Comprehensive Regulation of Water Services. Why Quality of Service and Economic Costs Cannot be Considered Separately

Abstract

Regulation in the water sector emerged as a formula to protect customers from the natural monopoly that conforms water and wastewater services. As there is little information about regulatory practices in the sector around the world, information has been collected though a survey sent to water regulators. The results of the survey provided enough information to understand how the different utilities’ behaviours are regulated and the methodologies used. Among all the behaviours to be regulated, economic and quality of service regulation emerge as key aspects from a technical point of view. The first one supervises utilities’ costs and tariffs while the second, the standards the service is provided. However, it has been detected that these aspects are regulated separately and the quality of service does not have an impact on economic regulation. This work quantifies the impact that the quality of services has on costs and the consequences derived from not considering it in the economic regulation. In addition, this study also lists all the different aspect of the quality of service with an impact on costs.