Water Price Regulation: A Review of Portuguese Tariff Recommendations

Abstract

The context of severe economic crisis and financial constraints has reinforced existing pressures on services considered to be of community interest by public authorities and therefore subject to specific public service obligations. This is the case of the water industry, with increased pressure for full cost recovery and on the use of prices as a tool for the management of water resources in EU countries. The Portuguese situation confirms these trends and the expected increases in water tariffs raise special concerns. In these volatile times it is particularly relevant to analyze the management and regulatory work of the Portuguese Water and Waste Services Regulation Authority, which recently acquired extended powers in pricing regulation. Findings reveal a complexity of tariff schemes in Portuguese municipalities, with tariff recommendations being a clear commitment to selected economic theory proposals and the harmonization of price schemes in the heterogeneous water utilities national context.