Interview – Christian Minelli, Head of The Association of European Regulators in the drinking water and wastewater sector (WAREG) Secretariat

WAREG, the association of European public authorities involved in water regulation, addresses key challenges in the sector, including the economic aspects of water supply and sanitation. In this interview, WAREG explores its role in navigating the complexities of water governance and the importance of effective regulation in ensuring sustainable water management across Europe.

What are the roles and objectives of WAREG in the context of European water regulation and management?

WAREG is the association of European public authorities with economic responsibilities in the water supply and sanitation sector, based in Milan by the Italian Regulatory Authority for Energy, Networks and Environment (ARERA). The relevance of economic regulation in this sector has increased in the past years. Still, we believe there are enormous spaces to promote public awareness about how crucial economic regulation can be as an instrument for effectively enforcing EU water legislation and principles at the local level across Member States.

Water is a public good, but its supply and treatment have a cost. Access to good drinking water and releasing clean wastewater into the environment are public obligations towards all citizens and future generations. However, at the same time, they generate high costs for public or private utilities – in terms of investment, operations and maintenance of water infrastructures – to supply water services to smaller or larger local communities.

Following the recent EU legislation, these costs may even increase in some EU countries in the future, and they could hardly be covered by local or national taxation or by international transfers alone.

Additionally, considering that water is not a product and that it can only be supplied locally, water services are typically delivered under monopoly conditions, and water utilities are unable to identify market signals to make ideal decisions and to set efficient prices for their services (e.g. over or under-investment, inefficient costs, poor innovation and non-compliance with environmental standards).

On the one hand, tariffs defined by economic regulators and paid by citizens through their water bills are a powerful leverage of taxation and transfers. On the other hand, tariff-setting is a complex methodology to incentivise the efficiency of water services’ costs and investment in innovation and environmental sustainability, which are negative externalities and would hardly be done by water utilities.

However, like any instrument, economic regulation also requires specific competencies and skills (e.g., collecting, analysing, and monitoring economic and financial data from water utilities, setting tariffs, and protecting customers), which cannot always be found at the local level or national ministries. In this sense, WAREG has the ambition to understand the different governance models that regulate the pricing of drinking water and wastewater services in EU and EU neighbouring countries.

WAREG Members reflect the richness and diversity of European water governance models, bringing together national and regional regulators, competition authorities and ministerial agencies, all with different economic supervision powers over the water supply and sanitation services. Our main scope is to cooperate, share data on water supply and exchange knowledge of economic regulation tools.

Another scope of WAREG is to support the full implementation of the EU acquis on water within our Members. Through our institutional office in Brussels, hosted by the Energy Regulatory Commission of Brussels (BRUGEL), we offer regular monitoring of EU legislation, we liaise with European associations of water utilities and other stakeholders, and we explain to EU institutions the main challenges in the water sector from our perspective, including the needs of more than 400 million customers that our Members protect in their own countries. Additionally, WAREG promotes the approximation of its non-EU Members to the EU water legislation and to the EU Green Deal targets through training, peer-to-peer activities, and study visits.

How does WAREG facilitate the cooperation and exchange of best practices between water regulators across Europe?

WAREG’s core objective is to strengthen knowledge, innovate and increase the effectiveness of regulation through research and exchange of best practices. We work to strengthen our relationships with EU institutions, international organisations, European associations of water utilities and other stakeholders in the water sector, including academia and opinion makers. This is done by sharing best practices, through working groups, internal seminars, surveys, and the General Assembly of Members that meets at least three times per year.

One of our primary functions as a no-profit association is to allow a smooth flow of regulatory knowledge across our Members. On one side, the Board and the Secretariat of WAREG provide them with a constant stream of information about European regulatory and policy developments, primarily through our website and internal communications. On the other side, we tend to operate with a bottom-up approach to address specific requests from Members. Today, a WAREG Member can expect to receive information from all around Europe on regulatory developments and models, and knows that we can provide specific data on request in a short span of time.

How does WAREG engage Institutions and stakeholders to promote greater awareness of water-related issues?

We work to increase the capacity of our organisation to share professional experience with EU institutions, sector stakeholders and academia. First, as a think tank that analyses and processes information for our Members, while supporting them in their relations with the EU, and secondly, as a source of data for European Institutions, supporting them on specific requests.

WAREG regularly publishes thematic papers and reports on key topics such as water governance, KPIs, utility aggregations, tariffs and the energy-to-water nexus. Additionally, we organise trainings and workshops.

We acknowledge the importance of having an online strategy. For instance, we have redesigned our website and revamped our social media presence. Furthermore, we have started a campaign to increase awareness and educate the general public on water-related topics and the EU Water Acquis. The campaign is called the Water Basics Series. It consists of a dedicated set of articles explaining economic regulation, how it affects the sector, and what the EU water acquis is.

We also pay high attention to raising public awareness of the role of public institutions in addressing specific water sector challenges. Our main initiative in this respect is the European Forum on the Regulation of Water Services (EFRWS), which we organise every two years. The EFRWS is the first and unique Forum to combine the views of European policymakers, regulators, and sector stakeholders on the future trends in water supply and sanitation in Europe.

After the successful 1^st edition in Rome in December 2019 and the 2^nd edition online during the hard times of COVID-19 in November 2021, we will organise the 3^rd EFRWS in Brussels on 6 December. The Forum brings together experts from EU Institutions, international organisations, sector stakeholders and academia from all over Europe to discuss the impacts of the EU Green Deal in the water sector. EFRWS is a public initiative organised by WAREG.

What are WAREG’s future priorities?

We aim to understand all water governance models in Europe, especially in those countries not yet represented in WAREG. We wish to keep contributing to developing a stronger, more efficient, and effective regulatory framework for water customers in Europe.

In the coming years, we aim to strengthen further our collaboration with stakeholders, including the EU institutions, national/regional regulators, and academia, to share best practices, address common challenges, and improve water governance.

We also recognise the need to adapt and evolve to meet the changing needs of the water sector, and we are constantly evaluating our approach to water regulation to ensure that it remains effective and relevant.

We are exploring new ways to leverage technology and data to enhance our monitoring and enforcement capabilities, and we are working to ameliorate the regulatory tools of our Members. We stress the importance of efficiency and effectiveness. Water regulation is not an additional layer of red tape nor a burden, but a tool that contributes to generate more financial stability for water utilities, protecting water customers’ rights and interests and incentivising innovation and environmental sustainability of water services.

Ultimately, our goal is to continue to be a trusted, impartial voice in the water sector, and to work together with our members and partners to ensure the sustainable management of water resources for current and future generations.

*Interview conducted during the 21st International Euro-INBO Conference, October 2023.