Today, the consumers meet a variety of prices of drinking water and wastewater purification depending on their address. This means that households and companies can be subject to price variations depending on where they live.
Some of the price differentials are contingent upon objective factors including customer proximity and the age of company assets. Another aspect of the price differential can be explained by differences in company efficiency standards and operations.
The water sector today
Today the water sector consists of about 2300 public drinking water supply companies. The majority are structured as consumer owned waterworks and about 104 wastewater companies, which are primarily municipality owned operate as well. About 300 of the largest companies are subject to financial regulation ensuring that the consumers pay reasonable prices.
The water sector functions as a natural monopoly. This means that households and companies do not have freedom of choice regarding which water and wastewater companies they receive services from, but that they are linked to local waterworks and/or waste water purification plants. Therefore, it is important to ensure a regulatory framework that supports efficient management and high water quality delivery services from local water providers to consumers and businesses.
New regulation to support an efficient water sector
In 2009 a new regulation was introduced in the water sector, including introduction of efficiency requirements. This has resulted in greater stability and lower prices. In the water and wastewater sectors the total efficiency requirements were DKK 1.1 billion from 2011 to 2016 (fixed prices). Without the law on regulation of the water sector and the benchmark regulation, the requirements would not have been raised and the price of water and waste water would have been about DKK 1.1 billion higher.
Ambitious plans for our future water sector
Today, one of the challenges of the water sector is the fact that the present regulation first consists of a "whip" in the form of imposed efficiency requirements. This means that there is no reward for company owners when the efficiency gains exceed the imposed efficiency requirements. The lack of incentive may discourage further improvements in efficiency gains beyond the requirements.
The government presented The Supply for the Future Strategy on September 15th 2016. Based on the strategy, the government will analyse how to create sufficient incentive structures to increase efficiency gains beyond the base targets established within the requirements.
The government will also analyse possibilities for a better consolidated and efficient water sector characterized by a high degree of supply security, along with guaranteeing environmental and human health protections.
Read The Supply for the Future Strategy