Supply of water and waste water
Citizens and companies need drinking water and waste water purification of high quality and at reasonable prices.
Today, the consumers meet a variety of prices of drinking water and waste water purification depending on their address. This means that households and companies can have extremely different prices depending on where they live.
Some of the price differentials can be due to differences in objective factors such as e.g. differences in customer proximity and the age of the company assets. Another part of the price differential can be explained by differences in the efficiency of running the companies.
The water sector today
Today the water sector consists of about 2300 public drinking water supplies, of which the major part consists of consumer owned waterworks and about 104 waste water companies, primarily municipality owned. About 300 of the biggest ones of these companies are subject to financial regulation ensuring that the consumers pay reasonable prices.
The water sector is a natural monopoly. This means e.g. that households and companies do not have a free choice of water and waste water company, but that they are linked to local waterworks and/or waste water purification plants. Consequently, it is important to ensure a regulation that supports efficient management and high water quality from local water providers.
New regulation to support an efficient water sector
In 2009 a new regulation was introduced in the water sector, including among other things the introduction of efficiency requirements. This has resulted in a tendency of more stability and lower prices. In the water and waste water sectors the total efficiency requirements were DKK 1.1 billion from 2011 to 2016 (fix prices). Without the law on regulation of the water sector and the benchmark regulation their 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 to the owners of the companies, where the efficiency exceeds the imposed efficiency requirements. This may discourage them from improving efficiency beyond the requirements.
The government presented on 15 September 2016 the strategy Supply for the future. It appears from the strategy that the government will analyse how to create incentives for making efficiency beyond the requirements.
The government will also analyse whether it is possible to create a basis for a more well consolidated and efficient sector with a high degree of security of supply, environmental protection and health reasons.