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2018 | OriginalPaper | Buchkapitel

Water Regulation: An Innovative Approach

verfasst von : Lorenzo Bardelli

Erschienen in: The Italian Water Industry

Verlag: Springer International Publishing

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Abstract

An innovative approach was adopted by the Italian Parliament in 2011, together with the Government of Premier Monti, when it was decided that they would extend the competences—powers and functions—of the existing independent regulator for electricity and gas, Autorità per l’energia elettrica e il gas (AEEG), to the water sector (subsequently renamed AEEGSI, to include the reference to “sistema idrico” in the acronym). A further innovative approach was developed by AEEGSI in the definition of Italian water regulation. The present paper is a first illustration of both approaches, since my personal belief is that the degree of innovation of the second (in regulation) is deeply related to the degree of innovation of the first (in legislation). In Section “The Reasons for the Innovative Approach in Legislation”, some of the main reasons underlying the reform that was approved at the end of 2011 will be presented; in Section “The New Regulatory Framework”, a brief description of the functioning of the new regulatory governance is reported; in Sections “First Regulatory Period (2012–2015)” and “Second Regulatory Period (2016–2019)”, the regulatory approaches and the respective outcomes with reference to the first and second regulatory periods are illustrated; Section “Non-regulatory Outcomes of Independent Regulation” contains some observations related to the other outcomes achieved by means of independent regulation; and Section “Next steps” reports the next regulatory steps to be considered.

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Fußnoten
1
Referendum abrogativo, June 2011.
 
2
These are companies that have been entrusted to operate water services through an assignment contract. The process by which the contract is awarded (e.g., in-house or competitive process) and the ownership of the companies (e.g., fully local-government-owned, mix of public and private ownership, or, to a lesser extent, fully privately owned) can differ.
 
3
UTILITATIS (2011). ‘Blue Book. I dati sul servizio idrico integrato in Italia’.
 
4
OECD (2011). See, in particular, p. 119: ‘Recommendations on water: …Allow water companies to charge prices that fully reflect costs including the need to renew infrastructure over time. Social concerns should be dealt with using social policies…The existing national commission, Conviri, should become an independent national regulatory authority to monitor water supply and quality, including water that does not enter public distribution networks, enforcing competition rules (in conjunction with the Competition Authority) and quality standards. Its mandate should also include improving the reliability and comparability of statistics on water…Revisit national legislation on the structure of water pricing. Prices should be set as a function of the cost of supply and the level of demand, not as a function of the nature of the consumer, and should fully reflect the polluter-pays principle.’
 
5
It appears to be not a simple exercise to encompass the reform adopted in Italy within the categories of Economic Theory of Regulation and, since this is not a theoretical paper, it is possible to report only few remarks. Economics provides some relevant insights on the decision related to when and how to set up independent regulators: under Public Interest Theories, the regulator is the part of the State in charge of overcoming market failures (market power, externalities and public goods, asymmetric information); within Private Interest Theories, the introduction of regulation is related to the protection of interests of private groups (i.e., producers, consumers, investors); the so-called Economic Theory approaches investigate the causes of the regulation using models of competition among interested groups or parties. The reported categories appear unable to explain the Italian approach, which seems considerably dependent on decision-process failures, both public and private, and is caused by specific forms of transaction/public-decision costs.
 
6
It is worth mentioning that AEEGSI started immediatly to work in the water field also at international level and was the main promoter of Wareg, the association of water regulators.
 
7
Ente di Governo dell’Ambito (EGA) is the legal entity in charge of public functions of planning and tariff proposal for a specific territory, delimitated by regional legislation following criteria of homogeneity (Ambito Territoriale Ottimale, ATO). All the municipalities included in the ATO perimeter have the legal obligation to participate in the EGA and to exercise their administrative attribution together within the EGA. This provision was introduced in 1994 and was not uniformly implemented throughout the country, since many municipalities wanted to preserve their historical prerogatives in the water sector and, as it turned out, certain Regions and the Government were unable to force them to comply with the reform.
 
8
To some international observers, it may appear strange that the regulatory period started while the regulation was still yet to be defined. AEEGSI considered this issue with pragmatism: the first regulatory period was divided into two two-year sub-periods, with the first devoted to data collection and the implementation of a transition tariff mechanism, and the second dedicated to the first introduction of the new regulation.
 
9
AEEGSI (2012a), Decision 585/2012/R/IDR ‘Regolazione dei servizi idrici: approvazione del metodo tariffario transitorio (MTT) per la determinazione delle tariffe negli anni 2012 e 2013’.
 
10
AEEGSI (2013).
 
11
Standardized financial viability of operators was considered in the calculation of Financial and Fiscal Costs, in the CAPEX formula.
 
13
The remaining part of the country, corresponding to 10% of the population, is managed by operators whose tariff proposals are still under review.
 
14
AEEGSI (2015c).
 
15
MTI-2 has also introduced some relevant incentives for quality performance; however, this is beyond the scope of this article.
 
16
AEEGSI (2015a).
 
17
AEEGSI (2015b).
 
18
For example, assignment by competitive process, Institutionalised Public–Private Partnerships (PPPpaved the way to a clear, stable and coherent ), or in-house provision.
 
19
For 109 industrial operators (serving 35 m customers), AEEGSI approved tariff proposals consistent with planned investments.
 
21
Sample of 130 operators serving 46,663,760 inhabitants.
 
22
In AEEGSI regulation, operating costs can be classified in two categories: endogenous (given the duration of the regulatory period, they fall under the responsibility of the supplier) and pass-through (given the duration of the regulatory period, they are exogenous for the supplier). The first category is determined on the basis of current values reported in the year 2011, upgraded with the expected inflation rate (Rolling-Cap regulation), while the second category is adjusted on a two year basis, considering the effective ex-post values reported by accountancy (Pass-Through Regulation). In the first category are included 2/3 of the total operating cost, and in the second category, the remaining 1/3: this is the reason underlying the assumption that, in the new regulation, operating costs are under efficiency pressure.
 
23
See AEEGSI (2017c, d).
 
Literatur
Zurück zum Zitat AEEGSI. (2012). Decision 585/2012/R/IDR ‘Regolazione dei servizi idrici: approvazione del metodo tariffario transitorio—MTT’. AEEGSI. (2012). Decision 585/2012/R/IDR ‘Regolazione dei servizi idrici: approvazione del metodo tariffario transitorio—MTT’.
Zurück zum Zitat AEEGSI. (2013). Decision 643/2013/R/IDR ‘Approvazione del metodo tariffario idrico e delle disposizioni di completamento—MTI’. AEEGSI. (2013). Decision 643/2013/R/IDR ‘Approvazione del metodo tariffario idrico e delle disposizioni di completamento—MTI’.
Zurück zum Zitat AEEGSI. (2015a). Decision 655/2015/R/IDR, ‘Regolazione della qualità contrattuale del servizio idrico integrato ovvero di ciascuno dei singoli servizi che lo compongono—RQSII’. AEEGSI. (2015a). Decision 655/2015/R/IDR, ‘Regolazione della qualità contrattuale del servizio idrico integrato ovvero di ciascuno dei singoli servizi che lo compongono—RQSII’.
Zurück zum Zitat AEEGSI. (2015b). Decision 656/2015/R/IDR, ‘Convenzione tipo per la regolazione dei rapporti tra enti affidanti e gestori del servizio idrico integrato— Disposizioni sui contenuti minimi essenziali’. AEEGSI. (2015b). Decision 656/2015/R/IDR, ‘Convenzione tipo per la regolazione dei rapporti tra enti affidanti e gestori del servizio idrico integrato— Disposizioni sui contenuti minimi essenziali’.
Zurück zum Zitat AEEGSI. (2015c). Decision 664/2015/R/IDR ‘Approvazione del metodo tariffario idrico per il secondo periodo regolatorio MTI-2’. AEEGSI. (2015c). Decision 664/2015/R/IDR ‘Approvazione del metodo tariffario idrico per il secondo periodo regolatorio MTI-2’.
Zurück zum Zitat AEEGSI. (2017a). Annual report to the government and parliament on the regulated sectors. AEEGSI. (2017a). Annual report to the government and parliament on the regulated sectors.
Zurück zum Zitat AEEGSI. (2017b). Report 499/2017/I/IDR to the Parliament on the local governance of the water sector. AEEGSI. (2017b). Report 499/2017/I/IDR to the Parliament on the local governance of the water sector.
Zurück zum Zitat AEEGSI. (2017c). Consultation documents 251/2017/R/IDR and 604/2017/R/IDR ‘Criteri di articolazione tariffaria applicata agli utenti dei servizi idrici—TICSI’. AEEGSI. (2017c). Consultation documents 251/2017/R/IDR and 604/2017/R/IDR ‘Criteri di articolazione tariffaria applicata agli utenti dei servizi idrici—TICSI’.
Zurück zum Zitat AEEGSI. (2017d). Consultation document 622/2017/R/IDR ‘Regolazione della qualità tecnica del servizio idrico integrato—RQTI’. AEEGSI. (2017d). Consultation document 622/2017/R/IDR ‘Regolazione della qualità tecnica del servizio idrico integrato—RQTI’.
Zurück zum Zitat OECD. (2011). ‘OECD Economic surveys: Italy 2011’. OECD. (2011). ‘OECD Economic surveys: Italy 2011’.
Zurück zum Zitat OECD. (2014). ‘The Governance of Regulators’. OECD. (2014). ‘The Governance of Regulators’.
Zurück zum Zitat Petretto, A. (2017). ‘La regolamentazione del servizio idrico integrato: struttura tariffaria e investimenti’, in ‘Vent’anni di regolazione accentrata di servizi pubblici locali’, Collana Cesifin, Firenze: Giappichielli. Petretto, A. (2017). ‘La regolamentazione del servizio idrico integrato: struttura tariffaria e investimenti’, in ‘Vent’anni di regolazione accentrata di servizi pubblici locali’, Collana Cesifin, Firenze: Giappichielli.
Zurück zum Zitat Utilitatis. (2011). ‘Blue Book. I dati sul servizio idrico integrato in Italia’. Utilitatis. (2011). ‘Blue Book. I dati sul servizio idrico integrato in Italia’.
Metadaten
Titel
Water Regulation: An Innovative Approach
verfasst von
Lorenzo Bardelli
Copyright-Jahr
2018
DOI
https://doi.org/10.1007/978-3-319-71336-6_2