On 2nd of May 2014, AS Tallinna Vesi submitted a claim to the Tallinn Administrative Court to avoid the expiry of monetary claims against the Competition Authority. On 2nd of May 2011 the Competition Authority refused to approve the Company’s tariffs. The law requires that monetary claims have to be made within three years of this date.
AS Tallinna Vesi is claiming compensation for potential damages of over 90 million euros from the Competition Authority for total losses over the lifetime of the contract to 2020. The total compensation claim applies when the tariffs will remain unchanged till 2020. Of this amount, over 50 million euros has been already caused by the Competition Authority’s refusal to approve tariff increases in the period of 2011 - 2013, having an impact to the period 2011 - 2020. The balance of the claim is avoidable should the Competition Authority terminate its unlawful action.
This claim amount has been calculated based on the volumes of water services sold and the water tariffs set out in the Services Agreement for the period of 2011 to 2020. The final claim for the compensation of damages shall be dependent on the change in the Consumer Price Index (CPI) and the actual consumption of water services in the period of 2014 - 2020. The damages impact by years can be found from AS Tallinna Vesi’s website.
Since May 2011, the Competition Authority has unlawfully refused to approve the water tariff applications submitted by the Company, despite the fact that Estonian courts have deemed the tariffs part of the Services Agreement to be an Administrative contract. Pursuant to the Administrative Procedure Act, the State of Estonia shall have to comply with an administrative contract until the contract is amended or declared invalid. The submitted tariff applications are fully in accordance with the privatisation contract sponsored by the European Bank for Reconstruction and Development (EBRD) and approved by the Government of the Republic of Estonia in 2000.
According to the Services Agreement, the Company is entitled to increase the water tariffs by the change in the CPI. The change in the CPI has been agreed to be established based on the period of 12 months ending at the end of June of the year preceding the new tariffs. The CPI has increased by 17.1% from June 2009 to June 2013, which is cumulatively in compliance with the applications submitted by the Company for tariff increases respectively for 3.5% due from 1st of January 2011; for 4.9% due from 1st of January 2012; for 3.9% due from 1st of January 2013 and for 3.8% due from 1st of January 2014.
The date of the next court proceedings is unknown at this point in time. One cannot exclude the suspension of the proceedings by the court until the termination of the earlier court disputes related to the unlawfulness of the Competition Authority’s actions.
The Company has continuously stated its belief in fully transparent regulation and its willingness to enter into meaningful and evidence-based dialogue that takes into account the terms and conditions of the privatization contract signed in 2001.
Mariliis Mia Topp
AS Tallinna Vesi
Head of Communications
Tel: (+372)62 62 275
mariliismia.topp@tvesi.ee