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Regulatory Impact Assessment (RIA) of conceptual model of price regulation in water supply

Solution period: 10/02/2014 – 11/10/2014
Contract authority: Ministry of Industry and Trade of the Czech Republic
Registration number: číslo smlouvy 03/14/31200
Contact: Ondřej Vojáček (vojacek@ireas.cz)

How to regulate the water sector effectively? The assessment of different regulatory options results in recommendations leading to coordination of activities and implementation of benchmarking among water utilities.

Over the last 25 years, regulation in water supply has steadily evolved in the Czech Republic. In the 1990s, inter alia, waterworks in the Czech Republic were privatised, approved by city assemblies. Consequently, 5,900 water management companies and approximately 2,500 operators of various sizes, governance models and ownership structures were founded and currently act on the market. From the standpoint of individual municipalities, a development characterized by significant heterogeneity can be observed. In many cases, the infrastructure is undermaintained and even the control roles of authorities, owners and operators are not sufficient. Within the Regulatory Impact Assessment, two different scenarios and the current state of regulation were examined. The costs of proposed scenarios and their benefits were identified and quantified in the RIA.

Considering all the identified problems of the current situation and assessed proposals for their solution, a new alternative scenario was recommended. This scenario reinforces the Ministry of Agriculture’s role as well as cooperation with other departments and ministries, the Government Office and the Union of Towns and Municipalities, accomplished by establishment of a Cooperation Council. The aim is to achieve sustainability of water and sewer infrastructures, creating sufficient reserves for continuous renewal of water and sewer systems and ensuring high-quality, smooth and reliable supply of drinking water and wastewater treatment at reasonable prices.

Research team: Ondřej Vojáček, Jan Macháč, Jiří Louda.