1. CROATIA – Water Services Sector
Council for Water Services
Vladimir Šimić, vice-chairman
Lisabon, 8 October 2018

2. Water services sector (1)
Population (Croatia) – 4,17 M
Surface area – sq.km.
Annual turnover (in sector) – EUR 495 M
Fragmented WUTs ( , – 156, )
apx employees in WUTs
Water prices bellow 1,8% of NDI of a household, before EU investments
Business customers – 43% higher prices than households, in average
Water services sector (1)

3. Water services sector (2)
Unaccounted for water ( % u 2009, 2017 – over 50%)
Water supply – available for 94% of inhabitants
More than 200 small unregulated water supply systems (in settlements up to 3500 inhabitants)
Waste water collection - 53% of inhabitants
Waste water treatment - 44% of inhabitants
Water services sector (2)

4. Key players Water utilities (190) -188 public, 2 private
Cities/municipalities (555)
Ministry of Environment and Energy
Croatian Water – national water management agency – resources management, technical assistance and co-financing of local water and waste water projects
Council for Water Services – independent regulator
Key players

5. COUNCIL FOR WATER SERVICES
2010. under the act of Parliament (Water Act of 2009)
Independent state body
Ad hoc body (in reality)
Permanent body (under the Water Act am. of 2013), no governmental decree on organisation has been passed
Main objective – to prevent under-pricing or over-pricing where in place ( Water Management Strategy of 2008)
Proposes to Government – Water Tariff Methodology (decree of 2010)
Established

6. Appointment and Composition
9 councillors; to freely elect their chairman and vice-chairman
5 yr. term
appointed by the Parliament on the Governments proposal
accountable to the Parliament
reporting (annually) to the Parliament
Ministry (of Environment and Energy) – administrative and technical assistance
No. of professional staffers: 1
Annual budget – covers monthly fees of the councillors
Appointment and Composition

7. Consumer’s bills 5 components Water Tariffs (WUTs revenue; M&O)
Fixed - Full
Variable - Social
2. VAT (13%)
3. Development Charge (WUTs revenue; ND&R)
4. Water Abstraction Charge (Croatian Water’s revenue; inter alia ND&R; reallocation to local water projects )
5. Water pollution Charge (Croatian Water’s revenue; inter alia ND&R; reallocation to local water projects )
(Bulk water prices – out of consumer’s bills)
Consumer’s bills

8. Economic regulation (1)
Water tariff
STEP 1 – Local regulation
water utility sets the tariff + mayor’s approval = tariff becomes effective
STEP 2 – National regulation - Ex post (subsidiary)
Suspension of illegal tariff
Interim tariff
Economic regulation (1)

9. Economic regulation (2)
Development charge
Step 1 – Local regulation (DC- tariff)
Water utility proposal
Local council passes (or not)
Step 2 – National regulation (if passed)
Regulator proposing suspension of illegal DC- tariff to the Ministry
Ministry suspends DC-tariff (or not)
Step 2 – National regulation (if not passed)
Regulator to expand payment obligation to cities/municipalities not enacted DC – tariff, if DC has been paid at 50% of C/M (measured in water volume)
Regulator to level DC tariff at the service area
Economic regulation (2)

10. Economic regulation (3)
Bulk water tariff
Step 1
Contract between WUTs
(if not) unilateral decision by the WUT – seller
Step 2
Dissatisfied party to start a litigation + to apply for an interim injunction
Step 3
Regulator issues (and changes) interim injunction with temporary tariff
Economic regulation (3)

11. Average values Water consumption
Per capita litre/day , 3,93 m3/month
Household – 2,8 members
Per household m3/month
Water price (all 5 components)
Households 2,08 EUR/m3
Businesses 2,96 EUR/m3
Consumer’s bill
Per capita – 8,19 EUR/month, 98,35 EUR/year
Per household – 22,95 EUR/month, 275,45 EUR/year
Average values

12. Benchmarking Water Act of 2009, Government Decree of 2010
6 areas 1. Coverage of water services 2. Volume of water services 3. Volume of water supply (invoiced/non-invoiced, breakages, non-complying samples etc.) 4. Quality of service 5. Costs 6. Debt and Capital
KPIs
46 ( )
Results
Collection – YES, analysis – NO, verification - NO
Croatian Water initiative of to reform benchmarking (new KPIs, new definitions, training for WUTs, online entries…; not accepted so far)
Benchmarking

13. Achievements Universal introduction of variable and fixed tariff
Universal introduction of social tariff (not more than 60% of full tariff)
Comparable cost structure
Financial stabilisation in sector
profit 5,6% -total, 0,79 – public sector
losses 0,67 total and public sector (30% of WUTs)
4/5 of water volume sold by 25 WUTs
all distortions occur within 1/5 of sold water
Achievements

14. Challenges WUTs merger new service areas (190 to 38)
„one utility per service area”
non-profitable utilities
water prices control – from „pump up” – overall costs control; from „price cap” to „revenue cap” model
water price – not to exceed 3,6% NDI
Challenges

15. Thank you