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Thursday, 28.03.2024, 09:48
Tallinna Vesi loses tariff dispute against Competition Authority in top court
The top court found that the Competition Authority does not have to follow
the agreement of the city and the water company concerning the prices of water
services. The amended law also does no longer enable basing price determination
on the methodology used by the city. This is why the Competition Authority was
unable to coordinate the price request of Tallinna
Vesi and handing a precept to the water company to legally coordinate the
price was justified, the Supreme Court said.
One clause of the appeal was satisfied. Namely, the precept said that it
will be deemed fulfilled when the Competition Authority coordinates a new price
request. The Supreme Court said that as the law enables the Competition
Authority room for deliberation when coordinating the price request, the
appellant will not have the possibility of ensuring coordination even if they
eliminate the concrete violations highlighted in the precept.
The dispute concerns two decisions of the Competition Authority. With the
first the Competition Authority refused to coordinate a water service price
proposal, that is a price request, filed by Tallinna
Vesi, and with the second the authority handed a precept to the water
company to bring the price of the water service in accordance with the law. The
dispute focused on the question whether in a situation, where in 2010 an
amendment to the Public Water Supply and Sewerage Act was carried out, the
Competition Authority must follow an agreement made by Tallinna Vesi and the City of Tallinn in 2001 when deciding over
the price.
Surveillance of the prices of the water service also changed with the law
amendment and while earlier, the local government set the prices, then now Tallinna Vesi must request price
coordination from the Competition Authority.
In February 2017, AS Tallinna Vesi
lodged an appeal in cassation with the Supreme Court against a decision made by
the Tallinn Circuit Court on Jan. 26, 2017, in which the second tier court
dismissed the company's claim against the Competition Authority as regards to
the tariff dispute. On June 20, 2017, the Supreme Court accepted the appeal for
proceedings.
Tallinna Vesi and the City of Tallinn entered on Jan. 12, 2001 into a service agreement
that set down the conditions of providing the water supply and sewerage
services, including the tariff regime of Tallinna
Vesi for 15 years. The contract was extended until 2020 in 2007. Under the
terms of the agreement, Tallinna Vesi
had the right to raise tariffs each year by the change in the consumer price
index.
The Public Water Supply and Sewerage Act that stepped into effect in
November 2010 laid the task of endorsing tariff changes on the Competition
Authority. Under the law the prices of water services must be based on
justified costs and cost benefits, not the consumer price index. The
competition watchdog refused to give the nod to the next tariff increase and
ordered Tallinna Vesi in 2011 to
bring its tariffs into keeping with the law. The water company did not comply
and took legal action. The debate between the Competition Authority and the
water company has been going on since then.
Tallinna Vesi has also started arbitration proceedings to claim compensation for
potential damages of more than 90 million euros for total losses over the
lifetime of the contract until 2020. The sum includes more than 50 million
euros of damage already caused by the refusal to permit tariff increases in
2011-2013 and the ongoing impact of the refusal in 2014-2020.
Tallinna Vesi revalued its claim from 90 million to 73 million euros at the end of July,
and size of the claim had decreased further to 67.5 million euros by November.