OREANDA-NEWS. November 24, 2010. AS Tallinna Vesi has submitted its tariff application for 2011-2015 to the Competition Authority in accordance with the Anti-Monopoly Bill that came into effect, the Company is hoping that the new regulator will approve the tariffs within the next 30 days.

AS Tallinna Vesi’s CEO Ian Plenderleith said that the Company agrees with the Competition Authority’s statement that regulation matters should be discussed openly in a democratic society. „Thus AS Tallinna Vesi is publishing its tariff application in full to act in line with good corporate governance practices and with international regulation principles in order to ensure that the public will understand how tariffs are calculated and the process becomes more transparent,“ said Plenderleith.

The Services Agreement between AS Tallinna Vesi and the City of Tallinn prescribes that water tariffs in Tallinn would only change by CPI between 2010 and 2020. The Company believes that the current contract protects customers from future cost increases above the level of general inflation and provides returns to investors, therefore Company has decided against applying for the full cost increases that would be allowed under the new regulatory model proposed by the Competition Authority. „AS Tallinna Vesi has proposed for a nominal tariff change over the five year period from January 2011 until December 2015, as a multi-year application accords with international norms for privatised water utility regulation and recognises that the water industry has long planning horizons,“ added Plenderleith. AS Tallinna Vesi has sought expert verification of its 10 –year review of performance and expects the regulator to conduct a thorough review of the Company’s performance in the previous regulatory period from 2001 until 2010 prior to finalising the fortcoming price determination.

According to the Company’s tariff application, water tariffs would increase by 3,5% in 2011; 2,5% in 2012; 2,6% in 2013, 2,7% in 2014 and 2,7% in 2015, helping the Company ensure that the service and quality standards in effect under the current contract with the City of Tallinn remain in place and will be achieved in the future as well. „However, as Estonia is joining the Euro zone from January 1st 2011, the Company will round its tariffs down to the nearest cent, therefore the proposed increase for 2011 will in fact be below 3 per cent and below the rate of inflation for the period,“ added Plenderleith.

The Company expects that its application will be dealt with solely on its economic and quality of service merits and that the application is the first step towards an open and professional discussion on best practice economic regulation. „We would expect the authorities to consider the real cost of capital and the actual value of invested capital, when determining the justified profitability of AS Tallinna Vesi,“ added Plenderleith.