infrastructure4 in this field. Nevertheless, the Galli Law has launched a process
meant to adjust tariffs to long-term operation and infrastructural costs, a
process which is still underway. The finalization of the transformation of the
management system (from the present 13,000 operators to the about 80-100
foreseen when the Optimal Territorial Ambits (ATOs) will be in full
operation), has been considered to be a preliminary condition needed in a view
to containing tariff increases in the weaker areas.
From the other hand, the delays in the implementation of this reform have
compromised the possibility of attracting capital for infrastructure investments
which are essential for the attainment of the quality targets set forth in the
Framework Directive. At the same time, tariff regulation is forced to come to
terms with short-term policies and limited incentives.
But, while it could seem expedient to favour a rapid adjustment of tariffs to
investment-inclusive costs, it is also evident that water service tariff policies
have also to take into account the question of social affordability. Indeed, the
closer to the marginal costs (externalities included) tariffs are, the more
efficient resource allocation is.
In addition to other things, the Galli Law (and related regulations enforced to
the Regional level), assigns the planning of the new investments required to
local governments by means of the so-called Ambit Plans. The cost of these
investments is charged on the tariff by the operator in charge of the
management of the SII that is required to implement the selected plan with the
relevant financial burden. This mechanisms accounts for an incentive to the
implementation of new works, whose cost turn out to be “neutral” for the
operator thus discouraging any investments intended to produce a better and
efficient use of the existing resources that should be borne by the same
oprator.
4
Under article 13, comma 2 of the new tariff regulation of Law Galli “the tariff is determined
taking into account the quality of the water resource and of the service supplied as well as the
required upgrading works, the management costs of said works, adequacy of the profitability
of the capital invested and the costs of the management of protected areas so that a
comprehensive coverage of investment and management costs can be assured”.
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