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                                                                    Slovenian Economic Mirror, July-August 2009            27
                                                                                                  Selected Topics

Formation and control of prices of public
                                                                  A survey of systems providing public utility services in some
utility services in Slovenia                                      of the old EU Member States shows that prices of these
                                                                  services are formed taking account of all costs, as stipulated
This chapter highlights the issues of forming and regulating
                                                                  by EU directives, and that in most countries pricing is
the prices of public utility services in Slovenia in light of
                                                                  the responsibility of local communities, yet with certain
recent regulatory changes in this area. By passing the
                                                                  arrangements or mechanisms for regulation. In Italy, public
»Decree repealing the Decree on the Formation of Prices
                                                                  utility services are controlled by the government according
for Basic Utility Services« in July, the government ceased
                                                                  to benchmark costs, inflation rate and productivity
to control basic utility service prices, transferring the
                                                                  growth. In Portugal, they are controlled in a similar way,
responsibility for handling and approving proposals for
                                                                  based on a comparative analysis of providers conducted
price changes to local communities. Even though the
                                                                  by an independent body. Also in Germany, prices are
practice of all decisions being made by the government
                                                                  formed and regulated under the concept of benchmark
was not appropriate either, the transfer of responsibilities
                                                                  prices, as they are in Denmark, which is also introducing a
may, given the absence of an appropriate pricing
                                                                  higher level of competition in the provision of services. In
methodology and a body monitoring its execution, not
                                                                  Austria, prices are capped by the law governing subsidies
result in a long-term solution to the public utility pricing
                                                                  for these activities. No special control mechanisms are
                                                                  in place in France. Prices are the responsibility of local
                                                                  communities, though services are mainly carried out by
Since the beginning of the 1990s, pricing of public utility
                                                                  private enterprises. When overall inclusion might lead to
services has been controlled by the government. As with
                                                                  high price rises, a system of subsidies is applied. In Great
this type of activity the enterprise or entity that carries
                                                                  Britain, public utility services are also carried out by the
out the activity independently has a monopoly on that
                                                                  private sector. They are controlled by an independent body
activity or a controlling position in the sector, and as
                                                                  setting the price rise ceiling for every 5-year period, while
these activities are essential for satisfying the needs of
                                                                  waste collection is controlled by the government; the aim
individuals and companies, cost efficiency in Slovenia
                                                                  of the control is to encourage a reduction in costs. In the
was ensured through a mechanism of formation and
                                                                  Netherlands, prices of services cover all costs. Services
regulation of prices. Up to the middle of this year,
                                                                  are mainly provided by public utility enterprises, which
prices of public utility services were regulated at the
                                                                  are, along with the price policy, controlled by regional
state level. This arrangement was focused at preventing
                                                                  authorities. In Spain, water supply is fairly liberalised, but
monopolistic behaviour of service providers and at price
                                                                  investment costs are nevertheless covered by the state.
regulation reflecting the costs of service provision and
                                                                  Prices of water supply do not cover the costs of service
enabling normal functioning of enterprises. Price rises
                                                                  provision and are regulated at the regional level.
were only allowed 
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