Väljaminev kiri

Dear Dace,

The days pass quickly with daily work and Water Reform tasks.

We are happy to share our regulatory practice and hereby I will send the answers to all your questions.

1. 1. Is it true that as of 1 July 2026, water and wastewater tariffs in Tallinn are required to be equal for household consumers and legal entities?
   (While practical implementation may be delayed, is there a legal requirement to transition to equal tariffs?)

Yes, that is true and it derives from the law. Currently valid Public Water Supply and Sewerage Act (PWSSA) is in force since 01.07.2023 (Public Water Supply and Sewerage Act–Riigi Teataja). The § 73 (1) stipulates “If a water undertaking has established different prices of the public water supply and sewerage service for legal and natural persons, it undertakes to bring the prices into conformity with the principle of equal treatment within three years after the entry into force of this Act.” Therefore, all water companies must use equal water tariffs from 01.07.2026.

2. 2. Has Tallinna Vesi received any state or municipal subsidies (that are not included in tariffs) for water management purposes during the past three years?

In addition to public water supply and sewerage services, Tallinna Vesi also manages separated storm water sewerage systems and public water intake points. These activities are not water services within the meaning of the PWSSA. Tallinna Vesi has received and will continue to receive support from the City of Tallinn for the costs and assets related to these activities.

In the water price application, Tallinna Vesi must distinguish data on regulated activities from data on other activities. In the pricing procedure we have to assess the appropriateness of the allocation.

3. 3. What is the WACC value for water management services for 2025 and 2026?

Until 18.06.2025 the WACC for water companies was 6,28%. Since 18.06.2025 it has been 5,61%. We haven’t decided yet when it will change again.

About the Tallinna Vesi different tariffs to other water companies:

4. 4. Which cost items were reduced or excluded when calculating the wholesale tariffs for Tallinna Vesi?

During price assessment we have to follow the principles set in law. PWSSA stipulates “The costs to be included in the price of the public water supply and sewerage service must be justified, based on efficiency and enable the water undertaking to perform the duties provided for by law.” Basically the tariff has to cover costs and assets which are connected with this service. For example: to provide water service to other water companies Tallinna Vesi is using the main collectors. It means that most water and wastewater pipelines and pump stations are not used and are not included to the tariff of other water companies. The same principle is used for expenses. For example, the customer service unit is mainly necessary for Tallinna Vesi regular customers, not for other water companies.

5. 5. Was it ensured that all costs of providing the services were nevertheless fully covered (by other user groups)?

We are sure that all justified costs were fully covered with water tariffs. But we cannot be sure that allocation between different tariffs is absolutely fair. In one moment you reach the point where more detailed analysis does not give a significant effect to the result but only increases the effort and takes time.

6. 6. Is there any specific methodology or set of rules in legislation that regulate such an approach to calculating lower wholesale tariffs? If so, we would greatly appreciate it if you could share the relevant provisions (in Estonian), along with some indications of where exactly they are set out.

PWSSA § 57 (2) For the public water supply and sewerage service provided to another water undertaking, the water undertaking may charge the fee specified in subsection 1 of § 48 of this Act pursuant to the price decision of the Competition Authority.

Tariff calculation principles are the same for all water tariffs. Regulator has to check that costs and assets included to certain tariff relate to providing that water service.

Hopefully our answers are useful to you. Feel free to let us know if you would like additional information about the answers or if you have any new questions.

With best wishes

Dear Kertu and Vivika,

I would be very grateful if you could share your experience with one additional, more specific question.

We understand that wholesale tariffs for other water companies supplied by Tallinna Vesi have been approved (28 November 2025: EUR 0.85/m³ for water and EUR 0.80/m³ for wastewater).

At present, our Ministry of Climate and Energy is considering amendments to the Law on Water Management Services that would require the regulator to approve separate wholesale tariffs for other water companies. This would mainly affect Rīgas ūdens and its surrounding companies, as well as several other service providers in the regions.

In this context, we are asking the Ministry to establish legal principles that would allow deviations from the standard principles of technical and economic justification (set in the Law on Regulators of Public Utilities). Our position is that, if these principles are strictly applied, the tariff reduction envisaged by the Ministry cannot be achieved, so we need other principles set in the  specific regulations for the sector.

In return the Ministry is looking at us for ideas. Rīgas ūdens would be ready not to apply return on capital to water supply and wastewater collection (but would still apply them to water production and wastewater treatment). We see some potential for minor reductions in administrative costs and water meter costs. With regard to the depreciation of fixed assets, careful consideration must be given to whether and on what basis it could be applied to a lesser extent.

Against this background, could you please elaborate on the following:

• * Which cost items were reduced or excluded when calculating the wholesale tariffs for Tallinna Vesi?

• * Was it ensured that all costs of providing the services were nevertheless fully covered (by other user groups)?

• * Is there any specific methodology or set of rules in legislation that regulate such an approach to calculating lower wholesale tariffs? If so, we would greatly appreciate it if you could share the relevant provisions (in Estonian), along with some indications of where exactly they are set out.

Dear Vivika,

I hope this message finds you well.

I am writing to you regarding Tallinna Vesi. In recent months, there has been considerable public discussion in Riga about district heating, partly driven by political developments ahead of the elections. Recently, similar attention has turned to water services.

In this context, an active member of the Latvian Parliament (Saeima) has prepared a comparison between the Baltic capitals; however, the information presented is not fully accurate.

I would therefore appreciate your assistance with the following factual questions:

1. 1. 1. Is it true that as of 1 July 2026, water and wastewater tariffs in Tallinn are required to be equal for household consumers and legal entities?
   (While practical implementation may be delayed, is there a legal requirement to transition to equal tariffs?)

2. 2. Has Tallinna Vesi received any state or municipal subsidies (that are not included in tariffs) for water management purposes during the past three years?

3. 3. What is the WACC value for water management services for 2025 and 2026?

Thank you very much in advance for your help.

Best regards,

Dace Čodare-Plaude
Water, Deposit System and Waste Management Department

Head of Water Management Division
T.    +371 66222344

Skanstes street 25,
Riga, LV-1013
www.sprk.gov.lv


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