Annual Report 2010 - AdP

7. Regulation
The AdP Group is mainly engaged in the provision of general economic services that are vital to the public wellbeing, the development
of business activities and the protection of the environment. These activities are developed with a view to continuous improvements
in the provision of public water supply, wastewater sanitation and waste treatment and recovery services as well as increasing
efficiency gains in terms of both production and environmental protection.
The regulated activities of the AdP Group are the services it provides on a concession basis in the form of upstream multi-municipal
water supply and waste treatment and recovery systems. These services operate in a context defined by current legislation and
regulations; the public service concession contracts agreed with the state and the rulings and recommendations issued by the the
Water and Waste Services Regulator (ERSAR).
In 2009, the publication of Decree Law no. 277/2009, of 2 October, strengthened ERSAR’s powers and broadened its scope to cover
services provided to end-users (downstream services). ERSAR’s new statutes will enable it to reduce existing distortions in the market
caused by the fact that tariffs charged to end-users have not been optimised. These tariffs can now be scrutinised by the Regulator.
In this context, ERSAR issued a recommendation in 2009 on the configuration of tariffs for the public supply of water for human
consumption, urban wastewater sanitation and urban waste management (IRAR Recommendation no. 1/2009 - Tariff
Recommendation), which was supplemented in 2010 with a recommendation that seeks to establish guidelines for ascertaining costs
and setting tariffs.
The AdP Group expects that the application of these two ERSAR recommendations will result in the establishing of a more efficient
tariff framework able to foster greater and more appropriate recovery of the costs associated with the provision of downstream
services and thus contribute to greater sector sustainability.
Economic Regulation
In accordance with the stipulations of the concession contracts, the annual regulatory cycle begins on 30 September with the
presentation of budget and tariff plan proposals for the following year/years to the concession granter and the Regulator. The
publication of Decree Law 195/2009, of 20 August, standardised the period for assessing proposals for all multi-municipal systems
to a maximum of 60 days.
Proposals are presented according to the terms of Ministerial Order 275/2003, of 7 November.
The 2010 budget cycle, begun in September 2009, extended to October 2010, the date on which the last tariff was approved. On
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