AS Tallinna Vesi is concerned about the lack of cooperation in regulation implementation

AS Tallinna Vesi is concerned about the approach of government institutions to  
governance principles in the implementation of water sector regulation from     
November 1st. On 22nd October the Ministry of Economy issued its draft decree to
establish the basis, which the Competition Authority needs to rely on, should it
decide to use the right given to it in the Public Water and Sewerage Services   
Act and establish a temporary water price for a water undertaking.              

AS Tallinna Vesi has submitted over 8 pages of regulatory principles, comments  
and questions to the Competition Authority in response to their draft           
methodology, however to date the Competition Authority has not included any of  
the amendments raised by the Company nor has it responded to the points and     
questions.                                                                      
„A high quality regulatory system is best implemented with the full and active  
involvement of all industry participants - water companies, municipalities,     
ministries and customers,“ said AS Tallinna Vesi CEO Ian Plenderleith, adding   
that a prerequisite of any good regulatory regime is ensuring that due process  
is followed and time is given for discussion and analysis.                      
The Company is concerned about the lack of respect for due process, the absence 
of independent verification of methods and decision-making when analysing       
tariffs and issuing notices and setting temporary tariffs  and the ability of   
government agencies to make random decisions without having the obligation to   
explain their decisions to those impacted by those decisions.                   

„It seems that the the government insitutions involved in drafting the          
regulation have never intended to engage in any dialogue and are task-oriented  
to forcefully establish a pre-determined methodology by November 1st,“ noted    
Plenderleith.                                                                   

AS Tallinna Vesi is interested in protecting the long-term interests of the     
water industry and expects a price setting regime to be based on sound          
independently verified economic principles. Thus the Company recommends that
the 
implementation of the Decree is delayed until all material points raised by the 
industry have been discussed and answered. “It is a known fact that good        
government policy welcomes challenge especially if this would lead to a higher  
quality methodology, which we believe is what the Ministry is aiming to         
achieve,” said Plenderleith. Furthermore, the Company believes this will reduce 
the likelihood of a methodology being implemented for short term political      
advantage.                                                                      

AS Tallinna Vesi and its investors have repeatedly stated their willingness to  
work within a regulatory regime that uses best practice internationally accepted
regulatory principles. “It is for this reason we have made a number of positive 
suggestions throughout our correspondence with various authorities,” added      
Plenderleith. “We look forward to fully open dialogue with all institutions to  
help implement a methodology that deliver sustainable benefits to our customers 
and the environment,” stressed Plenderleith.                                    

However, should a regime be implemented for short term political gain and       
without any form of professional consultation or dialogue, then AS Tallinna Vesi
and its investors will take all necessary steps to ensure their rights as       
investors are not violated, especially as to date the Company has always met all
the contractual obligations it signed up to on privatisation in 2001.

Priit Koff
Head of Public Relations
AS Tallinna Vesi
+372 6262 209
priit.koff@tvesi.ee