The Estonian Competition Authority (ECA) is a government agency, which operates within the area of government of the Ministry of Ministry of Justice, has a directing function and which exercises state supervision and applies enforcement powers of the state on the bases to the extent prescribed by law.
The ECA conducts state surveillance and issues precepts, for the performance of obligations, specified by law, in the sphere of competition, fuel and energy, public water supply and sewerage system, railway, airport and postal communication. ECA rights and obligations in terms of drinking water supply and wastewater treatment sectors regulation are defined in the Public Water Supply and Sewerage Act (ECA rights entered into force 01.11.2010; https://www.riigiteataja.ee/en/eli/505022015004/consolide).
The functions of the Authority are prescribed by Statutes of Estonian Competition Authority, Competition Act, Electricity Market Act, Natural Gas Act, District Heating Act, Public Water Supply and Sewerage Act, Aviation Act, Postal Act, Railways Act and encompass the natural gas, energy, electricity, district heating, water sector, railway, post and airport regulation (more or less) and overall supervision of these sectors.
The functions of the ECA are divided between main structural units: Competition Division (includes Supervisory Department and Merger Control Department), Regulatory Division (includes Water Department, District Heating Department and Department of Energy and Postal Communication).
The main functions of the Competition Division are exercising competition related supervision; control of concentrations in all economic sectors; analyzing competitive situations, counselling undertakings and raising competition related awareness. The main functions of the Regulatory Division are approving prices and methodologies of connection fees and solving problems of market participants about previous questions in different regulation areas.
Public Water Supply and Sewerage Act provides requirements for determining water price. ECA has to approve the water prices, when water company’s territory is situated in a waste water collection area with a pollution load of 2000 p.e or more (otherwise the local government has to approve the water prices).
The price of the water service has to afford water company to: 1) cover justified operational costs; 2) make investments to guarantee the sustainability of the existing public water supply and sewerage systems; 3) comply with environmental requirements; 4) comply with quality and safety requirements; 5) operate with justified profitability on the capital invested by the water company; 6) develop the public water supply and sewerage system in development areas started before 22 March 1999.
By Public Water Supply and Sewerage Act the recommended principles for calculation of prices for water services shall be prepared and disclosed on its website by the ECA and must take into account following:
Only technical losses are included in water price (commercial losses are not included).
Reasonable profit is calculated by multiplying the value of regulatory asset base (residual value of water management assets in accounting) with a justified rate of return (WACC), (assets created using EU funds are not included to the tariffs).
There are no differences in regulation of private and municipal owned water companies. Prices for water services shall not be discriminatory to different clients or groups. Prices for domestic customers (flat house or non flat house) are same to everyone, because the responsibility of water company ends at the boundary of the immovable (real estate). Between the flats water bill are shared by the condominium (not business of water company).
Quality of Service
Abstracted water volume (million m3): taken from all sources 1749,69578 million m3; Incl. used for water supply 97,55319 million m3.
Average consumption – 60 - 70 litres per person per day;
Sources of water in public water supply systems: 64% ground water; 36% surface water.
Water losses: ca 21% average.
98% of connected population are receiving drinking water that meets all the requirements (2015).
Water Act and secondary legislation on the basis of Water Act provides requirements for drinking water and wastewater treatment quality. The supplied water is safe and of a good quality, when it does not exceed the limits and specific indicators.
The municipalities are responsible for organizing water supply and wastewater collection and treatment in their administrative territory.
Year of establishment: 1993.
Characteristics: Multi-sector regulator, independent regulatory authority; Legal basis: Statutes of Estonian Competition Authority (last one entered into force 01.09.2015). Number of employees: approximately 46 employees (4 in water sector regulation), including 1 Director General (mandated for 5 years) and 2 Deputy Director General; Budget: 1,9 million Euros (2016).
Contacts: ECA – the Estonian Competition Authority, Auna 6, 10317 Tallinn, Estonia
Tel: +372 667 2400, Fax:+370 667 2401, Email: email@example.com Website: http://www.konkurentsiamet.ee
Other relevant entities
Local governments - responsible for municipal infrastructure – including the public water supply and sewerage development planning. Gives by a decision to a water undertaking rights to operate and approve the rules for connection and rules on use of the public water supply and sewerage systems in local area.
Ministry of the Environment - responsible for the regulation and sustainability of water resources and responsible for the regulation of environmental pollution.
Ministry of Health – establishes the requirements of quality and safety for drinking water.
Ministry of Economic Affairs and Communications - responsible for establishing regulation and the conditions of procedure for the establishment of temporary prices for water services for a water undertaking (in the cases it’s necessary).
In 2013, there were 59 agglomerations (waste water collection area) of more than 2000 population equivalent (p.e) and 455 agglomerations of less than 2000 p.e in Estonia. Approximately 70 water supplies (the biggest, that are situated in the waste water collection area of more than 2000 p.e) were serving more than 2000 inhabitants and the rest of them -130 water supplies (that are situated in the waste water collection area of less than 2000 p.e) were serving 50-2000 inhabitants altogether.
In 2015, 86% of Estonian population was connected to public water supply system and 83% was connected to public sewerage system.
In 2014, the water supplies sold ca 41,3 million m3 of drinking water and treated 43,5 million m3 of waste water in total.
In 2000-2015, 893 million € EU and state funds have been transferred to upgrade water management: Small Municipalities Investment programme (SMIP) carried out in 2000-2006, where 17 municipalities were involved − the total cost of the SMIP was approximately 35 million €; 2000(2004)-2006 EU programming period involved 80 municipalities − 239 million € from ISPA/Cohesion Fund allocated for water infrastructure projects; 2007-2013 EU programming period involved 84 municipalities − 469 million € allocated from Cohesion Fund for water infrastructure projects; Since 2000 the Environmental Investment Centre (EIC)* has supported water infrastructure projects with 150 million €.
Legal and institutional framework
The current legal framework in the water sector consists of: law of local governments, law of water, law of public water supply and sewerage, law of drinking water hygiene and quality standards, law of taxes for use natural resources (in line with EU directives). Local governments are responsible for public water and waste water services based on the description of the duties in the law on local self-government. Local governments also give a water undertaking approval to operate in local government area and also approve the rules for connection and rules on use of the public water supply and sewerage systems in licensed territory of a water undertaking. The Ministry of Health is responsible for controlling the quality and safety of drinking water. The Ministry of Environment is responsible for the regulation and sustainability of water resources and the regulation of environmental pollution and the water utility has to obtain the license for water supply (to take the water from nature) to perform public service. Estonian Competition Authority (ECA) controls and approves prices for water and waste water services in the waste water collection area with pollution load of 2000 population equivalent or more. ECA is the multi sector regulatory authority (government agency), accountable to the Ministry of Economic Affairs and Communications, though it’s independent in everyday work. ECA activities encompass the natural gas, energy, electricity, district heating, water sector, railway, and airport regulation (more or less) and overall supervision of these sectors.
Currently there are approximately 70 water undertakings (supplies the water and/or leads off the waste water through public water supply and/or sewerage facilities), that have to coordinate prices with ECA out of approximately 200 water undertakings. Water undertakings that coordinate prices with ECA, supply approximately 90 percent of total amount of water to almost 1,2 million inhabitants (as well as lead off the waste water).
Ownership and management of services.
Ownership structure: 95% companies belong to the local government, others are private ownership companies.
Area – 45,227 km2; Population – 1,32 million (2014), Population density – 29 inhab/km2; Share of urban population - 67% (2013); Number of households - 597 thousand (2011); Average households’ size – 2,13 (2011); GDP per capita – 15 405 EUR (2015).
Main indicators of the water sector
Number of water and wastewater operators – 200;
Percentage of households served: water supply – 86%; wastewater collection and treatment – 83%; Average consumption – 60 - 100 liters per person per day; Turnover – 90 million Euros (2014); Number of consumers - 1,11 million.
Estonia joined the European Union in the spring of 2004. Already at that time, the water legislation was in force and was overall in line with the European Union law. No major problems existed with water supply and wastewater collection in bigger cities where the majority of inhabitants were already connected to water supply and wastewater collection system. In smaller towns and country areas situation was and in some places still are different where existing water supply infrastructure was and still is old and poorly functioning and still not completely covered with public water supply and sewerage. By the time, water supply and waste water treatment investment plans have been prepared, actual investment projects started and large financial resources (including a major part from the EU funds) were used to improve and renovate public water supply and sewerage system in cities as well as in country areas.