New Water Law. New fees. New payment rules.
“Water is not a commercial product like any other but, rather, a heritage which must be protected, defended and treated as such,” states the Water Framework Directive. The principle of the recovery of the costs of water services is being introduced to encourage savings and optimal use of water. This will be a substantial burden for many businesses.
The principle of recovery of the costs of water services is designed to ensure that users of water bear the costs of water-related services and also the costs associated with depletion of resources or reductions in water quality. And under the “polluter pays” principle, generators of wastewater should bear the costs resulting from negative impacts on the environment.
Draft of new Water Law
Full implementation of these principles in Poland is supposed to be achieved through the proposed new Water Law presented in June 2016. The Water Framework Directive (2000/60/EC) was adopted in 2000 but has yet to be properly implemented in Poland. This was confirmed recently by the Court of Justice of the European Union in Commission v Poland (Case C-648/13), holding in a judgment issued on 30 June 2016 that Poland has failed to properly implement the Water Framework Directive and thus failed to fulfil its obligation under EU law.
The present proposal is not the first attempt by Polish lawmakers to draft an entirely new Water Law. The previous government presented a proposal a year or so earlier but did not manage to pass it. The current proposal differs significantly, and many of the provisions are controversial. One of the controversies concerns the principle of recovery of the costs of water services. Many methods of using water are to face higher fees, and fees will be charged for a greater number of various types of activity.
The bill is a huge document, comprising over 550 articles, and many of the proposed solutions differ greatly from current law. The proponents expect the act to enter into force on 1 January 2017.
The main assumption of the bill is an obligation to manage water in compliance with the principle of rational and holistic treatment of surface water and groundwater resources, and also with attention to the quantity and quality of resources. Water management is to be based on the principle of recovery of the costs of water services, reflecting environmental costs and resource costs as well as economic calculations.
The bill redefines the competencies of Poland’s water management authorities, establishing a “super-regulator” in the form of Polish Waters, the state water enterprise (Państwowe Gospodarstwo Wodne Wody Polskie), as well as significantly modifying the rules for charging fees for use of water. The bill introduces the concept of “water services” providing households, public entities, and businesses with the possibility of using water for various purposes. These services include abstraction, impoundment, storage and retention of surface water or groundwater, and collection and discharge of rainwater or melt into surface water, the ground, or sewers.
Fees for water services
One of the fundamental economic instruments in the proposed new Water Law is fees for water services. Meanwhile, the provision on fees for exploitation of the environment with respect to consumption of water and removal and discharge of wastewater to waters or the earth would be deleted from the Environmental Protection Law.
The range of activities carrying an obligation to pay fees is very broad. It includes abstraction of groundwater or surface water, discharge of wastewater to water or the ground, and release of rainwater or melt collected in storm sewers into waters or the ground. Fees would also be charged for release into waters or the ground of water from drainage of land in cities, industrial sites and construction excavations. Thus fees would apply not only to discharge of wastewater, but also for draining of rainwater.
The rules for charging of fees, the amounts of fees, a small number of exemptions, and other factors enabling determination of amounts due are defined in great detail. Consequently, if the proposal in its current form is adopted, any business whose activity includes abstraction of water will need to examine these provisions carefully in order to correctly identify its obligations under the new regulations. We discuss below only some of the general rules.
Fees for abstraction of water (e.g. for producing beverages)
In the case of abstraction of water, the fee will include a fixed component and a variable component. The amount of the fee will depend on the quantity of water taken, whether it is surface water or groundwater, the intended use of the water, and the mean annual minimum flow, as well as documented groundwater resources.
The amount of the fixed fee is to be set in the water law permit (or integrated permit) based on algorithms specified in the act. In the simplest terms, the fee will be the product of a unit rate, time, and the maximum quantity of water that may be taken pursuant to the permit. The level of the variable fee will be calculated by multiplying a unit rate by the quantity of water taken.
Fees for release of wastewater to waters or earth
The fee for water services for release of wastewater into waters or the earth will comprise a fixed fee and a variable fee depending on the quantity and quality of the wastewater. It will thus depend on the type of substances contained in the wastewater and their quantities, the type of wastes, and in the case of water from cooling systems at power plants and combined heat and power plants, the temperature of the water.
The level of the fixed fee will be set much as in the case of the fee for abstraction of water, as the product of a unit rate, time, and the maximum quantity of wastewater specified in the permit. The variable fee will be calculated by multiplying a unit rate by the quantity, in kilograms, of substances released to waters or the earth with the wastewater.
Fees for removal of water (e.g. rainwater)
In this case the fee will comprise a fixed component and a variable component depending on the population density and the existence of equipment for retaining water from sealed terrain.
The fixed fee will be the product of a unit rate, time, and the maximum quantity of water to be removed specified in the permit. The variable fee for release into waters or the earth of rainwater or melt collected in open or closed sewers will be calculated by multiplying the unit rate by the quantity of water removed (in cubic metres) and time, expressed in years, taking into consideration the existence of devices for retaining water from sealed terrain and their capacities.
Meters will have to be purchased
The fees for water services and heightened fees will be paid by the entity using these services to the bank account of Polish Waters. Payment of the fixed fees will be straightforward, in four quarterly instalments, without demand. Payment of the variable fees will be more complicated. Here the quantity of water consumed or released will be determined based on readings from metering devices.
Businesses will be required to ensure separate metering of groundwater and surface water abstracted. And if the water is to be used for different purposes, it will be necessary to measure the quantities separately for these different needs.
The meter readings will be taken by employees of Polish Waters. The water authority will calculate the fees and notify the user, and the user will then be required to pay the fee to the account of Polish Waters within 14 days. That will also be the deadline for filing a complaint if the user does not agree with the calculation of the fee.
High fees for water services
The unit rates for the fees are specified in the proposal in extreme detail, across dozens of provisions of the bill. The rate depends on numerous factors. For example, in the case of abstraction of groundwater, the rate will depend on the available groundwater resources.
The bill provides various fee rates for different types of activity, such as coal mining, production of foods, production of beverages, and manufacturing of textiles, clothing, leather goods, paper, chemicals, pharmaceuticals, metals, and so on. For each of these activities a different rate is provided. Separate rates are also provided for use of water for agricultural purposes, to supply water for human needs or for farm animals, or for irrigation of land and crops not constituting ordinary use of water.
Particularly high rates are provided for production of beverages, at PLN 8.20/m3 for abstracted groundwater and PLN 4.10/m3 for surface water. Interestingly, the proposal does not distinguish between water that is ultimately included in the beverages or is used for auxiliary purposes during production, which could be particularly burdensome for beverage companies.
In the case of release of wastewater to waters or the earth, apart from the rates there are also differentiation factors depending on the type of waste involved.
The rates indicated in the act would be adjusted annually, with the rates in force for the following year to be published in Monitor Polski by the end of each October.
A user of water services would be required to pay heightened fees in two instances: firstly if the entity uses water services without obtaining a required water permit or integrated permit, and secondly if the entity uses water services in violation of a permit or exceeding the quantities specified in the permit.
In the first instance, the heightened fee would equal 500% of the regular fee. The amount of the heightened fee is to be assessed by Polish Waters. The user will then be notified and required to arrange for payment of the heightened fee. However, in the case of abstraction of water exceeding the conditions specified in a water permit or integrated permit, the heightened fee for the excess quantity will be calculated at 10 times the regular unit rate. This amount would be determined somewhat differently, by way of an administrative decision which could be appealed.
Only a general outline of the rules for the proposed new water charges is presented above. The rules are extremely complicated, and in places ambiguous, creating a high risk of errors or disputes over the amounts of fees.
One thing that is plain to see is that if and when these regulations are adopted, use of water will become very costly. This should encourage savings of water, but will also drive up the price of certain goods which require water for their production. Consumers will probably feel the difference soon.
Dominik Wałkowski, Environmental Law Practice, Wardyński & Partners