site.btaRegulator to Incentivize Water Operator Consolidation

The Energy and Water Regulatory Commission (EWRC) will encourage the consolidation of Bulgaria's water sector through new secondary legislation, to improve service quality and keep socially affordable prices.

The regulator held a public consultation on a draft ordinance on incentives for water operators that have already been consolidated or are in the process of consolidation.

Of all the invited stakeholders, including government institutions, municipalities, and industry organizations, only Maya Dubrovska, head of department at the Bulgarian Water Holding, attended the consultation, according to the regulator's press office.

The draft secondary legislation implements the water supply and wastewater reform commitments under Bulgaria's National Recovery and Resilience Plan. The initiative follows amendments to the Water Act, adopted on June 8 this year, and to the Water Supply and Sewerage Services Regulation Act. These amendments introduce a legal definition of the consolidation of designated water and wastewater service areas, a methodology for assessing consolidation opportunities, and a framework for regulatory incentives.

The aim is to encourage the voluntary consolidation of the designated service areas through economic incentives, while achieving higher quality of water and wastewater services, optimizing costs, and establishing socially affordable prices, the Energy and Water Regulatory Commission  said.

The Commission is expected to apply the incentives during the process of approving the business plans of water operators. Depending on the selected incentive, the water regulator will recognize as economically justified the costs directly related to consolidation, and these costs may be spread over a period of up to three years.

Business plans that include a consolidation process will be reviewed and approved as a priority. They are also expected to be eligible for approval for a longer period. Amendments to already approved business plans will likewise be reviewed with priority when they are related to the consolidation process.

In such cases, the regulator will issue a decision within 60 days of receiving the application, the EWRC added.

The Commission will recognize the planned investments that are directly related to the consolidation process, namely those aimed at integrating the connected water and wastewater systems and assets, constructing connecting infrastructure, modernizing facilities, implementing common information systems, and other related activities.

When the reported investments in the newly integrated service area exceed the investments planned for the consolidation period, the companies will receive a positive financial adjustment during the annual revisions of approved prices or revenues.

At the public consultation, the representative of Bulgarian Water Holding supported the proposed draft ordinance, emphasizing that it had been prepared by the Energy and Water Regulatory Commissionin a timely manner.

Participants in the public consultation, as well as other interested parties, may submit written opinions on the draft to the Commission within 14 days.

The EWRC is expected to make the final decision on the regulatory act at a closed meeting on August 24.