Only municipalities will be able to approve water and sewage tariffs, and Polish Waters could interfere, but to a limited extent – according to the draft amendment to the regulations on this matter. The commune will also be able to introduce a progressive tariff – the price for water would increase with its consumption.
On Friday, a draft amendment to the Act on collective water supply and collective sewage disposal and the Water Law Act was published on the website of the Government Legislation Center (RCL). The new regulations provide for a change in the method of approving water and sewage tariffs and the role of Wody Polskie as the current regulator of water prices. Until 2017, issues related to collective water supply, including supervision of water supply and sewage enterprises, including verification of investment plans and tariff calculations, were within the competence of local governments. With the amendment to the Act on collective water supply and collective sewage disposal of October 2017, Polish Waters, i.e. the director of the Regional Water Management Board, became the regulatory body. The appeal body is the president of Wody Polskie.
Tariffs return to municipalities
The regulatory impact assessment (IAR) of the proposed amendment emphasizes that the key change is “reassigning the commune council to the exclusive competence to approve water and sewage tariffs.”
“Tariffs understood as a list of publicly announced prices and fee rates for collective water supply and collective sewage disposal as well as the conditions of their application, excluding tariffs changed in connection with changes in the tax on goods and services rates, will be subject to approval by way of a resolution of the commune council” – added. According to the proposed regulations, the water and sewage company will initiate the procedure by submitting an application for tariff approval to the commune head, mayor or city president. Then, the commune head, mayor or president will formally check the draft tariff for compliance with the regulations and develop recommendations for the commune council. “A water supply and sewage company will be able to submit a tariff application each time it documents changes in economic conditions, the volume of services and the conditions for their provision,” the OSR said.
The project provides that the commune head, mayor or president will analyze the changes in the economic conditions of the water and sewage company's business, the costs of the business and whether they justify an increase in the tariff. The applications will later be submitted to the commune council, which will decide to approve or refuse to approve the tariff.
The role of Polish waters
According to the amendment, if the draft tariff assumes “a change in prices and fee rates (…) by more than 15% of the planned tariff compared to the previously applicable average tariffs over a period of 3 years for a given enterprise – then it will be mandatory to obtain the position of the regulatory authority (Water Polish – ed.) (arrangements) regarding the approval of the tariff. If a change in the tariff does not require agreement, the commune council will be able to request an opinion on the tariff for Wód Polskie, but this will not be obligatory. “The solution in question will ensure adequate protection of the local community against unjustified changes in the prices of water supply and sewage services based on substantive premises. The position expressed by PGW WP will constitute an additional premise that will allow the commune council to make an appropriate decision regarding the approval of the tariff,” the RIA stated. It was added that a negative opinion of Wody Polskie will not automatically lead to a reduction in the price included in the draft tariff, “as there may potentially be cases where the negative opinion will result from circumstances other than an unjustified price change”. “Such a situation may occur, for example, in the absence of sufficient justification for a tariff change (when a tariff change is justified due to planned investments, but has not been adequately justified),” we read in the regulatory impact assessment.
The new regulations also provide that the requirement to agree on a draft tariff will not apply to cases where “the change in the level of prices and fee rates for water supply or sewage disposal is greater than the inflation increase or an increase of 15% compared to the average rates from the last 3 years in a situation when the change in question is greater solely due to the level of inflation that occurred during that period.
A revolution in water bills
The amendment is also intended to allow municipalities to introduce a progressive tariff, where the rates will increase with, for example, the increase in water consumption. This will not be obligatory, and the introduction of such tariffs will take place on the basis of an appropriate act of local law; it would have to include individual thresholds in the form of water abstracted and differences between the rates included in individual thresholds. “It is expected that the progressive water fee rate will take into account the number of people in a household, which can be determined, among others, by submitting an appropriate declaration. It is assumed that municipalities that decide to introduce progressive rates will have the opportunity to reduce the prices of access to drinking water for residents, and on the other hand, they will be able to set rates for higher water consumption in a very flexible way,” the project's RIA states.
In August, Deputy Minister of Infrastructure Przemysław Koperski announced that the ministry was working on an amendment to the Water Supply Act, which would provide a minimum of drinking water for a symbolic one zloty.
– One thousand liters is a guarantee of access to free drinking water for every Pole. We want there to be no economic barrier for anyone, but it is different. Some of us use more water, and some of us lack it. We want to encourage Poles to use tap water instead of bottled water. (…) We also want to have access to free drinking water in hotels, restaurants and cafes, as is the case in Europe, he said.
– The next two meters (cubic – ed.) will cost less (than currently – ed.). If someone uses more than three cubic meters per person, they must be prepared for higher bills, because the entire system must be balanced. Those who do not use shared water resources sparingly will have to pay more. Three meters per person is a standard in which everyone can function comfortably, Koperski noted. As the Deputy Minister of Infrastructure clarified, water fees are to be structured in such a way as to encourage water saving.
Paweł Sikorski, president of the “Polish Waterworks” Chamber of Commerce, did not hide his concerns in an interview with tvn24.pl. – It is obvious that nothing comes for free and someone has to finance these gigantic amounts of water. We are afraid that – despite good intentions – the proposed assumptions may lead to a situation where Kowalski in a family with several children, by using more water overall, will finance free water for Nowak without children in a single household – he explained.
Problem with tariffs. Inspection results
In accordance with applicable regulations, tariffs are valid for three years. However, they can be changed – pursuant to Art. 24j of the Act on collective water supply and collective sewage disposal. It provides that in justified cases, in particular if it results from documented changes in economic conditions and the volume of services and the conditions for their provision, a water and sewage company, during the period in which the current tariff is in force, may submit to the regulatory body an application to shorten the period of validity of this tariff together with a draft new tariff and justification. The results of the Supreme Audit Office's inspection of local governments regarding the regulations in force until December 12, 2017, showed that local governments did not effectively protect their residents against excessive increases in water and sewage prices. The audit conclusions indicated the need to establish an external market regulator at the central or regional level. After determining the regulator, i.e. Polish Waters, local governments as well as water and sewage companies submitted numerous comments.
The Ministry of Infrastructure responded to PAP's questions in March last year. pointed out that, in their opinion, the regulator's actions led to a deterioration of the economic situation of water and sewage enterprises, which may affect the quality or continuity of services provided, or cause stagnation in the modernization and expansion of infrastructure.
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