DRAFT
Service Price Tariff Policies and
Communication Modalities
_________________________________________________________...
TABLE OF CONTENTS
1 Introduction ............................................................................................
10.5 Utility responsibility..................................................................................................
List of tables
Table 1. Collection rates in Serbia [%].......................................................................
List of abbreviations
Abbreviation Description
BLS Building level substation
EUR/€ Euro
KOMDEL Business Association of Pub...
1
1 Introduction
Standing Conference of Towns and Municipalities - National Association of Local Authorities in
Serbia (SC...
2
2 Recommendations andAction Plan
2.1 Main recommendations
LSGs and PUCs in Serbia have many short and long-term capacity...
3
any incentives for the customers who are paying for their bills in a short notice. Only a bit more
than a half of PUCs d...
4
At the same time, PUCs need assistance in their monitoring and reporting systems through the
introduction of standards f...
5
The communication modalities are outlined on the followingchart and and in the accompanying
table:
# From To Communicati...
6
4 Association SKGO  Provides feedback on proposed tools both within its structure as well as
from member PUCs;
 Provid...
7
Set of Trainings includesfollowing modules (each training module is targeting a different
institution):
 pricing method...
8
2.3 Action plan
The action plan presents the possible involvement of SKGO and other actors in supporting Serbian LSGs an...
9
3 Introduction of new template for
Justification of the Decisionon
changing of utility serviceprices
Objective: A templa...
10
Dissemination of the new
reporting standards
Trainings for LSG to understand
- annualbusiness plans of PUCs;
- annualan...
11
Campaigns should be targeting the customers the
most, and scope of campaigns should be: 1.
awareness on the importance ...
12
Proposedsequenceoftheactionplan
Action
2014 2015 2016
3 4 1 2 3 4 1 2 3 4
Position paper forSKGO X
Implementation of ex...
13
3 Overviewof legislationthat regulates utility service pricing policy
in Serbia
Legal framework that covers utility ser...
14
service in accordance with the regulations which closer defines the performance of these utility
services.
(4) Responsi...
15
The principles for determining the cost of utility services
Article 25
(1) Prices of utility servicesaredeterminedbased...
16
(3) Togetherwiththe applicationforapprovalreferredto in paragraph2 of this Article, the
utility servicesoperatorsubmits...
17
Funds for the construction of utility infrastructure
Article 30
(1) The construction of utility infrastructure is finan...
18
(3) SupervisoryBoard of the Publiccompany makes a decision onhow to cover the
financiallosseswith the approvalof the co...
19
1) the statute;
2) provision of guarantees, sureties, guarantees, pledges and other collaterals for
business activities...
20
3.3 LAW ON CONSUMER PROTECTION
Definitions of terms
Article 5
(1) Certain terms used herein shall have the following me...
21
As it is earlier stated in the Law on communal services, all the consumers have the same rights
regarding provision of ...
22
The rightof termination
Article 89
(1) The consumerhas the rightto unilaterally terminate thecontract for the provision...
23
(2) Theretailerisobliged to quote in the bill for servicesof common economicinterest all ofthe
elements in order toallo...
24
Article 2
(1) Energy protected consumer, orvulnerable consumer, in termsof this regulationis a
household(individual,fam...
25
(2) for householdswith two or three members in the amount of 45 m³ per
month;
(3) for households with four or five memb...
26
heat distribution and management of the distribution system and heat supply of tariff purchasers
(hereinafter: district...
27
2) the cost of electricity used in the production process,
3) the cost of water and water treatment.
Article 5
(1) The ...
28
One of the more interesting is the case of the City of Leskovac, where the city Council adopted
the decision approving ...
29
but also the moment the consumer starts paying bills for the receiving of the services he
undoubtedly acknowledges the ...
30
4 Conclusions from the poll dedicated to Public Utility Companies'
pricing communication
In order to get more insight o...
31
Such a low levels of collection rates are leading to a conclusion that many Utility Companies are
facing difficulties i...
32
More than a half of companies does have the organized service for the complaints and just more
than quarter of them hav...
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Pricing Report-finaldraft_formated v 02.07.2014[1]

Published on: Mar 4, 2016
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Transcripts - Pricing Report-finaldraft_formated v 02.07.2014[1]

  • 1. DRAFT Service Price Tariff Policies and Communication Modalities _________________________________________________________________________________________________________ Prepared by: BojanGajić RafalStanek
  • 2. TABLE OF CONTENTS 1 Introduction ..................................................................................................................................1 2 Recommendations and Action Plan................................................................................................2 2.1 Main recommendations.............................................................................................................................................2 2.2 Communication modalities ......................................................................................................................................4 2.3 Action plan.......................................................................................................................................................................8 3 Overview of legislation that regulates utility service pricing policy in Serbia ...............................13 3.1 Law onCommunalServices......................................................................................................................................13 3.2 Law on Public Companies.......................................................................................................................................17 3.3 Lawon Consumer Protection.................................................................................................................................20 3.4 Regulation on Energy Protected Consumeror Vulnerable Heat Consumer......................................23 3.5 Regulation on Determing the Highetsandthe LowestAvarage Pricesof Heat During the Season2012/2013......................................................................................................................................................25 3.6 Conclusions....................................................................................................................................................................28 4 Conclusions from the poll dedicated to Public Utility Companies' pricing communication ...........30 4.1 Debt collection rate....................................................................................................................................................33 4.2 Individual examples in Serbian PUCs ................................................................................................................35 4.2.1 PUC "Higijena" Pančevo...............................................................................................................................35 4.2.2 PUC "Gradska toplana" Niš.........................................................................................................................36 5 Conclusions from Ministry's questionnaires on pricing of utility services....................................40 6 Service price levels in Serbia, related to actual cost......................................................................41 6.1 Annual business plans..............................................................................................................................................41 6.2 Annual financial reports..........................................................................................................................................42 6.3 Tariff change requests..............................................................................................................................................42 6.4 Surveys............................................................................................................................................................................42 7 Very brief historical overview of communal service pricing policy leading to the current state ...43 7.1 Price fluctuationsof basicutilityservicesfrom 2006-2012 andtheirimpactoncostsofliving............ .............................................................................................................................................................................................43 8 Brief summary of similar activities previously conductedby national or international organizations in Serbia.......................................................................................................................................................46 9 General comparison of communal service prices levels................................................................48 9.1 Water and wastewater.............................................................................................................................................48 9.2 District heating ............................................................................................................................................................50 9.3 Solid waste.....................................................................................................................................................................52 9.4 Conclusions....................................................................................................................................................................54 10 International experience on regulation of communal services (pricing).......................................55 10.1 Principles of tariff setting........................................................................................................................................55 10.2 Functions of tariffs.....................................................................................................................................................57 10.3 Cost coverage and tariff calculation formulas................................................................................................59 10.4 Affordability..................................................................................................................................................................64
  • 3. 10.5 Utility responsibility..................................................................................................................................................66 10.6 Customer database.....................................................................................................................................................68 10.7 Cost basis for user charges.....................................................................................................................................68 10.7.1 Solid waste management tariffs...............................................................................................................68 10.7.2 Water and wastewater tariffs...................................................................................................................74 10.7.3 District heating tariffs...................................................................................................................................75 10.8 Price Regulation..........................................................................................................................................................75 10.9 Capacity of local governments and utilities ....................................................................................................77 10.10 Communication between local governments and utilities ..................................................................77 10.11 Communication with customers and customer service management ...........................................78 11 Drawbacks in current communal services pricing policy .............................................................79 11.1 Awareness on actual costs......................................................................................................................................79 11.2 Analysis of maintenance costs..............................................................................................................................80 11.3 Benchmarking..............................................................................................................................................................80 11.4 Tariff structure.............................................................................................................................................................80 11.4.1 Water and wastewater.................................................................................................................................80 11.4.2 Heating................................................................................................................................................................80 11.4.3 Solid waste.........................................................................................................................................................81 11.5 Social function of tariff.............................................................................................................................................81 11.6 Regulation on national level ..................................................................................................................................81 11.7 Reflecting collection rate.........................................................................................................................................81 11.8 Bills collected by third organization ..................................................................................................................82 11.9 Incentives for customers and improvement of collection rate...............................................................82 11.10 Communication with customers .....................................................................................................................82 11.11 Communications LSG and support from LSG.............................................................................................83 11.12 Gender aspects in the utility service pricing..............................................................................................83 11.12.1 Gender Aspects of use of utility services..............................................................................................84 11.12.2 Availability of utilities..................................................................................................................................84 12 Review of options for service pricing...........................................................................................86 12.1 Solid waste tariffs.......................................................................................................................................................87 12.2 Water and wastewater tariffs................................................................................................................................88 12.3 Heating tariffs...............................................................................................................................................................88 12.4 Capacity needs .............................................................................................................................................................88 12.5 Conclusions....................................................................................................................................................................89 13 Draft templates for price request .................................................................................................90 13.1 Introduction..................................................................................................................................................................90 13.2 Water and wastewater.............................................................................................................................................91 13.3 District heating .........................................................................................................................................................100 13.4 Solid waste..................................................................................................................................................................110
  • 4. List of tables Table 1. Collection rates in Serbia [%]..................................................................................................................................30 Table 2. Uncollected receivables of the PUCs.....................................................................................................................33 Table 3. The level of payment collection services of waste disposal at 31.12.2013 .........................................35 Table 4. The collection rate services of waste disposal PUC "Higijena" Pančevo for the period of 01.01.2013-31.12.2013 on day 20.01.2014........................................................................................................................35 Table 5. Structure of Households with collection rates of waste disposal service from PUC "Higijena" Pančevo for the period of 01.01.2013 - 31.12.2013 on day 20.01.2014................................................................36 Table 6. Structure of consumers from Commercial sector with collection rates of waste disposal service from PUC "Higijena" Pančevo for the period of 01.01.2013 - 31.12.2013 on day 20.01.2014.....................36 Table 7. Structure of consumers with uncollected receivables from the Commercial sector of PUC "Gradska toplana" Niš on the day 03.06.2014...................................................................................................................36 Table 8. Structure of the debtors of PUC "Gradska toplana" Niš on the day 03.06.2014. taking into account the height of the debt ..................................................................................................................................................37 Table 9. 20 largest debtors of the PUC "Gradska toplana" Niš from the commercial sector on the day 03.06.2014.........................................................................................................................................................................................38 Table 10. Breakdown of 20 largest debtors of the PUC "Gradska toplana" Niš from the household sector on the day 03.06.2014..................................................................................................................................................................39 Table 11. Indicator of price needed to the current price [#] ..................................................................................40 Table 12. Price levels in Serbia in 2006, 2009 and 2012 [EUR, % of average salary]......................................44 Table 13. Comparison of prices for water and wastewater and annual fee paid by households of 2.6 persons, consuming 120 lcd [EUR].........................................................................................................................................48 Table 14.Comparison of prices for district heating and annual fee paid by customer consuming 140 kWh/m2 for apartment of 60m2 [EUR]...............................................................................................................................50 Table 15.Comparison of prices for solid waste collection and annual fee paid by customer having a bin of 120 l removed weekly, or having 60m2 of apartment or family of 2.6 persons [EUR].............................52 Table 16. Components of full cost recovery calculation................................................................................................63 Table 17. Coping strategies, including exclusion, self-disconnection, and non-payment, poorest quintile ................................................................................................................................................................................................................65 List of figures Figure 1. Incentives for customers who are paying bills in short notice ...............................................................31 Figure 2. LSG help in collection of unpaid bills by budget users ...............................................................................33
  • 5. List of abbreviations Abbreviation Description BLS Building level substation EUR/€ Euro KOMDEL Business Association of Public Utility Companies kWh Kilowatt hour, unit of energy equal to 103watt hours or 3.6 MJ lcd Litres per capita per day LSG Local Self-Government MJ Mega-joule (106 Joules) PUC Public Utility Company RSD Serbia Dinar SALAR Swedish Association of Local Authorities and Regions SCTM/SKGO Standing Conference of Towns and Municipalities SIDA Swedish International Development Cooperation Agency
  • 6. 1 1 Introduction Standing Conference of Towns and Municipalities - National Association of Local Authorities in Serbia (SCTM) and Swedish Association of Local Authorities and Regions (SALAR) through its subsidiary SKL International are currently implementing SIDA financed programme entitled “Support to Local Governments in Serbia in the EU integration process”. The programme purpose is to strengthen the capacity of Serbian localgovernment to respond to EU accession requirements through enhanced effectiveness of SCTM to support members’ interests and development. The programme includes the followingcomponents:  EU accession of Serbia and its implications forthe locallevel of government  Environmental protection  Gender equality at local level  LG regulatory frameworkfor more favourable business environment  SCTM capacity building Within the scope of thematic partnerships, Programme is tackling topic of service pricing at the local level and especially in fields relevant to cluster cooperation. Assignment of Expert Team in a first phase was to give overview of situation surrounding service prices at the local level in Serbia in order for SCTM to further define its position on the topic and in a second phase, based on previous findings, propose appropriate steps (action plan) for operationalization of service pricing adjustments. This report is an outcome the assignment.
  • 7. 2 2 Recommendations andAction Plan 2.1 Main recommendations LSGs and PUCs in Serbia have many short and long-term capacity development needs in order to be able to implement properly calculated tariffsthat reflectthe principles of cost recovery. This reports reviews various aspects of the utility pricing. Section 3 overviews the legislation that regulates utility service pricing policy in Serbia. Competence of utility services falls completely under LSGs. They are the ones who are establishing the public utility companies, entrusting the performing of utility services and eventually taking care of utility services operations by themselves (in smaller LSGs1). The public utility companies are representing the long hand of LSGs who are monitoring the operations of public utility companies, obliged to give the consent to every important decision made by PUCs and controlling the level of utility prices. Practically not always LSGs and PUCs are fully complying with different regulations regarding utility services. For example, problems are with tariffs setting (shall be one price for all customers and price shall cover costs of services). Another example is that PUCs are not meeting the obligation to separate accounting of incomes and expenses devoted to particular service. Section 4 and 5 draws conclusions from two questionnaires related to utility pricing. One was organized in co-operation with KOMDEL and second one is Ministry of regional development and local self-government questionnaire on pricing of utility services. Ministry’s questionnaire focus on utility pricing and operating costs coverage by utility tariffs. It shows that the biggest need for the price raising would be in the sector of sewage, and the prices that needs the least raising would be in district heating. The KOMDEL’s questionnaire was much wider and covered not only utility pricing abut also other aspects of PUCs activities. From the questionnaire it is visible that collection rates for communal services in Serbia are alarming. On the other hand PUCs and LSGs are doing nothing or very little to improve collection rate. For example, 80% of utility companies don't have 1 Smaller LSGs in Serbia, when faced with a problem that they don't have PUCs set in place for taking care of utility services, are contracting companies to deal with utility services, or Land Directorate (often called “Direkcija”) as part of LSGs. The Law on communal services however, recognizes the possibility that utility services cou ld be performed directly by LSGs.
  • 8. 3 any incentives for the customers who are paying for their bills in a short notice. Only a bit more than a half of PUCs does have the organized service for the complaints and just more than quarter of them have the call service, few of them both. Special attention was put on collection rate. As there is no comprehensive information on collection rate, individual examples of Serbian PUCs were presented. It could be concluded that both households and institutional customers have debts. From the review it is evident that in 30 cities we have a bit weaker collection rates forhouseholds, but collection rates levels are very different from municipality to municipality. Looking into the structure of institutional debtors, we can see that the large part of uncollected receivables is among public institutions (owned by LSG or by the state). Often Local Government represents the largest debtor, as they are directly or indirectly responsible for the debts of their units (including schools and kindergartens). Section 6 presents the service price levels in Serbia, related to actual cost. The major source of the information was Ministry’s questionnaire mentioned above. It shows that price levels in Serbia are between 50% and 80% of actual costs. Section 7 presents historical overview of communal service pricing policy leading to the current state. It concludes that even the price levels were raised in last years, if we observe prices in relation to the average salary we see that only for district heating it was increase, while for other services prices decreased. This subject is continued in section 8 by providing comparison of communal service prices levels in other countries and in Serbia. Again as a good indicator to compare prices a monthly fee for household/net salary is provided. We can observe that while for heating Serbian prices are among the highest, for other services (water and sewage, solid waste collection) are far lower than not only in Western Europe but also in surrounding Balkan countries and other countries in Central and Eastern Europe. Thus for district heating, rather measures related to energy efficiency shall be promoted, especially those that are simple and cost-effective: installation of thermostatic valves and payment for energy consumed instead of m2 of heated space. Regarding water and wastewater and solid waste tariffs, the full cost recovery tariff shall be promoted because according to estimates of household affordability, households have some capacity to pay for tariff increases. Section 10 presents international experience on regulation of communal services (pricing) and Section 11 presents drawbacks in current communal services pricing policy while Section 12 summarizes review of options for service pricing. From last three sections we can draw the most urgent capacity development needs that PUCs and LSGs in Serbia shall perform in order to improve the situation. In particular, this includes enhancement of the cost separation capacities, better presentation of tariff request, preparation of long term tariff policy, integration of customer databases, introduction of stronger enforcement mechanisms, implementing national and local public information and awareness campaigns, and revenue enhancement. In the short-term, it is recommended that a pricing methodology and implementation tool be developed and disseminated to LSGs, their PUCs and relevant associations. The pricing methodology shall enable PUCs to clearly divide costs among different services and be able to calculate the proper tariff. Once the tool is disseminated, guidance on tariff policy for LSGs, including communication to citizens and city officials, should be provided. The tariff policy, approved by city assembly, shall give a long term and stable framework for utility pricing. One of the key documents is the tariff change request (Justification of the Decision on changing of utility service prices). So far this document, prepared by PUCs, usually provides vague information for LSGs and for citizens. What is the most important it does not provide clear information what is the need for tariff in order to cover costs. Instead, PUCs focus on inflation/price increase indices. There are several reasons for that and one is lack of implementation of pricing methodology. Thus a next step shall be to improve templates for the justification of decisions on changing utility service prices.
  • 9. 4 At the same time, PUCs need assistance in their monitoring and reporting systems through the introduction of standards for annual business plans and other reporting. Municipalities, on the other hand, require guidance and recommendations on measures to increase revenues. This should be done on a pilot basis, with dissemination of results to other municipalities. As the collection rate is very low and also, what was observed in this report the low collection rate is not correlated with high utility prices (see Section 4), the revenue enhancement measures shall be implemented. Revenue enhancement includes many different actions and through review and piloting of Serbian and international experience, the catalogue of best measures can be prepared and disseminated. This shall also include development of customer’s social cards/profiles. Social profiles will help LSG to subsidise vulnerable groups of citizens instead of keeping general prices low. Local and national awareness campaigns should be conducted. As a first step, selected LSGs should be supported on how to communicate tariffs to citizens. However this shall include also other aspects of good communication between LSGs, PUCs and citizens/customers related to the communal utility services. This action shall also include development of minimum service standards criteria which shall be communicated to citizens. The results of these local campaigns should then be disseminated at the national level. Finally, customer services need to be upgraded, not only to enable the implementation of software for customer services, but also to take advantage of revenue enhancement activities in LSGs (such as, improving taxpayer registration). 2.2 Communication modalities This chapter presents proposal forcommunication modalities between main actors involvedin pricing forcommunal services. The main actors are following: # Institution Note 1 SKGO Standing Conference of Towns and Municipalities 2 PUCs Public Utility Companies 3 LSG Local Self Government 4 Association1 Business Association "ToplaneSrbije" 5 Association2 Waterworksand Sewage Association 6 Association3 Business Association of Public Utility Companies “KOMDEL” 7 Association4 Serbian Chamber of Commerce 8 Citizens Individual customers, customers associations 9 Ministry 1 Ministry of Public Administration and Local Self-government 10 Ministry 2 Ministry of Agriculture and Environment 11 Ministry 3 Ministry of Mining and Energy 12 Ministry 4 Ministry of Construction, Transport and Infrastructure 13 Ministry 5 Ministry of Trade, Tourism and Telecommunications 14 Donors EC Delegation, SIDA, SDC, USAID, KfW,EBRD, EIB,other bilateral
  • 10. 5 The communication modalities are outlined on the followingchart and and in the accompanying table: # From To Communication modality 1 SKGO LSG  Set of trainings;  Development of guidelines;  Pilotinglocal tariff policy, tariff request template, revenue enhancement, local awareness campaigns and measures to improve customers service  Dissemination of results;  Communicating in preparation of the new reporting standards; 2 SKGO PUCs  Set of trainings;  Development of guidelines;  Piloting local tariff policy, tariff request template, revenue enhancement, local awareness campaigns and measures to improve customers service  Dissemination of results;  Communicating in preparation of the new reporting standards; 3 SKGO Association  Participation in set of trainings;  Participation in development of guidelines;  Participation in piloting;  Participation in dissemination of results;
  • 11. 6 4 Association SKGO  Provides feedback on proposed tools both within its structure as well as from member PUCs;  Provides support to organize (co-organize) selected training modules on: - Tariff methodology - Templates on Justificationof theDecisionon changingof utility serviceprices 5 Ministry PUCs  Prepares templates for reporting: - Performance indicators; - Annual and semi-annual reports; - Justification of the Decisionon changing of utility service prices; - Development of minimum service standards criteria; 6 PUCs Ministry Prepares reports, including Performance Indicators 7 Association PUCs  Trainings for PUCs on tariff methodology and revenue enhancement measures;  Request data for benchmarking; 8 PUCs Association  Prepares benchmarking reports;  Feedback on methodology and templates; 9 PUC LSG  Prepares and deliver annual and semi-annual reports, quarterly or monthly reports on LSG request;  Support preparation of the local tariff policy;  Prepares Justification of the Decision on changing of utility service prices; 10 LSG PUC  Approves tariffs;  Approves investment plans;  Request for annual and semi-annual reports, performance indicators; business plans and investment plans;  Support in awareness campaign;  Support in revenue enhancement by: - Analysis of debt structure - Putting pressure on PUC management to increase revenues, through incentive schemes for management - Providing measures which supports quick and regular payment (prize for citizens / organizations / businesses who pays quickly: tickets, free or reduced entrance fee for LSG events, other) - Synchronize database of debtors with PUCs, review of the database each time when LSG communicates with customer and making pressure when found in the database 11 PUC Citizens  Customer relation database, including gender information;  Awareness campaigns on saving of water/energy/waste,  Awareness campaigns on tariff change and what citizens pays for  Awareness campaigns on investment plans 12 LSG Citizens  Awareness campaigns on saving of water/energy/waste,  Awareness campaigns on tariff change and what citizens pays for  Awareness campaigns on investment plans  Customers social cards/profiles and subsidies to vulnerable citizens 13 SKGO Ministry  Provides support to prepare templates on Justification of the Decision on changing of utility service prices and trainings of the Ministry on tariff calculation;  Provides support to prepare reporting standards; 14 LSG SKGO  Participation in piloting;  Feedback on tariff policy;  Feedback on templates on Justification of the Decision on changing of utility service prices;  Feedback on reporting standards; 15 PUC SKGO  Participation in piloting;  Feedback on tariff policy;  Feedback on templates on Justification of the Decision on changing of utility service prices;  Feedback on reporting standards; 16 Ministry SKGO  Feedback on templates on Justification of the Decision on changing of utility service prices;  Feedback on reporting standards;
  • 12. 7 Set of Trainings includesfollowing modules (each training module is targeting a different institution):  pricing methodology already developed by SCTM ;  tariff request template (Justification of the Decision on changing of utility service prices – see Section 12 and proposed templates in Section 13);  local tariff policies;  reporting standards; Development of Guidelines includes following modules (each module is targeting a different institution):  development of local tariff policy;  tariff request template (Justification of the Decision on changing of utility service prices);  measures to increase revenues;  local awareness campaigns;  measures to improve customers service; Development of Guidelines includes following steps:  description of the relevant process, emphasizing steps which shall be performed;  collection of Serbian and/or European best practices;  consultation with relevant stakeholders;  at the end guidelines are supplemented with relevant 3-5 case studies; Pilotingincludes following modules (each module is targeting a different institution):  development of local tariff policy;  tariff request template (Justification of the Decision on changing of utility service prices);  measures to increase revenues;  local awareness campaigns;  measures to improve customers service; Piloting includes following steps:  Selection of about LSGs/PUCs for piloting;  Technical assistance (support)to selected LSG on developing the measure, using the developed guideline;  Preparation of case studies on how measures have been implemented and what are results; Dissemination of Results includes following modules:  development of local tariff policy;  measures to increase revenues;  local awareness campaigns;  measures to improve customers service;  new reporting standards Dissemination of Results on national level includes following steps:  Consultation with relevant stakeholders;  Adjustment of templates taking into account lessons learnt during piloting and consultation process;  Printing the guidance;  Organization of the conference and workshops for disseminating lessons learnt;  Dissemination of the guidance directly to LSGs and through SKGO web page;
  • 13. 8 2.3 Action plan The action plan presents the possible involvement of SKGO and other actors in supporting Serbian LSGs and PUCs in enhancing the communal services. # Actions Sub-actions Steps Feedback needed Timing [months] Main responsibility Other actors involved 0 Positionpaper for SKGO Objective: To understand why SKGO is undertaking actions on enhancing pricing policies Preparation of the position paper for SKGO 2 SKGO 1 Implementation of existing pricing methodology/tool Objective: To improve PUCs ability to allocate costs to different communal services and then to calculate unit costs of that services Dissemination of the tool Trainings for representatives of interested LSGs, their PUCs and relevant Associations on implementation of tariff methodology 6 SKGO Further promotion of the tool during other SKGO activities (conferences,workshops) 2 Tariff policy Objective: LSG are able to prepare and approve effective tariff policy document ion the local level. Tariff policy is a strategy that defines direction of development of local tariffs for communal services. Preparation of guidance for LSGs for understanding the tariff policy and set of recommendations for setting up a local tariff policy. Developing the guidance which will help LSG to better understand: - methods for tariff calculation and tariff influence on PUCs performance - how PUC shall response on cost change; - elements of good LSG tariff policy; - examples of LSG tariff policy for different sectors; 6 (finalize before the end of 2014) SKGO Piloting the development of local tariff policy in selected LSGs with support to communicate a tariff policy to citizens and tocity officials (city council) Selection of about 6 LSG for piloting From LSGs Support of selected LSG on developing tariff policy From selected LSGs, PUCs Approval of developed tariff policy by LSG assembles Assembly of selected LSGs Support of LSGs in communicating the tariff policy to citizens Preparation of at least 3 case studies of tariff policy for different sectors Adjustment of guidance taking into account lessons learnt during piloting 3 case studies are a part of the guidance Dissemination of the guidance Printing the guidance Organization of the workshop for disseminating lessons learnt from piloting and dissemination of the guidance during the workshop Workshop participants (LSGs) Dissemination of the guidance directly to LSGs and through SKGO web page
  • 14. 9 3 Introduction of new template for Justification of the Decisionon changing of utility serviceprices Objective: A template will be used by PUCs to clearly communicate a need for tariff change to LSG. A new template will replace current system of ad hoc tariff requests which are usually vaguely prepared. Piloting of new template for Justification of the Decision on changing of utility service prices in selected PUC/municipalities Development of the new template for Justification of the Decision on changing of utility service prices for 3 sectors PUC associations 12 (piloting during the first quarter of 2015) SKGO Ministry, LSGs, PUCs Selection of about 6-10 LSG/PUCs for piloting From LSGs Work with PUCs to prepare tariff change request using the templates From selected LSGs, PUCs Workshops for LSG representatives (members of city council and assembly, department responsible for communalservices) to understand the new tariff change request LSG representativ es LSGs approvalof a new tariffs using the templates Support of LSGs in communicating the tariff policy to citizens Preparation of at least 5 case studies Collection of opinions on template Organization of a conference where templates are presented and participants asked for their opinions. 5 case studies are presented Participants: LSGs, PUCs, Ministry Workshop participants (LSGs, PUC associations, Ministry) Adjusting templates Adjusting templates to reflect collected opinions Presentation of results to the Ministry Working meeting with the Ministry to present templates and take into account their opinion Ministry Adjusting templates Preparation of guideline Preparation of guideline to help LSGs and PUCs implement new templates PUC associations Implementation of template as Ministerial order Ministry 4 Enhancement of PUC’s monitoring/reportingsystem Objective: To strengthen capacity of LSG and Ministry to oversight PUCs. This includes development of a new reporting standards which shall contain easy to analyse information (including performance indicators) instead of long text descriptions. Preparation of the newreporting standards Development of the new reporting standards for: - annualbusiness plans of PUCs; - annualand semi-annualreports of PUCs; - PUCs performance indicators for reporting to LSG and Ministry 12 (year 2015) SKGO Ministry, LSGs, PUCs Definition of information flow (PUC,LSG, citizens, Ministry) Presentation of results to the Ministry and LSGs Organization of a workshop where proposal for newreporting standards are presented and participants asked for their opinions. Participants: LSGs, PUC associations, Ministry Workshop participants (LSGs, PUC associations, Ministry) Adjusting the reporting standards according to the collected opinions Implementation on Ministerial level Definition of newreporting standards Ministry Implementation on PUC associations level Implementation of benchmarking using the performance indicators PUC associations
  • 15. 10 Dissemination of the new reporting standards Trainings for LSG to understand - annualbusiness plans of PUCs; - annualand semi-annualreports of PUCs; - PUCs performance indicators; Trainings for PUCs in preparation of: - annualbusiness plans; - annualand semi-annualreports; - performance indicators; 5 Revenue enhancement Objective: To strengthen capacity of LSG and PUCs to collect revenues. The collection of revenues for communal services is currently alarming. Piloting with selected municipalities measures to increase revenues Selection of about 6 LSGs willing to pilot revenue enhancement LSGs 18 SKGO SKGO, PUCs, LSGs Collection of Serbian and European best practices for revenues enhancement LSGs/PUCs (consultant work) Support to PUCs in proper calculation of collection rate Workshops in each LSGs to select the best measures for revenue enhancement (Serbian and European best practices are presented) Implementation with LSG and their PUCs selected revenue enhancement measures Development by each LSG a model for preparation of customers social cards/profiles Each LSG subsidise vulnerable groups of citizens using social cards/profiles Measuring the impact of the measures for collection rate Preparing at least 3 case studies Preparation of guidelines and lessons learned from piloting revenue enhancement The guidelines shallpresent Serbian and European best practices for revenues enhancement and results from piloting Dissemination of revenue enhancement measures Organization of the conference presenting the guidelines and case studies LSGs Dissemination of the guidance directly to LSGs and through SKGO web page 6 Local awareness campaigns Objective: To support LSG and PUCs to raise customers’ awareness regarding the importance of communal services, service standards, efficient use of communal services, needs for investments and to build a good atmosphere to pay fees. Support to selected LSGs to communicate on communal services to citizens and citizens’ associations. Preparation of the guideline on local awareness campaigns (measures to be implemented, rules for implementation) - what am I paying for? How are tariffs determined? How is my bill calculated? Why is the tariff increase necessary? Where are we compared to other municipalities?. 18 PUCs LSGs, SKGO Selection of about 6 LSGs willing to pilot local awareness campaigns LSGs Workshop with each LSG and PUCs to select 2-3 measures for awareness campaigns Support to each LSG to perform local awareness campaigns.
  • 16. 11 Campaigns should be targeting the customers the most, and scope of campaigns should be: 1. awareness on the importance of tariffs and what are tariffs made of; 2. measures to be taken by the customers in order to decrease the amounts of using of communal services, and very important 3. awareness on the importance, and also on the necessary steps needed toorganize the work of multi- family dwellings associations. Focus on the composition of male and female representatives in the multi-family dwellings Development of minimum service standards criteria which will be communicated to citizens Preparing at least 3 case studies Preparation of guideline Preparation of guideline to help LSGs and PUCs implement local awareness campaigns and how to develop minimum service standards Dissemination of results on national level Organization of the workshop for disseminating lessons learnt from piloting local awareness campaigns and dissemination of case studies during the workshop Workshop participants (LSGs, PUC associations, Ministry) Dissemination of the case studies directly to LSGs and through SKGO web page and PUC associations 7 Promoting enhanced customer service Objective: To support PUCs and LSGs to improve customer service by making contacts with customers more effective. Piloting with selected PUCs measures to improve customers service Selection of about 6 LSGs and their PUCs willing to pilot measures to improve customers service LSGs 24 SKGO Collection of Serbian and European best practices for measures to improve customers service (this may include establishing the customers service departments,better collection and analysis of customers complains including gender information, enhancement of customers database, CRM software, one-stop-shops, new ways to pay bill) LSGs/PUCs (consultant work) Workshops in each PUC to select the best measures to improve customers service Implementation PUCs (and LSG) selected measures to improve customers service Preparing at least 3 case studies Dissemination of results on national level Organization of the workshop for disseminating lessons learnt from piloting enhanced customers service Workshop participants (LSGs, PUC associations, Ministry) Dissemination of the case studies directly to LSGs and through SKGO web page and PUC associations
  • 17. 12 Proposedsequenceoftheactionplan Action 2014 2015 2016 3 4 1 2 3 4 1 2 3 4 Position paper forSKGO X Implementation of existing pricing methodology/tool X X Tariff policy Introduction of new template for Justificationof the Decision on changing of utility service prices X X X X Enhancement of PUC’s monitoring/reporting system X X X X Revenue enhancement X X X X X X Local awareness campaigns X X X X X X Promoting enhanced customer service X X X X X X X X
  • 18. 13 3 Overviewof legislationthat regulates utility service pricing policy in Serbia Legal framework that covers utility services in Serbia is represented by, in a first place, Law on Utility services, and secondly in the legal acts that are covering area of every single utility service. However, the legislation that regulates utility service pricing policy, in addition to before mentioned is also a part of legislation that defines operations of public companies and customer protection. The most important legal act covering this area is, of course, The Law on utility services. In the material that follows we will look closer to the most important parts of this law from the utility service pricing policy perspective. 3.1 LAW ON COMMUNALSERVICES Article 13 (1) Thelocal governmentAssemblydetermines the way of performing utility services through adopting ordinances, as well as general and specific rights and obligations of utility services operatorsandserviceusersin theirterritory, includingthe methodofpaymentof the utility service price, the way of control of use and payment of utility services and authorities of utility service operators while acting in the control and measures that controllers are authorized to undertake. (2) Thelocal governmentAssembly's Ordinance, which defines general and specific rights and obligations of the utility service operators and users, is directly applicable to all contractual relations between utility service operators and the users as general conditions of business. (3) If the local governmentAssembly'sOrdinance ontheperformingof utility services does not deals with conclusion details of the single contracts between the operator and the user of utility services, it is considered that contractual relationship on the provision of utility services has started by initiating the use of utility services, i.e. with the beginning of the provision of utility
  • 19. 14 service in accordance with the regulations which closer defines the performance of these utility services. (4) Responsibilities of utility service users, including payment of utility service prices, are becoming obligatory the moment of beginning of the provision of utility service, even if utility service is provided contrary to regulations covering the utility services. It is very clear here that local authorities are responsible for all of the aspects related to the utility services at their territories. Having said that they are the one who are defining pricing policy related to the utility services. Local authority, also, by adopting its ordinance, defines the relations of utility companies with their customers, at the same time their citizens. The relation between the customers and utility companies starts with a moment of start of provision of utility service, and this is, from utility company's point of view very important fact. Since there is a great number of customers today who are not willing to pay for the utility services, and they are trying to back this up with a fact that in most cases there is no contract signed between customers and utility service operators, having underlined in the Law that relation between the two of them starts from the start of service provision, really helps utility companies to have the customers obliged to fulfil their commitments, paying for the service in the first place. Article 22 (1) If the utility service operatorperformssome otheractivityin addition tothoseentrusted to him, he is obliged to performaccounting in a way that separatelystates all incomes andexpensesrelated to theperformance ofentrustedutility services. It is very common in Serbian utility companies that they are performing not only several of utility services at the same time, but also they are performing even other services in parallel with utility services, such as trading, maintenance, construction works, projecting... All of this makes very hard for them to develop a clear overview of actual costs related to one of the utility services separately, which would have to be a first step in calculating the actual price of utility services. Sources of funds for the performance and development of utility services Article 24 (1) Fundingfor the performanceanddevelopmentofutilityservices are providedfrom: 1) Revenuesfromsalesofutility services; 2 ) Revenuesfromutility fees; 3 ) Revenuesfromconcessionfees for performingofutility services; 4) Revenuesfromlocalgovernments budget; 5 ) Earmarkedfundsfrom otherlevels of government; 6 ) Other sourcesin accordancewith the law. (2) If the enduser of utility servicescan bedetermined,theseservices are primarilyfunded from theprices of utility services,andif enduserof utility services cannot bedetermined,theyare financed fromthe budgetof the localgovernment,i.e.utility fees. Since we are focusing on 4 utility services (water supply, waste management, sewage and district heating), and all of them are the utility services where the end users can be determined, our main focus will be on the funding from the prices of utility services.
  • 20. 15 The principles for determining the cost of utility services Article 25 (1) Prices of utility servicesaredeterminedbasedonthe followingprinciples: 1) the implementationoftheprinciple "consumerpays"; 2) the implementationoftheprinciple "polluterpays"; 3) the sufficiency of prices to cover operatingexpenses; 4) complianceof the prices of utility services with the principleof accessibility; 5) no differencesin prices betweendifferentcategories ofconsumers,unless the distinctionis basedonthe different costs of provisionofutility services. (2) If different methodsofcalculation areappliedfor different categories ofusers of utility services,it will betaken into account that theprice will be in proportionwithcosts of providing theseservices. (3) A localgovernment,inthe process of controlof provisionofutility servicemaydetermine andcharge a different levelof price in caseof using utilityservices in a mannerthat is inconsistent with the regulationsthatare regulatingtheseutility services. (4) Thecost of utility servicescan bepaid in advance. Developed Methodology is strictly based on these 5 principles. The elements for determining prices of utility services Article 26 (1) Theelementsfor determiningprices of utilityservices are: 1) operatingexpensesreportedinthefinancialbooks and reports; 2) expensesfortheconstruction andreconstructionof publicutility infrastructure andfor procurementof equipment,accordingto the adoptedplansandprograms of utility servicesoperator withconsentof local government; 3) utility serviceoperatorprofit. (2) Funds that are earmarked for financing the reconstruction and construction of utility infrastructure are reported separately and may be used only for these purposes. (3) A local government is required to monitor movements of utility prices, particularly the compliance of the utility service prices with principles established by this Law. These elements are the most important part but at the same time the ones who are crucial in a process of determining and approving the utility service prices. As it is very common case in Serbian utility companies to provide more than one services, financial books and reports often does not clearly show the distinction of expenses. At the same time, often there is case when it is not completely clear if investment costs are made with a consent of local government or not, which also makes even more difficult for utility company to determine the right price. Profit is almost never included in a price structure. Changing of utility service prices Article 28 (1) Utility service operatoradoptsthedecisiononchangingof utilityservice prices. (2) Localgovernmentgivesconsentonthe decisiononchangingof utility serviceprices definedin Article 2 Paragraph3 items 1) to 8) of this Law,except for the transportofthe mortal remainsof the deceased.
  • 21. 16 (3) Togetherwiththe applicationforapprovalreferredto in paragraph2 of this Article, the utility servicesoperatorsubmitsto thecompetentauthorityof the localgovernmentajustification, which particularlycontainsthe reasonsforthe changeandthe detailedstructure of theproposed rates. (4) A localgovernmentpublishesarequestforapprovalof the decisiononchanging ofutility serviceprices, with ajustification, onthe notice boardatthe headquarters ofthe localgovernment, as wellas in electronicform via theInternet,at least 15days beforemaking a decisiononthe approval. (5) By the localgovernmentAssembly's Ordinanceonthemannerof performingofutility services,referredto in paragraph2of this article, orby Agreementonentrustingofutility service operation,theconditionscanbe regulated,underwhich changes ofutility service prices can enter into force beforetheapprovalof thecompetentauthorityof the localgovernment,withthe obligationofthe utilityservicesoperatorto make up for the differenceto the users of utility servicesif the competentauthorityof the local governmentrefuses to approveanincreasein prices. (7) By the localgovernmentAssembly's Ordinanceonthemannerof performingofutility services or byAgreementonentrustingof utility service operation,thewayof utility serviceprice changesat the initiativeof the localgovernmentcanbe regulated. (8) By the localgovernmentAssembly's Ordinance onthemannerof performingofutility services or byAgreementonentrustingof utility serviceoperation,the responsibility,ortherights andobligationsofthe partiesin the eventwhenthe utility serviceprices, thatare not subjectto approval,arenotset in accordancewith the methodologysetforthinthe Agreementonentrusting, maybe regulated. The mechanism of giving consent from local authority on the utility company's decision made a huge problem in the recent time in Serbia. Having local authority, who are primarily focusing on a social issues, usually results in not giving a consent to the utility company's decisions on the rising of the utility service prices. Doing so, utility companies were faced with insufficient levels of revenues in order to cover the operation expenses. As the mechanism is the same as it was, having a methodology for determining the prices of utility services, represents a successful tool for utility companies to easily persuade the local authorities about the necessity of the price increasing. Having the obligation of publishing of the request for the rising of the price, this represents the first way of communicating the price rising with the consumers. Subsidizing certain categories of utility service users Article 29 (1) A local government may establish categories of utility service users who are paying subsidized utility service prices, as well as amount of subsidies for each category. (2) A local government is required to submit a list of those utility service users to the utility serviceoperator,aswellas to compensatesubsidizedpartofthe cost to the utility serviceoperator. (3) By the Agreement on entrusting of utility service operation, a subsidized amount of the price for certain categoriesthat is notcompensatedto the utility serviceoperatorcouldbe defined. The successful subsidizing of certain categories could significantly help in price adoption process, as the pressure that comes from socially vulnerable groups could be drastically decreased.
  • 22. 17 Funds for the construction of utility infrastructure Article 30 (1) The construction of utility infrastructure is financed from: 1) income from leasing, or the use of utility infrastructure and other assets relating to utility services in public ownership; 2) part of the fee for the right to provide utility services; 3) part of theutility service prices dedicatedfor depreciation of assets for performance of utility services; 4) the budget of the local government; 5) means of the utility services operator; 6) the funds raised by issuing long-term securities values (municipal bonds); 7) loans and other forms of indebtedness; 8) transfers from other levels of government; 9) grants; 10) other sources determined by special regulations. (2) The fee for leasing or usage of assets for providing utility services that are in the public propertycannotbe lowerthanthe amountof depreciationforassets that arethe subject of charge. (3) The funds referred to in paragraph 1 point 1) of this article represent the income of the budget of the local government and are used through the budget fund for utility infrastructure dedicatedto constructionandmaintenanceof utility facilities,establishedbythe local government unit in accordance with the law regulating the budget system. (4) When securingtransferof funds from other levels of government for construction of utility infrastructure, it is taken into account whether the principles contained in this law are respected, and in particular whether the price of utility services cover the cost of utilities associated costs, as well as if service is performed on the principle of efficiency which includes economies of scale, or association of local governments in all cases where it is economically justified. The important thing to underline here is that the part of the utility service prices dedicated for depreciation of assets for performance of utility services is rarely, if ever, spent for the construction of the infrastructure. The main reason for this is of course the fact that the price level is usually insufficient to cover the costs of operations, and depreciation is always the first place to look for covering operation costs. The Law on public companies also tackles a few important points related to utility services, especially about the very basic relations between the public companies and their founder, the local authority. 3.2 LAW ON PUBLIC COMPANIES The distribution ofprofit and wayof covering financial losses Article 49 (1) SupervisoryBoardof a public company makes a decision ondistribution of profitswith approval of the company's founder. (2) By the decision referred toin paragraph 1 of thisarticle,partof funds fromprofitis directed tothefounderandpaid into the accountspecified forthe payment of publicincome.
  • 23. 18 (3) SupervisoryBoard of the Publiccompany makes a decision onhow to cover the financiallosseswith the approvalof the company's founder. Having in mind the decisions on distribution of profit and covering financial losses, makes the accurate price calculation even more important. 13 Relation to the company's founder 13.1. Business program Article 50 (1) Improvementoftheoperationanddevelopmentofa public company, as well as dependent company,is basedonthelong-termandmedium-termworkand development plan,adopted by the Supervisory Board of a public company or competent authority of a dependentcompany. (2) Foreach calendaryear, a public company and its dependent company founded by a public company,areadoptingtheannual business program(hereinafter:the program) and submitting it to the founder for approval, the latest by the 1st of December of the current year for the following year. (3) The program is considered adopted when it is approved by the founder . (4) Public company that uses or intends to use any form of budgetary support (grants, guaranteesandotherfinancial assistance) is requiredto proposeaspecialprogramwhichincludes programofusing thissupportwith time-limited and measurable dynamics of increasing efficiency andinternal changesthat willbring a public company in a position to be able to operates without these forms of support or to reduce them. (5) Theprogramincludes, particularly: the planned sources of revenue, and expenditure lines defined by purpose; plan of distribution of public company's profit, or plan of covering of the financial losses of a public company; elements for comprehensive overview of the price policy of products and services, wages and employment in the company, or dependent company, which are determined in accordance with the policies of the projected increase of wages in public sector, determinedbythe Governmentfortheyear for whichthe plan is adopted;the criteria for the use of aid funds, sports activities, propaganda and promotion activities; as well as criteria for determining the reimbursement for the work of the Presidentand members of the supervisory board. (6) The adopted program of public companies founded by autonomous province or local self- government, as well as of dependent companies founded by the public company, must contain all the elements defined in the paragraph 4 of this Article, and shall be submitted to the Ministry established for the area of that public company's activity (hereinafter: line Ministry), to the Ministry responsible for trade, to the Ministry in charge of Labour, to the Ministry responsible for Finance and to the Ministry responsible for local government affairs. As the price is determined by operating expenses reported in the financial books and reports (Law on utility services Art. 26), both, the public company and the local authority, must be very careful when preparing and approving annual business programs, as practically the price of utility service is set the moment the annual business programs are adopted by local authority. After business program adoption, only the simple calculation is needed to determine the price level. Ensuring of the protection of public interest Article 60 (1) In orderto ensuretheprotectionof public interestin a public company,the Government,or the competent authority of the autonomous province or local self-government gives consent to:
  • 24. 19 1) the statute; 2) provision of guarantees, sureties, guarantees, pledges and other collaterals for business activities that are not within the framework of services of general interest; 3) tariff (decision on prices, tariff system, etc.) unless other law does not provide that the consent should be given by another state authority; 4) manage (acquisition and disposal) of assets in public ownership that were transferred to the ownership of a public company, of the greater the value, which are relatedto the direct operationalactivities of common interest and identified in the Founding act; 5) the act on the general conditions for the supply of goods or services; 6) the investment of capital; 7) the changes in status; 8) the act on theassessmentofthe capitaland presentingof the capital in shares, as well as to the program and the decision on ownership transformation; 9) other decisions, in accordance with the law that defines the operation of activities of common interest and founding act. (2) The proposal for the approval referred to in paragraph 1 of this Article comes from responsible ministry or the executive authority of the autonomous province or local self- government. Here again it is clear that mechanism for implementation of price for utility service has to pass through the mechanism of ensuring the consent from the local authority on the price level. Article 61 (1) Realization of common interest in other forms of organization that are performing activities of common interest, in accordance with this Law, is provided with the approval of the Government or the competent authority of the autonomous province or local self-government to: 1) the statute; 2) tariff (decision on prices, tariff system, etc.) unless other law does not provide that the consent should be given by another state authority; 3) other decisions, in accordance with the law that defines the operation of activities of common interest and founding act. (2) The proposal for the approval referred to in paragraph 1 of this Article comes from responsible ministry or the executive authority of the autonomous province or local self- government. (3) The provisions of paragraph 1 of this Article shall apply to entrepreneurs who are performing activities of common interest. This article is dealing with a specific case, when it is not the utility company the one that operates with utility service. Apart from utility company, the most usual utility service operator is the local authority itself. Nevertheless the decision on prices has to pass the same way of approving. The Law on consumer protection practically sets the basis for the communication between the retailers and consumers. Also it pays a special attention to services of common interest as all of utility services are contained in them.
  • 25. 20 3.3 LAW ON CONSUMER PROTECTION Definitions of terms Article 5 (1) Certain terms used herein shall have the following meanings: ... 28) service of common economic interest is aservicewhose quality, conditions of providing, i.e.prices, are regulated and controlled by the state bodyorother holder ofpublicauthority, especially, because of the highvalue ofthe initial investment, the limitedresources necessaryforits implementation, sustainable development, social solidarityandneed forbalanced regional development, all in order to meet thecommon public interest(electronic communication, the supply ofelectricity and gas, utility services, and similar) ... The point 28) of the Article 5, practically sets the utility services in the scope of the Law on consumer protection. Electricity, gas, district heatingandwater Article 10 (1) Retailer that offers oradvertisesperformance ofacontinuoussupply of electricity, gas, district heatingorwaterthroughpipelines has the obligation to clearly state in its offeror advertisement: 1) price per unit of consumedelectricityorcentral heating, includingtaxes and charges; 2) price per unitof consumed water or gas, includingtaxesand charges. (2) Retailer has the obligation to clearly state, except unit pricereferred to in paragraph1 of thisarticle, the prices thatare not calculated per consumed measured unit, includingthe price paidfor theconnection to the distributionnetwork. The very basic way, that cannot be avoided, in communication between the utility company and their consumers is, of course, the bill issued by utility company. The customers must have a clear insight on what are they paying for! They must not be anyway puzzled by the bill they receive, as they could easily feel deceived, which later leads to their dissatisfaction, constant complains, and even refusing to pay for the service. Access to services of common economic interest Article 83 (1) The consumer has the right to regularand uninterrupted supply of services of common economicinterest of adequate quality at an affordable price. (2) In the process of connectingconsumersto the distribution network, the retailer is obliged to: 1) actpublicly; 2) avoid discrimination ofconsumers; 3) calculate the price according tothe actual costs of services provided.
  • 26. 21 As it is earlier stated in the Law on communal services, all the consumers have the same rights regarding provision of utility services. That also applies to the price they are paying for the service. Obligation of notification before the conclusion of the contract Article 87 (1) Besides of notifying referred to in Article 16 of this law, retailer of services of common economic interest has the obligation to notify the consumer, before the conclusion of the contract on the provision of services of common interest about: 1) the right to provide the service of common economic interest of a certain quality by the affordable price to the consumer; 2) the tariffs which covers a fee for connection to the network, the types of fees for the use and maintenance if the retailer offers maintenance services, which lists all of the standard discounts to the consumer is entitled to and special tariff rates, or elements, as well as the determined deadline for connection to the distribution network; 3) the way of accessing to the current tariffs and maintenance prices; 4) the right of consumers to change providers of services of common economic interest without compensation; 5) the way of exercising the rights of compensation or refund of the amount paid, if the service provided does not correspond to the quality agreed by the contract. The first time that retailer and consumer officially communicate is through signing the contract. that is why it is very important to have the contract that is easy to understand from any of consumers, especially notifying all their rights in any case of misunderstanding. Other obligations of notification Article 88 (1) Theretailerisobligedtoinformconsumersaboutpricechangesat least one monthbefore the implementation ofthe changedprice, unlessa special lawprovides otherwise. (2) The retailer isobliged to publicly and timelyinform theconsumersabout the plannedamendmentof the tariff systemandthe general conditionsof the contract. Above mentioned Article 28 of Law on utility services defines the 15 days deadline before the adoption of the price change when the local authority has to publish the request at the notifying board. At the same time the retailer is obliged to inform consumers about price changes one month before the implementation. This looks a bit unclear, as the utility company and local authority are notifying the public about the price changes even though at the time of notifying they don't know for sure if the change of prices will be adopted. Anyway, from the consumers perspective it is very convenient that they have enough time to react to the news of possible price changes. At the same time as utility company is now aware of the reaction from the consumers, they have to prepare very clear and understandable request for the change of the price.
  • 27. 22 The rightof termination Article 89 (1) The consumerhas the rightto unilaterally terminate thecontract for the provisionof services of commoneconomic interestif the consumerdoes not agreewith the change inpricesortariffsandchanges ofgeneral conditionsof the contract mentioned in the retailer's notification. (2) The consumeris required topay the amountfor services that herendered prior tothe unilateraltermination of the contract. Local authorities have the obligation to enable accessibility to utility services to all of their citizens. Because of that, utility companies, which represents a tool for enabling the accessibility, are almost always organized as a monopolists at the market of utility services. Having that in mind, giving a possibility to customers for stopping provision of utility service, when they don't have any other utility service operator could create a real problems in operations of utility services. What will consumer who does not like the new price of waste collection do when he doesn't want to use the service anymore? Is he going to stop to generate the waste? Or will he stop using sewage if he is unsatisfied with the price of water treatment? It is similar with other utility services. These questions are the reason why the utility companies, local authorities too, are trying not to underline this Article when communicating about the consumers rights. Usually unsatisfied consumers are asking to be disconnected, or not covered by the waste collection and not to terminate the contract and this gives some space to the utility companies to deal with them in favour of companies. Right to change the service provider Article 90 (1) Theretaileris obligedto allowtheconsumerconclusionofthecontractwith anotherretailer whoprovides servicesof common economic interestof the same typewithout having to payfees andcharges. (2) The term in which theretailer is obliged toallowthe consumerconclusion of the contractreferred to in paragraph1 of thisarticle cannotbe longer thanone monthfrom the dateof notificationoftheretailerabout the consumer's intent, unlessa specific lawdefinessomething else. (3) If acontract for the provisionofservicesofcommoneconomicinterestis concludedat certain timelimit, the expiry datemust be indicatedoneach single invoice. As it is said before, in almost all of the cases, the utility companies are monopolists at the area they provide the service, so the utilization of this Article is not really possible at the moment. Specificationof the bill Article 91 (1) The retailer isobliged to deliver bills for servicesof common economic interestwithoutdelayand intermsthat allowsthe consumer tomonitorrealized spending and his indebtednessfor the billingperiodof up toone month.
  • 28. 23 (2) Theretailerisobliged to quote in the bill for servicesof common economicinterest all ofthe elements in order toallow consumersto: 1) checkand monitor theamountof itsindebtedness; 2) havean insight intocurrent consumptionin order to checkthe totalspending bythe quality ofthe providedservices. (3) The retailer isobliged to deliver to the consumersthedetailed specification ofthe account attheir request, free of charge. (4) Servicesthat areprovidedto consumersat no chargecannot be listedin the bill. Besides the elements of the bill defined in the Article 10 of this Law, it is very important that the customer must have in the bill the insight on what is the amount of his indebtedness. Contact-lineand complaints Article 92 (1) Retailerswho areprovidingservicesofcommoneconomicinterestareobligedtoestablishan easily accessibleandfreecontact-linesto support consumersin relation tothe connection ofthe distribution network, quality and useof services of commoneconomic interest. In the finalstep in the communication between utility companies and consumers, the Law gives a chance to the utility companies to drastically improve their relation with the consumers through setting up contact lines. Having in mind that, out of this four utility services, district heating represents the utility service which has the biggest impact on the consumer's budget, national government has adopted part of secondary legal framework. Because of the strong financial impact from district heating (also electricity supply) on the consumers a regulation on energy protected consumer, or vulnerable heat consumer was adopted. This regulation sets up the conditions the consumers need to meet for reducing their energy bills, and also the method of calculating the reduction rate. The adoption of this regulation should really help local authorities to more easily approve the requests from utility companies on the changes of the prices of utility services, as the most vulnerable social groups should be met by the provisions of this regulation. 3.4 REGULATION ON ENERGYPROTECTEDCONSUMER, OR VULNERABLE HEAT CONSUMER Article 1 (1) Thisregulationlaysdowncriteria,methodof protection,terms, conditions and procedures for determining the status of an energy protected consumer and vulnerable heat consumer (hereinafter: vulnerable consumers) which is produced and sold by energy subject who is by Founding act or the act on entrusting of service operation obliged with heat production for tariff consumers,heat distribution and management of the distribution system and heat supply of tariff consumers (hereinafter: district heating company), source and way of providing funds for the delivery of certain amounts of electricity, natural gas and heat under special conditions and the way of keeping records of energy protected consumers and vulnerable consumers.
  • 29. 24 Article 2 (1) Energy protected consumer, orvulnerable consumer, in termsof this regulationis a household(individual,family), livinginadwellingwithonemeasuringpointatwhichtheconsumption ofelectricityornatural gas is measured or the heat issupplied. Article 3 (1) Thecriteriafor gainingthe statusoftheenergyprotectedconsumer, orvulnerableconsumer include: 1) the total monthlyhousehold income; 2) the numberof household members; 3) property status. Article 4 (1) Requirements for obtaining the status of an energy protected consumer or the vulnerableconsumer are recorded total monthly income of: 1) up to 13.222,00 RSD for households with one family member; 2) up to 19.251,00 RSD for households with two or three family members; 3) up to 25.276,00 RSD for households with four or five family members; 4) up to 31.786,00 RSD for households with six or more family members. (2) Total monthly household income defined in paragraph 1 of this Article shall be adjusted twice a year, as follows: on 1st of April and on 1st of October of the current year, taking into account the consumer price index over the past six months, according to the data of the National Bureau of Statistics. (3) Adjusted the amount referred to in paragraph 2 of this Article shall be determined by the Minister in charge of energy, with an act which is published in the "Official Gazette of the Republic of Serbia". (4) In addition to the income referred to in paragraph 1 of this Article, the requirements for acquiring the status of an energy protected consumer or the vulnerable consumer is lack of other living space, except living space that meets the needs of the household in accordance with the law regulating social protection. Article 9 (1) Energy protected consumer or vulnerable consumer acquires the right to reduce monthly obligations for a certain amount of electricity or natural gas, or heat per m2 of living space as follows: 1) for electricity, for all months: (1) for households with one member in the amount of 120 kWh per month; (2) for households with two or three members in the amount of 160 kWh per month; (3) for households with four or five members in the amount of 200 kWh per month; (4) for households with six members and more in the amount of 250 kWh per month, 2) for natural gas, for the months of January, February, March, October, November and December: (1) for households with one member in the amount of 35 m³ per month;
  • 30. 25 (2) for householdswith two or three members in the amount of 45 m³ per month; (3) for households with four or five members in the amount of 60 m³ per month; (4) for households with six or more members in the amount of 75 m³ per month, 3) for heat, for the months of October, November, December, January, February and March: (1) for households with one member in the amount of 25 m2 per month; (2) for households with two or three members in the amount of 35 m2 per month; (3) for households with four or five members in the amount of 45 m2 per month ; (4) for households with six or more members in the amount of 55 m2 per month. (2) Reduction of monthly liabilities is shown by the reduction of the base of a electricity monthlybillfor the amountdeterminedbymultiplyingtheamountreferred to in paragraph1 item 1) of this Article, with higher daily rates of the green zone for the consumers from the category "wide consumption" with two-tariff measurements increased by 10 %, from the price list of public electricity supplier CC "EPS Supply", Belgrade, to which the Council of the Energy Agency of the Republic of Serbia gave consent, and is in the implementation from 1st of October of current year. (3) Reduction of monthly liabilities is shown by the reduction of the base of a natural gas monthlybillfor the amountdetermined bymultiplyingtheamountreferred to in paragraph1 item 2) of this Article, with the tariff "energy" for consumers in the household group, supplied by "Srbijagas" increased by 5 % from the price list for natural gas for the public supply of PC "Srbijagas", Novi Sad, to which the Council of the Energy Agency of the Republic of Serbia gave consent and is in the implementation from 1st of October of current year. (4) Reduction of monthly liabilities is shown by the reduction of the base of a district heating monthlybillfor the amountdetermined by multiplying the number of m2 referred to in paragraph 1 item 3) of this Article, with 60,00 RSD/m2. (5) The amount determined in accordance with the provisions of paragraphs 2 and 3 of this Article shall apply until 30th of September of the following year. Having in mind the large differences in the price levels between different district heating companies in Serbia, but also having in mind the bad shape of district heating networks, which were the most vulnerable to the policy of utility service prices restriction, as they needed the highest investments, Regulation on determining the highest and lowest average prices of heat were adopted for the heating season 2012/13, and after that for 2013/14. This regulation really represents the first step in regulating the methodology for setting up the utility service prices. It takes into account the real expenses from utility company when calculating two way tariffs, for fixed and for the variable costs. 3.5 REGULATION ON DETERMING THE HIGHEST AND THE LOWEST AVERAGE PRICES OF HEAT DURING THE SEASON2012/2013 Article 1 (1) Thisregulationdefinesthewayofdeterminingthe highest andlowestaveragepriceof heat in the heatingseason2012/2013,whichisproducedandsoldbyenergysubject who is by Foundingact or the act on entrusting of service operation obliged with heat production for tariff purchasers,
  • 31. 26 heat distribution and management of the distribution system and heat supply of tariff purchasers (hereinafter: district heating company). (2) Priceof heat energyunder this Regulationshall be establishedif theenergy source for heat production is naturalgas, crude oil, heating oil, coal andbiomass. Article 2 (1) Thisregulationdoesnotapplyto thecalculationofthepriceofheatenergyfordistrictheating companies which are purchasing itfromother producers. (2) If the price for heat energy for district heating companiesreferred to in Article1 of this regulationisdeterminedon the basis ofthe tariff systemfor heat supplyingissuedinaccordancewith the provisionsof the Energy Law, pricedetermined in accordancewiththis act is applicable. Article 3 (1) The highest average price of thermal energy (Cq, max), by which the district heating company sells heat to certain categories of customers may be different, but their averaged value, calculated accordingto theshare of the heated surface area of particular categories of customers, shouldnotbe higherthanthe highestaveragepricedeterminedin accordancewith this regulation. Ratio of prices for certain categories of customers must be between 1:1,5. (2) Thecompetentauthorityof a localgovernmentmayestablishcategories ofheat customers who are paying subsidized price of heat, and the amount of subsidy for each category, in accordance with the law. (3) Thecompetentauthorityof a local government can make a decision on the conditions and methodof subsidizingthecostof introducingthemeasuringinstruments onthe place of delivery of heat energy, and then the individual measuring at the flats. (4) The highest average price of heat, without the value added tax shall be established on the basis of the eligible costs of production and distribution of heat, distribution system management and heat supply. Article 4 (1) Thehighestaveragepriceis calculated as the sum of the eligible fixed (Tf) and reasonable variable costs (Tv) of district heating company: Cq, max = (Tf + Tv x q)/n [RSD/m2] wherein : q = 140 kWh/m2- annual energy consumption by 1m2 heating space; n - number of months during which the heat energy is charged (n = 12), if the heat is charged evenly over the 12 months of the year). (2) Eligible fixed costs (Tf ) are eligible costs on a yearly level that are not changing with the change of volume of production and they include: 1) materials for investment and ongoing maintenance, 2) the cost of maintenance, 3) other materials, 4) wages, salaries and other personnel expenses, 5) depreciation, 6) the cost of capital, 7) commissions and banking services, 8) insurance, 9) taxes, fees and dues, 10) other fixed costs of heating. (3) Eligible variable costs (Tv) are eligible on a yearly level, the amount of which depends on the volume of production and they include: 1) the cost of fuel and energy,
  • 32. 27 2) the cost of electricity used in the production process, 3) the cost of water and water treatment. Article 5 (1) The maximum amount ofthe eligiblefixed costsreferred to in Article4paragraph 2of this regulation,(Tf) canamountupto 360.00 RSDper m2 of heating surface annually fordistrict heating companiesthatdo notmaintainthesecondaryheatinginstallations,or380.00RSDperm2 of heating surface annually fordistrict heating companiesthat maintainthese installations. (2) Increasingtheeligiblefixedcostscannotbe higher thanthe amount of projected inflationfor the given year. Article 6 (1) The maximum amountof eligiblevariable costsreferred to in Article4paragraph 3of this regulation,(Tv) of 1kWh of supplied heatis determined by theexpression: Tv = 3600 Cgor / (Hd x ηi x ηm) [RSD/kWh] wherein: Hd - Lowerheating valueof fuel according to the actual structureof used energy sources; Cgor - Unit costs of fuelaccording to the actualstructure of used energy sources; ηi - The level of efficiencyof the productionplant accordingto the actualstructure of energy mix; ηm - The level of efficiency of the distribution network. (2) The lowest calculated value of the level of efficiency of the production plant that uses: 1) gas as energy amounts ηi = 0,85, 2) crude oil or fuel oil as energy amounts ηi = 0,82, 3) coal or biomass as energy amounts ηi = 0,70. (3) The lowest calculated value of the level of efficiency of the distribution network of: 1) capacity up to 20 MW amounts ηm = 0,92, 2) capacity from 21 to 80 MW amounts ηm = 0,90, 3) capacity from 81 to 250 MW amounts ηm = 0,88, 4) capacity from 251 MW and above amounts ηm = 0,85. Article 7 (1) Thelowestaverage priceis equalto the maximumamount ofeligiblevariablecostsreferred to in Article6 of this regulation. Article 8 (1) The prices of energy fuel used in heating plants are determined by approved regulated prices in accordance with the law and most favourable prices on the market, and they are used as an input for calculation of the highest and the lowest heat prices. Article 9 (1) Changing, or harmonization of the production heat prices can be carried out in case of increase of the total price of energy of more than 3%, and necessarily in case of decrease of more than 5%. Apart from the national legal regulations dealing with utility services, every local authority regulates its own separate local legal framework dealing with utility service prices.
  • 33. 28 One of the more interesting is the case of the City of Leskovac, where the city Council adopted the decision approving the new prices for district heating, but at the same time subsidizing almost 2/3 of the price from the City budget for all of the households. DECISION of the city Council of the City of Leskovac 1 We are giving the approval to the decision of the Board of Public Utility Company "Toplana" in Leskovac, No. 4704/4 from 07.12.2012, on the increase of prices of production and distribution of heat complied with the regulation of the Government of the Republic of Serbia, which are: 1.a. Residential customers - Households 91,52 RSD/m2, or 98,84 RSD/m2 incl. VAT 1.b. Commercial customers - The first category 91,52 RSD/m2, or 98,84 RSD/m2 incl. VAT - The second category 120,00RSD/m2, or 129,60 RSD/m2 incl. VAT - The third category 137,28RSD/m2, or 148,26 RSD/m2 incl. VAT 2 Thecompetentauthoritybodyof localself-governmentshallsubsidizeheatingcosts forhouseholds with 30,00 RSD per m2, so that the new prices amount to 61,52 RSD per m2, and 66,44 RSD per m2 incl. VAT. 3.6 Conclusions To underline here the most important conclusions, we need to remind that the competence of utility services falls completely under LSGs. They are the ones who are establishing the public utility companies, entrusting the performing of utility services and eventually taking care of utility services operations by themselves (in smaller LSGs). The public utility companies are representing the long hand of LSGs who are monitoring the operations of public utility companies, obliged to give the consent to every important decision made by PUCs and controlling the level of utility prices. The responsibility of not meeting a law on utility services, having in mind previously concluded, falls on PUCs, because they are the one who are obliged to implement the law, but at the same extent to LSGs, as they are monitoring work of PUCs and doing so, they are allowing them to act comfortable regarding implementation of the law. This can be easily recognized as PUCs are not meeting the law obligation to separately perform the accounting of incomes and expenses devoted to every single service, but also not all principles for determining the price are completely met, and especially the 5th that determines the obligation that all categories of consumers are having the same price for utility services. Of course, the LSGs are not fully complying with the law when monitoring of these regulations. As said earlier, LSG gives an approval on decision on price changes, but for a years back, when making the final decision, LSGs are taking in into account social issues and because of that, they often don't give a consent. Doing so, LSGs are putting PUCs in a position where they cannot cover all of the expenses by their incomes because of the insufficient price of utility services. At the end this reflects to the PUC operations, and particularly to the investments in infrastructure which are very low or does not exist. Even though the Law on consumers protection recognizes the necessity of signing the contracts between the consumers and utility companies, they don't exist in reality. The PUCs are using the provision of the Law on consumers protection identifying the obligatory relation between the consumers and PUCs starting the moment when consumer starts receiving the utility service,
  • 34. 29 but also the moment the consumer starts paying bills for the receiving of the services he undoubtedly acknowledges the conditions of PUCs whatever they look like. Termination of contracts, or more appropriate for the municipal services in Serbia, termination of the obligatory relationship, relationship that starts the moment of the start of providing of service, as contracts practically don't exist, could potentially cause a significant problem in utility operations. The Law on consumers protection does not recognize the specificity of the utility services, and treats them as all other services when considering the customers' right to terminate the service contract at any time they feel unsatisfied. By terminating the contract, the customers don't have the obligation of paying for the service, which leads to cancelation of the service provision by the utility company. Having consumers dropping out of the system of utility services separately, already makes a problem, as this implies that customer is disposing (or not disposing at all) his waste the way that is contrary from the organized waste management (probably even against the regulation on power), or not having water supply for his needs, or being disconnected from the sewage or district heating network causing unpredictable results, especially when consumer is living in collective housing. At the end, in case of having a great number of customers terminating their contracts, at the moment when they don't have any other operator of the utility service at the market, could result in the total destruction of the utility service system and networks which have been constructed for providing the service to all of people covered by the area of the service, now oversized and ineffective because of the insufficient number of customers connected. Even though the obligation of setting up a contact line for complaints and information is obligation set by the law, from the data obtained from the questionnaires dedicated to the PUCs pricing communication it could be concluded that 30% of PUCs have organized call service for complaints and information. This is the area that must be significantly improved in the next period. The national authorities are trying to help LSGs in order to make them easier in determining a realistic levels of utility service prices. Because of that they have adopted aRegulation on energy protected consumer, or vulnerable heat consumer which represents the first step towards taking into account the social component when billing for utility services, and not keeping low level of prices for keeping the social order as it was done for a decades before. Implementation of this regulation must be in paired with creation of so called social cards which should determine the real picture of the socially most vulnerable customers. At the same time, having in mind that the bills for district heating are representing the biggest burden to the consumer's budgets, but also having in mind that the prices for district heating are varying a lot between the different LSGs, Ministry of energy, for two years in a row, is delivering to LSGs a Regulation on maximum and minimum prices of district heating. By adopting this regulation, Ministry really pushes DH companies and LSGs to adopt a methodology for determining prices, as LSGs that have adopted these methodologies are not obliged to implement Ministry's regulation.
  • 35. 30 4 Conclusions from the poll dedicated to Public Utility Companies' pricing communication In order to get more insight on a pricing communication, a poll was organized and aimed at Public Utility Companies. As a first step, a questionnaire was developed taking into account suggestions from KOMDEL (Association of utility companies in Serbia), but also from SCTM gender experts. This questionnaire was then distributed to utility companies with a strong assistance from KOMDEL, and now we have the results of utility companies responses on distributed questionnaires. A group of 20 utility companies responded to the questionnaires. 7 of them coming from sector of district heating, 8 of them from water supply and sewage, and 5 of them from waste collecting. These 20 companies represented the large, medium and small size municipalities from all parts of Serbia and they provided service to 381.833 individual customers (131.055 sewage customers are already included in a total number as all of them are also connected to the water supply network), and to 27.715 companies (1.635 sewage customers already included). This sample leads us to the conclusion that the analysis of the poll results will show us an overview of all of Utility Service Companies in Serbia from the 4 utility services that are processed here. The next Table shows the collection rates in total, but also for the every one of separate utility services: Table1. CollectionratesinSerbia[%] Utility service District Heating Water supply Sewage Waste collection TOTAL Collection rate on 31st of December 2013 (%) 85.77 72.25 69.25 72.98 75.11 Collection rate for the bills from 2013 on 31st of January 2014 (%) 85.28 68.90 63.73 76.37 72.74
  • 36. 31 Such a low levels of collection rates are leading to a conclusion that many Utility Companies are facing difficulties in their budget operations which are primarily reflected in the lack of investments and inadequate maintenance of the equipment and infrastructure. The table shows that we have the worst situation at sewage services, and at the same time the situation is most favourable in the service of district heating, even though district heating is the service that burdens family incomes the most. 13 other questions were mostly focused at the pricing policy of utility companies and current state of information services and communication with customers. Questionnaires showed that more than a half of examined companies are issuing bills for every single service they provide, even though, in most cases at the same time there exists an organized separate company that bills utility services. This is specifically emphasized in district heating where we have a great majority of these cases. There are even a few of cases where there are a part of customers with bills issued for the every single service separated, and the other part who's bills are issued by separate company who are issuing a joint bills for several utility services. 80% of utility companies don't have any incentives for the customers who are paying for their bills in a short notice. The 20% of companies who does have the incentives, here they have a discount of 5 to 10% for the bills for the customers who are paying for the bills at the short notice, are mostly coming from the district heating sector (all of them with 5% discount), and only one coming from water supply and sewage sector (with 10% discount) (see the graph). Figure 1. Incentives for customers who are paying bills in short notice We can also conclude that utility companies are using all of the suggested solutions (appealingthrough the local media, highlighting theamount of the debtfrom the previous periodon the newbill, periodicallysending letterstoCourt procedure,suing irregularpayers) when consumers don't pay for their bills. 0 2 4 6 8 10 12 14 16 18 utility companies without incentives utility companies with discounts Are there any incentives for customerswho are paying bills inshort notice? district heating (5%) water supply/sewage (10%) waste collection
  • 37. 32 More than a half of companies does have the organized service for the complaints and just more than quarter of them have the call service, few of them both. There are 60% of utility companies that have noofficialrecord of individual complaints, butthey react toeach individualcomplaint. 40% of other hasregisteredcomplaints at level of 2,6% of the total of their customers. The biggest percentage of complaints is registered in district heating sector (6%), then water supply and sewage (2,2%), and then waste collection (1,2%). Again, one of the biggest reasons for a high percentage in district heating lies in the fact that district heating bills takes the biggest stake of the family incomes, and because of that consumers are acting very cautious and expecting the highest level of service quality from it. Almost at the same extent the consumers are complaining on the bill calculating mistakes and on the quality of service! Only one of the all tested utility companies has the records with information on how many women and men separately are making the complaints. The data from this utility company (coming from the sector of water supply and sewage) shows that 40,4% of customers complaining are male and 59,6% are female. 75% of utility companies don't have any surveys or else in order to measure the satisfaction of the customers. Surveys of the rest of 25% of utility companies are not really comparable, but those delivered shows a very high levels of satisfactory of customers. Majority of the utility companies (75%) are delivering bills by regular mail and by their own collector service at the same time. At the same time there are 15% of utility companies that are delivering them only through their collector service, and 10% only by mail. Also 10% of companies are using services of other company in charge for the billing of utility services, but only for the part of their customers. The bills could be paid at the company's desk and in banks and post offices at the same time for almost all of utility companies. 40% of companies have a collector service, and bills could be paid to the collectors. Communication with the customers is usually performed, besides communication through delivering bills, with occasional announcements and notices (75% of utility companies). However, 25% of utility companies are using almost exclusively communication through bills.

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