EU-driven requirements mean that countries should achieve sustainable financing of water services, and should set tariffs accordingly. Here, Christos Safarikas, Nikolaos Safarikas and Georgios Safarikas present an assessment of the situation in Greece based on the legislation that has been enacted there.
Starting in 2018, water and irrigation providers in Greece must apply new costing and pricing rules for water services. This involves the identification of financial costs on the part of operators, and the determination of environmental costs and resource costs on the part of the state.
This is a major issue for the water supply and sewerage businesses of Greece. It requires a modification of the current pricing. It also requires some providers to increase the water price both for water supply and irrigation.
The rules for the costing and pricing of water services were introduced through a decision of the National Water Committee (Decision 135275 / 22-05-2017, Government Gazette B 1751/2017). The decision also included the method and procedures for the recovery of the cost of water services in its various uses.
This article firstly analyzes the key points of the NWC’s decision. It then analyzes the effects and implications of the decision as it currently stands based on data available for water pricing in Greece.
The legal context
The NWC was established by Law 3199/2003 (§ 1 article 3 of Law 3199/2003, Government Gazette A 280/2003), within the framework for the protection and management of waters, including harmonization with the European Union Water Framework Directive (2000/60/EC).
The NWC decision adopted the general rules for the cost accounting and pricing of water services for various uses and the procedures for the method of recovering the cost of services, including environmental costs and resource costs.
All this was in accordance with article 12 of Law 3199/2003, as well as Articles 8 and 12 of Presidential Decree 51/2007 (Government Gazette A 54 / 08-03-2007), which refers to the definition of measures and procedures for integrated water protection and management in compliance with the provisions of Directive 2000/60/EC.
The main purposes of the NWC Decision
The NWC decision achieves sustainable use and improvement of the status of waters according to environmental objectives and ensures the constitutionally guaranteed public character of water as a social good that is absolutely necessary for human life. The main purpose of this decision is to ensure:
(a) that water pricing policy provides sufficient incentives for users to use water resources efficiently, and,
(b) an adequate contribution of water use differences to recovering the cost of water services at a percentage that it is specified in approved river basin management plans taking into account, where appropriate, the social, environmental and economic impacts of rehabilitation, as well as geographic and climatic conditions.
The decision applies to water services for regulated water uses, as well as to sewage and sewerage treatment services. Water services suppliers include EYDAP (Athens Water Supply and Sewerage Company), EYATH (Thessaloniki Water Supply and Sewerage Company), the DEYA (local water services boards), municipal local authorities (OTA A grade organisations), and Land Improvement Organizations. These service providers determine the financial costs. These services may be provided to public, municipal or private collectively organized (either treated or untreated) water supply networks, as well to informal, hydrogeologically separate networks.
The deadline for water providers to first determine the financial cost was the end of 2017.
Financial cost calculation
For the calculation of financial costs (Article 4 of the NWC Decision), the following cost components are taken into account:
1. Capital cost (C) consisting of:
1.1. The disposable annual capital in the production and provision of water services.
1.2. The opportunity cost of invested capital, which is the return on capital to alternative placements.
2. The operating cost (O), which includes all the necessary costs for the proper operation of each water service organization or facility, excluding maintenance and administration costs. Operating costs are the sum of fixed and variable costs.
3. Maintenance costs (M), which includes expenditures on consumables and labour, so that existing infrastructure is in good working order throughout its useful life and provides seamlessly the services for which it was built.
4. Administration costs and other costs (A), which include the costs associated with the administration of the water service provider, such as the administration staff, the operation of the Board of Directors, the fees of third parties, and the rental of the headquarters.
Environmental and resource costs
The determination of environmental costs (Article 5 of the NWC Decision) and resource costs (Article 6 of the NWC Decision) is approved by the Secretary General of the Decentralized Management, following the recommendation of the relevant Department of Water of the Decentralized Administration and updated on an annual basis. These decisions for the approval of Environmental Cost and Resource Cost are notified by the relevant Directorates of Waters of the Decentralized Administrations to the Special Secretariat of Water of the Ministry of Environment and Energy.
The Water Directorate of the Decentralized Administration shall communicate the environmental costs and resource costs per cubic metre corresponding to the end users to the water service providers and to their respective OTA Grade A by 31 October of each year (Article 7 of the NWC Decision). It is noted that these costs (environmental and resource) are determined by the state and imposed on the providers by it.
The collection of fees by end users is done by the water providers by issuing relevant tariffs for the consumption of each user. This fee (environmental and resource) is allocated to a Green Fund in a Special Account to be set up for the implementation of the relevant additional measures (article 12 of 51/2007).
- Greece, financing, water bills and tariffs, utility management