1. WATER REGULATORY AUTHORITY CURRENT CHALLENGES
ENTI RREGULLATOR I UJIT
WATER REGULATORY AUTHORITY CURRENT CHALLENGES
Ndriçim SHANI, Chair of WRA
Lisbon, October 2018

2. Water Regulatory Authority (WRA)
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.
It is a modern form of intervention of the central government to manage WSS services in a monopoly environment in order to protect the public interest against the risk of a poor quality service offered by the operators and with higher tariffs than required.
It aims to ensure a better balance between the service operators and consumers’ interest, in providing these services under a transparent process.

3. Responsibilities of WRA
The exclusive responsibilities of the WRA are:
Licensing the operators in the water supply and sanitation sector
Set up tariffs for water supply and sanitation services
Monitor the performance of service providers
Customer Complaints

4. Licensing of the Operators
WRA issues Licenses for the Operators for the following categories:
Category A - Water collection & distribution for public consumption
Category B - Water treatment for public consumption
Category C - Wastewater disposal
Category D - Wastewater treatment

5. Licensing of the Operators
Based on DCM 958 and the Licensing Regulation by WRA, the Operators should filled the following requirements:
The Technical Director of the utility is graduated in engineering, preferably in hydraulics and/or environment branches, and with an experience not less the five years in the sector.
Hygiene and Sanitation Permission for systems facilities, including a full set of chemical, physical and bacteriological analysis for the water in source .
Environment Permission for the WWTP.
Other technical information for the water supply and sewerage systems, including the WWTP.

6. Licensing Process - Enforcement
LAW No 8102
On Regulatory Framework of the Water Sector
Article 18
Revocation of the License
The RC has the right to revoke the License in case of “materiel failure” of the Licensed Operator to comply with the license conditions.
Article 32/1
Administrative Contraventions
The following violations are subject of WRA penalties...c) a penalty of up to 400€ if the Operator fails to apply the License conditions ç) a penalty of up to 2,400€ if the Operator is exercising of the activity without License.

7. Issues in Licensing and Application in Site
Revocation of the License does not resolve the problem
Low penalties amounts applied in case of contraventions
The penalty is applied to the Operator and not to the responsible persons
Difficulties to comply with the sanitary conditions for the premises and other assets of the water supply and sewerages systems.
Difficulties to find the qualified staff for the technical and management key positions in the remote areas.

8. Proposal for Improving Licensing Process
Revising in general the Law nr “For the WRA” about the penalties.
Revising the legislation (CMD nr. 63) about the flexibility regarding the qualification requirements for the key management staff of the utilities.
In contravention cases the penalty has to be applied to the responsible persons (not to the Operator)
Revising the Law “For the State Sanitary Inspectorate and the normative acts related to the sanitary Inspections for sanitary conditions compliance of different WS systems elements.
Prepare the ground for a “stand by” Operator in cace of License revocation.

9. Methodology of Tariffs Setting
WRA, for both water supply and sewerage services is setting up volumetric and fixed tariffs.
The tariffs are separated for each customer’s categories:
Households
Institutions
Private
One volumetric tariff or in two blocks for WS services
One volumetric tariff for sewerage and WW services
One fixed tariffs for both services.

10. Tariffs Setting Methodology
The tariff setting procedures is based on the following principles:
Costs covering, (direct costs, total costs for a reasonable bill collection rate)
Management efficiency (Performance Indicators and Objectives)
Affordability (5% of the average household expenditures)
Environment protection (avoid negative impact)

11. Tariff Set Up Process Tariff Set Up Process
Preparation of Proposal by the Utility for the New Tariff s
Submission of the Application by the Operator to WRA
Additional Information Requested to the Operator
Economic Sector Analysis
Publication of New Tariffs (30 days prior app. to customers)
After Feedback, Final WNRC Decision to the Operator
Delivery of WNRC Opinion to the Operator and to the LGU
Presentation to NRC
Opinion of the Local Government for the New Tariffs
Public Hearing Session in the Service Area

12. Tariff Methodology (Performance Objectives)
REFORMA NË SEKTORIN UK
Water supply coverage
Sewerage coverage
Non Revenue Water
Direct costs coverage
Collection rate
Metering coverage
Continuity of services
Water quality
Energy efficiency

13. Methodology of Tariffs Setting
COSTS
The main elements of the costs are as follows:
fixed costs (administrative costs)
O&M costs (power, chemicals, staff etc.)
depreciation cost
network extension costs
loan interests.

14. Methodology of Tariffs Setting
REFORMA NË SEKTORIN UK
Non Revenue Water indicator analysis based in water balance drafted in compliance with IWA template with top down method, respectively:
Apparent losses (illegal connections, under billed customers, meters inaccuracy etc.)
Technical losses
Collection rate indicator issues (bad debtors etc)
Establish new Objectives for PIs with related action plan for their achievement.

15. Methodology of Tariff Setting (Art. 18)
Tariff Monitoring
REFORMA NË SEKTORIN UK
Methodology of Tariff Setting (Art. 18)
The Monitoring of Tariffs Applications
The WRA monitors the correct application of tariffs as approved by WRA by regular inspection visits in site
If the WRA finds that the company applies a tariff above the approved adjusted tariff, it will apply penalties provided for by article 32/1, item b, of law no. 8102
If the company has charged for the consumers a higher tariff, the company will correct it in the next billing cycle, and will refund all customers overcharged for the amount approved by the WRA.

16. Tariffs Setting - Enforcement
LAW No 8102
On Regulatory Framework
Article 32/1
Administrative Contraventions
The following administrative contraventions and are subject of penalties by the WRA: a) b) if the Operators fails to apply the WRA decisions on tariffs, a penalty of up to 800€ is applied

17. Tariffs Setting - Challenges
CHALLENGES in setting up the tariffs:
Prerequisite for utilities to submit in WRA a 5 Years Business Plan
WRA must include in their scope of works the tariffs set up for other items as, service connection, meter testing, etc., including the penalties for illegal connections, and so forth.
The service providers may apply differenced tariffs for some public institutions, as: hospitals, schools, colleges, etc.
Having reliable data reported by water companies
Promote and support the aggregation strategy of the small utilities.
In contravention cases the penalty has to be applied to the responsible persons (not to the Operator)

18. Water Sector Performance in 2017
Water Sector in Albania very fragmented with 58 public Operators.
The main Performance Indicators of the sector are, as follows:
water services coverage in urban area 78%
sewerage services coverage in urban area 50%
continuity of water supply 12 hours/day
non revenue water %
direct costs coverage %
total costs coverage 85%
collection rate %
Staff efficiency p./1000 conn.
The Sector is unbalanced while only 17/57 utilities cover Direct Costs, and 4/58 utilities provide water supply services 24/7 hours.

19. Challenges in Implementation of the Reform
The Utilities during the face the following challenges to
implement the water sector reform:
Up to the end of 2017 only 24/57 utilities have finished the reorganization procedures.
Difficulties in registering in NBC of the new organized utility because of a very poor existing or missing documentation about the assets in the rural area, previous debts, lack of balance sheets, etc.
Difficulties to complete the key staff positions with the required qualifications in the small and remote utilities.
Lack of investment to improve the very poor of the assets situation in the rural areas.
Need for additional subsidies from the CG to cover O&M costs for a transition period.

20. Implementation of the Reform (continue)
The Government re-launched the reform in the end of 2017 focused in:
Fighting against the illegal connections (estimated about 20% of the customers) leaving them a grace period of 3 months to be self-declared and signing a contract with the utility;
Penal punishment after the grace period for the illegal connections;
Signing a performance contract between MEI-Municipality;
Incentivizing with the investments the good performance of the utilities;
Incentivizing the aggregation of the utilities.

21. Thank You for the Attention !
WATER REGULATORY AUTHORITY
Thank You for the Attention !
Cel
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