The economic regulation of publicly owned water utilities: The case of Finland

The adoption of business management principles at publicly owned water and wastewater utilities in Finland presents challenges for the current system of economic regulation. This paper presents the results of empirical research on the need for regulatory reform from the utilities' point of view. The interviewed utility managers supported widening the scope of regulation to include, in addition to fairness of customer charges, the rate of return allowed for the owner of a water utility. Further research is recommended on the degree and scope of official regulation as well as on a system based on self-regulation, benchmarking, and peer reviews.