Benchmarking plan for a competitive future

Denmark's municipal waterworks are to launch their own benchmarking scheme to prepare for a future competitive situation. The waterworks, which have a de facto monopoly to supply water to 65% of Danish water consumers, expect to be forced into benchmarking soon, to measure which companies are best in terms of customer service, environmental management, quality and economy.

According to Anders Bækgaard, who heads DVF, the waterworks’ association, the introduction of this form of water supply competition should be viewed against the backdrop of greater competition generally in municipal utilities.

Key figures will be used to highlight inefficient waterworks, while municipal waterworks will compete in supplying the cheapest drinking water to Danes, who are becoming increasingly irritated over higher charges and taxes on water.

The price difference for the supply of water is daunting: the cheapest water utility charges DKK 18 (UK£1.54) per metre3, while the most expensive is in the region of DKK 59 (UK£5.04) per metre3. The charges reflect the varying conditions for the waterworks’ supply business – some works must invest more in pipes or anti-pollution measures than others.

‘What we must do is correct the figures for the variations in the conditions facing the individual waterworks so we get objective comparable figures,’ says Arne Svendsen of Odense’s waterworks, who chairs the working group responsible for the benchmarking initiative.

Gert Fischer, general manager of Copenhagen’s water supply, says increased competition is a good idea. ‘We believe we do a good job. But maybe we’re not effective enough and can learn from other waterworks,’ he said.

There is a risk that some waterworks will succumb to a temptation to reduce water quality to achieve a lower price.

‘Benchmarking will show which waterworks use water quality rather than low price as a parameter,’ Fischer says. ‘I believe consumers will pay a little more for water if they can be sure that the quality is OK.’

DVF’s benchmarking project will be carried out in collaboration the municipal wastewater treatment plants because the total price of water to consumers includes wastewater treatment.

Some of the largest environmental costs facing local councils are in wastewater treatment and they will increase in the future, the National Association of Local Councils says.

The island municipality of Ærøskøbing, for example, increased its wastewater treatment charges from DKK 45 (UK£3.85) per metre3 in 2000 to DKK 60 (UK£5.13) this year, so an average family with children will have to pay DKK 9,000 (UK£769.00) this year for wastewater treatment. It warns that the charge will probably rise to DKK 100 (UK£8.54) per metre3 over the next few years.

In contrast, Ballerup, an outer Copenhagen suburb, charges only DKK 9.85 (UK£0.84) per metre3 for wastewater treatment.

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