The water tariff structure in the new Convergence Regulatory Scheme

The most recent innovation in the regulation of the Italian Urban Water Management is the introduction of the Convergence Regulatory Scheme. The new tariff preparation method introduced by the Italian Regulatory Authority for Energy, Networks, and Environment (ARERA) aims to simplify the mechanism for identifying the water tariff for those managements characterized by enduring critical issues regarding investment planning and management of the Urban Water Management. The application of the Convergence scheme provides for the estimate of parametric costs to be considered in the construction of the water tariff, considering different cases depending on the management information available. But the same convergence mechanism also provides obligations for the Managers, including the structuring of tariff classes in compliance with the provisions of the ARERA resolutions. The initial point for defining the user's tariff structure is the Manager's Revenue Constraint, estimated based on a reference benchmark. This study proposes a mathematical programming model that allows, in compliance with the constraints dictated by the ARERA resolutions, to define the tariff structure for users in the application of the Convergence Regulatory Scheme, thus supporting in the complex decision process all those Operators that present serious problems in the management of the water service.