Since the seventies, there is a political claim for a "leaner" administration among many countries. This change in socio-political attitudes is not least based on economical considerations that are directed toward higher efficiency of public services and the consolidation of budgets on the provincial and communal level.

Influence depending on legal form

Water supply, as one of the essential public services, is also included in these considerations. Compared to other public activities, water supply can be carried out in different legal forms: through special authorities of provinces and communities, by funds and institutions, through outsourced companies with an individual legal entity partly or completely owned by the respective corporations or through private domestic or foreign companies. It is finally up to the political decision-maker, what form he chooses for the respective public service to be fulfilled.

"No matter what legal form a water utility has, it will have to calculate its tariffs adequately", Hans Sailer, managing director of the Vienna Waterworks. "This claim is weighing even more, since the EU Directive on the creation of a framework of Community measures in the field of water policy is explicitly asking for a cost-effective management of water use," says the expert of the Waterworks.

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Cost-effectiveness with regard to the environment

Water use is defined as the extraction, distribution and consumption or the economic utilisation of surface and ground water, as well as the discharge of pollutants into surface waters or plants for the collection and treatment of waste water, which subsequently discharge these pollutants into surface waters.

The cost-effectiveness required is somehow modified in the present draft, as implementation has to take into consideration both socio-economic consequences, environmental effects and geographical and climatic conditions of the region concerned. "However, the principal necessity of a sound cost calculation is uncontested", says Sailer.

The immediate benefit of a cost-volume-profit analysis is the creation of a basis for the calculation of tariffs (preliminary and subsequent calculation). In addition, statutory requirements are met by proving that the tariffs correspond to the actual costs involved. "The legal requirement to handle budgetary means in an utmost economical and appropriate way is additionally fulfilled," knows the managing director.

Through cost calculation it is also possible to carry out an actual versus target comparison and to establish viable benchmarks for a comparison of indexes. "It is advisable to used tailored computer programmes for the efficient implementation of the requirements. For this purpose, we already have feasible standard solutions," Sailer says.

"To create a basis for an effective company management it is necessary to collect certain data. These data include the costs of certain departments, the detailed costs within the departments, the fixed assets, the inventory, the stock and the commodity value. Only when these questions are clarified can further considerations be made and sound measures be taken. These measures for example include medium-term budget planning, human resource management or the evaluation of savings and optimisation potentials", explains Sailer.

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Calculation of tariffs by the Vienna Waterworks

Water supply in the federal capital of Vienna is part of the Vienna Municipality. The distribution of drinking water and the setting of water tariffs are laid down in the "Vienna Law on Water Supply", and in the "Budget Regulation of the Municipality of Vienna". When adopting the annual budget, the Vienna Community Council has to examine all the tariffs and duties under public law, as to whether alterations are necessary. "Different tasks are fulfilled in the framework of the Municipality such as wages and salaries, accounting, or the reading of water metres and the levying of water and sewage fees."

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Fact and Figures of the past fiscal year (1998)

The cubic metre of drinking water is costing about 1 € for all the water consumers in Vienna. There is no basic rate and no quantity discount. The average household consumption presently amounts to 150 litres per inhabitant and day. Thus, water costs per inhabitant amount to about € Cent 18 daily.

Every property or house is equipped with a water metre, the house costs are split by the owner or the management. Depending on the diameter, a fixed fee of € 1,45 is levied for maintenance and exchange of metres. Connection and installation fees are levied when the metre is first connected. After that, the connecting pipes and the water metre are serviced by the Waterworks and repaired if necessary.

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The total revenue from water fees and secondary services amounted to ATS 2,112 million in the budgetary year of 1998 compared to annual costs of ATS 1,227,916,000,- (expenditures minus investments and loan repayment, not immediately becoming effective in the fiscal year) and imputed costs (valuation adjustments, payment of interests on fixed assets and administration costs) of ATS 793,776,000,-.

This comparison leads to a cover ratio, i.e. that percentage to which the expenditure for water supply is covered by the revenue from water tariffs, that amounted to 104.5 percent in the fiscal year of 1998. Observations over a longer period of time have shown that this cover ratio moves between +/- 3 to 4 percentage points around 100 percent. In line with the so-called "1996 Structural Adjustment Law" the Austrian communities would have the right to raise the water tariffs to a cover ratio of maximally 200 percent on the basis of their right of decision. (Source: aqua press Int. 03/99)

Information & Contact:

Municipal Department 31
Vienna Waterworks
Grabnergasse 4-6
A-1060 Vienna
Tel. +43 1 599 59-0