Acea and the main Italian utilities appealed to the Lombardy Regional Administrative Court against the decision of the Energy Authority to revise downwards the rate of return for investments in the water sector (5,34% against the previous 6,4%: according to companies, the lowest rate among all regulated sectors, both in Italy and abroad).
The observations of the operators focus, in particular, on the market risk premium expected by investors (the Equity premium risk or Erp), which contributes to determining the final bar for the reimbursement of investment costs. In defining the water tariff, the utilities denounce, "the Authority has set, only for water services, the Erp at a level lower than all the other regulated sectors given the prevalence of public investors in this specific sector, the which may have – according to the Authority – a lower return expectation”.
This, in the opinion of the operators, "violates a very important principle in the regulation which establishes that the same must be independent of the ownership structures and that therefore the service must be regulated in the exclusive interest of the final consumer regardless of the nature, public or private, of the ownership structures".
The Authority's choice, according to the appellants, risks holding back investments in a sector that needs around 6-7 billion of investments a year: “Today – explains an operator – the highest remuneration is in gas storage. It doesn't seem to me a more strategic sector, at this stage, than sewers. The risk is that any utility operating in different sectors will be tempted to shift investments to where the return on invested capital is higher”.
