Information Note: Technical and Legal Justification for the New Tariff Structure.
This information note sets out the technical and legal grounds for the new water pricing structure. This adjustment addresses the fundamental need for financial equilibrium while ensuring strict compliance with the guidelines issued by the Generalitat Valenciana Price Commission.
Technical Complexity of the Water Supply System in Alcalalí
The water supply infrastructure in Alcalalí is subject to a level of technical and structural complexity significantly higher than that of neighbouring municipalities, driven by the following factors:
- Topographical and geographical challenges: The service covers two urban centers (Alcalalí and Llosa de Camacho) and numerous residential developments. It also features significant elevation differences, which necessitate the use of 6 reservoirs, 1 booster pump, and numerous pressure-reducing valves in the supply system, resulting in high energy and operating costs.
- Oversized network: A 33.7 km network is managed for a total of 1,100 subscribers. This means maintaining more than 30 meters of network per subscriber, a ratio that is 3 times higher than that of nearby towns. This implies much higher fixed maintenance costs per user.
- Quality Guarantee: The tariff update responds to the new costs derived from the construction of the plant for the removal of turbidity from the Fond de la Font well, which entails higher maintenance costs and reagents for water purification.
- Supply Guarantee: To guarantee the supply in the event of unforeseen circumstances (very high turbidity in the Fond de la Font well, breaks in distribution networks and/or episodes of drought) the Alcalalí City Council has a water purchase agreement with the Vall del Pop Irrigation and Users Community, with supply prices of €0.62/m3, but which in recent years has climbed to €0.76/m3 (a price higher than the low water tariff of the first block).
Compliance with the Pricing Commission’s Requirement (Valencian Government)
It is essential to clarify that the modification of the tariff structure is due to compliance with a requirement made by the Pricing Commission of the Valencian Government in the previous file (File No. 77/05 2023).
In that file, the Commission warned that the prices of the higher tiers (blocks 3 and 4) were significantly above the regional average, demanding that no future increases be applied to them until they were corrected. In accordance with this requirement, the current tariff study has modified the block structure to comply with this warning
Protection of Basic Consumption
The new tiered pricing structure reduces the limit for the first tier from 10 m³/month to 5 m³/month. However, it is important to note that despite this reduction, the price for this tier has not increased and remains at €0.705/m³. 48% of the water consumed in the municipality falls within the 5 m³/month limit. Therefore, essential consumption remains unaffected, as the estimated 48,700 m³ in the first tier (up to 5 m³/month) will not experience any price increase, thus protecting a significant portion of the billing related to subscribers’ actual basic consumption.
Customer Service Improvements and Investments
The new tariff will finance the pending investment in remote meter reading for the entire municipality, allowing customers to monitor their consumption in real time through the website’s virtual office and prevent internal leaks
In conclusion, the proposed tariff seeks the mandatory financial balance of the contract, complying with the legal requirements of the Generalitat to lower the prices of the higher tiers, and protecting the price of the tier where almost half of the municipality’s water consumption is concentrated.