Regulators – a joint response to face the COVID-19 crisis
The Hague, Netherlands, 29 April 2020. Regulatory agencies are at the forefront of making sure citizens and industry have access to fundamental services. They operate in a context of increasing complexity, technological disruption and constrained resources and in these days water regulators work in a critical health area of our societies.
Can I drink the tap water? Will I have access to safe water and sanitation during the pandemic? Can operators ensure affordable and safe services? – These are questions of the citizens and businesses around the globe during the pandemic. Can they trust the water and wastewater services during a highly contagious infectious pandemic caused by the new coronavirus? And will the economic stress have an impact?
The International Water Association discussed these concerns with international regulators in this edition of the IWA Online Panel series on water and COVID-19. The social, environmental and economic consequences of this crisis, both for utilities and customers will have to be assessed in the coming months.
Regulatory authorities from Europe, Asia and Latin America, who presented and discussed the different solutions in place to respond to the magnitude of the current pandemic and its complexity, have demanded “emergency regulation”. Utilities need a good, enabling environment to perform well and during the outbreak of the Corona Virus pandemic, this is as important as ever. Despite great uncertainties, the regulators identify common trends with positive results:
- Openness to and promotion of incorporation of digital (automatisation of) processes – that allow for safe operations for both staff and users;
- Added flexibility to the existing rules for the sector, favouring the (financial) sustainability of the services without compromising safety;
- Effective implementation of safety plans and risk management tools;
- Strengthened communication channels with users and service providers (using digital tools and technology); and
- Increased coordinated action amongst public actors, ensuring coherence in adopted measures.
Chaired by Mrs Carolina Latorre, IWA lead on Policy and Regulation, the IWA Online Panel discussion featured regulator representatives and their experience from regulations under the current pandemic. From Hong Kong, Mr Sai-Wai Chau, Deputy Director of the WSD, from Portugal Ms Ana Albuquerque, Member of the Executive Board of ERSAR, from Italy Prof. Andrea Guerrini, Commissioner of ARERA, and from Brazil Dr Jorge Werneck, Vice-President of the Brazilian Association of Regulatory Agencies (ABAR) and Director of ADASA, the regulatory authority in Brasilia.
Hong Kong SAR of the People’s Republic of China was one of the first places hit by the current COVID-19 pandemic, adding pressure to their mission to provide reliable and adequate supplies of quality water to a population of over 7.3 million.
Mr Sai-Wai Chau, Deputy Director of the WSD, explained that they considered maintaining reliable and quality water supply as one of the critical lines of defence to help stop the spread of the disease, and to enable personal and environmental hygiene measures. Of equal importance, the agency deals with safety and health protection of staff by preparing different emergency scenarios to maintain the expected and necessary high level of operations. These scenarios can be staff contracted with the virus or downsizing staff number due to quarantine measures.
Mr. Chau stated that a global crisis is not a new challenge for Hong Kong or the Water Supplies Department as they have a clear and solid response developed from working with climate change challenges to enhance safety from the tap.
Mr. Chau emphasised that “[together] we will certainly conquer this disease”, highlighting the role of customer communications and information in dealing with this crisis. An important pillar in the effectiveness of the contingency plan and the success of their measures relies on the concerted effort of all Hong Kong citizens in upholding precautionary measures recommended during this COVID-19 pandemic like social distancing, personal and environmental hygiene.
The WSD has published a list of regulatory recommendations and adopted measures on the WSD website.
In Portugal, a state of emergency was first declared on 18 March 2020. Prior to this , the Water and Waste Services Regulation Authority (ERSAR) had already started collaborating with other public authorities to address the pandemic, said Ms Ana Albuquerque, Member of the Executive Board of ERSAR.
Since 2003, ERSAR has been the national authority for drinking water quality which includes all 400 drinking water supply operators. The regulatory body has been ensuring the quality of the services and supervising the creation, execution, management and operation of those systems while safeguarding the stability and financial sustainability of the water operators sector.
To manage the current health crisis, the Ministry of Environment set up an emergency monitoring structure, appointing ERSAR as responsible for monitoring the water, wastewater and solid waste operators sector to identify and control potential problems in delivering the services.
“We have set up a two times per week survey to detect situations of difficulty on providing the service and to identify the needs of material like gloves, masks, alcohol…in order to anticipate and prevent shortage of products”, explained Ms Albuquerque. She further stated that this survey addresses all service operators, including continuous data collection and processing the results with direct reporting to the Ministry. Also, direct attention to operators which might face difficulties with service continuity to assess problems and share solutions, is part of ERASR’s role.
ERSAR defined and circulated recommendations for water companies and laboratories to guarantee safety of drinking water supply during the emergency. This includes among others:
- Recommendations on drinking-water quality control, allowing flexibility in the sampling points ensuring quality, either from tap or directly from the network;
- Guarantee at all times at least 0.5 mg/l of free chlorine according to WHO recommendations;
- Guidelines and measures that should be implemented by the operators in order to protect workers.
The financial sustainability of the sector is an important part of ERSAR’s mission during this crisis. ERSAR advises water operators to implement social tariffs and mechanism when needed to ensure affordability during times where economic instability is threatening the society through increasing unemployment rate and negative effects on businesses.
ERSAR has published online information to ensure transparency and latest information available for all stakeholders.
Italy’s independent regulator for energy, water and waste services, ARERA, has played a fundamental role in mitigating the economic and financial impact of the COVID-19 crisis on consumer and regulated companies.
Italy has been hit hard by the pandemic. The outbreak initiated with the first reported case of COVID-19 on 20 February 2020 in northern Italy. With the pandemic rapidly spreading to other regions within the country, Italy became one of the most affected countries in the world.
Prof. Andrea Guerrini, Commissioner of ARERA, stated that the national independent regulator reacted quickly and launched its first emergency provisions immediately after the declaration of alarm state declared by the Italian Government. These measures replaced the goals and actions set by the “normal” strategic plan of ARERA, which was temporarily suspended and partially derogated. ARERA maintained transparency of information from the beginning on and published on its website all relevant information for all stakeholders.
Professor Guerrini explained that the measures focused on:
- protection of all customers, with special focus on domestic ones, emphasising support during the financial crisis and coverage for operators’ financial shortages originating from extraordinary consumer protection measures;
- increased flexibility of regulation through extended deadlines and exemptions to support the operations facing increased difficulty in meeting their regulatory targets, due to unforeseen external conditions;
- addressing economic and financial tensions on regulated companies’ accounts with coverage of operators’ economic losses, stemming from extraordinary consumer protection measures and from extra costs incurred;
- promotion of stimulus to water investments includes follow up on previous proposals to the Italian Government to provide proper stimulus to investments in the regulated sectors, cooperation has been intensified to agree on additional measures for customer protection
Professor Guerrini said, “in Europe, national and regional regulators took extra-ordinary measures since the outbreak of the pandemic, mainly aimed at monitoring and ensuring continuity of water supply and affordability of tariffs”. He highlights the importance of a monitored approach adapted to the national and local situations. In the immediate reaction to the pandemic the main concern of regulatory agencies was to guarantee continuity of water supply and safe drinking water for all consumers. Today, there is an adapted change towards flexibility of rules for regulated companies to ensure financial sustainability and strengthened consumer protection.
In Brazil, regulation of water and sanitation services is a monumental task as one can expect from a continental sized country and its political structure. Brazil, is a Presidential Federated Republic composed of the Union, 26 States, a Federal District, and 5,570 municipalities, in which the exercise of power is attributed to distinct independent organs. The competency of regulating services such as transport, water supply, wastewater treatment, solid waste and urban drainage sits at the municipal level.
Dr Jorge Werneck, Vice-President of the Brazilian Association of Regulatory Agencies (ABAR) and Director of ADASA, the regulatory authority in Brasilia, explained that during the coronavirus crisis the structure of the country has led to more than 200 regulatory acts related to the COVID-19 from all competent actors, with more than 50 acts published by the Regulatory Agencies. This present and increased regulatory and legislative activity requires coordination.
He further states, that some of the measures adopted by regulators in Brazil are aimed at ensuring the maintenance of provision of water and sanitation services as essential services and protected as human rights. This includes defining exception rules for operation, inclusion of occupational safety, prohibition of cutting services due to non-payment, prohibition of the charging of fines and interest, and postponing expected tariff adjustments, among others.
Dr Werneck stated the main impacts of the COVID-19 pandemic are expected to affect the companies providing essential services, like water and sanitation, include increased obligations and responsibilities, revenue reduction, increases in operating costs and debt. “How to increase tariffs in an environment of economic recession and massive unemployment? In what period?” he asked. He expressed that in Brazil service provision is undertaken by both public and private companies, who will have to renegotiate their debts and loans, seek new resources, gain efficiency, be SMARTer, and adapt quickly to the new post-crisis reality.