHAT IS WATER REGULATORY AUTHORITY?
The Water Regulatory Authority (WRA) is an independent public institution regulating the water supply and sanitation sector in Albania, established by Law No dated , for the “Regulatory framework of the water supply sector and disposal and processing of polluted waters”, as amended, in order to ensure the security and protection of public interests and to create a transparent regulatory environment.

5. VISION / MISSION Vision Mission
A financially self-sustainable Water Supply and Sanitation sector providing high quality services but affordable for all consumers in Albania.
Mission
To assure all consumers in Albania that the water supply and sanitation service providers offer the best attainable quality at a fair price and in a sustainable financial manner. 4

6. GENERAL RULES & MANUALS
REGULATORY INSTRUMENTS OF Water Regulatory Authority (WRA)
GENERAL RULES & MANUALS
Licensing Rules
Tariff Methodology
Cost Manual
Business & Investment Plan
Manual on Consumers’ Service
SPECIFIC OBJECTIVES
Performance Agreements
License or Tariff Requirements
Benchmarking
MONITORING
Performance periodic monitoring
Field inspections
Performance Report
INFORMATION & PUBLIC PARTICIPATION
Annual Performance Report
Hearing sessions
Sample contracts

7. LICENSING
DCM No. 958 dated , “On approval of License Categories…” and “Licensing Regulation”, approved by NRC by virtue of Decision No. 29, dated
The National Regulatory Commission (NRC) is the only authority licensing all natural persons or legal entities operating in the Water Supply and Sanitation sector.
License categories are as follows:
Category A: Collection and distribution of water for public consumption
Category B: Water processing for public consumption
Category C: Collection and removal of polluted waters
Category D: Processing of polluted waters
The period of license validity is four (4) years.

8. WRA MAIN OBJECTIVE Protecting consumer interests
Increasing financial sustainability of service providers
The main instrument to meet this objective is the tariff approval process.

9. TARIFF IMPOSING METHODOLOGY
Approved by NRC by decision No. 28, dated
Tariff objectives
Tariff structure & approved model
Tariff monitoring for other services
Application model
Tariff approval process
Analysis of tariff change proposal

10. TARIFF POLICY OBJECTIVES
The tariffs are progressively increased until the receipts cover all costs, including the amortization and loan interests.
Management efficiency
The providers must show measurable progress for the improvement of technical and financial performance before WRE approves an increase of tariffs.
The families with low incomes should continue to be able to meet the basic needs of consumption, spending a maximum of 5% of their incomes for the water supply and sanitation services
The tariff structure should promote the preservation of resources and sustainable consumption levels.
Cost coverage
Affordability

11. Groups of tariff structures (cubic meter/month)
TARIFF STRUCTURE AND APPROVED MODEL
Categories of consumers
Groups of tariff structures (cubic meter/month)
< 4.5
4.5 to 20
20 to 30
> 30
Family
1.0*
1.0 to 3.0
1.5 to 4.0
2.5 to 6.0
Public
1.0 to 2.0
1.5 to 5.0
2.5 to 10.0
Private
2.0 to 6.0
3.0 to 12.0
The tariff structure is proposed by the operator and is approved by WRA

12. MONITORING TARIFFS FOR OTHER SERVICES
WRA

13. APPLICATION MODEL
Excel sheet document, where the operator introduces data:
Comprehensible and easily completed by the operators;
Facilitates the process of communication between the parties;
Transparent for the stakeholders.
Drafting a Guide on the presentation of application, based on the Business Plan
WRE shall encourage the operators to draft a Business Plan. The operators who have compiled a Business Plan may apply for new tariffs not only for one year but also for a period of 2-3 years.

14. TARIFF APPROVAL PROCESS
Hearing session in the service area (only for the large operators)
Annual balance sheet and information about the subsidies received
Preliminary review
(within 45 days)
Presentation of the application from the operator to WRE
Changes or additions to the documentation submitted by the operator
Delivery of WNRC decision to the operator (final deadline until March of the next year)
Publication of new tariffs from the operator (30 days in advance)
Delivery of WNRC opinion to the operator and local governance – 14 days for feedback from the operator
Presentation to WNRC
Economic Sector Analysis
Preparation of proposal for the tariff change (until 30 June) according to the bas. doc. and consum. opinion. (only for large operators)

15. Determination of tariff structure
PROPOSAL ANALYSIS FOR TARIFF CHANGE
Cost analysis
Deduction of unacceptable costs
O&M scheduled costs
O&M regulated costs
Performance analysis
Performance regulation
Regulation of performance indicators
Tariff imposed
Cashed amount
Average tariff
Determination of tariff structure
Categories of customers and consumption
Tariff categories
Cost analysis for WRE is a duty and challenge, so that they shall be really “reasonable and necessary” for the improvement of services to the benefit of all Albanian people.

16. KEY PERFORMANCE INDICATORSNo
Indicator
Attained level
Objective for the present year
Difference from the objective, expressed in % 1
Water without incomes (losses) 2
Measurement level (% of metering connections) 3
Water quality 4
Supply duration (hours of service) 5
Energy efficiency 6
Staff efficiency (staff/1,000 connections) 7
Water coverage 8
Sanitation coverage
Regulatory awareness 10
Additional measures 11
Cashing rate

17. WATER REGULATORY AUTHORITY
THANK YOU!