Today, Martin H. Thelle presents the conclusions from Copenhagen Economics’ study on consumer-owned water utilities and price regulation.

Regulation of the Danish water sector was supposed to secure lower water prices to consumers. However, our analysis questions the effectiveness of the current price regulation in reaching this goal.

Copenhagen Economics analysed the 131 consumer-owned utilities being subject to price regulation (supplying between 200.000 m3 water and 2 million m3 water) with the 53 municipal-owned utilities in the same size group. The main conclusions are:

• Consumer-owned water utilities have 30% lower prices and are 17% more efficient than comparable municipal water utilities.
• If the municipal water utilities performed as well as the consumer-owned water utilities, consumers could save DKK 260 mio. every year.
• The benefits from price regulation are questionable and small, while the chosen regulation model imposes additional costs for administrative burdens and increases the financing cost for utilities when a save-to-invest model is replaced by a borrow-to-invest model.
• Administrative costs and financing costs are likely to make water more expensive for the consumers, even if the estimated efficiency improvements can be realised.

Download the full report (in Danish) Download Martin H. Thelle’s presentation

For further information please contact Partner Martin H. Thelle