2020 is full of new developments for the Water Service.
- New MTI-3 Tariff Method (Del. 580/2019/R/idr);
- Measures to combat non-payment (Resolution 311/2019/R/Idr);
- Contractual Quality Amendment (and therefore of the Charter of Services – Del. 547/2019/R/idr – Annex A) with the new additions:
- From this year, **even** operators serving a population of less than 50,000 are required to report data on contractual quality;
- From 1 July, the methods for recording information and data concerning contractual quality must be adapted;
- Mechanisms for incentivisation, macro-indicators, classes and objectives have been introduced for Contractual Quality, similar to what is already applied to Technical Quality.
- Statute of limitations for consumption amounts or adjustments dating back more than 2 years (Budget Law 2018 no. 205 of 27/12/2017 and Del. 547/2019/R/Idr - Annex B);
- Introduction of the new UI4 component to cover the operating costs of the new Waterworks Guarantee Fund (Del. 580/2019/R/Idr as a result of Article 58 of Law 221/2015).
- Triennial adjustment of the ISEE threshold for access to the Water Bonus, increased to €8,265, valid for the years 2020-2021 and 2022.
Briefly, some details of the highlighted new features:
NEW MTI-3 TARIFF METHOD (Resolution 580/2019/R/idr)
The resolution provides for the sending of data by modalities yet to be defined (the data collection tool will be published).
This resolution attempts to:
- To further incentivise investment, by linking a tariff increase to the verification of actual investments made or certified management improvements;
- Incentivising energy efficiency, the reuse of treated water, the treatment of sewage sludge, etc…;
- Incentives for measures to improve water consumption metering, particularly in apartment blocks.;
A Plan for Strategic Works is established for Area Governing Bodies (for new assets expected to have a useful life of at least 20 years and whose construction will structurally take several years).
All operators are required to apply the new tariff method (i.e. to submit data) but all operators who have ceased operations under the law, including municipalities managing services in-house, cannot access the Tariff Update (i.e. an increase in revenue).
Standard operators, whether acting under "in economia" arrangements or not possessing the SAFEGUARDING requirement, can in any case access a RECALCULATION OF FEES (maintaining the same service revenue) in accordance with the TICSI provisions, in order to adjust tariffs to reflect household composition and allow for the calculation of the WATER BONUS, subject to approval by the District Governing Body and subsequently by the Authority.
Many managers, whether companies or municipalities managing in-house, should the specific conditions arise and the Area Governing Body promote them, could be interested in aggregation operations and in adopting a REGULATORY CONVERGENCE SCHEMA, prepared for inefficient managers who are significantly behind in applying the national regulatory system. In this case, a simplified system could be applied for a limited period of time (maximum 3 or 4 years) within which to complete the aggregations and start with the national regulatory schemes.
Measures to combat non-payment (Resolution 311/2019/R/Idr);
The measures adopted with resolution 311/2019 for the reduction and fight against arrears come into force, indicating the correct procedure to follow in order to proceed with the collection of outstanding amounts.
It is necessary for the managers to integrate such indications and procedures within the Water Service Regulations.
For any further details and information, we refer you to the appropriate article dedicated on our blog.
Statute of limitations for consumption or adjustments dating back more than 2 years (2018 Budget Law no. 205 of 27/12/2017 and Resolution 547/2019/R/Idr - Annex B);
The two-year statute of limitations for all invoices issued from 1 January 2020 on water consumption.
However, the statute of limitations also applies to amounts invoiced for consumption and adjustments dating back more than two years. Invoices issued in 2019, but due after 1 January 2020, also fall under the statute of limitations, therefore if they contain amounts for consumption or adjustments dating back more than two years (for example, to 2017), the user may object to the statute of limitations for amounts relating only to consumption or adjustments dating back more than two years, but must declare their intention not to pay such amounts.
In invoices, where amounts relating to consumption or adjustments dating back more than two years are present, providers will have to include this notice:
“The invoice [Specify invoice number] it contains amounts for consumption dating back more than two years, which may not be paid if responsibility for the delay in billing these amounts is not attributable to you, in accordance with the 2018 Budget Law (Law 205/17). We invite you to promptly communicate your intention not to pay these amounts to the contacts listed below. [Please provide contact details]”
The manager is required to provide adequate evidence of the presence of such amounts on the invoice, differentiating them from amounts relating to consumption older than two years. For this purpose, the manager may, alternatively:
- issue an invoice containing only amounts for consumption dating back more than two years
or
- provide separate and clear evidence of amounts for consumption dating back more than two years within an invoice also relating to consumption dating back less than two years.
The manager is required to supplement the invoice showing amounts relating to consumption more than two years old with an additional introductory page containing:
a) The following text notice: “This invoice contains amounts for consumption dating back over two years, which may not be payable, pursuant to the 2018 Budget Law (Law no. 205/17). To not pay these amounts, we invite you to promptly communicate your intention, for example by sending the completed form on this page to the details below [indicate contact details].”;
b) the amount of the sums subject to the statute of limitations;
c) a section containing a form that the end-user can use to object to a prescription that has occurred; such form must also be available on the operator's website, in a printable format as well, and at any physical service points present in the territory;
d) the indication of a postal or fax address and an email address of the operator, or an electronic method, to which the documents referred to in the previous letter c) can be sent, or any text drafted by the end-user with which the latter intends to object to the prescription.
The operator may, at their discretion, waive the invoicing of amounts relating to reconciliations and consumption dating back more than 2 years. In this case, the operator is obliged to provide prompt information to the end-user, specifying the amount of the charges for consumption dating back more than two years.
Amounts subject to prescription are excluded from the scope of any contractual clauses providing for payment methods such as SEPA Direct Debit (bank, post office or credit card direct debit), even if this was the method indicated by the end user for periodic and final bills.
In case of default relating to amounts for which the user could have raised the defence of limitation, but did not, the formal notice must include the warning: “Amounts for consumption dating back more than two years may not be paid, in accordance with the 2018 Budget Law (Law 205/17). To avoid paying these amounts, we invite you to promptly communicate your intention, for example by sending the prescription exception form attached to the invoice [indicate invoice number] to the contact details below [indicate contact details].
Introduction of the new cUI4 component for covering the management costs of the new Waterworks Guarantee Fund (Resolution 580/2019/R/Idr pursuant to Article 58 of Law 221/2015).
With effect from 1 January 2020, the UI4 balancing component equal to 0.4 euro cents/cubic metre is established, as an increase to the water supply, sewerage and treatment charges.
In the case of utilities for which consumption measurement is not available, the UI4 component shall be applied to the estimate of cubic metres used by each user, determined by dividing any fixed fees or charges applied to the same user by the average unit price of aqueduct, sewage and purification services, calculated by dividing the operator's revenue for each service by the total volumes supplied or introduced into the network in the preceding year in relation to each individual service.
The Authority updates the UI4 component on a semi-annual basis, in relation to the Account's requirements for funding and covering the management costs of the Water Works Guarantee Fund.
Integrated water service managers pay the amounts deriving from the application of the UI4 component to the Cassa (CSEA) within 60 days of the end of each two-month period.
In the event of non-payment or partial payment by the managers of all the equalization components (UI1-UI2-UI3-UI4), the Fund applies a default interest rate equal to:
a) the statutory interest rate in the case of delays of up to 14 days;
b) the European Central Bank's reference rate plus 5 percentage points, capped at the maximum threshold rate provided for in Article 2, paragraph 4, of Law 108/96, calculated starting from the Average Global Effective Rate (TEGM) for advances and discounts exceeding €200,000, in the event of delays exceeding 14 days.
For delays exceeding 14 days, the rate referred to in point b) shall also apply to the first 14 days.
Triennial adjustment of the ISEE threshold for access to the Water Bonus, raised to €8,265, valid for the years 2020-2021 and 2022.
The ISEE threshold value for economically disadvantaged families to access the electricity social bonus referred to in Article 2, paragraph 4 of DM 28 December 2007, the gas social bonus referred to in Article 3, paragraph 9 of DL 185/08, and the water social bonus referred to in DPCM 13 October 2016, is updated, effective 1 January 2020, and based on the provisions of Article 1, paragraph 3 of DM 29 December 2016, therefore setting this value at €8,265.
