The campaign for the local elections in Stara Zagora by GERB, specifically by the mayor of the municipality, Zhivko Todorov, began with stark populism.
Following a protest by citizens against the newly increased water price, the mayor wrote on his personal Facebook profile that he had spoken with the interim manager of the water supply company, Radostin Milanov, and received assurances that the necessary recalculations would be made to reduce the final price for consumers, which has been 4.60 leva per cubic meter since January 1, 2023.
Here is part of Todorov’s accompanying comment: “The increase was requested by the state water supply company and approved by the Energy and Water Regulatory Commission (EWRC) in the spring of last year. These actions took place under the management appointed by the then government, which also chaired the EWRC. We all know who was in charge during that period until August 2022. Now they are hiding and not taking a stance on the issue!”
What exactly Radostin Milanov promised the mayor of Stara Zagora is unclear, as he refused to answer our questions regarding the repairs of the water supply and sewage networks and the price of water in an interview with “Za Istinata.” Therefore, our research showed that the price of water is outlined in the five-year business plan of the water supply company for the period 2022 – 2026, developed and adopted back in 2021, during the mandate of the GERB administration.
For 2023, the established maximum price for residential consumers is 4.26 leva/m3, while the EWRC has approved a price of 4.60 leva.
It is essential to make an important clarification that Mayor Todorov omitted: this business plan, before being approved by the Energy and Water Regulatory Commission (EWRC), was adopted at an extraordinary general meeting of the AVIK-Stara Zagora—an association of all water supply companies in the region. In this association, each of the 11 municipalities has a proportional voting weight based on their population, with Stara Zagora municipality holding the largest weight at 31.98 percent in decision-making. However, at this meeting, the representative of Stara Zagora municipality—Deputy Mayor Engineer Yancho Kaloyanov—was not present, as he had not been authorized by the municipal councilors on how to vote. A majority of councilors expressed their opposition to the increase in the water price during a Municipal Council meeting, but they decided to postpone this agenda item in hopes of sabotaging the extraordinary general assembly of the Association. However, the plan was adopted by a majority vote from the other municipalities, effectively leaving Stara Zagora’s voice unheard.
Is it possible for the approved price for residential consumers in Stara Zagora to be reduced, as promised by Mayor Todorov?
The short answer is “yes.” This is possible and would yield dividends for the GERB mayoral candidate in the local elections in September. However, with an average monthly consumption of 10 cubic meters of drinking water for a household of four, the reduction would be at most 6 leva, as the price cannot fall below the level set in 2022. Even households that indulge in extravagance will not save more than 10 leva a month or 120 leva a year, which does not significantly impact a family budget.
But what will be the long-term consequences for the water supply company?
First of all, such a decision would contradict its established business plan and create problems in its implementation. This means that the current manager of the water supply company, Radostin Milanov, must take the risk of going against the collective decision of AVIK-Stara Zagora. Of course, it is possible that by then he may “burn out like another fuse” and be replaced by someone else, depending on who will be in power after the snap elections this spring, which are likely to take place—either a regular government or another caretaker cabinet led by President Radev.
“Za Istinata” posed a question to
the water supply holding – why a competition for the position of “manager” of the Stara Zagora water supply company was not announced, unlike other companies in the country that do not have appointed managers? We are awaiting this answer, but it is unlikely that this is a coincidence.
Secondly, Stara Zagora Water Supply Company has contracts with the European Bank for Reconstruction and Development (EBRD), which finances projects for the company, as well as with other banking institutions. It utilizes 30 million leva allocated by the water supply holding to implement its investment program, but not on credit; instead, it operates under a strict revenue and expenditure assessment in its business plan.
A report from the Energy and Water Regulatory Commission (EWRC) from December 2022 anticipates that in 2023, 15 regional water supply operators will receive a smaller increase in water service prices compared to what was approved in their business plans, and for 6 of them, a reduction in the current prices as of the end of 2022 is even proposed.
Only 5 regional companies in Varna, Pleven, Ruse, Smolyan, and Stara Zagora were approved by the EWRC for a higher price increase compared to what was approved in their business plans, as noted above.
The EWRC explains this policy as follows: “With the proposed price changes for 2023, the Commission provides an updated individual assessment of the results of each water supply operator with an approved business plan. For operators who have made specific commitments in their business plans but whose service quality has deteriorated and investments have not been achieved, the Commission imposes sanctions and reduces their approved prices for 2023. For companies that have demonstrated high performance in achieving set goals, the approved prices are increased.”
Thus, in practice, a high evaluation of the results of a water supply company’s operations leads to an increase in the water price set in their business plans. This allows them to implement their investment programs, raise employee compensation, and more. In this context, if Radostin Milanov, the manager of Stara Zagora Water Supply,
fulfills his promise as a result of some arrangement between him and the mayor of the municipality, could this not lead to sanctions against the company from the EWRC in the following period, resulting in another reduction in water prices?
This sounds appealing to residential consumers, but will it truly benefit them? And will the execution of the water supply rehabilitation project in Stara Zagora lead to a reduction in water prices in the future, as many citizens expect?
Therefore, stay tuned for a publication in “Za Istinata” in the coming days, detailing how the municipality of Stara Zagora monitors the implementation of water supply repairs in the city.
