Although it was planned that at the beginning of 2019, the Energy Regulatory Agency (RAE) would give consent to the municipalities to determine the price of water, the deadline will be extended because not all legal requirements have been met.
After the RAE pointed out the problems in the regulation of water prices, the Ministry of Tourism and Sustainable Development (MORT) formed a working group to amend the law on communal activities, in order to create the conditions for the full implementation of the regulation.
In the department headed by Minister Pavle Radulović, they could not confirm to the "News" when the entire work will be completed.
"More and more people are advocating the position that the part related to regulated communal activities (water supply and waste water management) should be separated from the Law on communal activities and that two laws should be made - the law on communal activities (without regulated communal activities) and the law on water services that would regulate issues related to regulated communal activities. The final position on this will be adopted soon and it depends on when the law/laws, i.e. their proposals, will be submitted to the Parliament", MORT announced.
They explained that the suggestions of the RAE will be taken into account through the new legal solutions, whose representative will participate in the working group for drafting the bill.
Amendments to the law on communal activities from 2016 stipulate that the RAE gives consent to water prices determined by municipal companies.
The president of the RAE board is Branislav Prelevic.
In the RAE Report on last year's activities related to the regulation of communal activities, which is currently in the parliamentary procedure, it was indicated that one of the most important issues is the current existence of double agreement on service (water) prices. In other words, the existing legal solution is that the RAE determines the price list in accordance with the methodology for determining prices, while at the same time the municipal assemblies approve the price list.
"The law should regulate the regulations in case of refusal to give consent by the local self-government unit," the RAE report says.
They also point out that the relationship between the amount of the monthly water bill and the average net household income is one of the key issues, which is why the limits of the affordability of those prices should be defined by law.
The position of the regulator is that the procedure for granting RAE consent to the price of the service must be established, while it should be borne in mind that the currently determined period of 15 days is insufficient for the regulator to grant consent to the prices for 23 water supply companies.
Based on the experience in the regulation of the energy sector, RAE proposes that this period be three months.
RAE also proposed that the law clearly determine the conditions for issuing, changing and revoking licenses, as well as the legal consequences in case of revoking the license and protecting the public interest in ensuring the continuity of service provision in that case.
In the report, RAE explains that the aim of the regulation is to enable stable financial and functional operations of local water companies while providing continuous and high-quality service to users at an acceptable price, and that the simple administration assigned to RAE by the current law on communal services does not allow the application of all regulatory mechanisms and instruments that are necessary in achieving the main goal of regulation.
"The purpose of regulation is not merely adopting methodologies, but regulating the relationship between conflicting interests, by definition, inefficient monopoly structures on the one hand and users on the other. For this reason, legal solutions should be improved so that the RAE is given clear powers in relation to the actors whose activity it should regulate and prescribe the ways that will enable the application of those powers", the report says.
The law needs to be changed again
MORT assessed that the shortcomings of certain legal solutions were shown, as well as the inadequacy of certain ones to implement them.
They state that the amendments to the Law on Communal Activities should have contributed to the establishment of a better legal framework for organizing and performing communal activities, which should have resulted in a higher level of communal services.
"Bearing in mind that from the time the text of the law was drafted to the beginning of its implementation, about nine years have passed and that in the meantime some circumstances have changed that directly or indirectly affect the performance of communal activities (business environment, legal framework in the areas of contact, transformation of public companies in companies...), it is realistic that certain legal solutions encounter difficulties in their application and that they need to be changed".
Water for companies costs up to 338 percent
Analyzing the data, RAE concluded that there is a significant disparity between the prices of water for citizens and companies, that is, it is 75 to 338 percent more expensive for companies.
The price for municipal wastewater management services is higher from 40 to 338 for companies compared to citizens.
"From this it follows that there is subsidization of citizens at the expense of companies, which does not reflect the cost principle according to which the user should pay for the service depending on the costs caused by the system. Since prices are formed in municipalities according to different principles, regulation should provide the same conditions for everyone and the same method of price calculation. We note that the law foresees the equalization of prices per unit of measure for legal and natural persons, as well as that the determination of the price of the service is based on the principle of 'recovery of costs', that is, that the price of the service includes all justified costs incurred in the provision of the utility service.
Vučelić's remarks and the announced price increase
Before the law assigned RAE to regulate water prices, there were objections to it from the Board of the Association of Utilities of the Chamber of Commerce.
The President of the Board, Vladan Vučelić, assessed then that the assignment of that competence to the RAE could call into question the constitutionality of the law, as well as that as a result, citizens will pay more for water.
Vučelić, who is also the director of the Podgorica company "Vodovod i kanalizacija", plans to raise water prices by 22,3 percent.
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