A research project supported by the European Commission
FP5: Energy, Environment and Sustainable Development www.watertime.org Key Action 4: City of Tomorrow and Cultural Heritage Thematic Priority 4.1.2: Improving the quality of urban life watertime@ watertime.org Contract No: EVK4-2002-0095
D11: WaterTim e case study - Arezzo, Italy
Emanuele Lobina Senior Research Fellow, PSIRU, Business School, University of Greenwich e.lobina@ gre.ac.uk
4th March 2005
One of 29 WaterTime case studies on decision-making on water systems
Watertime case studies Estonia: Tallinn
Finland: Tampere, Hämeenlinna
France: Grenoble
Germany: Berlin, Munich
Hungary: Budapest, Debrecen, Szeged Italy: Arezzo, Bologna, Milan, Rome Lithuania: Kaunas, Vilnius Netherlands: Rotterdam Poland: Gdansk, Lodz, Warsaw Romania: Bucharest, Timisoara Spain: Cordoba, Madrid, Palma de Mallorca, Gran Canaria Sweden: Stockholm UK: Cardiff, Edinburgh, Leeds
www.watertime.org
WaterTime partners: PSIRU, Business School, University of Greenwich, UK ERL, Universidad Complutense de Madrid, Spain Institute of Environmental Engineering and Biotechnology (IEEB), Tampere University of Technology, Finland International Water Affairs, Hamburg, Germany Eötvös József College, Hungary
Coordinator: PSIRU, Business School, University of Greenwich, Park Row, London SE10 9LS, U.K. www.watertime.org
Table of Contents
ACKNOWLEDGEM ENTS...... 3 1 INTRODUCTION...... 4 2 CITY BACKGROUND ...... 4 3 WATER AND WASTEWATER UNDERTAKING ...... 4 3.1 BACKGROUND...... 4 3.2 WATER AND WASTEWATER UNDERTAKING PROFILE...... 4 3.3 SYSTEM PROFILE...... 5 3.4 REGION PROFILE...... 5 4 ACTORS IN WATER AND WASTEWATER SERVICES PROVISION AND PRODUCTION ...... 5 5 EPISODES...... 6 5.1 DECISION TO AWARD A SEM I-PRIVATISED CONCESSION: 1990-1999 ...... 6 5.1.1 Failure to implement decision in favour of public sector option, 1990-1995...... 6 5.1.2 From rejection of the public sector option to the award of the semi-private concession: 1995-1999...... 8 5.1.3 The tendering procedure and concession award ...... 10 5.2 DECISION TO RENEGOTIATE THE SEM I-PRIVATISED CONCESSION: 1999-2004 ...... 14 5.2.1 A troubled start for the semi-private operator: 1999-2001...... 14 5.2.2 The first renegotiation of the concession agreement ...... 15 5.2.3 Court rulings on the validity of the concession award...... 15 5.2.4 The second renegotiation of the concession agreement: 2001-2003...... 16 6 PARTICIPATION AND SUSTAINABILITY IN DECISION-M AKING...... 22 6.1 PUBLIC PARTICIPATION IN AREZZO...... 22 6.2 SUSTAINABILITY...... 24 6.2.1 Sustainability of Final Outcome for Episode 1...... 24 6.2.2 Sustainability of Final Outcome for Episode 2...... 25 7 CITY IN TIM E...... 26 8 CONCLUSIONS AND DISCUSSION OF FINDINGS...... 27 REFERENCES...... 29 NOTES...... 30
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Acknowledgements
The author wishes to acknowledge the financial support of the European Commission and would like to thank the following for making the time to be interviewed and providing documents and other material:
• Pierre Andrade, Managing Director, Nuove Acque S.p.A. • Luca Berti, Responsabile Unità Organizzativa, Historical Archives, Municipality of Arezzo • Enzo Bianchi, Responsabile servizio tecnico manutentivo, Municipality of Arezzo • Vincenzo Ceccarelli, President, Province of Arezzo • Alberto Ciolfi, President, Coingas S.p.A. • Franco Dringoli, Secretary, Federconsumatori Arezzo • Renato Drusiani, Director General, Federgasacqua • Franco Gallori, Settore Tutela Acque Interne e Costiere, Servizi Idrici, Dipartimento generale delle politiche territoriali e ambientali, Region Tuscany • Luigi Falasconi, Il Ghiozzo • Marisa Grilli, FNLE-CGIL Arezzo • Gennaro Evangelista, President, Federconsumatori Arezzo • Luigi Lucherini, Mayor, Municipality of Arezzo (June 1999 to date) • Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ • Stefano Mencucci, Forum Sociale Arezzo • Paola Pancini, Servizio Ambiente, Municipality of Arezzo • Paolo Ricci, President, Nuove Acque S.p.A. and former Mayor, Municipality of Arezzo (May 1995- June 1999) • Roberto Romizi, Coordinator, Centro Francesco Redi • Mario Daniele Rossi, Director, Ufficio Controllo di Gestione, Organizzazione e Partecipazioni, Municipality of Arezzo • Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003) • Enrico Valentini, President, Legambiente Arezzo
Unless otherwise stated, the views expressed in this report are those of the author and do not necessarily reflect the views of the European Commission, nor any of the listed stakeholders.
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1 Introduction The Watertime research project relies on the analysis of 29 case studies, one of which is on Arezzo, Italy. These case studies are expected to identify the dynamics of decision making on the reform of urban water supply and sanitation systems by providing information on the interaction between a range of PESTE factors (including factors at political and institutional, economic, social, technical and environmental levels), and the parties and processes involved.
Arezzo is the first example of application of the 1994 Galli Law, thus representing the most mature example of implementation of the reform, which provided for the restructuring of water operations at a supra- municipal level, and allowing for observation of the implications of decisions made. Local authorities have decided to award a water supply and sanitation concession for the whole ATO 4 Alto Valdarno to a public- private joint venture, where the minority partner is a private consortium led by French water multinational Ondeo. The experience in Arezzo has been controversial from many points of view, for example in terms of the transparency of the decision making process, the efficiency of operations, costs borne by consumers, disappointing service quality and investment levels, continuous conflicts between the operator and the regulatory agency, with associated transaction costs and a paradoxical ambiguity in the position of local authorities. This has been perceived by other local authorities in Italy as a cause of concern, inducing them to take a more cautious approach and contributing to the delay in the implementation of the Galli Law observed at national level. Furthermore, experience with water reform in Arezzo appears to confirm many of the problems experienced in Europe with PSP (Private Sector Participation) in Europe, including the difficulty to introduce appreciable competition in the water sector, local authorities‘ difficulty to manage the relationship with the private operator - perceived by the served population as distant and indifferent to local requirements, shielded by the contractual framework from responding to the local community‘s calls for a more socially oriented approach in performing operations œ and the long term effects of decisions to enter PPPs extremely costly to exit from irrespective of the problems experienced in practice (path dependency). Finally, there have been problems with introducing public participation, either in terms of the initial absence of public participation mechanisms and the successive difficulty to introduce meaningful forms of public participation (or even transparency) despite the problems encountered with the semi-private concession.
2 City background Arezzo is a town of over 90,000 inhabitants in eastern Tuscany, Italy.
3 Water and wastewater undertaking
3.1 Background This section lays out a short introduction to the context of the case study water and wastewater undertaking, the role of the municipalities as well as a brief historical background of water and wastewater services in the city. It also includes information on the ownership, operational management responsibility and administrative structure of the water and wastewater services.
3.2 Water and wastewater undertaking profile The below table provides data on Nuove Acque, the semi-privatised water supply and sanitation operator serving the city of Arezzo. It should be noted that Nuove Acque operates in a concession area that is broader than the city of Arezzo, although Arezzo is the largest urban centre. For details on the concession area served by Nuove Acque, see section 3.4 Region Profile below.
Leakage from the water supply network in the commune of Arezzo prior to the 1999 semi-privatisation was estimated at 25.9%1.
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DATA CONCEPT Undertaking identification Nuove Acque S.p.A. Geographical scope ATO 4 —Alto Valdarno“, Tuscany Type of activity Water supply, sewerage and wastewater treatment Type of assets ownership Public Type of operations Mixed (under private management) Total personnel (no) 190 (as of 31st December 2003)2 Average annual investment (EUR/a) ⁄ 9,978,700 per year3 Tariffs (EUR/m) ⁄ 1.33/m3 (excluding VAT; data as of 30 June 2003, based on 200m3 of yearly consumption)4
3.3 System profile The length of the water supply network in the municipality of Arezzo is Km 490, while the sewerage network is Km 270 long. The total length of the water supply and sewerage pipeline networks in the 37 communes of ATO 4 —Alto Valdarno“ (see section 3.4 Region Profile below) is, respectively, Km 1,946.9 and Km 1,120.5 (all data as of 19975).
As of 2003, the municipality of Arezzo was served by 4 wastewater treatment plants: the Casolino wastewater treatment plant, with a capacity of 90,000 population equivalent, which became operational in 1981 (originally, the plant had a capacity of 60,000 population equivalent and was upgraded between November 1996 and January 1999); the Quarata wastewater treatment plant, with a capacity of 2,000 population equivalent, which became operational in 1988; the Ponte a Chiani treatment plant, with a capacity of 23,000 population equivalent (of which 15,000 relate to the commune of Arezzo and the remaining 8,000 to the commune of Civitella della Chiana), which became operational in 1993; and the Ponte alla Chiassa treatment plant, with a capacity of 3,500 population equivalent, which became operational in 1994 (Comune di Arezzo, 2004: p. 61).
3.4 Region profile*
The municipality of Arezzo is part of the concession area ATO 4 —Alto Valdarno“ in eastern Tuscany, defined pursuant to the Galli Law. This means that Nuove Acque serves a total population of over 296,000 over 37 communes (population data as of 1997)6.
As of 2003, the Gross National Product per capita in the Province of Arezzo was estimated at ⁄ 20,3027, while the Gross National Product per capita in the commune of Arezzo amounted to ⁄ 26,8008.
4 Actors in water and wastewater services provision and production
It might be interesting to note the prominent role of the municipality of Arezzo before implementation of the Galli Law and the award of the semi-private concession (in observance of national and regional law and despite the initiative of the public undertaking Coingas). After the award of the semi-private concession it appears that the commune of Arezzo assumed a secondary role in decision making process beyond the fact that decisions taken by the ATO governing body had to reflect the joint will of all the communes and not of the Arezzo municipality alone. In fact, not only has the private operator shown a remarkable resilience to municipal attempts to pursue the originally intended objectives. Eventually, the majority of communes with the notable exception of Arezzo ended up supporting the position of the private operator that crowned its persistence in interest-seeking.
* Relevant region must be regarded as the area served by the water undertaking, since it can be the city, as in Grenoble or Timisoara cases, or the autonomous community, as in Madrid case study
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5 Episodes 5.1 Decision to award a semi-privatised concession: 1990-1999
5.1.1 Failure to implement decision in favour of public sector option, 1990-1995 As of 1990, water supply, sewerage and wastewater treatment services in the commune of Arezzo were provided by municipal departments, under direct municipal management or —gestione in economia“ (see Lobina, 2005a: pp. 7-9).
In 1990, municipal elections in Arezzo saw the victory of a centre-left coalition, including the communist party PCI (which would then change name into PDS and subsequently DS), the Socialist Party and the Green Party. The new mayor, Valdo Vannucci, took office in June 1990. The major factors leading to change in organisational mode in water supply and sanitation provision under Mr. Vannucci‘s administration were two. First, what would then become the Galli Law or L.n. 36/94 (see Lobina, 2005a: pp. 9-11) was being debated in the Italian Parliament in that period and operators were expecting the introduction of a reform of the water sector, leading to the integration of water supply and sanitation operations over a plurality of municipalities. Second, a number of problems associated with direct municipal management of water operations had been identified, including insufficiently sound management, lack of investment and the limited territorial scope of operations at a time where diversification of water sources became increasingly urgent9. The municipally- owned enterprise Coingas was active in gas distribution in 15 communes of the Arezzo Province, including the commune of Arezzo, and its strategy was to become a municipally-owned multi-utility providing gas and water services. Coingas approached the Vannucci administration putting forward its proposal to assume water supply and sanitation operations and obtained a positive response from the Arezzo mayor10.
In December 1991, the city nominated a technical commission, composed of municipal and Coingas officials, with the task to study and prepare the transformation of Coingas into a municipally-owned —azienda speciale“, pursuant to L.n. 142/90 (see Lobina, 2005a: pp. 7-9), and the award of water supply, sewerage and wastewater treatment services to Coingas11. Submitted to the city executive on 30th October, 1992, the plan also discussed the merits of the various organisational modes among which local authorities could choose, as provided for by L.n. 142/90, with particular reference to —azienda speciale“ and public limited company (PLC). Although —azienda speciale“ was favoured as a more straightforward reform to implement as regards the transfer of municipal assets and employees to a separate undertaking12, the plan did not rule out the eventual transformation of Coingas from —azienda speciale“ to PLC13.
The technical commission plan, approved by Arezzo city council in December 199214, noted that the synergies and economies which could be obtained through gas and water multi-utilities were considerable and that inter-municipal operations would enable the attraction of otherwise unattainable advanced technical and professional skills15. It envisaged that Coingas would have enjoyed managerial autonomy16 and would have operated under the obligation to balance its budget (and to pursue efficiency, effectiveness and cost- effectiveness)17, but that the tariff policy in each of the 25 communes would have been provisionally determined by the relevant municipal administration. This would allow communes for deciding whether to cover all costs through tariffs or whether to subsidise part of the operations, while the different tariff policies would then be gradually harmonised until the adoption of a unique tariff for the whole territory served by Coingas18. This provision would have enhanced the political and social acceptability of the merger, so that higher costs observed in some of the communes would not lead to sudden increases in communes enjoying lower costs and tariffs. The technical commission worked under the assumption that the personnel of the Arezzo municipal departments providing water supply and sanitation services would be first transferred to Coingas after the municipality of Arezzo had awarded water operations to the public undertaking. In a second phase, 24 other municipalities in the Arezzo Province would decide to award water supply and sanitation services to Coingas. In other words, the Arezzo municipality would take the leading role in awarding water services to Coingas and restructure the municipally-owned enterprise, as well as in transferring its water personnel to Coingas. The other 24 municipalities would then follow19.
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The plan elaborated by the technical commission drew on a report commissioned by Coingas to the consultancy Pubblitecnica, especially as regards economic and financial projections. The Pubblitecnica report estimated that all operating and capital costs associated with water supply would be covered by 1993 thanks to price increases up to an average tariff of ITL1,000 to ITL1,050/m3. While the wastewater tariff covered all costs, that was not the case with sewerage charges so that the municipality would have to compensate for the remainder, amounting to 20% of overall costs or ITL1 billion, with its own funds. The consultancy envisaged that budget balance would have been achieved thanks to substantial reductions in the workforce and economies resulting of synergies between gas, water and sewerage operations. More precisely, such economies were estimated at 10% to 15% of purchasing costs and 20% to 25% of maintenance costs, for a total of ITL400 million to ITL500 million. However, the technical commission rejected the 17 job cuts the consultants‘ report saw as necessary and argued that the same results could have been achieved with a reduction of 10 units in the workforce. In fact, if the transfer of municipal workers to Coingas would have meant an increase in salary due to the different applicable contract, it would also imply an extension of the working week by two hours. Furthermore, relying on a relatively stronger in-house capacity base would have allowed for providing the same service levels with limited resort to outsourcing and for extending service provision from the municipality of Arezzo to the neighbouring communes without the need to acquire new personnel20.
In October 1993, the municipality of Arezzo and Coingas called for a meeting of all the 25 mayors concerned in which the plan was discussed and approved. In November 1993, Arezzo city council approved the restructuring of Coingas and gave authority to the mayor to sign the convention elaborated by the technical commission as subsequently amended21. In April 1994, Tuscany‘s regional Co.Re.Co. (Comitato Regionale di Controllo), a committee vested with the power to vet the legitimacy of administrative acts undertaken by local governments, annulled two specific provisions of decisions adopted by the city council in November 1993 and March 1994, while the remainder became executive22.
In the meantime, the Italian Parliament adopted the Galli Law in January 1994. The Galli Law provided for regional regulations to integrate its provisions within each Italian region (see Lobina, 2005a: pp. 9-11). Tuscany‘s regional law L.R. n. 81/1995 was approved in July 199523. L.R. n. 81/1995 did not provide for local authorities to adopt a specific organisational mode, but simply left the choice open among the organisational modes allowed by national legislation, that is to say: a) direct municipal management; b) —azienda speciale“; c) PLC or limited company, majority or minority owned by local authorities; d) private concession. Although the regional law did not provide for any prescription on which of the above organisational forms had to be adopted, it appears that a choice in favour of public-private PLCs had been made by the regional structure of DS, the most powerful political party in Tuscany. This would have eventually led to the emergence of the so-called Tuscany organisational model, consisting in a public-private joint venture, majority owned by local authorities with a minority of the shares in the hands of a private operator, and its adoption not only in Arezzo but in all the 6 ATOs in the region24.
Following municipal elections in Arezzo in April 1995, Mr. Vannucci‘s mayoral mandate had terminated in May 1995. The 1995 municipal elections saw the victory of a centre-left coalition, including the post- communist party Democratici di Sinistra (DS) and the post-Christian Democrat party La Margherita. Although the DS party had since then supported the hypothesis to award water services to Coingas, the new mayor Paolo Ricci opposed such option and the DS, who were the strongest party within the new majority, changed their attitude in favour of Mr. Ricci‘s preferred option25. More precisely, Mr. Ricci favoured the award of water services to a public-private single purpose company, rather than to a wholly municipally- owned multi-utility26.
The restructuring of Coingas went on irrespective of the change in municipal government in Arezzo. In September 1995, Coingas became a municipally-owned —azienda speciale“. In the winter of 1995, an industrial agreement was signed providing for the transfer of workers from the municipal departments providing water supply and sanitation services to Coingas27.
However, the new mayor blocked the above process on the grounds that the multi-utility structure of Coingas would have not ensured financial transparency as cross-subsidisation could have taken place between gas
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www.watertime.org and water operations. The debate on the merits of the two options was limited to the political domain and no comparative evaluation of business plans elaborated under the two hypotheses was carried out. Mr. Ricci disapproved the idea of awarding the concession to Coingas, as its experience in the water sector was limited to a handful of minor communes in the province of Arezzo28. By contrast, advocates of the Coingas solution argued that this had the capacity and creditworthiness to finance the required investments in the ATO, that it enjoyed a solid reputation among local authorities and consumers as a reliable and efficient public gas distributor and that the Galli Law provided for the transfer of water workers from the previously operating municipal structures or undertaking to the new concessionaire, so that Coingas would have faced no substantial problem in terms of operational capacity or local knowledge29. An accountant by profession, Mr. Ricci also believed that multi-utilities, as Coingas would become was it to be awarded the water concession, were intrinsically subject to a lack of financial transparency in light of the unavoidable cross-subsidies between different activities, even if the multi-utility was structured as a holding with different subsidiaries operating a distinct service each. The only way to have full financial transparency was, according to Mr. Ricci, to award a water supply and sanitation concession to an operator selected by competitive tendering. A public-private joint venture would have ensured the private operator‘s contribution in terms of expertise and ability to tap investment finance as well as local control and attention for public interest considerations30.
Mr. Ricci had all the political clout necessary to promote the type of reform he favoured and acted accordingly. In February 1996, Arezzo city council endorsed Mr. Ricci‘s proposal to set up a PLC majority owned by the municipality and that water supply and sanitation services would be awarded to that PLC (which would be provisionally 95% owned by Arezzo municipality, the remaining 5% would be owned by one or more banks among those more deeply rooted in the local territory). The city council also decided to give full powers to the mayor to enact its decision31.
5.1.2 From rejection of the public sector option to the award of the semi-private concession: 1995- 1999 In March 1996, Tuscany‘s Co.Re.Co. annulled the February 1996 Arezzo city council decision to set up a public-private PLC, as this was contrary to the prescription of Tuscany‘s regional law L.R. n. 81/1995. In fact, after establishing that ATO 4 Alto Valdarno would cover 37 communes including Arezzo for a total of about 300,000 inhabitants, the regional law provided for the following: only one operator would be active in each ATO, unless the exceptional circumstances identified by art. 9.4 of the Galli Law materialised; the governing body of each ATO (—Autorità d‘Ambito“ or AATO) would have exclusive powers to decide the organisational mode of the water operator in the respective ATO and to award water services to the operator. In other words, the municipality of Arezzo had acted without having the power to do so32. The only powers that L.R. n. 81/1995 recognised to the more populated commune in each ATO, as was the case with Arezzo in ATO 4, was to lead the process towards the establishment of the ATO governing body —Autorità d‘Ambito“, but not to replace it. In March 1996, the day after Tuscany‘s Co.Re.Co. annulled the February 1996 Arezzo decision, the 37 communes of ATO 4 established the governing body —Autorità d‘Ambito“33. The communes‘ participation in the ATO syndicate was proportional to the respective population, so that the municipality of Arezzo accounted for 31.02% in terms of voting power within and capital contribution towards the costs of ATO 4‘s —Autorità di Ambito“34.
In April 1997, Tuscany‘s regional government adopted the regional law L.R. n. 26/1997, integrating the Galli Law provisions in further detail. L.R. n. 26/1997 was an essential piece of legislation as it disciplined the procedure for surveying infrastructure prior to the award of operations35 and the exceptional safeguard of existing water operations36, the transfer of personnel from the existing operations to the unique operator for each ATO37, and the economic and legal treatment of workers38, together with industrial relations39. Also, L.R. n. 26/1997 laid out a template for the contractual agreement between the —Autorità d‘Ambito“ and the selected operator40.
Following the annulment of the February 1996 Arezzo city council decision, Coingas tried to reopen the debate on the public sector option. In April 1997, a feasibility study commissioned to the consulatncy Proaqua by Coingas and the municipally-owned enterprise CIGAF was circulated (Proaqua, 1997). The study was based on the hypothesis of a joint Coingas-CIGAF water supply and sanitation operations in ATO
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4, possibly preluding to a merger of the two public undertakings41. CIGAF already operated water supply, sewerage and wastewater treatment services in 8 communes of the Valdichana valley in ATO 4 (Proaqua, 1997: p. 3). However, the plan failed to attract political support42.
In July 1997, the 37 communes met in the Assembly of the —Autorità d‘Ambito“ and decided that the unique operator would have the legal form of a majority-publicly owned PLC and that the private operator would be selected through competitive tender43. More precisely, 54% of the PLC‘s capital would be held by public local entities (51% owned by the 37 communes, 2% owned by Coingas and the remainder 1% jointly owned by the local entity —Comunità Montana“ and the Province of Arezzo)44. Also, under Mr. Ricci‘s initiative45, the —Autorità d‘Ambito“ decided that the public-private service provider would develop synergies with Coingas in order to benefit from the capacity, structures and technical and managerial skills acquired by the municipally-owned gas distribution undertaking, including in matters of customer relations46. Arezzo city council explained that the decision to set up the operator as a PLC rather than a —azienda speciale“ was taken due to the following considerations among others: a) a PLC would enable a clearer distinction between the planning and regulatory functions of local authorities on the one hand and operational responsibilities on the other, whereby the 1995 regional law required such distinction47. In fact, even if controlled by local authorities, a PLC would prove more independent of local authorities, as those could only act in the light of powers attributed to a company‘s shareholders; b) company law governing PLCs was more suitable to the entrepreneurial management of water operations, especially in terms of greater flexibility at decision making and operational levels, than administrative law governing —aziende speciali“; c) a PLC would enable to enlist private operators as shareholders and benefit from their experience in terms of entrepreneurial management of water services, which was particularly needed in view of the fact that in 26 of the 37 communes in ATO 4 operations were provided under direct municipal management48. Furthermore, local authorities justified the decision to set up a majority-owned PLC with management entrusted to a private operator in the light of the need to provide considerable financial resources to fund projected investments, although investment finance would be covered through tariffs pursuant to the Galli Law (see Lobina, 2005a: pp. 10-11) irrespective of the operator‘s organisational mode (Forum Sociale Arezzo, 2003: pp. 16-17).
In July 1998, after the AATO technical office completed the survey of existing infrastructure, the ATO —Autorità d‘Ambito“ approved the investment plan (—Piano d‘Ambito“, or PdA) which would constitute the basis for the call for tenders and evaluation of the bids put forward in the competitive procedure. More precisely, submitted bids were to be structured as proposals to improve the content of the provisional business plan adopted by local authorities. The definite business plan would be approved after the selection of the private partner and the establishment of the public-private water company and in conjunction with the signature of the concession agreement (—Convenzione di affidamento“)49. The call for tender was published on 3rd October 1998 and candidates were allowed one month to submit their bids (Drusiani and Nilberto, 2001: p. 107).
Local authorities and the ruling political parties decided to speed up the reform process as municipal elections were due in June 1999 and they wanted to avoid the associated uncertainty so that there was pressure to accelerate the procedure leading to the concession award before the upcoming elections. Vincenzo Ceccarelli, President of the Province of Arezzo, explained that the political will and necessity to swiftly implement the reform was not due by mere electoral considerations, but in view of the fact that with municipal elections due in 1999 in many of the ATO4 communes there was a risk of loosing the experience accumulated by the administrators who had overseen the whole process since 199750. Conversely, a stakeholder has suggested in an interview that the Galli Law was perceived as the political creature of the centre-left coalition at national level and that this explained the commitment of the local centre-left administration to implementing the reform, as well as the acceleration of the process eventually resulting in hasted implementation51. Furthermore, local authorities and ruling political parties attached a lot of importance to being the first in Italy to implement the Galli Law, as they believed that this would have favourably impressed potential sources of investment finance and helped attract interest particularly from the Region Tuscany and the European Union52.
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5.1.3 The tendering procedure and concession award In organising the tendering procedure for the selection of the private operator, local authorities aimed at attracting a major international water operator. The tendering specifications were designed to achieve that goal but resulted in restricted competition. In fact, the minimum requirements to be entitled to bid were so high that only three consortia put forward bids: one led by French multinational Suez, another led by French multinational Vivendi (now called Veolia Environnement) and one led by Rome‘s Acea. Drusiani and Nilberto (2001: p. 101) note that Acea, which by then had been providing water supply and sanitation services to a population of some 3 million people in Rome (almost 10 times that of ATO 4 Alto Valdarno) for 15 years, barely met the requirements set by local authorities in the tendering specifications and could thus bid. According to Drusiani and Nilberto (2001: p. 101), who refer to Bardelli and Doni (2001), restricted competition in the bidding procedure for the selection of the water operator in ATO 4 was the result of, among other factors, the prominence of operating experience as a criterion, not only in the admission of candidates to the tender, but also in the evaluation of bids put forward. The call for tenders required bidders to have acquired experience of directly or indirectly providing water supply and sanitation services to at least 400,000 people in the preceding two years, of which at least 200,000 had to be served through the same contract, and to have an annual turnover of no less than ITL 150 billion (Drusiani and Nilberto, 2001: p. 107)53.
If the tendering specifications required considerable size and experience as preconditions to participate in the bidding procedure, the assessment of submitted bids particularly emphasised the experience acquired by bidders and their ability to tap project finance. The evaluation commission had a mandate to assess the bids with a maximum of 100 points that could be assigned to each bid, of which: a) up to 45 points in the light of the bidders‘ experience (respectively, up to 20 points for experience accumulated in the previous five years in the management of water supply and sanitation services, with particular reference to the joint operation of water services in the same concession area; up to 20 points for experience in tapping project financing as a water operator; up to 5 points for other experience); b) a maximum of 35 points in view of proposed improvements to the investment plan PdA (respectively, 17 points for improvements to the PdA aiming at enhancing service quality and 18 points for the economic and financial impact resulting of proposed revisions of the PdA); c) up to 15 points for the arrangements aimed at securing project financing, based on the indication of the interest rates, amounts of finance ad lines of credit to be received, and the banks that would issue the loans; d) up to 5 points for the payment of 46% of the capital of the public-private water company54.
On 14th January 1999, the evaluation commission ruled that the Suez-led consortium had won the bidding procedure with a total of 83 points, compared to 59 points attributed to Vivendi and 43 to Acea55. Suez obtained more points than its two competitors in each of the broad areas of evaluation: a) 41 of the avaliable 45 points for the acquired experience56; b) 26 of the available 35 points for proposed improvements to the investment plan57; c) 12 of the 15 points available for project finance58; d) 4 of the 5 points available for the payment of equity shares59.
It should be noted that Suez projected tariff levels higher than both competitors as well as the tariff based on the provisional PdA. However, the evaluation commission decided unanimously to disregard tariff levels projected by bidders, as these were based on different managerial and accounting hypotheses. When compared on a like-for-like basis, tariff levels under the three bids showed little difference and the evaluation commission appreciated that the causes of disparity between projected tariffs could have been easily eliminated during negotiations prior to the concession award60. In terms of rational decision making, such decision appears questionable as the effects of different approaches informing the three bids were taken into account in any other aspect of the evaluation. Furthermore, the commission adjusted the technical evaluation of bids by taking into account the effect of a political decision, that to renegotiate tariff levels prior to the concession award, which rested exclusively on the —Autorità d‘Ambito“ and which the commission itself could not control61. In fact, no revision of tariffs took place prior to the concession award and the business plan put forward by the Suez-led consortium was accepted without changes62.
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It should also be noted that Suez projected operating costs higher than Vivendi by ITL 112 billion, higher than Acea by ITL 83 billion and higher than the amount set in the provisional PdA by ITL 96 billion. The commission commented that the higher operating costs projected by Suez were justified by the necessity to spend to achieve efficiency. More precisely, in order to achieve efficiency savings in the cost of the workforce, in electricity and sludge disposal, Suez would have sustained higher costs in terms of consultancy and technical assistance. Suez projected savings of ITL 31 billion in light of reduced personnel costs, although the progression of remuneration formulated in the Suez bid (+3% annually on the costs projected by the provisional PdA) would result in an increase of ITL 70 billion in the cost of the workforce63.
Interestingly, Suez formulated the hypothesis that it would perceive dividends for the first 14 years of operations, so that all profits could be reinvested in the system reducing the necessity to resort to extenal finance and allowing the public-private water company to reduce its indebtedness. In the remaining part of the concession, dividends projected would compensate shareholders for dividends foregone during the first 14 years. On the other hand, Vivendi and Acea projected dividends in the first 14 years of operations totalling respectively ITL 87.4 billion and ITL 41.4 billion64.
As regards the evaluation of the arrangements for project finance, Suez prevailed as it had indicated a more favourable interest rate but also as it accompanied its bid with a binding agreement from supporting banks to provide at least a part of the required amount. Conversely, Vivendi and Acea only submitted generic declarations on the banks‘ intentions to finance the project65.
In February 1999, the ATO —Autorità d‘Ambito“ decided to adopt the business plan (—Piano Economico- Finanziario“, or PEF) elaborated by the Suez-led consortium —Intesa Aretina“ to incorporate improvements elaborated by the successful bidder66. According to the then President of the ATO —Autorità d‘Ambito“ Carlo Schiatti, the move was aimed at ensuring that the operator could not justify eventual non-performance pointing to purported failings in planning by local authorities (Schiatti, 2003: p. 1). By replacing the provisional business plan with the PEF developed by the Suez-led consortium, the ATO —Autorità d‘Ambito“ accepted that the private partners would provide technical assistance to the public-private water company, defined as —prestazioni accessorie“ (accessory services)67, amounting to a total ITL 44.75bn across the life of the contract68. In a practice reminiscent of the French —frais de siège“ or —charges de structure“ (see Lobina, 2005b), the public-private water company would acquire from its shareholders, and thus mainly from Suez and AMGA, technical know-how equivalent to a predetermined amount for the duration of the concession. In turn, the public-private water operator would recover the cost of —prestazioni accessorie“, to be accounted for as operating costs69, through tariffs charged to consumers. It should be noted that the agreement between the municipalities and the consortium —Intesa Aretina“ governing relationships among public and private shareholders within Nuove Acque (—patti parasociali“) provided for the semi-privatised operator to subcontract not only all works but also all services to its own shareholders70. This was reinforced by the agreement among the members of the Suez-led consortium to favour Nuove Acque private shareholders in accessing subcontracting (Forum Sociale Arezzo, 2004: p. 23).
Also, upon the request of trade unions, local authorities agreed to apply the public water association Federgasacqua collective contract to the employees of the public-private water company, rather than the contract elaborated by private water association Anfida. This would result in an increase in operating costs for the first year of operation, estimated at some ITL 1.43 billion71.
On 21st May 1999, the ATO —Autorità d‘Ambito“ awarded a 25-year water supply and sanitation concession to the public-private joint venture Nuove Acque SpA72. Nuove Acque was 54% owned by 30 of the 37 municipalities and other public entities, including the provincial government of Arezzo and Coingas, and 46% owned by the Suez-Lyonnaise des Eaux-led consortium —Intesa Aretina“. More precisely, the consortium Intesa Aretina was 51% owned by Suez-Lyonnaise des Eaux; 35% owned by former Genoa municipalised water undertaking AMGA Genoa; 10% owned by Iride, grouping local artisan associations; and 2% each by local commercial banks BPEL and Monte dei Paschi di Siena (MPS)73.
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5.1.3.1 Fiscal gains for the municipalities The business plan approved in May 1999 provided for Nuove Acque to pay the communes a yearly concession fee (—canone di concessione“), which included a number of components74: a) a yearly fee of ITL 2.5billion to allow municipalities to acquire the respective equity shares in Nuove Acque (Rossi et al., 2003: p. 154)75; b) the amount of outstanding loans contracted by municipalities for the construction of existing infrastructure; c) a yearly sum of ITL 708million to be distributed among those communes, including Arezzo (Rossi et al., 2003: p. 154), which had invested more in the infrastructure system; d) a yearly sum of ITL 250million in favour of mountain communes with less than 3,000 inhabitants76. The total amount of projected concession fees across the duration of the contract exceeded ITL 237.9billion77. It should be noted that the above values of concession fees did not include 20% VAT78.
According to the local citizen organisation Forum Sociale Arezzo, the amount of concession fees to be paid to the municipalities had been overestimated (Forum Sociale Arezzo, 2003: p. 15). This appears confirmed by Drusiani (2003: p. 6).
According to the local consumer organisation FederConsumatori e Utenti Arezzo-Valdarno, the municipality of Arezzo obtained considerable fiscal gains from the transfer of water operations from its departments to the public-private concessionaire. As of December 2000, such fiscal gains were apparently being used to relieve the municipal budget rather than reduce the municipal property tax (FederConsumatori, 2000a). More precisely, apart from benefiting from the payment of the yearly —canone“, the commune ceased sustaining the losses associated with running the service without recovering the full costs through tariffs charged. Table 1 below shows the total costs borne by the municipality of Arezzo for running water services in 1996, 1997 and 1998, together with yearly revenues and the relative cost recovery ratio.
Table 1. Costs, revenues and cost recovery under direct municipal management in the commune of Arezzo (1996, 1997, 1998) Year Total costs Revenues Cost recovery ratio 1996 ITL 7.188 billion ITL 5.759 billion 80.11% 1997 ITL 7.685 billion ITL 6.390 billion 83.15% 1998 ITL 8.294 billion ITL 6.000 billion 72.34% Source: FederConsumatori (2000b)
FederConsumatori estimated that in 2000, not only the municipality of Arezzo would avoid sustaining losses that in 1998 amounted to ITL 2.294 billion, but it would also receive payment of concession fees for a total of ITL 4.923 billion. The —canone“ paid by Nuove Acque in 2000 was composed of ITL 3.731 billion aimed at compensating payment of loans contracted for the construction of existing infrastructure, ITL 416 million to reward capital investments superior to those realised by the other communes, and ITL 775 million to allow the municipality of Arezzo to acquire equity shares in the public-private concessionaire. In addition, the commune of Arezzo was reimbursed the sum of ITL 372 million for sustaining the costs of the ATO governing body —Autorità d‘Ambito“ (FederConsumatori, 2000b).
In 2003, the municipality of Arezzo perceived a yearly gross —canone“ of over ⁄2.5 million (ITL 4.867 billion), including VAT (Rossi et al., 2003: p. 154).
5.1.3.2 The first business plan and contractually agreed objectives The concession agreement requested the operator to constantly improve efficiency by reducing operating costs, as a result of projected investments as prescribed in the PdA79. Other benefits to consumers expected from the semi-privatised concession included improved maintenance and a more transparent invoicing method80.
The May 1999 PEF also provided for investments totalling over ITL 365.5billion across the lifetime of the concession, with ITL 274.8billion or more than 75% of all investments concentrated in the first 12 years81. Finance would come from a mix of sources, including project financing in the form of loans contracted with banks, with most of financial resources being however provided by billing and shareholders‘ capital (see
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Figure 1. Structure of Nuove Acque financing as in 1999 business plan below)82. The public-private concessionaire had a contractual obligation to start project financing in March 200083, tapping a total of ITL 70billion in order to fund investments to be realised in the first six years of the concession84. No dividends would be distributed to shareholders in the first 14 years, but a total of ITL 192.8billion dividends would be paid out in the remaining 11 years85. It should be noted that all such amounts were before VAT and that different levels of VAT applied to different items, so that 10% VAT had to be added on top of tariffs as projected by the PEF, 10% VAT had to be added to the value of works while 20% VAT applied to other types of investment86.
Figure 1. Structure of Nuove Acque financing as in 1999 business plan
Capitale Sociale Debiti verso banche 200.000.000.000
180.000.000.000
160.000.000.000
140.000.000.000
120.000.000.000
100.000.000.000
80.000.000.000
60.000.000.000
40.000.000.000
20.000.000.000
0
9 1 3 5 7 9 1 3 5 7 9 1 3 9 0 0 0 0 0 1 1 1 1 1 2 2 9 0 0 0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 2 2 2 2 2
Source: PEF 1999. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“.
The business plan allowed for a considerable increase in tariffs in respect of previous operations as the new tariffs had to cover the full cost of providing water supply and sanitation services, including capital investments and loans contracted by the municipalities to finance construction of infrastructure. In addition tariffs included a 7% rate of return on invested capital, as provided for by national law (see Lobina, 2005a: pp. 10-11), and 10% VAT (FederConsumatori, 2000b). Average tariffs charged in different areas of ATO 4 prior to the semi-privatised concession are broken down in Table 2 below, while the average tariff charged in the commune of Arezzo in the same period was ITL 1,54287.
Table 2. Average tariffs in the Arezzo region, prior to 1999 privatisation Geographical area Number of communes Population Average tariffs (ITL pcm) Valtiberina 7 31,563 1,443 Casentino 13 43,733 1,650 Arezzo/Valdarno 5 108,575 1,609 Valdichiana 7 63,207 2,425 Senese 5 49,241 3,039 Source: Communes, July 2000
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Average tariffs charged by Nuove Acque were set at ITL 1,781 for fiscal year 1999 and were designed to increase at a yearly rate of 6.5% reaching a peak of ITL 4.149 in 2015 to slowly decrease to a level of ITL 3.740 in 202388. Figure 2 below shows the trend in tariffs projected by the original 1999 PEF under Nuove Acque operations, in ITL across the 25 years of the concession. It should be noted that tariff values included expected inflation of 1.5% and that depreciation would not be changed in occasion of any of the subsequent renegotiations89.
Figure 2. Tariff development as in 1999 business plan (tariffs to be charged by Nuove Acque, ITL)
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Source: PEF 1999. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“.
5.2 Decision to renegotiate the semi-privatised concession: 1999-2004
5.2.1 A troubled start for the semi-private operator: 1999-2001 In June 1999, Nuove Acque S.p.A. started operations90. As it had been agreed that the 51% of Nuove Acque‘s capital would be distributed to the communes in proportion to their share in the ATO —Autorità d‘Ambito“91, which in turn was proportional to the respective population, the municipality of Arezzo held a 15.84% equity stake in the public-private concessionaire (Rossi et al., 2003: pp. 149, 152).
In June 1999, municipal elections saw the victory of a centre-right coalition and the appointment of Luigi Lucherini, of the Forza Italia party, as mayor92.
As agreed between the parties to the concession agreement93, in June 1999 the —Autorità d‘Ambito“ submitted its survey of existing infrastructure to Nuove Acque, so that the operator could endorse it and start operating on that basis. Nuove Acque was given 6 months to carry out its own survey and compare it with that of the AATO technical office, 6 months in which the regulatory authority would not expect the private operator to invest in the system but simply to carry out ordinary day-to-day operations. At the expiry of the 6 months, Nuove Acque asked for a two month extension of the period which was endorsed by the —Autorità d‘Ambito“94. This meant that no investments were made at least until February 2000.
In early 2000, the first water bills were issued and popular protest broke out due to what were perceived as excessive tariff increases. According to the current director of the technical office of the —Autorità
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www.watertime.org d‘Ambito“ Giovanni Mancini, that perception was fuelled by the fact that consumers received delayed bills relative to the previous municipal operations together with bills relative to the first year of the Nuove Acque operations (the first Nuove Acque bills covered the period starting from January 1999 although public- private operations started in June 1999)95.
The popular protest sparked political confrontation among the various communes of ATO 4, particularly between small mountain communes, that used to enjoy low bills due to the availability of freshwater sources in their own territory, and others including the commune of Arezzo that were perceived as benefitting from the implementation of the reform. However, Mr. Mancini pointed out that due to the lack of adequate wastewater treatment mountain communes passed considerable costs on to communes located downstream, as treatment plants of larger municipalities had to treat increased volumes of pollutants. Also, the real costs of providing water services to mountain communes should also include maintenance of aqueducts which in many cases had been neglected96.
In response to the popular protest, Carlo Schiatti, President of the —Autorità d‘Ambito“, engaged in an intensive series of meetings with consumers and citizens in the various areas of the ATO. According to Mr. Schiatti, such meetings paid off in that explaning the causes of the increases in bills and tariffs tended to defuse popular animosity97. Similar initiatives were undertaken by the President of the Province of Arezzo and the mayors of some communes98.
Following privatisation, service quality appeared to have deteriorated in many respects as denounced by the mayors of Montemignaio and Castiglion Fiorentino99. While the municipality of Montemignaio used to clean reservoirs twice a year, reservoirs were never cleaned in one year since privatisation. Also, the time of intervention considerably increased. In Montemignaio, consumers had to call 12 times before Nuove Acque staff actually intervened. Similar episodes were also reported in Arezzo. The mayor of Montemignaio found unacceptable that the company staff replied to outraged consumers by blaming the municipalities for the poor service. Of all the interviewed stakeholders, 4 noted that the private operator was perceived or had proved to be more distant from consumers‘ needs than direct municipal operations prior to privatisation. In particular, the President of the Province of Arezzo noted that the deterioration in service quality was due to the fact that not all the workers of the pre-existing undertakings had been transferred to Nuove Acque, so that local knowledge and memory had been lost in the restructuring process100.
5.2.2 The first renegotiation of the concession agreement In December 2000, the ATO governing body and Nuove Acque renegotiated the investment plan (PdA). The renegotiated agreement provided for a change in the computation of tariffs, replacing amounts due for minimum consumption (e.g. consumers were to pay for a minimum volume of 100m3 of water consumed irrespective of actual consumption), which had become particularly unpopular as a result of tariff increases, as well as the obligation to pay for private wells and for hiring water meters. All such amounts were replaced by a fix sum, due by all consumers as payment for access to the service (Rossi et al., 2003: p. 178).
It should be noted that the total amounts due by ATO 4 consumers as payment through tariffs, did not change substantially. Only the components of tariffs did, without any change in the total amount of revenues collected by the operator through water bills101.
Also, as water operators previously active in the 37 communes used to charge different tariffs, a new mechanism designed for the gradual convergence of tariffs in different communes of ATO 4 was introduced (Rossi et al., 2003: p. 178; Schiatti, 2003: p. 2) and the renegotiated business and investment plan applied retroactively to 1st January 2000102.
5.2.3 Court rulings on the validity of the concession award The validity of the tendering procedure was challenged but in early June 2001103, Italy‘s State Council, the supreme administrative justice court, rejected a January 2001 ruling by the Tuscany‘s Regional Administrative Tribunal which annulled the concession award to a Suez-Lyonnaise des Eaux-led consortium
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www.watertime.org in Tuscany‘s ATO-4. The case was brought to the Regional Administrative Tribunal by Vivendi, which came second in the January 1999 tender104.
The Regional Court had argued that the municipally-owned PLC AMGA Genoa could not legally operate outside the Genoa area, as this would be against the interest of the local community. This was the last in a series of contradictory court rulings on the territorial competence of former municipal enterprises. —Although Italian law does not regulate these matters expressly, the jurisprudence appears to be orientated towards the equal treatment of municipally-owned PLCs and private companies“, Prof. Giuseppe Morbidelli, who represented the —Autorità d‘Ambito“ and Nuove Acque in front of the State Council, told the Global Water Report105.
The decision of the Regional Court had also been given on the following grounds: • Contrary to Italian law, the identity of all bidders was disclosed before the closing date for submitting bids. • Contrary to Italian law, the documentation produced by the bidders in the pre-selection phase of the tender was examined behind closed doors in the absence of the bidders‘ representatives. • The Suez-Lyonnaise consortium submitted the documentation required by Italian anti-mafia legislation after the closing date and should have been excluded from the tender. • The bidders‘ experience with investment projects was not evaluated according to predefined criteria, which biased the final evaluation of the bidders‘ experience. • Investment finance schemes proposed by the bidders were not evaluated according to predefined criteria, which biased the final evaluation of the proposed finance schemes. • Contrary to predefined evaluation criteria, the business plans proposed by the bidders were not evaluated taking into account the prospective impact on tariffs. • The method proposed by the Suez-Lyonnaise consortium for calculating depreciation, in case the municipalities sought to redeem the infrastructure, was contrary to Italian law106.
The popular protest having defused and after the rejection of legal challenges to the validity of the concession award, it looked like no further problems could affect the regular running of water operations. But this was a faulty impression.
5.2.4 The second renegotiation of the concession agreement: 2001-2003 Subsequent events to the December 2000 renegotiation generated a high level of conflict between the local regulator and the concessionaire, with paradoxical effects in terms of the role played by local authorities. Acting on behalf of local authorities, the local regulator œ technically, an office of the ATO —Autorità d‘Ambito“, the governing body of the ATO, where communes are represented œ repeatedly imposed sanctions on the operator for failing to comply with contractual requirements. In turn, the semi-private operator Nuove Acque œ where local authorities held 54% of the shares œ appealed against such sanctions in front of Tuscany‘s Regional Administrative Tribunal and threatened local authorities that it would cease paying concession fees.
By contrast, Nuove Acque claimed that tariffs were too low because demand levels had been overestimated and required a tariff increase as the excessively low tariffs explained the operator‘s failure to resort to project finance. The operator claims to have invested ⁄ 40m in the first 3 years, all from the equity capital of Nuove Acque. However, it should be noted that a 2001 study by Federgasacqua pointed to the fact the business plan for ATO 4 Alto Valdarno as it was agreed by the parties would have caused problems in terms of tapping project finance, because the break-even point was projected to be reached only at the 23rd year of the 25-year concession.
In order to solve such a standstill a renegotiation process started which led to a revision of the concession agreement in 2003. The renegotiated agreement provides for no tariff increase but postpones the realisation of a substantial amount of investments. The projected investment programme is now to be implemented in
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www.watertime.org the first 20 years of the concession, instead of the first 12 years as initially agreed. Also, local authorities have agreed to assume the costs of the local regulator which initially were included in the tariff formula.
The president of the local regulatory agency was very critical of how the whole process had been handled and resigned in protest after writing a report on his experience as a regulator in which he claimed that the PPP model tested in Arezzo might not possibly work.
5.2.4.1 Events in brief In January 2001, the technical office of the —Autorità d‘Ambito“ applied the regulatory method —Controlla“, developed with the assistance of the University of Siena, aiming at monitoring the implementation of agreed operational activities, as well as the efficiency, effectiveness and cost-effectiveness of operations (Schiatti, 2003: p. 3; Rossi et al., 2003: p. 178). In June 2001, the —Autorità d‘Ambito“ issued an official warning/reprimand (—messa in mora“) against Nuove Acque pointing to several problems with management that the operator had to solve if contractually agreed investments and service levels were to be implemented (Schiatti, 2003: p. 3)107.
In October 2001, the —Autorità d‘Ambito“ communicated its concern to Nuove Acque about the observed delay in the realisation of projected investments and requested clarifications on the delay in obtaining project financing, which was contractually due to start in March 2000108.
In November 2001, Nuove Acque sent a note to the —Autorità d‘Ambito“ stating that, as a result of the December 2000 revision of the investment plan and the newly adopted tariff structure, costs borne by the operator proved higher than projections and requested local authorities to remedy the situation and re- establish the economic and financial viability of operations. In other words, Nuove Acque requested a further renegotiation of the concession agreement to make for the unexpected losses, failing which project financing would be undermined. More precisely, the operator claimed that costs were higher than estimated, especially due to higher electricity and personnel costs, and income was lower than forecast as volumes of water sold failed to reach projected levels while the application of the new tariffs failed to compensate for the shortfall109. According to Giovanni Mancini, Director of the technical office of the —Autorità d‘Ambito“, the abolition of the minimum consumption charge in December 2000 meant that there was no buffer against the combination of reduced consumption caused by tariff increases and the application of the tariff block formula. The resulting reduction in revenues, more than proportional to the reduction in volumes sold as this was related to the higher tariff blocks, would be difficult to calculate. Also, Mr. Mancini explained that higher electricity costs were due to variations in oil prices110.
As a matter of fact, the President of the —Autorità d‘Ambito“ noted that figures presented by Nuove Acque in support of its claims were considerably different from corresponding results as shown in the operator‘s financial accounts for the year 2000 and preliminary accounts for the year 2001, which were officially communicated in September 2001 and integrated in October 2001. In December 2001, the —Autorità d‘Ambito“ issued an injunction to Nuove Acque to initiate procedures aimed at tapping project financing, emphasising that this was a contractual obligation whose implementation was independent of remedies for the purported deficiencies in terms of cash flow. Also, the —Autorità d‘Ambito“ requested an exhaustive explanation of discrepancy between the two sets of data111 112. At the same time, the —Autorità d‘Ambito“ started investigations to distinguish the costs due to unforeseen external factors, which were to be compensated by tariff increases, and the costs due to inefficiencies which were to be attributed to Nuove Acque (Schiatti, 2003: p. 4; Rossi et al., 2003: pp. 178-179).
In July 2002, Nuove Acque withheld payment of concession fees (—canoni“) to communes in reaction to regulatory investigations initiated in December 2001 (Schiatti, 2003: p. 5). This put communes under considerable pressure from the fiscal point of view as the foregone payments were undermining the ability of the municipalities to respect the stability pact113.
The investigation found that costs not projected in the original business plan were mostly due to the operator‘s inefficiency. More precisely, the private operator‘s inefficiencies amounted to more than ITL 2bn
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www.watertime.org per year. On 30th September 2002, in a compromise between the findings of the investigation and the claims of the operator, the —Autorità d‘Ambito“ decided that the PEF would be revised as follows: a) tariffs and the fix charge for accessing the service would remain stable throughout the years; b) investments would remain stable throughout the years, with the exception of 2002 where only part of the projected investments had been implemented; c) industrial consumers would be charged a fix amount of ITL 500,000 per year to access sanittaion services; d) water charges would increase for public consumers, while the municipalities themselves would have to assume the costs of the functioning of the —Autorità d‘Ambito“ previously covered through tariffs, for a total amount of some ITL1.8billion; e) —prestazioni accessorie“ would be reduced by ITL350 billion per year and their amount would be evenly distributed throughout the remaining years of te concession; f) Nuove Acque was requested to devise a plan by November 2002 and to reduce estimated inefficiencies of over ITL2 billion a year; g) losses recorded in the previous years of operation would be covered by Nuove Acque shareholders, so that the municipalities would have to bear the majority of losses. It should be noted that the renegotiated business plan was retroactively valid starting from January 2002 (Schiatti, 2003: pp. 3-4).
However, Nuove Acque proved to be not satisfied by the above compromise as it requested that local authorities contributed more substantially to restoring the viability of water operations. Such contributions were presented as a precondition to tapping project financing. Furthermore, aiming at a reduction of concession fees paid to the communes, the public-private water company requested that the infrastructure be re-evaluated (Schiatti, 2003: p. 5). In November 2002, Nuove Acque planned to reduce its costs by ITL900million instead of the ITL2billion requested by local authorities (Schiatti, 2003: p. 6). Also, Nuove Acque‘s budget (—bilancio“) adopted all the changes introduced by the —Autorità d‘Ambito“ in September 2002 but did not include any reduction in the amount of —prestazioni accessorie“, despite the operator‘s contractual obligation to respect planning by the —Autorità d‘Ambito“ (Schiatti, 2003: p. 5). The so-called —prestazioni accessorie“ were in fact regarded as an anticipation of the private operator‘s remuneration for the disbursed capital of Nuove Acque (Schiatti, 2003: p. 8). As noted above, the evaluation commission had appreciated the fact that the bid submitted by Suez projected no dividends for the first 14 years of the concession, allowing for the reinvestment of ITL96 billion into the system. Therefore, such evaluation appears to be contradicted by the real function of —prestazioni accessorie“, as those represented a de facto remuneration of the private operator other than payment of dividends.
In January 2003, Nuove Acque announced that it was planning to cut costs by ITL1.3billion instead of the ITL900million previously planned and proposed that projected investments be considerably postponed, that the fix charge for accessing the service be continuously increased during the course of the concession, and that —prestazioni accessorie“ be re-established at their original level, thus without the ITL350million reduction envisaged by the —Autorità d‘Ambito“ in September 2002 (Schiatti, 2003: p. 6). Mr. Schiatti, President of the —Autorità d‘Ambito“, criticised the Nuove Acque plan for failing to provide incentives to enhance water management and for inducing the public-private service provider to seek to renegotiate the concession agreement in the future, aiming at obtaining further postponements of the investment programme and tariff increases (Schiatti, 2003: p. 7).
In March 2003, Enrico Terzani, an accountant commissioned by the —Autorità d‘Ambito“ to evaluate efficiencies attainable by Nuove Acque, presented its findings stating that the water operator was in a position to reduce its costs by more than ITL2 billion and that success in achieveing savings depended entirely on the company‘s willingness. Also, Mr. Terzani noted that Nuove Acque tended to defer the restoration of financial viability which, if delayed, could further undermine water operations and stressed that the continuous postponement of action necessary to cut costs did not represent sound management practice114.
In May 2003, the President of the —Autorità d‘Ambito“ submitted a draft 3-year business plan to the communes for their approval. Mr. Schiatti‘s business plan redimensioned the amount of —prestazioni accessorie“ in the light of their inadequacy to achieve intended objectives: contributing the private partner‘s know-how in order to enhance efficiency and ensure the viability of water operations. This was in line with advice provided by three accountants contracted by the —Autorità d‘Ambito“ (Enrico Terzani, Prof. Antonio Andreani and Athos Vetrini), who emphasised that the content of —prestazioni accessorie“ had to be clear and
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www.watertime.org defined, that their efficacy and efficiency should be measurable so that payment for —prestazioni accessorie“ was proportional to the results produced (Schiatti, 2003: p. 7).
In June 2003, the mayors of the ATO communes rejected Mr. Schiatti‘s draft business plan and failed to address the issue of —prestazioni accessorie“. As a result, Mr. Schiatti officially requested the opinion of the national Supervising Committee COVIRI (Comitato di vigilanza sull‘uso delle risorse idriche; see Lobina, 2005a: p. 10) on the nature of —prestazioni accessorie“. COVIRI responded that the —Autorità d‘Ambito“ could decide to include —prestazioni accessorie“ within operating costs, but their price should be determined in the light of their content. Furthermore, the —Autorità d‘Ambito“ had the power to decide on whether to include —prestazioni accessorie“ in the business plan and on the relative amount irrespective previous contractual agreements on those matters between local authorities and the operator. Finally, in case that —prestazioni accessorie“ had a pre-determined amount for a non-defined content, local authorities would have been legally entitled to exclude —prestazioni accessorie“ from Nuove Acque‘s operating costs (Schiatti, 2003: p. 7).
In September 2003, the —Autorità d‘Ambito“ proceeded with an inspection of Nuove Acque‘s records on —prestazioni accessorie“, as the company had refused to disclose information requested by the regulatory body in order to ascertain whether payment of these qualified as a royalty to the operator. Although the concession agreement provides for the power of the —Autorità d‘Ambito“ to request and obtain any information on operations115, the operator considered such a request as an undue interference in its internal management. The inspection found out that reporting on the performed —prestazioni accessorie“ was poor and amounts invoiced were not accompanied by an accurate description of the performance invoiced (Schiatti, 2003: pp. 8-9). Furthemore, —prestazioni accessorie“ consisted almost entirely of activities falling within the ordinary responsibilities of Nuove Acque management and personnel, with apparently little if any justification for intervention external to the operator, and were characterised as one-off actions requiring no recurrent performance with the associated costs (Schiatti, 2003: p. 10). Finally, Mr. Schiatti questioned the efficiency and cost-effectiveness resulting of —prestazioni accessorie“ as in the case of technical assistance aimed at reducing leakage. In fact, savings on the cost of water purchased from the Montedoglio dam resulting of reduced leakage were projected at ⁄179,000 in six years, from 2003 to 2008, whereas —prestazioni accessorie“ aimed at achieving the desired leakage reduction was costed at ⁄1,179,600 in three years, without considering the resources devoted to the same goal in 2002 and the first half of 2003 (Schiatti, 2003: p. 12).
On 31st October 2003, at the end of his second mandate as President of the —Autorità d‘Ambito“, Mr. Schiatti resigned to be successively replaced by former mayor of the town of San Sepolcro Dario Casini, who had vigorously supported the arguments put forward by Nuove Acque in its standoff against the —Autorità d‘Ambito“116.
The renegotiation of the investment plan PdA and the business plan PEF was completed on 16th December 2003 (Rossi et al., 2004)117, in conjunction with the mutual decision to suspend the ongoing legal proceedings between Nuove Acque and the —Autorità d‘Ambito“118. The renegotiation of the business plan resulted in tariffs remaining at approximately the same level as projected by the 2000 PEF, while investments were slightly reduced in value and the realisation of most investments was postponed until later on in the course of the concession. More importantly perhaps, the total amount of —prestazioni accessorie“ was confirmed and there was a considerable increase in revenues from the fix charge for access to the service. Figure 3 below shows the progression of new tariffs as projected by the December 2003 business plan, whereby the blue line represents the tariff to be charged to consumers. According to the local citizen organisation Forum Sociale Arezzo, total investments projected by the 2003 business plan were some ⁄ 9.2 million less than what projected by the 2000 PEF in nominal terms, although the difference in real terms amounted to some ⁄ 17.9 million. Also, the aggregate value of controversial —prestazioni accessorie“ (renamed as technical assistance, —consulenze tecniche“) decreased by a mere ⁄ 0.8 million, while total revenues from the fix charge for access to the service were projected at ⁄ 52.1 million (Forum Sociale Arezzo, 2004: pp. 27-29). Furthermore, the overall result of the renegotiation initiated in September 2002 and completed in December 2003 was that Nuove Acque would gain a total ⁄ 115.02 million in respect of what projected by the 2000 PEF, while taxpayers and consumers would only gain a total ⁄ 0.84 million. The
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Figure 3. Tariffs as projected by the 2003 PEF (in ⁄ / blue line: applicable tariff)
Andamento Tariffario
2.50000
2.00000
1.50000 o r u E
1.00000
0.50000
0.00000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Anni
Tariffa applicabile Tariffa rivalutata Tariffa reale media
Source: PEF 2003. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“.
5.2.4.2 Obstructed regulation and inducements to renegotiation Due to the tense standoff between the —Autorità di Ambito“ and Nuove Acque on the effectiveness and efficiency of the so-called —prestazioni accessorie“ which preceded the 2003 renegotiation, it remains to explain why the municipalities agreed to such a favourable revision of the business plan in favour of the semi-privatised operator. This appears to be explained by two factors: a) the semi-private operator engagement in continuous obstruction of regulatory activity and its success in effectively blocking regulatory action, mainly through resort to the administrative justice; b) pressure exerted by the semi-private operator on municipalities by suspending payment of concession fees, requesting the revision of concession fees and threatening multi-million compensation. All the above resulted in the municipalities abandoning any attempt at reining in the private counterpart and giving in to all the requests put forward by private shareholders, in terms of a more advantageous economic arrangement and possibly a more relaxed regulatory framework. The sequence of events from the award of the semi-privatised concession in 1999 to its revision in 2003 thus suggests that regulatory capture in the case of Arezzo and the whole ATO 4 is to be regarded as more than a theoretical concern.
From July 2002 to 30th September 2003, Nuove Acque withheld payment of the concession fees due to the municipalities (Schiatti, 2003: p. 5).
In February 2003, Nuove Acque resorted to Tuscany‘s Regional Administrative Tribunal against the —Autorità d‘Ambito“ regulation defining sanctions to be imposed to the operator in case of breach of contract (Schiatti, 2003: p. 5). Not only did the semi-privatised concessionaire sought the annulment of the AATO regulations but also the very of the very sanction which had been imposed on Nuove Acque for breach of its contractual obligations in terms of service quality (Rossi et al., 2003: p. 180). Legal action in front of Tuscany‘s Regional Administrative Tribunal was only suspended in occasion of the December 2003 renegotiation of the business plan (Rossi et al., 2004), and it was agreed that the matter of regulatory sanctions would be settled subsequently among the parties to the dispute119.
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In April 2003, Nuove Acque claimed that any revision to the business plan required its approval (Schiatti, 2003, p. 5), irrespective of provisions contained the contractual agreement and Tuscany‘s regional law providing for the exclusive powers of —Autorità d‘Ambito“ in terms of planning and regulation.
According to Mr. Schiatti (2003: p. 14), the municipalities would have failed to obtain compliance with the private operator‘s contractual obligations due to the perceived threat of having to pay multi-million compensation to the private partner. This would have become particularly evident in the period from June to October 2003120. It should also be noted that article 34 of the concession agreement (Convenzione) governed dispute resolution between the —Autorità di Ambito“ and Nuove Acque through arbitration121. This interpretation of events seems to be confirmed by Mr. Schiatti‘s successor as President of the ATO governing body. In January 2004, Mr. Casini stated that 33 out of 37 mayors within the —Autorità d‘Ambito“ had voted in favour of the December 2003 renegotiation in order to put an end to the conflicts with Nuove Acque which had undermined the viability of operations and compromised the budgetary position of many communes122.
Finally, Mr. Schiatti stressed the paradoxical nature of the confrontation between the —Autorità d‘Ambito“ and Nuove Acque (2003: p. 5), as the municipalities failed to pursue their interests irrespective of the majority they enjoyed in both bodies. According to Mr. Schiatti, among other factors leading to the failure to discipline the private operator, was a lack of technical capacity of municipal representatives having to confront the well prepared representatives of the private partner123.
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6 Participation and Sustainability in Decision-making 6.1 Public participation in Arezzo Very little public participation, if any at all, took place in Arezzo. No public participation in drawing up investment plans took place and that was lamented from both environmentalists and consumers. No public participation took place in deciding the organisational mode of the prospective water service provider. Limited consultation with consumers‘ organisations took place on marginal issues as operations were carried out.
Consultation with trade unions during the confrontation between the —Autorità d‘Ambito“ President and Nuove Acque.
Apparently, most public participation took place in the form of meetings between politicians or key officials and angry crowds protesting at the price increases.
A citizens‘ association is trying and affect the local political agenda in favour of remunicipalisation through a number of means, including petitions, and in collaboration with political parties such as Rifondazione Comunista in view of the upcoming June 2004 municipal and provincial elections.
As noted by Forum Sociale Arezzo, Tuscany‘s 1995 and 1997 regional laws did not provide anything on public participation, nor did the concession agreement with Nuove Acque, which might explain why participation remained at an unsatisfactory level throughout the whole decision making process. Also, Italian law is generally feeble when it comes to public participation in the water sector and has in the past adopted the approach to confine participation to a consumer-provider relationship governed by the supply contract.
Nuove Acque‘s President expressed the view that in the future public participation should retain the form of consultation.
The table below is an attempt at summarising the forms of public participation that have taken place in each of the two episodes analysed. The symbol —1“ indicates that a certain form of public participation, as indicated by the first column on the left, has taken place within a certain episode.
Public Participation by Episode in Arezzo
Episode: Ep1 Ep2 Information œ Transparency
Media 1 1 Web œ Internet 1 Notice Board Information centers Others (Official acts) 1 1 Consultation
User questionnaires Impact assessments Focus group Opinion polls Discussion 1 Participative budget Others (Stakeholder ? 1 consultation) Discussion
Multi-attribute analysis
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Subsidiaries roles Planning for real Meetings 1 Others… Codecision making
Partnership Consensus building Participative budget Stakeholders members Others… Decision making
Concessions Stakeholders as operators Delegation Capacity building Others…
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6.2 Sustainability
This section assesses how the decision making process in each episode addressed sustainability objectives, in terms of water supply and sanitation provision. Decisions are first taken into account in view of how their objectives directly relate to sustainability and of the motives informing their adoption. For example, not all objectives pursued by decision makers are necessarily conducive to water sustainability as a number of personal, institutional and stakeholders‘ interests might prevail in the course of the decision making process. Subsequently, decisions are assessed in the light of the extent to which implementation of the adopted decisions succeeded in achieving set targets.
6.2.1 Sustainability of Final Outcome for Episode 1
6.2.1.1 Political sustainability The political sustainability of the decision to award a semi-privatised concession proved modest. Despite the decision generated a high level of controversy, especially after its implementation, the semi-privatised concession has shown considerable durability in the light of the municipalities‘ failure to take concerted action and the private operator‘s persistence in pursuing its objectives. The mayor of Arezzo revealed in his interview to the author that attempts had been made to sell the shares held by the city in the public-private service provider. Those attempts failed as no acquirer was found. As a matter of fact, political durability might result in undermining the sustainability of water provisions if political arrangements represent an obstacle to addressing unsatisfactory outcomes of past decisions from the economic, social, technical and/or environmental points of view.
6.2.1.2 Economic sustainability The economic sustainability of the decision to award a semi-privatised concession proved low. Of all the set objectives, very few were achieved. Although the conceding authorities succeeded in selecting a major transational water operator with considerable experience, such operational experience failed to bring the expected benefits. To the contrary, expensive and ineffective —prestazioni accessorie“ contradicted the principles of efficiency, effectiveness and cost-effectiveness on which the Galli Law, Tuscany‘s regional law and the concession agreement so firmly insist. Furthermore, the private operator could rely on its superior experience and resources, for example in legal terms, to obtain renegotiation of the original concession arrangements to the detriment of local consumers. Benefits in terms of investments failed to materialise in the expected amount, while costs soared.
Fiscal considerations can hardly be regarded as contributing to the sustainability of water supply and sanitation services, with overestimated concession fees representing a for of —hidden taxation“ as inflated billing is in turn used by the operator to recover such costs. If it can be questioned whether taxpayers benefited from fiscal gains obtained by the municipalities, the municipalities themselves failed to obtain as much fiscal gains as initially expected. As a result of renegotiation, the communes accepted to bear additional costs, such as the costs of the governing body —Autorità d‘Ambito“ and part of the losses accumulated by the public-private water concessionaire.
6.2.1.3 Social sustainability The social sustainability of the decision to award a semi-privatised concession proved low in the light of unsatisfactory levels of public participation.
6.2.1.4 Technical sustainability The technical sustainability of the decision to award a semi-privatised concession proved low. First because the reversal of the initial decision to award water supply and sanitation services to the municipally-owned —azienda speciale“ Coingas resulted in the deferred intervention. Even more so because, as noted by one interviewed stakeholder, many municipalities managing water services under direct labour had stopped
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www.watertime.org investing in the system when it became clear that they would not retain responsibility for running operations. It should be noted that Nuove Acque failed to realise the amount of investment projected in the first 4 years of operation, with only some ⁄ 38.3 million made instead of the ⁄ 52.25 million provided for by the 2000 business plan (Forum Sociale Arezzo, 2004: p. 8). In addition, procedures aimed at tapping project financing did not initiate by the agreed date, with a considerable delay in achieving this objective and ensure a prompt implementation of the investment programme. Finally, with renegotiation resulting in the postponement of the investment programme, the already negative impact on technical sustainability can only worsen.
6.2.1.5 Environmental sustainability The environmental sustainability of the decision to award a semi-privatised concession proved low. As, following renegotiation, reduced amounts of investment are going to be implemented for higher costs, the environment appears to lose in relative terms. As with technical sustainability, the fact that the investment programme will be diluted along a longer period than originally envisaged, can only have a detrimental effect on environmental sustainability.
City: Arezzo
Episode 1
PESTE factors ‰ Political Economical Social Technical Environment Sustainability High Medium X Low X X X X
6.2.2 Sustainability of Final Outcome for Episode 2
6.2.2.1 Political sustainability The political sustainability of the decision to renegotiate the concession in December 2003 might prove modest. In that sense, see argumentation under section 6.3.1.1. The appointment of a new President of the governing body —Autorità d‘Ambito“, known for supporting Nuove Acque‘s arguments, might possibly result in strengthened political durability of the current arrangements, while augmenting the risk of regulatory capture.
6.2.2.2 Economic sustainability The economic sustainability of the decision to renegotiate the concession in December 2003 might prove low. The fact that the private operator successfully achieved its commercial objectives through renegotiation might represent an incentive to seek new opportunities for revising the arrangements in its own favour rather than sticking to its new obligations in terms of costs and outputs. On the other hand, as regulation under the concession system is affected by the political will of conceding authorities, the private operator might take advantage of lax regulation as municipalities prefer not to engage in another standoff against such a powerful counterpart.
6.2.2.3 Social sustainability The social sustainability of the decision to renegotiate the concession in December 2003 might prove modest. More precisely, while the decision in itself cannot be expected to promote public participation in any form, it is possible to expect that local authorities will have to introduce further opportunities for participation as European legislation requiring that is adopted in Italy. The extent to which enhanced opportunities for participation will result in greater transparency and accountability remains to be seen as factors such as culture and established stakeholders‘ interests.
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6.2.2.4 Technical sustainability The technical sustainability of the decision to renegotiate the concession in December 2003 might prove low. The fact that the private operator successfully achieved its commercial objectives through renegotiation might represent an incentive to seek new opportunities for revising the arrangements in its own favour rather than sticking to its new obligations in terms of overhauling and expanding the current infrastructure system.
6.2.2.5 Environmental sustainability The environmental sustainability of the decision to renegotiate the concession in December 2003 might prove low. The fact that the private operator successfully achieved its commercial objectives through renegotiation might represent an incentive to seek new opportunities for revising the arrangements in its own favour rather than sticking to its new obligations in terms of timely delivery of the agreed investment levels.
City: Arezzo
Episode 2
PESTE factors ‰ Political Economical Social Technical Environment Sustainability High Medium X X Low X X X
7 City in Time In 1870, water in Arezzo was supplied by a number of private and public wells as well as through a fountain connected to the aqueduct Vasariano built in 1603 with funding from the local charity Fraternita dei Laici. However, no water supply pipeline network existed. Studies aiming at providing the town and all its citizens with piped water from surface sources had been carried out since 1860, as the satisfaction of hygienic and industrial requirements became increasingly impellent under the pressure of urban growth. In fact, the population of Arezzo rose from 11,154 in 1871 to 34,302 in 1951.
In 1870, Fraternita dei Laici redirected water previously devoted to private usage in order to serve the hospital and other public buildings as well as individual citizens. In 1871, the charity started construction of the pipeline network in the old town, which in November 1872 served 46 users. In 1886, both the Fraternita dei Laici and the municipal administration constructed a reservoir for the distribution of water by gravity. From 1871 to 1866, 11 public fountains had also been built but scarcity of water remained a problem, especially in periods of drought. Therefore, while the Fraternita concentrated its efforts on repairing the ancient aqueduct (whose restoration would be completed in 1923), the commune purchased the right to new water sources in 1891. However, this did not suffice to solve the problem of water scarcity so that the commune financed the construction of a subsidiary aqueduct, completed in 1908, to serve industrial users in the lower town (supply to households did not take place due to water quality concerns). In order to find a decisive solution to the necessities of the town in terms of quality and quantity of water supplied, the commune financed the construction of a new aqueduct, which was concluded in 1929. The new aqueduct, named the Buon Riposo aqueduct, supplied water from a number of wells tapping groundwater deriving from the river Arno, which was then artificially recharged drawing from the course itself. Even the Buon Riposo aqueduct was used exclusively when necessary to meet demand, even though its capacity exceeded overall requirements.
In 1930, the commune of Arezzo became responsible for operating the Vasariano aqueduct, behind payment of a fee for the lease of the land. The move originated from the fact that the Fraternita could not afford anymore the cost of running the ancient aqueduct. Furthermore, the decision aimed at ensuring the rationality
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With post-war reconstruction, water treatment plants tapping surface water from the river Arno were built at the Buon Riposo aqueduct starting from 1952 (Stocchi, 1998; Comune di Arezzo, undated). Surface water from Buon Riposo would be eventually replaced only at the end of the 1990s‘ with water from the Montedoglio dam. Water supply and sewerage remained under direct municipal management (—gestione diretta“ or —gestione in economia“) until 1999124. Wastewater treatment was first introduced in 1980 with completion of the Casolino wastewater treatment plant by Suez subsidiary Degrémont (Tafi, 1985: p. 330), to be followed by the construction other 3 minor wastewater treatment plants.
8 Conclusions and discussion of findings The following appear to be general conclusions to be drawn from the Arezzo case study, which might have a broader relevance to enhancing sustainability through urban water supply and sanitation services reform.
1) Prior to adoption of final decisions, decision makers should engage in thorough comparative evaluation of alternative arrangements rather than basing resolutions on unsubstantiated claims and the rhetoric of the political discourse. This is even more important when decision makers consider reversing previous decisions, with the risk of exceedingly delaying the course of reform, undermining the sustainability potential of previously adopted decisions without the necessary guarantee that the new decision would succeed in achieving the desired objectives.
2) In order to optimise decision making, it is not sufficient to undertake systematic comparative evaluation of competing options. Such comparison should take place in the light of a clear set of objectives related to enhancing the sustainability of water supply and sanitation services, whereas other considerations not directly related to sustainability should be clearly identified and taken into account for their impact on the sustainability of local water systems. Fiscal considerations of local authorities provide a clear example of objectives unrelated to sustainability, as overestimated concession fees or entry rights might result in hidden taxation by inflating the cost of service provision to consumers.
3) Decision makers should carefully review the opportunity of entering PPPs, particularly with powerful international water operators, irrespective of expected benefits and the scope of contractual obligations. Regulatory capture theory appears in fact to be confirmed as predictive, in view of the considerable asymmetry of capacity and resources between experienced and skilled private operators and local authorities who are vested with the ultimate responsibility to regulate. The relationship between regulator and regulated undertaking might prove different from the being a —partnership of equals“ as expected in theory, as private operators appear apt to pursue their commercial interests through a variety of mechanisms - ranging from overoptimistic demand projections to withholding of payment of concession fees, from privileged access to subcontracting of works and services to exerting pressure through legal action and threatening multi-million compensation claims œ while local authorities remain bound to the long term nature of agreements notwithstanding their changed content.
4) The effectiveness of regulation appears to be determined by a number of factors which might escape the scope of regulatory theory. For example, regulation might prove problematic and its effectiveness questionable even if arrangements are put in place to minimise asymmetry of information between the regulator and the regulated operator. That might be explained by agency theory, in that the principal‘s inability to exert control on its agent, whereby the agent is the service provider (in that sense, see point 3) above), might undermine the principal‘s ability to achieve the expected benefits of reform, including the expected benefits of introducing a sophisticated regulatory framework. Regardless of widespread emphasis on separating planning and regulatory functions from management of operations in order to enhance transparency, decision makers should be aware
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of the risk of distancing themselves from their agents and loosing control on implementation of decisions adopted. Conversely, decision makers might obtain more satisfactory results in retaining control on their agent through retaining total ownership, while injecting transparency and accountability through arms length relationship, ideally strengthened by meaningful public participation.
5) Depending on the local political setup, social values and traditions in terms of participation and deliberation, the lack of appreciable levels of public participation in the water supply and sanitation sector might be explained in the light of the absence of legal provisions requiring the adoption of specific forms of participation. In order to obtain the expected benefits of public participation, that is to be comprehensively introduced since the outset of a given reform, for example since the adoption of decisions on the organisational model of the operator as well as planning. Once a reform is implemented without meaningful public participation, the late introduction of participatory mechanisms will likely have to be adapted to the interests of already established stakeholders.
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References
Bardelli, L. and Doni, N. (2001) Analisi di diverse procedure di affidamento della gestione dei servizi pubblici locali, in Economia Pubblica, n. 4, 2001.
Comune di Arezzo (undated) L‘attività della amministrazione domunale negli anni 1946-1950 e la ricostrazione di Arezzo. Comune di Arezzo, pp. 38-40.
Comune di Arezzo (2004) Rapporto sullo Stato dell‘Ambiente della Città di Arezzo 2003. Report by Servizio Ambiente e Sanità, Assessorato all‘Ambiente, Comune di Arezzo, April 2004.
Drusiani, R. (2003) Competition for water services in the Italian experience, in Euromarket Newsletter, Second Issue, December 2003, pp. 5-8 (http://mir.epfl.ch/euromarket/newsletter/EUROMARKET_Newsletter_December03.pdf).
Drusiani, R. and Nilberto, G. (2001) Il ruolo del gestore-impresa per una nuova politica industriale nell‘ambito del servizio idrico integrato, in Relazioni, XII H2Obiettivo 2000 (Bari, 25-26 October 2001), pp. 97-107.
FederConsumatori (2000a) Una battaglia per tariffe eque, in Primo Maggio. Notiziario FederConsumatori e Utenti Arezzo-Valdarno. Arezzo, December 2000, p. 1.
FederConsumatori (2000b) Perchè la tariffa dell‘acqua è aumentata così tanto?, in Primo Maggio. Notiziario FederConsumatori e Utenti Arezzo-Valdarno. Arezzo, December 2000, p. 2.
Forum Sociale Arezzo (2004) Un‘altra acqua è possible œ più partecipazione, maggiore conoscenza, diversa gestione (marzo 2003 œ aggiornato all‘agosto 2004). Forum Sociale Arezzo working paper, August 2004.
Forum Sociale Arezzo (2003) Un‘altra acqua è possible œ più partecipazione, maggiore conoscenza, diversa gestione. Paper presented at Piazza Tematica sull‘Acqua, Arezzo, March 2003 (www.isf.lilik.it/files/arezzo.rtf).
Hall, D., Lanz, K., Lobina, E. and de la Motte, R. (2004) International and European Context Report, WaterTime Deliverable D7, July 2004 (http://www.watertime.net/wt_reports.asp#IC).
Lobina, E. (2005a) WaterTime National Context Report œ Italy, WaterTime Deliverable D10f (www.watertime.org).
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Proaqua (1997) Studio di fattibilità del piano di cui all‘art. 11 comma 3, della L. 36/94 per Ambito —Alto Valdarno“ œ Sintesi. Rome, April 1997.
Rossi, M. D., Bassi, G., Capacci, S. & F. Moretti (2004) Il portafoglio partecipazioni del Comune in società, enti ed aziende œ Servizi pubblici esternalizzati ed attività controllate. Comune di Arezzo, Assessorato alle Partecipazioni, Ufficio Controllo di Gestione, Organizzazione e Partecipazioni. Arezzo, December 2004 (http://www.comune.arezzo.it/retecivica/URP/URP.nsf/DocumentID/37D621E24FBBB693C1256F720029 AB0B?opendocument).
Rossi, M. D., Bassi, G., Capacci, S. & F. Moretti (2003) Il portafoglio partecipazioni del Comune in società, enti ed aziende œ Servizi pubblici esternalizzati ed attività controllate. Comune di Arezzo, Assessorato alle Partecipazioni, Ufficio Controllo di Gestione, Organizzazione e Partecipazioni. Arezzo, October 2003
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(http://www.comune.arezzo.it/retecivica/URP/URP.nsf/DocumentID/BEA332AFA6550626C1256E04002 D4F89?opendocument).
Schiatti, Carlo (2003) Relazione del Presidente all‘Assemblea. Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Arezzo, 31st October 2003.
Stocchi (1998) la distribuzione idrica nella città di Arezzo dal 1870 al 1953, in notiziario turistico AR, n. 232, March-April 1998, pp. 19-22.
Tafi, A. (1985) Immagine di Arezzo œ Guida storico-artistica - La città oltre le mura medicee e il territorio comunale. Cortona: Calosci.
Notes
1 Source: Riepilogo Situazione Gestioni Preesistenti. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“. Document based on data provided by the 37 municipalities of ATO 4, including the municipality of Arezzo. 2 Source: http://www.nuoveacque.it/lasocieta.htm (accessed on 23rd February 2005). 3 Source: Forum Sociale Arezzo (2004, p. 8), based on Nuove Acque yearly accounts. More precisely, Nuove Acque invested ⁄ 10,902,000 in 2001, ⁄ 10,999,000 in 2002 and ⁄ 8,035,000 in 2003. 4 Source: Federgasacqua, Tariffe idriche al 30 giugno 2003 in alcuni capoluoghi di Provincia (IVA esclusa) calcolata su un consumo medio annuo di 200 mc. (http://www.federgasacqua.it). 5 Source: Riepilogo dati di gestione 1997. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“. 6 Source: Riepilogo dati di gestione 1997. Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“. 7 Source: La Nazione (http://lanazione.quotidiano.net/chan/9/1:4996146:/2003/12/05). 8 Based on a January 2004 publication by Censis-Rur, based on data on municipalities, related to the period 2000-2003. Source: http://www.jobtel.it/rubriche/dossier/ArchivioDossier/Ricchezza_Italia_Censis.aspx#3 (accessed on 3rd March 2005). 9 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, pp. 3-5. 10 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 11 Giunta Comunale di Arezzo, Verbale dell‘adunanza del 3 dicembre 1992, Oggetto: Progetto di trasformazione del —Coingas“ ai sensi della l. 142/90 ed affidamento al consorzio del ciclo completo delle acque. Introduzione, modifiche ed approvazione. Arezzo, 3rd December 1992, p. 1. 12 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, pp. 10-13. 13 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, p. 29. 14 Giunta Comunale di Arezzo, Verbale dell‘adunanza del 3 dicembre 1992, Oggetto: Progetto di trasformazione del —Coingas“ ai sensi della l. 142/90 ed affidamento al consorzio del ciclo completo delle acque. Introduzione, modifiche ed approvazione. Arezzo, 3rd December 1992, pp. 4-5. 15 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, pp. 6-7. 16 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, p. 11. 17 Art. 14.1, Bozza di convenzione ex 2° comma dell‘Art. 25 della Legge 142/1990. Annex to Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992.
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18 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, pp. 16-17. 19 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 20 Commissione Tecnica (nominata con deliberazione della Giunta Municipale n. 5934 del 23.11.1991). Progetto di trasformazione del —Coingas“ ai sensi della legge 142/1990 e affidamento al consorzio del ciclo completo delle acque. Arezzo, 30th October 1992, pp. 37-39. 21 Consiglio Comunale, Deliberazione n° 244 del 10 Novembre 1993. Oggetto: Revisione del Coingas ai sensi degli articoli 25 e 60 della L. 142/1990 œ approvazione schema di convenzione e statuto. Arezzo, 10 November 1993. 22 Regione Toscana, Comitato Regionale di Controllo. Prot. 29345/93 e 7518/94. Oggetto: deliberazione C.C. n. 244 del 10.11.93 avente per oggetto: Revisione COINGAS. Deliberazione C.C. n. 46 del 17.03.94 avente per oggetto: Integrazioni, modificazioni e chiarimenti deliberazione n. 244/CC del 10.11.1993. Florence, 19th April 1994. 23 Legge Regionale 21 luglio l995, n. 81. Norme di attuazione della Legge 5.1.1994, n. 36. 'Disposizioni in materia di risorse idriche.' 24 Interview with Stefano Mencucci, Forum Sociale Arezzo, 3rd March 2004. 25 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 26 Interview with Paolo Ricci, President, Nuove Acque S.p.A. and former mayor of Arezzo (May 1995-June 1999), 10th March 2004. 27 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 28 Interview with Paolo Ricci, President, Nuove Acque S.p.A. and former mayor of Arezzo (May 1995-June 1999), 10th March 2004. 29 Interview with Stefano Mencucci, Forum Sociale Arezzo, 3rd March 2004. 30 Interview with Paolo Ricci, President, Nuove Acque S.p.A. and former mayor of Arezzo (May 1995-June 1999), 10th March 2004. 31 Consiglio Comunale di Arezzo, Adunanza del 12 febbraio 1996, Seduta pubblica œ I° Convocazione. Oggetto: Costituzione di una società per azioni a prevalente partecipazione pubblica locale per la gestione dei servizi idrici integrati. Arezzo, 12th February 1996. 32 Regione Toscana, Comitato Regionale di Controllo. Prot. 3357. Oggetto: deliberazione C.C. n. 57 del 12.02.1996 avente ad oggetto: Costituzione S.p.a. per gestione servizi idrici integrati. Florence, 13th March 1996. Regional law provisions breached by the February 1996 decision adopted by Arezzo city council were articles 4, 5 and 7, L.R. 81/95. 33 Consiglio Comunale di Arezzo. Adunanza del 10 marzo 1999. Seduta pubblica. Oggetto: Partecipazione del Comune di Arezzo alla società a prevalente capitale pubblico locale per la gestione del servizio idrico integrato dell‘A.T.O. n. 4 —Alto Valdarno“, p. 3. 34 Source: phone interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 19th January 2005. 35 Art. 2, Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 36 Art. 2.3b and art. 3, Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 37 Art. 6 and art. 7, Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 38 Art. 8, Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 39 Art. 9, Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 40 Allegato A œ Schema di convenzione tipo per regolare i rapporti fra l'Ente d‘Ambito ed il Gestore del servizio idrico integrato. Annex to Legge Regionale 4 aprile 1997, n. 26. Norme di indirizzo per l'organizzazione del servizio idrico integrato in attuazione degli articoli 11 e 12 della Legge 5.1.1994, n. 36. 41 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 42 Interview with Alberto Ciolfi, President, Coingas S.p.A., 3rd November 2004. 43 Art. 9, Accordo di Programma, AATO n° 4 —Alto Valdarno“. Arezzo, 10th July 1998. 44 Art. 3 and art. 4, Accordo di Programma, AATO n° 4 —Alto Valdarno“. Arezzo, 10th July 1998. 45 Consiglio Comunale di Arezzo. Adunanza del 10 marzo 1999. Seduta pubblica. Oggetto: Partecipazione del Comune di Arezzo alla società a prevalente capitale pubblico locale per la gestione del servizio idrico integrato dell‘A.T.O. n. 4 —Alto Valdarno“. Transcript of the debate, p. 2. 46 Art. 5, Accordo di Programma, AATO n° 4 —Alto Valdarno“. Arezzo, 10th July 1998. 47 Art. 7.1, Legge Regionale 21 luglio l995, n. 81. Norme di attuazione della Legge 5.1.1994, n. 36. 'Disposizioni in materia di risorse idriche.'
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48 Consiglio Comunale di Arezzo. Adunanza del 10 marzo 1999. Seduta pubblica. Oggetto: Partecipazione del Comune di Arezzo alla società a prevalente capitale pubblico locale per la gestione del servizio idrico integrato dell‘A.T.O. n. 4 —Alto Valdarno“, pp. 3-4. 49 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 8, Adunanza del 10 luglio 1998. Seduta pubblica. Oggetto: Adozione del Piano d‘Ambito. Arezzo, 10th July 1998 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_1998/08-98.doc). 50 Interview with Vincenzo Ceccarelli, President, Province of Arezzo, 5th March 2004. 51 Interview with Stefano Mencucci, Forum Sociale Arezzo, 3rd March 2004. 52 Interview with Vincenzo Ceccarelli, President, Province of Arezzo, 5th March 2004. 53 Disciplinare di gara per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del Servizio Idrico Integrato dell‘ATO N°4 œ Alto Valdarno. Arezzo, 3rd October 1998, p. 2. 54 Tribunale Amministrativo Regionale per la Toscana, Ia Sezione. Sentenza sul sul ricorso n.1459/99 proposto dalla Vivendi, società anonima di diritto francese. N. 24 REG. SENT. ANNO 2001 n. 1459 Reg. Ric. Anno 1999. Florence, 15th January 2001, pp. 24-25. 55 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, p. 16. 56 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 2-5. 57 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 5-15. 58 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 15-16. 59 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 1-2. 60 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 12-13. 61 The statutory powers of the commission did not extent beyond the evaluation of bids put forward. Art. 9.3 and Art. 10, Accordo di Programma, AATO n° 4 —Alto Valdarno“. Arezzo, 10th July 1998. 62 The fact that no revision of tariffs as projected by the Suez-led consortium —Intesa Aretina“ took place prior to the concession award to the same undertaking is confirmed by the following two sources. Email communication with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 17th January 2005. Phone interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 19th January 2005. 63 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, p. 13. 64 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 10-11. 65 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, pp. 15-16. 66 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 4, Adunanza del 25 febbraio 1999. Seduta pubblica. Oggetto: Affidamento del servizio idrico integrato. Preliminare di convenzione e determinazioni in merito al Piano d‘Ambito. Arezzo, 25th February 1999 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_1999/04-99.doc). 67 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 4, Adunanza del 25 febbraio 1999. Seduta pubblica. Oggetto: Affidamento del servizio idrico integrato. Preliminare di convenzione e determinazioni in merito al Piano d‘Ambito. Arezzo, 25th February 1999 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_1999/04-99.doc). 68 —Schiatti deve dare le dimissioni“, La Nazione Arezzo: 14/03/2001, p. 4; Malvestiti, G. —Rifondazione Comunista: tariffe alte, bisogna rivedere la convenzione con Nuove Acque“, La Nazione Arezzo: 25/06/2000, p. 5. 69 Verbale di gara n° 18 per la selezione di un socio privato di minoranza per la costituenda società mista di gestione del servizio idrico integrato dell‘ATO n° 4 —Alto Valdarno“. Arezzo, 14th January 1999, p. 13. 70 Art. 4 Affidamento dei lavori e dei servizi. Allegato B alla deliberazione CC 10.3.1999, n. 52. Consiglio Comunale di Arezzo. Adunanza del 10 marzo 1999. Seduta pubblica. Oggetto: Partecipazione del Comune di Arezzo alla società a prevalente capitale pubblico locale per la gestione del servizio idrico integrato dell‘A.T.O. n. 4 —Alto Valdarno“. 71 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 4, Adunanza del 25 febbraio 1999. Seduta pubblica. Oggetto: Affidamento del servizio idrico integrato. Preliminare di convenzione e determinazioni in merito al Piano d‘Ambito. Arezzo, 25th February 1999 72 Art. 1 and art. 3, Convenzione di affidamento del servizio idrico integrato dell‘A.T.O. N. 4 —Alto Valdarno“. Allegato alla deliberazione n.7 del 21.5.1999 dell‘Assemblea. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O.
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n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina1/CONVENZIONE%20%20ORIGINALE.doc). 73 Malvestiti, G. —L‘acqua —francese“ inizia a scorrere dal primo giugno“, La Nazione Arezzo: 01/04/99. 74 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 7, Adunanza del 2 maggio 1999. Seduta pubblica. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_1999/07-99.doc). 75 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004. 76 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 7, Adunanza del 21 maggio 1999. Seduta pubblica. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_1999/07-99.doc). 77 Source: Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ 78 Source: Email communication with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 17th January 2005. 79 Art. 17 Incrementi di Efficienza. Convenzione di Affidamento del Servizio Idrico Integrato dell‘A.T.O. N. 4 —Alto Valdarno“. Allegato alla deliberazione n. 7 del 21.5.1999 dell‘Assemblea, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina1/CONVENZIONE%20%20ORIGINALE.doc). 80 Malvestiti, G. —L‘acqua —francese“ inizia a scorrere dal primo giugno“, La Nazione Arezzo: 01/04/99. 81 Source: Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ 82 Source: Email communication with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 17th January 2005. 83 Nota Prot. n. 1998, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Ai Signori Sindaci dei Comuni Consorziati. Oggetto: Comunicazione di Nuove Acque relativa a presunto squilibrio economico-finanziario della gestione e richiesta di provvedimenti correttivi del Piano di Ambito. Arezzo, 5th December 2001. 84 Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Deliberazione n. 29, Adunanza del 6 novembre 2003. Seduta pubblica. Oggetto: Problematiche connesse all‘attivazione dei finanziamenti per la realizzazione degli investimenti previsti dal Piano di Ambito, da parte di Nuove Acque S.p.A. Determinazioni. Arezzo, 6th November 2003 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Assemblea/Delibere_2003/029-03.doc). 85 Source: Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ 86 Source: Email communication with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 17th January 2005. 87 Source: Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ 88 Source: Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ 89 Sources: Email communication with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 17th January 2005. Phone interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996- October 2003), 19th January 2005. 90 Malvestiti, G. —L‘acqua —francese“ inizia a scorrere dal primo giugno“, La Nazione Arezzo: 01/04/99. 91 Consiglio Comunale di Arezzo. Adunanza del 10 marzo 1999. Seduta pubblica. Oggetto: Partecipazione del Comune di Arezzo alla società a prevalente capitale pubblico locale per la gestione del servizio idrico integrato dell‘A.T.O. n. 4 —Alto Valdarno“, p. 7. 92 Source: http://www.prefettura.arezzo.it/elettorale/comunali/BallottaggioArezzo.htm; http://www.adnkronos.com/SpecialiIGN2.0/Elezioni_Europee/Notizie_Manuali/toscana.html. 93 Art. 8, Convenzione di affidamento del servizio idrico integrato dell‘A.T.O. N. 4 —Alto Valdarno“. Allegato alla deliberazione n.7 del 21.5.1999 dell‘Assemblea. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina1/CONVENZIONE%20%20ORIGINALE.doc). 94 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004. 95 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004.
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96 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004. 97 Interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 4th October 2004. 98 Interview with Vincenzo Ceccarelli, President, Province of Arezzo, 5th March 2004. 99 Deliberazione del Consiglio di Amministrazione n. 55, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Verbale dell‘Adunanza dell‘11 Dicembre 2001. Oggetto: Disservizio nel Comune di Castiglion Fiorentino. Risposta a nota del Sindaco. Arezzo, 21st June 2001 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Consiglio%20di%20Amministrazione/delibere_2001/55- 01.doc). 100 Interview with Vincenzo Ceccarelli, President, Province of Arezzo, 5th March 2004. 101 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004. 102 Nota Prot. n. 1998, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Ai Signori Sindaci dei Comuni Consorziati. Oggetto: Comunicazione di Nuove Acque relativa a presunto squilibrio economico-finanziario della gestione e richiesta di provvedimenti correttivi del Piano di Ambito. Arezzo, 5th December 2001. 103 Consiglio di Stato, Quinta Sezione. Decisione sui ricorsi in appello riuniti nn. 1297/2001, 1513/2001, 1514/2001, 1846/2001. N. REG.DEC. N. 1297-1513-1514 e 1846 REG. RIC. ANNO 2001. Rome, 5th June 2001, pp. . 104 Tribunale Amministrativo Regionale per la Toscana, Ia Sezione. Sentenza sul sul ricorso n.1459/99 proposto dalla Vivendi, società anonima di diritto francese. N. 24 REG. SENT. ANNO 2001 n. 1459 Reg. Ric. Anno 1999. Florence, 15th January 2001. 105 —Two steps forward and one step back in Italy“, Global Water Report, Issue 125, 6 July 2001, pp. 1-2. 106 —Two steps forward and one step back in Italy“, Global Water Report, Issue 125, 6 July 2001, pp. 1-2. 107 Deliberazione del Consiglio di Amministrazione n. 28, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Verbale dell‘Adunanza del 21 Giugno 2001. Oggetto: Esito visita ispettiva disposta a Nuove Acque S.p.A. nel mese di aprile 2001, ai sensi dell‘art.20 della Convenzione di affidamento del servizio idrico integrato. Arezzo, 21st June 2001 (http://www.ato4.toscana.it/documenti/Pagina4/Delibere%20Consiglio%20di%20Amministrazione/delibere_2001/28- 01%20.doc). 108 Nota Prot. n. 1998, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Ai Signori Sindaci dei Comuni Consorziati. Oggetto: Comunicazione di Nuove Acque relativa a presunto squilibrio economico-finanziario della gestione e richiesta di provvedimenti correttivi del Piano di Ambito. Arezzo, 5th December 2001. 109 Nota Prot. Sez. 158 AD/mp, Nuove Acque S.p. A.. Oggetto: Delibere dell‘A.A.T.O. nn. 17 e 18 del 20/12/2000 œ Verifica dei primi dati significativi sulla gestione svolta da Nuove Acque S.p.A. 110 Interview with Giovanni Mancini, Technical Director (1997-2001) and Director (2001 to date), Ufficio tecnico, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, 30th September 2004. According to Mr. Mancini, reduced consumption in reaction to tariff increases was exacerbated by the fact that over 28,000 private wells for domestic consumption exist in the ATO 4 area. Although increase in water consumption was projected at a yearly rate of 1%, in light of the operator‘s programme to expand service coverage to unconnected households, consumers‘ reaction at tariff increases meant that consumption grew at a rate between 0.6% and 0.7%. Furthermore, the adoption of Decree 152/1999, which transposed EU Directives 91/271/CEE and 91/676/CEE into Italian law in October 2000, meant that investments had to be diverted from water supply to wastewater treatment. EU Directive 91/271/CEE, also known as the Urban Waste Water Directive, required EU member states to ensure that all agglomerations above 2,000 population equivalent would be provided with sewage collection and treatment systems, and more precisely with secondary or appropriate treatment (Hall et al., 2004: p. 12). 111 Nota Prot. n. 1997, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, A Nuove Acque S.p.A. Oggetto: Comunicazione di Nuove Acque prot. sez. 158 AD/mp del 28.11.2001 assunta al prot. dell‘Ente il 29.11.2001 con numero 157. Arezzo, 5th December 2001. 112 Nota Prot. n. 1998, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“, Ai Signori Sindaci dei Comuni Consorziati. Oggetto: Comunicazione di Nuove Acque relativa a presunto squilibrio economico-finanziario della gestione e richiesta di provvedimenti correttivi del Piano di Ambito. Arezzo, 5th December 2001. 113 Interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 4th October 2004. 114 Studio Terzani, Commercialisti Revisori Contabili. Raccomandata anticipata via fax. Oggetto: Determinazioni finali e conclusive in merito alla perizia consegnata in data 24 febbraio 2003 relativa al Piano Industriale N.A. Florence, 25th March 2003. 115 Art. 20, Convenzione di affidamento del servizio idrico integrato dell‘A.T.O. N. 4 —Alto Valdarno“. Allegato alla deliberazione n.7 del 21.5.1999 dell‘Assemblea. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4
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alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina1/CONVENZIONE%20%20ORIGINALE.doc). 116 Source: Email communication with Luigi Falasconi, Il Ghiozzo (www.ghiozzo.it), 13th January 2005. 117 Source: http://www.comune.arezzo.it/retecivica/URP/URP.nsf/cd67656c1570a72fc12566d60039eaeb/e1dae13575601464c1256 f71005aa343/$FILE/AATO%204.pdf. 118 Source: Phone interview with Mario Daniele Rossi, Director, Ufficio Controllo di Gestione, Organizzazione e Partecipazioni, Municipality of Arezzo, 19th January 2005. 119 Source: Phone interview with Mario Daniele Rossi, Director, Ufficio Controllo di Gestione, Organizzazione e Partecipazioni, Municipality of Arezzo, 19th January 2005. 120 Interview with Carlo Schiatti, former President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 4th October 2004. 121 Art. 34 Clausola Compromissoria. Convenzione di affidamento del servizio idrico integrato dell‘A.T.O. N. 4 —Alto Valdarno“. Allegato alla deliberazione n.7 del 21.5.1999 dell‘Assemblea. Oggetto: Affidamento del Servizio Idrico Integrato dell‘A.T.O. n.4 alla società per azioni a prevalente capitale pubblico locale —Nuove Acque“ ai sensi e per gli effetti dell‘art.9 della L.R. n.81/95. Arezzo, 21st May 1999 (http://www.ato4.toscana.it/documenti/Pagina1/CONVENZIONE%20%20ORIGINALE.doc). 122 Scortecci, P. —Acqua, noi ai francesi diamo 1,7 milioni in meno“, La Nazione Arezzo, 10th January 2004, p. VI. 123 Interview with Carlo Schiatti, President, Autorità di Ambito Territoriale Ottimale n° 4 —Alto Valdarno“ (March 1996-October 2003), 4th October 2004. 124 Interview with Enzo Bianchi, Municipality of Arezzo, 4th October 2004
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