e20005a Performance Indicators for the Regulation of the Water and Sewerage Services: the French Experience
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1 e20005a Performance Indicators for the Regulation of the Water and Sewerage Services: the French Experience ABSTRACT Lætitia Guérin-Schneider, ENGREF, laboratory GEA, Emmanuelle Brunet, ENGREF, laboratory GEA, In France, water and sewerage services have undergone great change over the past twenty years. The aim to increase the supply capacity has been replaced by the drive to improve the quality of the services. The subsequent price increases have given rise to a call for openness. In this context, the local authorities, responsible for the organisation of these services, must ensure that the public services obligations are fully taken into account. They also have to keep the users informed. However, the control of the water services has become difficult: competition is limited and regulation is required. Assessing performance through indicators focusing on the qualitative results could be a suitable tool for improving management by the local councillors. Indicators enable to define the expected quality and to follow up the utility s results. They improve communications with the customers, making the service more conspicuous. Several working groups, among which IWA's one, have established a list of such indicators covering all the fundamental tasks of the water and sewerage services. Our Ministry of Agriculture has recently adopted this panel to support the local authorities. Other applications are envisaged. The most interesting is the project of a national regulator, focusing on benchmarking. KEY WORDS water services; sewerage services; performance indicators; benchmarking; competition; France INTRODUCTION In France, the management of water and sewerage services has undergone major changes in the course of the last twenty years. During the period of rebuilding following World War II, the chief objective was to achieve a quantitative increase in the service by connecting as many people to the system as possible. Now that a very large majority of the connectable population has been connected to the system, the objective is that of providing better service quality. The term quality is to be understood in the wider sense, including the sanitary quality of the water and the requirements applicable to waste water discharges, and also customer service, operating efficiency and sustainable assets management.
2 It is clear now that operators, whether public or private, are accountable for their operation and are required to keep their commitments, not only in terms of prices, but also in terms of service content. The heightening of regulation and transparency in the field of water is all the more important because users are increasingly unhappy with the rise in the price of water. The lack of transparency and its consequences, which were widely talked about in France, have made the people suspicious about how water services are managed. The question is that of finding the regulating tools that will promote the new quality objectives. Performance indicators, which offer the possibility of local steering and national benchmarking, can become valuable instruments and are beginning to gain popularity in France. This article reviews the possible introduction of performance measurement in the regulation of water services, the benefits that can be expected from such measurement and the applications under way in France. The Organisation of Water Services in France: Responsibility of Local Authorities The organisation of water and sewerage services is one of the prerogatives of local government. Municipalities can come together in inter-municipal cooperative organisations to manage these services. Whatever the system, decisions are made on the local level (municipality or groupings of municipalities). As a result, the local authorities select the (public or private) management method and play a direct part in investment decisions and the determination of the price of the service. The central government merely sets out common rules, verifies compliance with the laws and assists those municipalities that turn to governmental departments for technical, financial or legal support. Table 1 Number of water and sewerage services in France (source: 1998 water survey, Ifen, Scees, Water Agencies) Drinking water Sewerage Municipal departments managing both services Inter-municipal services Partial municipal services Including network management Including production management Total number of services Municipalities with no service The local elected officials are therefore responsible for addressing the public service obligations. However, that does not mean that the service is necessarily managed by a public sector entity. The authorities are free to manage their water services directly or delegate operation or even part of the investment to a private operator, under the wellknown delegation system. Regardless of the management system, the authorities are responsible for the service. They set the objectives and make sure that the operator meets the objectives. They also have a duty to inform the users. And yet, the local authorities have very few tools to carry out those essential tasks: the asymmetry in terms of information of their position relative to the operator, the existence of an oligopoly and the natural monopoly situation are some of the factors that weaken the position of elected officials. In practice, initial competition happens to be limited (Brunet et
3 al., in press) and insufficient to offer public service management that protects the general interests. Regulation is therefore required. Performance Indicators: A Solution for the Difficulties in Implementing Local Regulation The question for local authorities is therefore threefold: - How to ensure that more efforts are made to meet the new quality objectives? - How to reduce the dissymmetry of information and reintroduce the stimulus of competition in an area that is devoid of competition? - How to provide better information to users and obtain their involvement in the life of the public service? The performance indicators relating to non-financial aspects offer a solution to the three questions. That is because by laying stress on result-oriented indicators that relate to the various aspects of the service (e.g., for water, customer service, quantitative and qualitative management of the resource, management of the network and service continuity), performance measurement leads to improvements in service quality (Guérin-Schneider and Nakhla, 2000). It makes it possible to better formulate commitments and track fulfilment. Table 2 provides a concrete illustration of the indicators that can be used. Further, indicators are a source of information, not only because they act as material for exchange between the operator and the local body, but also because when the same indicators are common to several services, they make it possible to set up references. Knowledge can be shared by several local authorities on the basis of the benchmarking principle. Pseudo competition through comparisons can therefore be organised. Lastly, some selected indicators from the indicators tracked by the authority can be provided to users in order to make those aspects of performance that are rarely perceived more visible to the users. For instance, three indicators suffice to show the impact of efforts to renew the network in order to limit leaks and ensure continuous service the rate of renewal of the network (renewed length/total length), water losses per kilometre and the rate of water interruptions. Development of a Panel of Indicators for Regulating Water and Sewerage Services in France. These general principles have been put into application. At the initiative of the GEA laboratory of the National School of Water and Forestry Engineering (ENGREF) and in relation with the IWA project (Alegre et al., 2000), a list of indicators has been proposed for local regulation by the authorities (Guérin-Schneider, 2001). The list has been discussed extensively with public and private players in the industry. The indicators are classified by summary criteria that reflect the chief aspects of the management of a water or sewerage service (see table 2 providing the list of water service indicators). They are divided into recommended indicators and optional indicators, in order to provide a choice in respect of local use. Compliance with local prerogatives is a key feature in France. That adaptation of the measuring tool is all the more necessary since the diversity of situations makes it impossible to use the same series of indicators uniformly across the country.
4 Table 2 Presentation of performance indicators used, classified by summary criterion Criterion Recommended indicators Optional indicators Customer service - Rate of replies to letters within fifteen days - Proportion of waiting letters among the replies on time - Existing connections efficiency (Rate of on-time restarting of existing connections) - New connections efficiency (rate of in-time works on new connections) - Presence of commitments towards customers - Possibility of payment in instalments - Rate of beneficiaries of payment schedules - Rate of unpaid bills six months after billing - Rate of first recorded-delivery reminders for customer late payments Complaints Resource management (quantity and quality) Network management and service continuity (water) Analysis of the number of complaints (number per 1000 subscribers), classified by subject - Quality of supplied water (rate of conformity in Health Authority tests) - Rate of conformity in selfmonitoring tests (distributed water) - Primary water losses per kilometre (i.e. water losses + unmetered water) - Primary efficiency of use of water resource - Mains failures (repairs of main pipes for leaks or breaks per kilometre) - Water interruptions (Rate of unscheduled interruptions) water - Quality of raw water (rate of conformity in Health Authority tests) - Rate of conformity in self-monitoring tests (raw water) - Intensity of self-monitoring tests (supplied water) - Days with restrictions to water service - Resources availability ratio in peak periods (consumption including water exported / abstraction capacity and imported water allowance) - Storage capacity (mean storage time) - Peak period coefficient - Net water losses per kilometre - Primary losses per connection - Net efficiency of use of water resource - Realisation of leak sectoring operation - Leakage control (length of mains subject to active leakage control / total mains length) - Rate of network renewal - Rate of connection renewal - Rate of meter renewal - Value of renewal and investment made by the authority and the operator This performance measurement method has been tested in the field in five pilot localities with varying sizes and management contexts (private or public). The study has been performed with the support of the Water Agencies and the Ministry of the Environment. The test has led to the validation of several important ideas. 1) Most of the proposed indicators are available in most services, including the smallest ones. The exceptions are the indicators relating to customer service (time, complaint tracking etc.), which are currently only available in those services that have put in place special
5 measuring systems. That mainly concerns the services managed by private groups who have invested in the field. The reliability of information relating to treatment works is the least when the size of the service is small. That is because self-monitoring and testing obligations increase along with the size of the service. 2) The method is conclusive: the indicators are meaningful and can act as the basis for constructive dialogue, as shown in the real example presented below. Performance criterium: "Quantitative and qualitative resource management" Indicators tracked Unit Note Reliability Quality of supplied water (rate of conformity in Health Authority tests) % , ,9 (1) J Rate of conformity in self-monitoring tests (distributed water) % NA! NA! NA! ,5 (1) J Intensity of self-monitoring (supplied water) No./10 3 m³ NA!! NA! NA! 1,11 1,12 J Days with restrictions to water service % J Resources availability ratio in peak periods % 78,1 ND! 108,2 NA! 90,5 (2) K Peak coefficient 1,09 ND! 1,55 1,15 1,15 (2) K Storage capacity (Mean storage time) h 44,2 44,1 45,5 44,4 43,0 J NA!: Not available Note: 1 - nonconformity = atrazine + simazine (actual nonconformity is persistent, but reduced to these parameters) 2 - ratios established with the volume distributed in the peak week (1996 to 1998) or the peak month (1994, unreliable value in view of its mode of determination) Comments: The utility has only one source of water (imported from another utility). The presence of traces of pesticides is the only quality deficiency found in the distributed water. To the extent to which the pollution appears persistent, corrective measures are required (diversifying the sources, extending treatment etc.).
6 In the peak period, the authority is often close to the maximum volume it is allowed to import from its neighbour. It would therefore be useful to either review the import terms to increase the volume available to the authority or diversify the sources. The service has a comfortable overall storage time, which ought to enable it to handle any incident in the distribution system. No restriction was imposed during the previous five years. The existence of self-monitoring tests shows that the operator is aware of the need to track the quality of water. 3) Applying the method does not require any major investment in tracking resources. The authority responsible for monitoring the service does not have unlimited resources in terms of personnel. Tests have shown that the time required for preparing quality indicators is relatively short half day to collect the data in the field and analyse the reports supplied, half a day to prepare the form of quality indicators and half a day to interpret the data and prepare a summary report, i.e. a day and a half in all per service (and not more than three days for water and sewerage). The time invested is perfectly compatible with the resources available to authorities for following up their service. 4) There remains however the issue of the reliability of the data transmitted. Trust is a key factor for a large part of the information transmitted. Most of the basic data are collected by the operators themselves. Two necessary conditions can be identified to ensure the reliability of the system: - the operator should be allowed to state its position in respect of the calculated indicators (if only to avoid errors), - the authority should be entitled to check the way in which the data are collected at all times, even though such inspections are exceptional in actual fact. 5) The constitution of references for comparison. The implementation of indicators only becomes truly useful when a large number of services are compared with each other. However, such comparisons should not be made indiscriminately. First of all, comparability classes must be set up. The test suggests that the size of the service is a key factor. Secondly, no arbitrary classifications should be made on the basis of indicators that have been taken out of their context and have no absolute value. Typically, the appropriate level of leakage control depends on the age and condition of the network and the cost of producing water. Performance Indicators and Benchmarking: Current Application. The application of the method prepared by ENGREF has started already. The most advanced experiment is that started with the Departmental Agriculture and Forestry Authorities (Ministry of Agriculture). Local government bodies often turn to these departments for help in water service management (in case of delegation or even of direct management). As a result, the Agriculture and Forestry Authorities submit an annual Lease Tracking report. A computer program (called "Public Service Management") has
7 been developed to help them to prepare the report. A Performance Tracking module, which is used to produce the performance indicators defined above, is integrated in the software. The implementation of the module has been discussed with the operators, who can submit the data required to calculate the indicators directly in electronic form (the operators save the time required to prepare an additional report and the Agriculture and Forestry Authorities save the time required to input the data). The three main private operators in Western France have accepted to supply a series of data from The Artois Picardie Water Agency plans to set up an observatory of prices and service quality. Price data would be accompanied by a page with key indicators that show the performance of a service. Lastly, these approaches are now beginning to be reflected in contracts, both through Health and Forestry Authority models of contracts and the initiatives of independent consulting agencies such as Service Public 2000 (Bonnet and Guérin-Schneider, 2001, in press). Other possibilities of application can be seen on two levels: - voluntary application by local authorities, particularly by making up information exchange groups, - more centrally organised application, as part of the plan to set up a Higher Council for Water and Sewerage Public Services, supported by the Ministry of the Environment. CONCLUSION In France, the momentum has been created to set up regulation based on performance measurements and comparison (Haut Conseil du Secteur Public, 1999, Martinand, 2001, Tavernier, 2001). But the potential of such regulation can only be exploited fully if a more consistent regulation plan that brings together the local and national level becomes a reality. The Ministry of the Environment has become aware of that fact. As part of its bill to reform the water policy, it proposes the setting up of a national regulation authority, the Higher Council for Water and Sewerage Public Services. The main task of the Council will be to define common indicators, bring together price and performance data, prepare statistics and apply them on the local level. It would have no enforcement powers, rather, its powers would be based on the principle of sunshine regulation. The results of the upcoming elections (March 2002) will have a determining effect on the materialisation of the project planned by the present government. To conclude about the regulation of water services, it seems important not to approach the regulation of performance and price indicators in an isolated fashion. That is why some of the performance indicators could be used as incentives, which would affect the revenue of operators. Such a system would bring in the financial motive, which often provides effective leverage. Work on the idea of balanced services over the term of the contract and on contractual incentive mechanisms therefore appears to offer a promising way forward (Grand d'esnon and Guérin-Schneider, 2000). Lastly, it must be noted that eventually, benchmarking ought to be extended beyond the borders of France. That is what Ofwat is doing already. Initiatives have already been taken in France (ENGREF and OIEau, in press), but there is still a long way to go.
8 ACKNOLEDGEMENTS The authors would like to thank Dr. Michel Nakhla, Dr. Antoine Grand d'esnon and Dr. Helena Alegre for their contribution to our work on performance indicators and regulation of the water services. We have also to address our acknowledgements to the French Ministry of Agriculture, to the French Ministry of the Environment and to the Water Agencies for their support to this work. REFERENCES Alegre, H., Hirner, W., Baptista, J. M. and Parena, R. (2000). Performance Indicators in Water Supply Systems - IWA Manual of Best Practice, IWA Publishing, London, UK. Bonnet, F. and Guérin-Schneider, L. (2001). Du nouveau dans la gestion dèlèguèe des services d'eau et d'assainissement : les contrats sur performance. In: Actes du colloque Hydrotop, Marseille, F. Bonnet, F. and Guérin-Schneider, L. (in press). Les outils contractuels de régulation du rapport qualité-prix des services d'eau et d'assainissement. In: Performance measurement and regulation of the water and sewerage services Workshop Prodeedings, ENGREF and OIEau, Montpellier, F. Brunet, E., Guérin-Schneider, L. and Bonnet, F. (in press). Impact of a new legislation on the water market and competition in France. In: Enviro 2002 IWA World Water Congress proceedings, Melbourne, AUS. ENGREF and OIEau (in press). Mesure de performance et régulation des services d'eau et d'assainissement - Information, contrôle ou incitation? Fondements et pratiques françaises et internationales, Workshop proceedings, ENGREF and OIEau, Montpellier, F. Grand d'esnon, A. and Guérin-Schneider, L. (2000). Délégation de service public - Vers de nouveaux indicateurs de performance. Le Moniteur des Travaux Publics et du Bâtiment, 5062, Guérin-Schneider, L. (2001). Introduire la mesure de performance dans la régulation des services d'eau et d'assainissement en France - Instrumentation et organisation. PhD thesis, Laboratory GEA, ENGREF, Paris, F. Guérin-Schneider, L. and Nakhla, M. (2000). Le service public d'eau délégué : du contrôle local des moyens au suivi de la performance. Revue Politiques et Management Public, 18, Haut Conseil du Secteur Public (1999). Quelle régulation pour l'eau et les services urbains, Report, Haut Conseil du Secteur Public, Paris, pp Martinand, C. (2001). La maîtrise des services publics urbains organisés en réseaux, Les éditions des journaux officiels, Paris, F. Tavernier, Y. (2001). Rapport d'information n 3081 déposé par la commission des finances en conclusion des travaux d'une mission d'évaluation et de contrôle par M. TAVERNIER sur le financement et la gestion de l'eau, Assemblée Nationale, Paris, F. CONTACT Laetitia Guérin-Schneider Laboratory "Management of Water and Sewerage Services" (GEA) ENGREF rue JF Breton - BP Montpellier Cedex 5 France Tel. +33 (0) Fax. +33 (0) guerin@engref.fr
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