6 December 2022
“As an advocate for the citizens’ rights and interests, I recommend no increase in the price of the water and sewerage services provided by W&S Smolyan, W&S Ruse, W&S Yambol, W&S Stara Zagora, W&S Pleven, W&S Varna, W&S Montana, W&S Veliko Tarnovo, W&S Silistra, W&S Vratsa, W&S Targovishte, W&S Plovdiv and W&S Gabrovo.” This is the opinion that Ombudsman Diana Kovacheva has sent to the Energy and Water Regulatory Commission (EWRC) in relation to the public discussion of changes in the approved prices of W&S services in 2023.
Prof. Kovacheva is certain that the increase in prices is in breach of the principles the EWRC is to apply by law, namely ensuring conditions for universal access to W&S services, protection of the consumers’ interests, economic feasibility of water prices and taking into account the needs of consumers who, due to geographic, field or other reasons, are at a disadvantage.
In her opinion, the citizens find it increasingly difficult to cover the growing bills for water in the situation of crises (economic, political, financial, post-Covid) and an enormous inflation – the annual inflation as at October 2022 in comparison to October 2021 stands at 17.6%.
“Unfortunately, the EWRC has failed to take into account the Ombudsman’s arguments and has raised the prices of the services of nineteen W&S operators. The average increase in the combined W&S services in 2022 in comparison to 2021 is 36%,” the Ombudsman emphasises.
Diana Kovacheva draws attention to the fact that the prices of the W&S services in 2023 are increased in 13 of the 19 regions in the country where the W&S operators have approved business plans for the regulatory period 2022 – 2026.
She notes that the Smolyan Region, where currently the price of the W&S service is the fourth highest in the country, will see the largest increase (24%) in comparison to the prices approved for 2022. Thus, as of 1 January of next year, the citizens of Smolyan and the region will have to pay for a W&S service which is 68% more expensive than the beginning of 2022.
“The citizens of Omurtag have held numerous protests against the harsh regime of water supply which has been in place for years. Next year, they will have to pay a price for the water which is 3% higher than the price approved for 2022 and 4% higher than that for 2021 even though the issues with the quality of the service have not been resolved,” Prof. Kovacheva emphasises.
She also notes that the achievement of the quality benchmark “overall loss of water in the water supply systems” is not taken into account by the regulator when changes are made in the W&S prices for 2023.
“I appreciate that the actions of the EWRC follow the statutory provisions but I have emphasised numerous times over the years that the loss of water along the water supply network is one of the major reasons for water supply regimes in hundreds of places in the country,” the Public Advocate points out.
Prof. Kovacheva adds that the EWRC 2021 Comparative Analysis of the W&S sector gives a result of “complete non-compliance” with the indicator “overall loss of water” for 16 of 19 W&S operators with approved business plans for the current regulatory period.
“In the regions of Montana, Yambol, Razgrad, Targovishte, Varna, Pleven and Vratsa, the overall loss of water exceeds 60%. As a result, the consumers suffer. They have a reasonable request – the price of water should be decreased when the W&S operators tolerate great loss of water,” Kovacheva states.
She also brings to the fore the fact that, in April 2021, the EWRC approved Instructions for the Regulatory Period 2022 – 2026; in those Instructions, the Commission defines the quality benchmark “overall loss of water in the water supply system” as an efficiency indicator but it will be applied for the changes in W&S service prices after the third year of the regulatory period and as late as the first year of the next one.
“Until then, the citizens will pay the price for a service which does not meet the quality requirements for the provision of the service, which is not fair,” the Ombudsman reasons.
In her opinion, Kovacheva also draws attention to the affordability of the price of water for 2023 and notes that the EWRC has not published the data used in its calculation – average monthly income per person in a household by regions in 2021 from the Household Budget Monitoring survey.
“The report of the working group explains that the data are provided by the National Statistical Institute (NSI) under the condition that, when published, the values of maximum error for each area will also be given. This is necessary in view of the fact that the data are not reliable,” the Public Advocate adds.
She emphasises that the determination of affordability, which is essential to ensuring the citizens’ capability to cover their obligations for water, needs to use proven reliable data.
“Very close to the point of affordability are the prices of W&S services for 2023 of: Water Supply Dunav EOOD (price inclusive of VAT – BGN 5.191 given a point of affordability inclusive of VAT of BGN 5.384), W&S OOD Silistra (price inclusive of VAT – BGN 5.284 given a point of affordability inclusive of VAT of BGN 5.545), W&S AD Lovech (price inclusive of VAT – BGN 4.002 given a point of affordability inclusive of VAT of BGN 4.232),” the Ombudsman notes concluding that the prices of the W&S service for these companies could actually exceed the threshold of affordability which is inadmissible.
The Ombudsman has also sent a negative opinion to the EWRC in relation to the price proposal for W&S Kardzhali, noting that, in 2023, consumers will be forced to pay a price for the W&S service which is 45% higher than the price in 2021, also applied in 2022, i.e. from BGN 2.648 (inclusive of VAT) to BGN 3.847 (inclusive of VAT). The price proposed for 2026 is a whopping 86% higher than the one last year – from BGN 2.648 (inclusive of VAT) to BGN 4.927 (inclusive of VAT).
“The business plan and the price proposal of W&S OOD Kardzhali for the regulatory period 2022 – 2026 are reviewed by the EWRC during the last month of the first year of the said period. In this way, on 6 December 2022, the EWRC held a public discussion to approve the prices of W&S services in the Kardzhali region for 2023, 2024, 2025 and 2026 and to amend and approve the price for 2023. This is a precedent in the work of the EWRC. In practice, the regulatory period for W&S Kardzhali has 4 rather than 5 years, which is contrary to the regulatory framework” the Ombudsman notes.
Prof. Kovacheva emphasises yet again that the significant increase in the water price in Kardzhali and the region is inadmissible taking into account the unsatisfactory quality of the service provided.