Comparison of ongoing annual sewer fees by districts based on a fictitious model household (3 persons, floor area: 140 m2, water consumption: 50 m3/capita/year)

Austria: Modern Billing System for Wastewater Management Needed

This is the result of a capital cost estimate undertaken by Kommunalkredit Public Consulting in 2012. A new sewer billing system would also be consistent with the public request for more transparency

Wastewater billing is primarily governed by national und European laws. The most important European law in this respect is the EU Water Framework Directive (WFD), which in paragraph 1 of Article 9 establishes the principle of reco-very of the costs of water services, including environmental and resource costs. The WFD also seeks to create incentives for an efficient use of water through water-pricing policies. It requires the disaggregation of water use at least into the sectors households, industry and agriculture which, in tune with the polluter pays principle, shall adequately contribute to the recovery of the costs of water services.

At the national level (in Austria), wastewater billing is mainly covered by the laws relating to tariffs and charges of the individual provinces. These laws partly came into force in the 1970s and differ greatly from one another. Huge differences are also found in the calculation models underlying these laws, which also vary greatly in their details. Hence it is difficult to draw general conclusions on the basis of these provincial laws. 

The maximum service charge is laid down in the Fiscal Equalisation Act of 1993. The presumable annual revenues must not exceed the double amount of the annual expenses for plant maintenance and ope-ration plus interest and amortisation of the construction cost. This does not imply, however, that a double recovery of the costs is permissible over the long term, as this would be unconstitutional. What is meant here is a short-term option to support the plausibility of the cameralistic accounting statement. In a modern cost and activity accounting system, the principle of equivalence does not allow for a double recovery (compare Kamper, 2007).

Current billing system in Austria

In 2012, Kommunalkredit Public Consulting was commissioned by the Austrian Ministry of Environment (BMLFUW) to prepare a highly representative capital cost estimate for Austrian urban water mana-gement over the forthcoming decade, in which the billing systems used in the individual communities were also analysed. The specific focus of the estimate was to identify the methods used to calculate on-going service fees and the actual fees levied from a fictitious household. Calculations were based on an exemplary household with three persons, a water consumption rate of 50 m3/capita/year and 140 m2 of floor area (split up into two storeys with one bathroom/toilet each). 

It could be shown that in Austria a variety of different systems with strongly varying reference parameters is used. The most common parameters include drinking water consumption, the building space on which the calculation is based and the number of buildings, inhabitants, toilets etc. These parameters are partly combined with a fixed base charge. In 40 % of the communities, ongoing sewer fees are calculated on the basis of drinking water consumption, in 29 % of the communities they are based on floor space (with different methods of evaluating the floor space to be calculated). 12 % of the communities combine a variable calculation method for water consumption with a fixed base charge, which best reflects the composition of costs levied for the rendering of services. 11 % use a so-called flat-rate model (e/building, e/toilet etc.), which contains no consumption-based component at all. Calculation models based on floor space do not contain a consumption-based component either, but at least they allow to determine one indirectly. 

Regional distribution of calculation models

The geographical distribution of the calculation models in use reveals several interesting aspects (Fig. 1). The sewer law of Lower Austria establishes uniform calculation schemes. The sewer fee is the product of floor space and standard rate; the floor space used for calculation must be provided in detail. Other calculation methods may only be used by communities which are organised in the form of cooperatives. 

In the Austrian provinces of Vorarlberg, Tyrol, Salzburg, Upper Austria and presumably also in Carinthia, calculation is primarily based on water consumption, even though the mandatory character of this calculation method differs by province. The sewer billing laws of Styria and Burgenland do not impose any mandatory calculation methods. As is seen in Figure 1, this results in a variety of different calculation models. The regional use of calculation methods in Burgenland is additionally influenced by the other adjoining provinces. While in North Burgenland the calculation model based on floor space prevails (like in the adjoining province of Lower Austria), in South Burgenland a great variety of different models are in use (like in the adjoining province of Styria).

Sewer fees of an average household

Figure 2 shows the annual sewer fees levied from an exemplary household. The figures were obtained by community and averaged across the relevant district. What strikes the eye is the pronounced spread bet-ween Upper Austria (500 e/household/year on average) and Burgenland (around 200 e/household/year). The fees in Tyrol, Vorarlberg and Styria are comparatively low. The uniformly higher fees in Upper Austria are presumably due to a province-wide minimum charge requirement, which leads to a standardisation of fees and consequently to a continuous adjustment of these fees. At this point no statement is made as to the extent to which these fees cover the costs incurred; a justified distinction based on facts would only be possible if uniform and standardised cost and activity accounting schemes were used (an economic steering mechanism which is still only little used, at least not in sufficient qua-lity). To facilitate a standardisation of such cost and activity accounting schemes, the Austrian Water and Waste Management Association (ÖWAV) has recently released a new guidance (Arbeitsbehelf AB 41). A first conclusion to be drawn is that many of the very low fees do not cover the costs incurred.

Outlook on the development of billing schemes

An outlook on future billing schemes reveals that water management will be faced with difficult boundary conditions. The high fixed costs of appro-ximately 80 % are hardly covered by the relatively low fixed revenues. The WFD and the general principle of sustainable resource management require po-licymakers to create special incentives. But with only a 20 % portion of the fee tied to consumption, this will be impossible to realise! To achieve a steering effect, the variable portion of the fee would have to be raised to 50 %.

What is more, a further decline in water consumption resulting from new technologies puts water utilities under increasing economic pressure. In Germany, water consumption came down from 144 l/capita/day in 1991 to 121 l/capita/day in 2010. 

Demographic change also plays a role. A survey by Tränckner et al. (2013) has shown that in Germany the specific cost per inhabitant (and the pressure on the level of fees per household) would be much higher than in other scenarios, such as increasing burden on wastewater treatment or disproportionate increase in energy prices.

The polluter pays principle – a challenge

Another challenge lies in the aforementioned request to at least split up water use into the sectors households, industry and agriculture and their reasonable contribution to cost recovery. In the industry sector, for instance, this would lead to the introduction of pollution-based fees (e.g. surplus charges for heavy polluters). A well-established practice in Germany is the splitting of wastewater fees into “wastewater disposal” and “rainwater disposal”. A trend in this direction is also observed in court rulings (DWA, 2012), where the share of rainwater disposal in the overall cost is not taken into account. It is only a matter of time when this trend will also be adopted on a large scale in Austria. The splitting of fees is a relatively complicated method, especially when the intention is to accurately assess the proportion of rainwater disposal (such as making a clear distinction between paved and unpaved surfaces). If the costs of rainwater disposal are minimal in relation to the total costs, the splitting of fees may not be reasonable. There is no explicit rule or recommendation as to the percentage from where a splitting would make sense.

Summary and recommendations for the future

An analysis of the Austrian practice of wastewater billing reveals that the latter does not really conform to the mentioned trends and requirements and that there is a huge potential for improvement. The hetero-geneity of the existing systems cannot be explained by facts. A uniform scheme based on mo-dern calculation methods would be highly desirable, also with a view to the equality of treatment and the growing public request for more transparency. But such modernisation requires broad consensus as this step would also result in an adjustment of the laws at provincial level. Kommunalkredit Public Consulting GmbH recommends a three-pillar billing scheme: firstly, a one-off connection fee which contributes to the construction costs; secondly, an annual base charge to cover part of the fixed costs; and thirdly, an annual fee tied to consumption.

Further information:
Kommunalkredit Public Consulting GmbH
DI Dr. Johannes Laber
E-Mail: j.laber@remove-this.kommunalkredit.at
Web: www.publicconsulting.at


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