In Latvia, the entitled authority for water sector regulation is the Public Utilities Commission (PUC). PUC is institutionally and functionally independent multi-sector regulator performing regulatory functions in energy, electronic communications, post, waste disposal and water management sectors. The water management sector is regulated in areas of water production, water supply, wastewater collection, and wastewater treatment. Water quality is supervised by the Health Inspectorate of Latvia.
PUC is operating in accordance with the Law On Regulators of Public Utilities (Law). In accordance with the Law, PUC in water management sector shall perform the following functions: approve regulations on general authorization for provision of water services; register the service providers; determine the methodology for calculation of tariffs; determine the tariffs; examine disputes in the cases and in accordance with the procedures laid down in Law.
The regulation of water services is covered by the new Law on Water Management Services (Water Law), which was approved on June 18th 2015 and came into force on January 1st 2016. The purpose of Water Law is to facilitate availability of water management services which are qualitative and conforming to the environmental requirements in order to ensure service users with continuous and safe services balancing the interests of environmental protection, sustainable use of natural resources and socio-economic interests. Water Law determines the competence of public authorities in provision of availability of the water management services; general requirements and procedures for the provision and use of the water management services; rights and obligations of a service provider and service user.
According to Water Law and Regulation No. 1227 “Regulations Regarding Types of regulated Public Utilities” in the water management sector PUC regulates the abstraction, accumulation and preparation of water for the use until delivery to the water supply network, the water supply from the delivery site in the water supply network to the service user, the collection and drainage of wastewater to wastewater treatment plants and the wastewater treatment and drainage in surface water bodies. In accordance to the Regulations No. 1227 starting from February 27, 2015, PUC regulates (supervises and sets tariffs) only to utilities whose provided service amount exceeds 100 000 m3 per year. There are 67 regulated utilities and total sum of their provided service amount forms 95% of all service amount in Latvia provided by utilities. All utilities are municipalities owned. Water services in Riga (the capital city of Latvia) are provided by a single utility, which has a 59% share of the overall water service market.
The annual volume of services of 13 utilities (including the service provider in Riga) exceeds 500 000 m3. These companies mostly operate in large cities of Latvia and have an 82% share of the overall water service market.
According to the Water Law the municipalities set a price to respective utilities, if the volume of service provided in at least one of them represents less than 100 000 m3 per annum.
Water Management Law states that tariffs have to be determined according to normative acts, abiding principle that all service users cover all costs for water management services justified as a result of economic analysis.
Methodology for the calculation of tariffs for water management services is developed and approved by PUC. It is adopted as a legal act. The water and sewage tariffs are calculated for each water company based on its costs, plus profit margin which cannot exceed 7% of the total expenses (cost-plus regulation). The tariffs are set in euro per cubic meter and they are the same for all types of users. During a tariff evaluation and approval process, PUC verifies and analyses actual and planning costs and documents supporting such costs to ensure that only technologically and economically substantiated costs, which are necessary for efficient provision of the relevant water management service, are included in tariff.
Quality of Service
To encourage high quality of provided services, PUC in sample order organizes annual inspections of service providers. During inspections PUC examine whether merchants provide services in compliance with legal acts and requirements of general authorization.
If PUC detects any unconformity with requirements or legal acts, PUC sets a deadline for corrections. PUC also has powers to enforce execution of its decisions by issuing warnings or setting administrative penalties. Results of inspections are not published.
Year of establishment – 2001. Regulatory functions in the water management sector PUC took over from municipal regulator of Riga by January 1, 2008 from all others municipal regulators and municipal councils by November 1, 2009. The PUC took over regulatory functions from 17 municipal regulators.
The Law on Regulators of Public Utilities
Number of employees
PUC is established as a single regulator with the consequent administrative and management model, while complying with the requirement to establish a proper organizational structure of the executive body. PUC executive body consists of units responsible for a particular sector regulation, as well as units performing support functions (such as economic analysis, legal support, accounting and administrative units) to ensure effective supervision in regulated sectors. PUC functions in water management sector are performed by PUC Board, Water Management and Waste disposal services department (10 employees) supported by Legal and Economic analysis departments.
Ministry of Environmental Protection and Regional Development
Health Inspectorate of Latvia
Number of regulated operators
Volume of activity
Economic and financial data