28 April 2023
Ombudsman Diana Kovacheva sent an opinion to the Minister of Regional Development and Public Works architect Ivan Shishkov in connection with the revised bill for public consultation of the Water Supply and Sewerage Act, in which she fully reaffirms her position stated in December 2022, because “as can be seen from the table reflecting the proposals received” her opinion was not adopted.
In her new opinion, Prof. Kovacheva once again draws attention to the main problems outlined in the “revised” bill, insisting on its revision. The reason, again, is that the rights and interests of household customers of water supply services are not sufficiently protected and guaranteed.
“At all public discussions within the Commission for Energy and Water Regulation (KEVR) on the prices of water and sewerage services, the Ombudsman insisted on the annual linking of the price of water for drinking and household needs to the performance of quality indicators. The draft legal act envisages the establishment of a new Commission that will only regulate prices, the rules for their formation, reflecting only the structure of costs. Control over the performance of the quality indicators – reduced from 15 to 3 – is to be carried out by Water Supply and Sewerage Associations. This is puzzling, as there is no provision linking the performance of quality indicators to the prices of water and sewerage services,” the Ombudsman writes.
Prof. Kovacheva asks how the Commission will protect the interests of consumers – a principle that should be observed in its activities.
She draws attention to the economic justification of the prices of water and sewerage services – the other principle that the new Commission should apply, and emphasizes that it does not correspond to the single price in the designated territory, substantiated by the initiator of the bill for the purposes of solidarity and reducing inequality in their provision.
“What kind of solidarity and inequality are we talking about under the conditions of different ways of supplying water, for which different costs are incurred. This also contradicts the principle of economic justification of the price”, Diana Kovacheva states categorically.
She emphasizes once again that according to the Strategy for the Development and Management of Water Supply and Sewerage in the Republic of Bulgaria 2014-2023, the “quality for money” goal will be considered accomplished when the Bulgarian water and sewerage companies achieve efficiency and quality of service indicators that are commensurate with the good European practices, and ultimately leading to public satisfaction with the services and prices.
The Ombudsman notes that the proposed draft act omits important indicators – drinking water quality, level of coverage of WSS services, water supply continuity, water supply and sewerage system failures – but simultaneously introduces a new financial burden for household users, i.e. an access fee to be paid regardless of whether or not the service is used, which the Ombudsman strongly opposes.
“The method of determining the social affordability of water supply prices on the basis of the amount of water consumed, as provided for in the bill, entails the conclusion that the access price will not be included in its determination, which is very disturbing,” Kovacheva also writes.
She adds that there is no change in relation to the NSI data on the average monthly income of households by administrative region and recalls that the NSI has repeatedly clarified that the data is unreliable.
Prof. Diana Kovacheva points out another problem where the bill initiator does not even consider it correct to provide for a procedure for application of a lower price of water when the service does not meet the regulatory requirements for quality, including in the case of a ban by the Regional Health Inspectorate on use of the water for drinking-domestic needs or when the water is clearly unfit for consumption, which is inexplicable, to say the least.
“In this regard, the fulfillment of the obligation under Directive (EU) 2020/2184 of the European Parliament and of the Council of 16 December 2020 on the quality of water intended for human consumption (Article 17, paragraph 2) remains questionable – all persons supplied with water intended for consumption receive the following information regularly and at least once a year, and in the most appropriate and easily accessible form”, writes the Ombudsman.
Prof. Kovacheva emphasizes that the bill does not take into account the need for “water aid” to support “vulnerable consumers”. She adds that this is a task assigned by the 44th National Assembly to the Minister of Regional Development and Public Works by decision of 13 December 2019 (SG No. 100 of 2019).
“The bill does not provide for a procedure under which the public consultations on acceptance and amendment of the general terms and conditions for the provision of WSS services will be held. At the same time, the adoption of Regulations for the implementation of the bill is not envisaged”, the Ombudsman also states.
She notes the fact that there is no provision for a state body to approve the general terms and conditions of the contracts with water supply consumers and the subsequent amendments to them, which automatically cancels the application of Article 148, paragraph 2 of the Consumer Protection Act, i.e. the general terms and conditions to be sent to the Commission for Consumer Protection for an opinion on the presence of unfair clauses.
The Ombudsman also emphasizes that the possibility remains in the revised bill for the water supply operator to obtain an execution order for a monetary obligation, regardless of its amount.
“The initiator of the bill did not accept the Ombudsman’s proposal to provide for a procedure before commencing the implementation of such possibility, i.e. for voluntary execution, such as sending an invitation, in which the time limit for payment of the obligation is expressly indicated, after the expiry of which, in case of non-execution, action will be taken to forcibly collect the obligation,” Diana Kovacheva points out. She adds that there is no provision for concluding an agreement to reschedule the obligation.
With regard to remote reading of water meters, the Ombudsman notes that currently water supply operators and heat and water distribution companies use remote reading devices with different data reporting software. She points out that the revised bill again does not set out a text to exchange data between them without this being at the expense of consumers.
She draws attention to the fact that in practice the management of the water supply and sewerage sector passes to the State.
“Currently, 27 water supply operators are predominantly state-owned, of which 14 are 100% state-owned. In case of mandatory consolidation, only these companies and "Sofiiska Voda" AD, serving the administrative region of Sofia city, will remain. It is envisaged that the municipalities which are not members of an Association to join an Association within 6 months of the entry into force of the act. I emphasize again that this is contrary to the provision of Article 21, paragraph 1, item 8 of the Local Self-Governance and Local Administration Act, under which the Municipal Council adopts a decision on the management of municipal property. After the transition of the non-affiliated municipalities to the Association, their residents will accordingly pay a higher price for the water supply service – the single price, for example: for the residents of Berkovitsa the price will increase by 160%, in Troyan by 55%, in Sapareva Banya by 54%, in Bratsigovo by 21%”, the Ombudsman also writes and points out that she does not accept the initiator's argument about the so-called solidarity and equality, because this “is beyond any economic and legal logic”.
Diana Kovacheva also adds that it is not clearly set in the bill what will be the procedure for changing the prices of water supply services after the consolidation until the adoption of the Ordinance under Article 89, given the stipulated different deadlines for accession (6 months from the entry into force of the act) and for the adoption of the by-law (12 months from the entry into force of the act), and asks when the residents of the associated municipalities will start to pay the new single price.
“The ordinances for price regulation, for quality indicators, for the investment programme etc. will be prepared by the Minister of Regional Development and Public Works. The activity of the new independent Commission from the executive will be carried out in line with an ordinance on the prices of water and sewerage services, proposed by the Minister of Regional Development and Public Works and adopted by the Council of Ministers. Currently, under the Water Supply and Sewerage Services Act, the methods of price regulation, the rules for their formation, reflecting the structure of costs, the procedure for submitting price proposals and their approval, as well as the procedure for providing information are determined by an ordinance adopted by the Council of Ministers on the proposal of KEVR”, writes the public defendant.
She also adds that the activities of the new Commission do not include the previous functions of KEVR for approval of business plans, but instead the Commission will only regulate the prices of water supply services.
“I cannot agree with the initiator’s argument that the State’s quota of 35% in the General Assembly of Water and Sewerage Associations was determined in view of its responsibilities for the implementation of the State policy in the sector. In practice, with this blocking quota, decision-making always depends on the State, which is clearly the role of the Association”, the Ombudsman points out.
She also draws attention to another problem related to the performance of quality indicators, which is intended to be controlled by the Associations, and asks whether they have the necessary administrative, financial, expert resources for this. She points out that such a decision of an Association should be preceded by a decision of the relevant municipal councils. She also adds that it is not clear how they will make this decision and that they are being entrusted with atypical functions.
“I consider the lack of a clearly stipulated procedure in case of non-approval of an investment programme by the Water Supply and Sewerage Association to be an omission in the bill. Currently, this is emerging as one of the main problems in approving the business plans of water supply operators because Associations do not make a decision on coordination of a business plan or have voted against it but since it was not returned on time with motivated instructions, it is considered that the business plan is accepted without objections, which, however, does not correspond to reality,” the Ombudsman writes.
She also notes that the Commission for the regulation of the prices of WSS services has very limited powers and that it is not clear from the reasons for the submission of the bill why this restriction is imposed.
“In this situation, it is inexplicable why, with three commissioners at the moment, the new Commission will consist of 5 members. Its composition will require additional financial resources. At the same time, in the reasons for the bill, it is noted that the proposed draft of the act will not have an impact on the state budget”, points out Prof. Kovacheva.
Last but not least, the Ombudsman expresses her strong disapproval of being included in the composition of the Public Council for Water Supply and Sewerage, which is intended as an advisory unit to help address problems within the competence of the minister, especially in view of the fact that the opinions she has sent are not reflected in “the revised” bill.
“You should bear in mind that the Ombudsman promotes and protects human rights by employing the means provided for in the Ombudsman Act. The Ombudsman’s powers are expressly regulated. In addition, under Article 45, paragraph 2 of the Administration Act, the Councils may include experts, as well as representatives of non-governmental organisations related to the activity of the relevant ministry”, concludes Prof. Diana Kovacheva.