Regulator: Consumers can claim tens of millions from Tallinn Waterworks

While consumers were overcharged only a few euros per month, total damages could reach into the tens of millions of euros.
While consumers were overcharged only a few euros per month, total damages could reach into the tens of millions of euros. Source: (Postimees/Scanpix)

The Estonian Competition Authority said that following Tuesday's appeal ruling by the Supreme Court of Estonia, consumers will be able to claim tens of millions of euros in compensation from listed water utility company Tallinn Waterworks (Tallinna Vesi) for being overcharged on water tariffs for years.

"Consumers always have the right of claim, but they are not regulated by the current Public Water Supply and Sewerage Act," Estonian Competition Authority director general Mart Ots told BNS. "For this, customers must nevertheless stand against the company in civil proceedings."

Ots said that no other authority or institution can stand for consumers in this regard, and they must go to court in order to receive compensation. "This means that if consumers find that harm has been done to them, if they have paid too high of a price, then they must turn to civil court," he explained.

According to the director general, it would be reasonable for consumers who wish to receive compensation to join together and jointly take the matter to court. "If we consider one consumer, the size of their claim is probably not very large," he said. "An apartment consumer probably pays a couple of euros more per month. If we consider all consumers combined, then we are probably talking about tens of millions of euros."

Exactly how much all of the possible claims could amount to altogether, however, is not entirely clear, as this depends on a number of factors, Ots continued. "It depends on where the starting point is," he cited as one example of many. "Tallinn Waterworks' current tariff regime dates back to 2001; it is very difficult to go back 20 years in history. If we take 2011, when the new tariff regime came into effect and when the Competition Authority had to start coordinating prices, as the starting point, then very exact calculations would have to be made."

According to Ots, the magnitude of the damage could be estimated based on the amount for which Tallinn Waterworks has filed an action with an international arbitration court, which was in the sum of €70-90 million. He added, however, that in order to determine exact figures, consumers would have to turn to court.

In additional to possible compensation claims from consumers, the Estonian Competition Authority, in light of the decision announced on Tuesday, is waiting for a new price request from Tallinn Waterworks within five weeks for setting a water tariff. "The court has very clearly said that the current price is not cost-based," Ots added.

Top court leaves Waterworks' appeal largely unsatisfied

The Administrative Law Chamber of the Supreme Court of Estonia to a larger extent left unsatisfied an appeal filed by listed water company Tallinn Waterworks against the Estonian Competition Authority.

The top court found that the Competition Authority does not have to follow the agreement between the City of Tallinn and the water company concerning the prices of water services. The amended law also no longer allows basing price determination on the methodology used by the city. This is why the Competition Authority was unable to coordinate Tallinn Waterworks' price request, and handing a precept to the water company to legally coordinate the price — that is, to reduce it — was justified.

In addition to disputes in Estonian courts, which concluded on Tuesday, Tallinn Waterworks also launched arbitration proceedings to claim compensation for potentialdamages of more than €90 million for total losses over the lifetime of the contract through 2020. This sum includes more than €50 million in damage already caused by the refusal to permit tariff increases from 2011-2013 as well as the ongoing impact of the refusal from 2014-2020.

Tallinn Waterworks revalued its claim from €90 million to €73 million at the end of July, and the size of the claim had recreased further to €67.5 million by November.

Editor: Aili Vahtla

Source: BNS

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