The Reorganization of Tariff Classes in the Integrated Water Service. An Optimizing Model for Define the Tariff Classes in Compliance with TICSI

In Italy, over the past few years, the fragmentation of the management system of water services, especially in the south of the country, has required big efforts on the National Authority (ARERA). Efforts aimed to achieve the homogenization of the methods and procedures adopted by the public or private regulated companies in the management of the integrated water service. Specific attention was paid to the reorganization of the tariff classes to bring together very different approaches within a single model subject to precise rules. In particular, through the TICSI (Integrated Text for the tariff classes of water service, approved by ARERA with resolution n. 665/2017/R/Idr), it was decided that the maximum number of tariff classes be equal to five; the ratio between the last class tariff and the first class tariff must be less than six; another constraint to be respected is about the revenue which must be the same with respect to the two-year period preceding the regulatory review. It is therefore a typical problem of optimizing an economic function. In fact, guaranteeing an unchanged revenue, the tariff classes must be defined by providing a facilitated class and a base class, where the facilitated has the social function of protecting the less privileged sections of the population and building, then, the other upper classes in relation to the manager’s objectives, to contingent political purposes and to user expectations. The proposed model tries to balance legislative indications with conflicting objectives achieved at different times.