The main topics discussed at the meeting of the Stakeholder Dialogue Platform in the field of water services, organized by the Union of Municipalities of Montenegro (UoM) with the support of the RCDN+ project (Regional Capacity Development Network for Water Supply and Sanitation Services), were the Draft Methodology amending and supplementing the Methodology for Determining Prices of Services for the Performance of Regulated Utility Activities, prepared by the Energy and Water Regulatory Agency, as well as the Draft Branch Collective Agreement for the Utility Sector prepared by a working group of the Chamber of Economy of Montenegro (CEM).
Negative trends, particularly the restrictive provisions of the Law on Utility Services, amendments to which have been initiated by the Union of Municipalities, the Branch Collective Agreement for Housing and Utility Services, the obligation to equalize water service prices for households and businesses, and the reluctance of local governments to approve price increases determined in accordance with the law, are significantly jeopardizing the operations of all water service providers in Montenegro.
The key changes introduced by the Draft Methodology amending and supplementing the Methodology for Determining Prices of Services for the Performance of Regulated Utility Activities relate to the method of determining labour costs for 2026 and 2027 (as a transitional period), and to determining labour costs from 2028 onwards. The basis for determining these costs is defined by the costs incurred in 2024, which was the first full year in which costs increased significantly as a result of the amendments to the Branch Collective Agreement for Housing and Utility Services adopted in October 2023. The essence of these amendments is that, for the purpose of setting prices for 2026, eligible costs would be recognized up to the amount of such costs incurred in 2024, while for 2027 they would be recognized up to the amount of costs incurred in 2025, but not exceeding the amount incurred in 2024.
The methodological approach to price setting from 2028 onwards is based on the principle of encouraging the rationalization of labour costs, whereby half of the labour cost savings achieved in the previous year are recognized as eligible operating costs for the regulatory period.
In addition, the amendments simplify the method for calculating electricity costs in the event of changes to the relevant elements during the regulatory year.
In the discussion that followed, it was pointed out that, due to legal constraints, the Methodology cannot recognize the actual costs related to improving and modernizing the operations of water service providers, and that amendments to the Law on Utility Services therefore need to be adopted first.
Sanja Uljarević (PKCG) recalled that the Constitutional Court had found that the Government and the representative trade union were not authorized to conclude a branch collective agreement applicable to companies founded by local self-government units and had repealed Article 2 of the Branch Collective Agreement for Housing and Utility Services, which regulated its scope of application.
In order to fill the legal gap created by the decision of the Constitutional Court, a working group was established within the Association of Utility Companies of the Chamber of Economy of Montenegro (PKCG), which prepared the Draft Branch Collective Agreement for Utility Services applicable to all companies founded by local self-government units.
Under the Law on Local Self-Government, the municipal assembly is the founder of municipal companies. Accordingly, all interested municipal assemblies should give their consent to the text of the collective agreement and authorize a person to sign it on behalf of the founder. Given that the collective agreement would also apply to companies operating at a loss, pursuant to the provisions of the Law on Salaries of Employees in the Public Sector, the proposed coefficients set out in the branch collective agreement are subject to the prior opinion of the Ministry of Finance and the approval of the Government.
At the request of the Chamber of Economy of Montenegro, the Union of Municipalities of Montenegro (UoM) forwarded the Draft Branch Collective Agreement to the municipalities for consideration and further action. The Draft Branch Collective Agreement constitutes an offer within the negotiation process between the municipalities, as founders of utility and water supply companies, and the representative trade union organization.
