Water supply and wastewater treatment are key elements of society's infrastructure. The quality of service is of great importance for drinking water quality, health and the environment. Consumers pay around NOK 7.5 billion annually in water and wastewater fees. Rough estimates indicate a total replacement cost of the facilities used in the provision of services (water works, wastewater treatment plants and pipelines) of NOK 200-300 billion.
Responsibility for the delivery of services rests with local authorities, and some municipalities have chosen to organise parts of the business into inter-municipal companies. Private contractors are widely used in assignments associated with investments in plant and equipment, but less so for operational tasks. The sector is characterised by many small players and inefficient operations.
The sector faces major challenges in the years ahead, major reinvestment needs, increased expectations plus the implementation of EU directives will lead to large investment needs, with increased requirements for human and financial resource contributions. This will primarily reinforce the sector's (known) main problem; the availability of expertise in the future. The average age of current employees is high, and the supply of new personnel with relevant training alarming is low.
The water and sewerage sector is structured as a monopoly. In a monopoly market prices must be regulated to prevent providers exploiting consumers. Today prices in the sector are set on a non-profit making basis. Total income from consumers shall not exceed the municipality's total costs, including a defined return on invested capital.
The Department for Regions and Municipalities has initiated a research project to evaluate other ways to regulate the sector in order to make it more efficient. In this regard, a regulation model that resembles that of the electricity grid will be considered.