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Thursday, June 13, 2024

Water and sewage tariffs. Water companies want to raise their prices due to rising electricity prices. What about Polish Waters?

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High energy prices hit water companies. – Enterprises are not able to finance themselves for nothing in the world – says Marek Wójcik from the Association of Polish Cities and adds that in a moment “we will have a gigantic problem”. Meanwhile, Polish Waters, which approve the tariffs, give the green light for increases only in some cases.

Jeleniewo commune with a population of 3,000 in the Podlaskie Voivodeship. In June, the Department of Municipal and Housing Management changes its legal form to one that allows for co-financing from the municipal budget. “We couldn’t keep up with the growth energy pricesjust like many other enterprises in Poland, says Leszek Sienkiewicz, head of the unit, in an interview with TVN24 Biznes.

However, the problem is not only in this municipality, because electricity prices have increased throughout the country. – Our water and sewage companies are not able to self-finance for anything in the world, and it’s not their own fault – explains Marek Wójcik from the Association of Polish Cities. He adds that “Polish Waters have such a policy that in a moment we will have a gigantic problem.”

Possible bankruptcy filings

Mariusz Bednarczyk, president of Miejskie Wodociągi i Kanalizacja in Piła, estimates in an interview with TVN24 Biznes that a scenario is possible that the management boards of companies will have to file for bankruptcy. – Such a conclusion is, of course, a last resort, but you have to take into account that if the attitude of the regulator, i.e. Polish Waters, is as it has been so far, there may be situations where the liquidity of enterprises will be permanently lost – he points out.

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As Bednarczyk explains, the electricity bill in the Piła waterworks increased by several hundred percent. – Other costs have increased by about 20 percent and these are the grounds for submitting an application for the establishment of new tariffs for water and sewage – he points out.

– Polish Waters received our first application to change the applicable tariff in September last year and considered it negative. As a result, the company’s revenues clearly do not cover the costs incurred – he points out and states that the loss for 2022 exceeds PLN 2.1 million, with revenues of less than PLN 40 million per year.

The second application of MWiK in Piła to Polish Waters was submitted on February 6, 2023. – I hope that this time Polish Waters behave responsibly – he says.

In his opinion, if the situation in the water supply system becomes critical, it will be necessary to consider “who pays and who does not.” – If I have a dilemma whether to pay people who work in waterworks or Waterworks Polskie, whose water or environmental fees amount to over a million zlotys a year, I will choose people – he says.

126 people work in the Piła waterworks, and water is supplied to almost 75,000 recipients.

Living costs ‘increased by up to 30 per cent’

Andrzej Wdowiak, president of the Water Supply and Sewage Company in Szczecinek, which supplies water to 12,000 customers in six communes, also confirms in an interview with TVN24 Biznes that the increase in energy prices has hit the sector the hardest.

– The company’s maintenance costs have increased by up to 30 percent. In the last year, electricity, fuels and gas energy increased the most, but also chemical supplies. There is an increase in production costs, because, for example, fittings have to be imported due to the war Brazil – indicates.

In his opinion, “the regulator (Wody Polskie – ed.) does not want to accept that costs have increased and does not approve new tariffs that correspond to the economic environment.” – He explains it in a perverse way that in this way he protects the interests of recipients. This is utter nonsense, because it really does harm – he emphasizes.

Wdowiak explained that “if companies do not have the money for the proper operation of wastewater treatment equipment, repairs and investment works, then companies will go bankrupt”. – If the baker does not have electricity, he does not have flour, he closes the bakery – he sums up.

“This case concerns 36 million Poles”

Paweł Chudziński, president of the management board of the Poznań company Aquanet, which manages the water and sewage infrastructure in Poznań and neighboring municipalities, says on TVN24 Biznes that “for unknown reasons, the regulator decided not to take into account what the law requires, i.e. to take into account the increase in the operating costs of enterprises “. – We submitted applications in 2020, and since then our electricity has increased two, three and even five times. Gas exactly the same. Various services, materials, all this is growing by several dozen percent – emphasizes the head of the water supply company, which supplies water to 900,000 customers.

He emphasizes that “the regulator rejects almost all applications”. – The latest figures say that he accepted six percent of the applications. – Minister Marek Gróbarczyk (deputy minister of infrastructure) announced in August 2022 that he accepts tariff increases by ten percent, and then withdrew from it a month later – he says.

– This case concerns not only the so-called Kowalskis from Poznań, nearly a million people, but 36 million Poles who are recipients of water throughout Poland. Trade unions are also very concerned because many companies have to introduce contingency plans that affect employees and their families. For example, Aquanet employs less than 900 people – he points out and adds that “unfortunately, there is no light at the end of the tunnel now”.

Protest action

Jarosław Lange, chairman of the Wielkopolska Solidarity, in an interview with TVN24 Biznes informs that on Monday, February 13, a protest action of trade unions began in Wielkopolska. On February 20, a protest of waterworks workers near Waters of Poland is planned.

– The situation is complicated. Management boards of sewage companies inform that revenues do not compensate for all costs, especially those related to electricity. There is a great threat to the functioning of these enterprises – he emphasizes.

As he said, the condition of the company is important for trade unions. – Because it translates into a potential, possible danger of dismissal of employees – he explains.

81 percent of water utilities at a loss

The President of the “Polish Waterworks” Chamber of Commerce, Paweł Sikorski, admits that “the situation of the waterworks is dramatically deteriorating”.

– In January this year, the Chamber conducted a survey among its members on the current financial situation of water supply and sewage companies, in which about 170 entities participated. It turned out that over 81 percent suffered a loss on basic water and sewage operations for 2022.

He added that this has major consequences, because the financial problems of enterprises translate into investments and renovations – As many as 90 percent of entities report that they had to stop investments and reduce renovations, and about 40 percent were forced to incur additional financial commitments to maintain their basic water supply activities. and wastewater collection, he explains.

Commentary of Polish Waters

In response to our questions, Wody Polskie, which approves tariffs for water and sewage (just like the Energy Regulatory Office tariffs for electricity or gas), informed that “by the end of January 2023, the directors of regional water management boards received a total of 804 applications for shortening “Of these applications, in 111 cases the regulator issued decisions adjudicating on the shortening of the tariff period, and in 335 cases there was a refusal to shorten the approved tariffs” – it was reported. This means consent to increases in one case out of seven.

At the same time, it was explained that the reasons for the applications for shortening the tariff validity period being rejected were their formal and legal defects as well as substantive errors. “It should be borne in mind that the procedure for modifying the tariff is a procedure conducted under the procedure and on the principles of the Code of Administrative Procedure. Shortening the period of validity of the current tariff pursuant to Article 24j of the Act on collective water supply and collective sewage disposal is a statutory exception standard tariff approval mode. Water and sewage tariffs are approved for three years.

Wody Polskie explains that in the first stage, the regulatory authority determines whether the circumstances raised by the water supply and sewage company actually constitute a justified case that allows for the validity of the current tariff to be shortened and a new one to be approved in its place. “Only after this qualification of the circumstances indicated by the company is it possible to assess, analyze and verify the draft of the new tariff” – it was emphasized.

According to Wody Polskie, in order to be able to shorten the validity of the current tariff, all circumstances indicated by the water and sewage company as a justified case must be qualified as such by the regulatory authority. “It must not be forgotten that all premises that go beyond the procedure of Article 24j are unjustified costs and, as a consequence, cause an increase in prices for water and sewage. The statutory task of the regulatory body is to protect consumers against unjustified price increases” – it was written in answers.

Joint Tariff Communication

In August, it was reported in a joint communiqué of Polish Waters and the “Wodociągi Polskie” Chamber of Commerce that, as announced, the Chamber, on behalf of the majority of water and sewage companies, asked the Deputy Minister of Infrastructure Marek Gróbarczyk to launch a new process of verifying and approving tariffs of water and sewage companies in connection with with the deteriorating economic situation of enterprises in this sector.

“Minister Marek Gróbarczyk positively agreed to the request of the Chamber of Commerce ‘Wodociągi Polskie’, representing water and sewage companies. From September 1, Polish Waters will start a new tariffification process, i.e. setting prices for water and sewage. It will take place in a special mode – Art. 24j of the Act on collective water supply and collective sewage disposal.

Each local government may submit an application for a change in the water tariff, but each rate will be thoroughly checked and controlled, said Deputy Minister of Infrastructure Marek Gróbarczyk a month later. He added that “water and sewage charges should not increase.”

Read also: The economy is pressing the brakes, entrepreneurs are in very bad moods. “One of the most difficult periods in the 21st century”

Main photo source: Shutterstock



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