Water regulation

Resolution 639/2021/R/idr of 30 December 2021: criteria for the biennial update (2022-2023) of the tariff arrangements for the Integrated Water Service 

In the wake of Resolution 306/2021/R/idr of July 2021 initiating the procedure, and the related consultation begun in November with document 489/2021/R/idr, in which the Authority expressed its guidelines on the subject, the provisions relating to the rules and procedures for the intra-period tariff update were approved with the resolution in question in late December, in compliance with the methodology set out in Resolution 580/2019/R/idr (MTI-3).
The deadline for the submission of the tariff application by the Divisional Governing Bodies (EGAs) is 30 April 2022.
As part of the dedicated consultation, with a 10 December 2021 deadline, Acea Ato2 communicated its positions and proposals in the joint document drawn up for Acea group companies in the water sector.
The provisions of Resolution 639/2021/R/idr constitute an intra- period revision and are substantially in line with those already defined in Resolution 580/2019/R/idr. In addition, there are also provisions in compliance with the outcome of disputes relating to previous tariff methods and technical quality regulation, as well as measures to achieve the effective implementation of the Next Generation EU supporting instruments.

The following points are noteworthy in relation to the cost components recognised in the tariff: 

• the Opmis component is aimed at implementing measures to speed up compliance with the most recent regulatory provisions helping to make users more aware of their consumption, as well as to encourage limitation procedures in the event of arrears and selective disconnection. It may be redetermined also on the basis of any additional charges to increase the effectiveness of the metering service (i.e. the provisions introduced by Resolution 609/2021/R/idr). The quantification criteria are also specified in greater detail, and are identified as the coverage of the costs of providing incentives to users for works to individualise supply and the contracting/entrusting of complete metering services within apartment buildings (condominiums); 
• as regards electricity, the average cost of the supply sector is set at the highest values of the ranges put out to consultation (0.1543 €/kWh for 2022 and 0.1618 €/kWh for 2023). There is also the possibility of also exploiting an additional forecast component aimed at getting at least a partial advance warning of the effects of rising electricity costs; 
• the additional costs due to the Covid-19 epidemiological emergency, OpCovid, are confirmed for the year 2021; 
• as regards the cost of arrears, there is a widening of the turnover base to which the percentages for calculating the maximum recognised cost are to be applied. From 2022 this will include the revenue from the application of the tariff equalisation components.

With regard to the planning documents, it is established that the Action Plan and the Strategic Works Plan encompass the actions financed by the public resources allocated within the framework of the Next Generation EU instruments, with an indication of the time development of the relative planned spending; these documents must also take into account the impact of the adjustments to the regulation of technical quality and the methods for assessing the technical and contractual quality performance.
Attention is also drawn to the provisions for compliance with various of Council of State decisions on tariff calculation rules for 2012, 2013 and for the period 21 July - 31 December 2011. In this regard, there is a specific item within the adjustment components, designed to recover what was not recognised by the previous tariff rules (it specifically concerns the methods of calculating net working capital, tax charges on the FoNI, systemic changes or exceptional events, financial charges for adjustments of the restriction recognised on revenues, costs of equity in the determination of revenues admissible for the calculation of post-referendum refunds).
There are also amendments to the technical quality regulation, involving the revision of M1 macro-indicator (Water losses) in compliance with Council of State decision No. 2672/2021. The change includes the length of the distribution network connections in the calculation of linear water losses and the consequent modification of the classification grid.
The proceeds of the UI2 component will be used to cover technical and contractual quality premiums, while the revenue from the allocative component introduced by MTI-3 regarding the operating costs efficiency drive will be diverted to the new account set up at CSEA, for the promotion of innovation in the integrated water service, with criteria for use and management methods to be defined by subsequent measures. Elements of flexibility in the contractual quality performance assessment mechanisms will be extended to the 2022-2023 two-year period, with cumulative assessment on a two-year basis of targets for 2022 and 2023.
With specific regard to assessing the achievement of the technical quality objectives for 2018 and 2019, initially planned for 2020 and postponed due to the pandemic, developments are awaited, also in the light of the new provisions introduced.
In the area of the monetary adjustment, the inflation rate is set at 0.10% for 2021 and 0.20% for 2022, while the deflators of gross fixed capital formation are set at 1.005 for 2021/2020 and 1.005 for 2022/2021; the real risk free rate is set at 0.13%, the Water Utility Risk Premium at 1.7% and the benchmark return on fixed assets, including the Debt Risk Premium, at 2.4%.
Finally, as from 1 January 2022, the new mechanism for automatic recognition of the social water bonus led to the value of the UI3 equalisation component to cover the bonus being updated to € 1.79 cents per cubic metre.

With the publication on 8 February 2021 on the Authority’s website, of the Communication “Data collection: Contractual quality of the integrated water service (SII) - 2020”, the collection of data and information relating to contractual quality of the integrated water service was opened to operators and government entities, with reference to the period 1 January 2020 - 31 December 2020, pursuant to art. 77, paragraph 1 to the SII Contractual quality regulation (RQSII - Annex A to Resolution 655/2015/R/ idr). This data collection edition also includes the transmission of data relating to the provision of the automatic indemnities relating to the cases detailed under art. 10 of the default regulation in SII (REMSI), pursuant to Annex A to Resolution 311/2019/R/idr and subsequent amendments.
The deadline for operators was set at 15 March 2021, whereas the second stage for AGB validation was completed on 26 April.
Once again with regard to Contractual Quality, on 24 March, during a webinar organised for World Water Day, ARERA presented the contractual quality data for water operators, which it made available on its website using interactive infodata journalism tools, to make it accessible to all stakeholders. Tables, maps, integrated graphics, and texts will be published on a periodic basis on the Authority’s website, showing the contractual quality performance of individual Italian water management operators, thus confirming the Authority’s commitment to provide consumers with tools for comparative analyses and transparent disclosure.

Consultation 572/2021/R/idr of 14 December 2021: updating of the methods for checking commercial quality data for the distribution, measurement and sale of electricity and natural gas and for the contractual quality of the integrated water service 

At the same time as initiating the pan-sector and pan-service procedure for updating the methods for checking commercial/ contractual quality data (opened with Resolution 571/2021/R/ com of 14 December 2021), the Authority issued its guidelines for consultation, with a comments and proposals submission deadline set for 11 February 2022. For the integrated water service, penalties are calculated following the second control on the basis of the invalid/non-compliant performances found.
The consultation document proposes the replacement of this method, with penalties recalculated by reapplying the statistical method already used to determine the results of the first control.

Resolution 63/2021/R/com of 23 February 2021: application procedures for the system of automatic recognition of beneficiaries of the electricity, gas and water Social Bonus for economic hardship 

With Resolution 63/2021/R/com, ARERA regulates the automatic recognition of social electric, gas and water bonuses for economic hardship, pursuant to Decree-Law no. 124 of 26 October 2019, converted with amendments by Law no. 157 of 19 December 2019.
The application procedures for the new system were defined, replacing the previous “on demand” regulations, and more specifically, the relative information flows: Acquirente Unico, operator of the Integrated Information System (IIS) will receive information from the Italian National Pension Fund (INPS) relating to family units, which on the basis of the certified Single Declaration [“Dichiarazioni Sostitutive Uniche”] for the previous month, find themselves experiencing economic hardship; the IIS will check that no other family member has already benefited from the bonus for the same reference year. Specifically with regard to the water social bonus, based on the data received from INPS and via the Authority’s Water Territorial Database [“Anagrafica Territoriale Idrica - ATID”], the IIS will identify the water operator that is responsible for the territory, to whom the information will be sent to find the supply that will be assisted and paid the bonus.
The provision produces effects, in terms of recognising the benefits to those that are eligible (family units with an Equivalent Economic Situation Indicator (ISEE) not higher than € 8,265 or with at least 4 dependent children and an ISEE indicator not higher than € 20,000; beneficiaries of national income or pensions), as from 1 January 2021, in accordance with the provisions of the aforementioned Decree-Law no. 124/196; taking into consideration the time needed to develop the related IT systems, the mechanism is expected to become operational from 1 June 2021 with regard to the activities pertinent to the IIS, and consequently, from 1 July regarding the activities pertinent to operators.
The measure also details the transitory provision procedures for beneficiaries of the 2021 bonus portions accrued prior to the mechanism becoming operational.
Moreover, Acquirente Unico will transmit periodically to ARERA the reporting related to observance of the formalities relating to the accrediting process by the water operators, under the terms of paragraph 6.1 of Annex A to Resolution ARG/com 201/10.
Therefore, following consultations with participants, in April the Acquirente Unico published the Technical Specifications for implementation of the rules for identifying supplies to be supported, and in July it published the Technical Specifications for the reporting of the Social Bonus.
As specified by ARERA in a press release dated 25 February 2021, the automatic recognition of the bonus to family units experiencing economic hardship will make it possible to provide benefits to over 2.6 million eligible families, surpassing the on-request bonus mechanism, which had in fact limited the application of the benefit in the past to only one third of potential 42 beneficiaries.
Finally, with the Communication dated 5 March 2021, in order to comply with the disclosure and communication obligations for data relating to 2020, the Authority requested that operators send through the information relating to the water social bonus and integrated water bonus, pursuant to paragraphs 12.3 and 12.4 respectively of the TIBSI (Annex A to Resolution 897/2017/R/idr), accompanied by the relative illustrative note required by paragraph 12.5.

Resolution 223/2021/R/com of 27 May 2021: procedures for transmission, from INPS to the integrated information system managed by Acquirente Unico SpA, of the data required for the automatic recognition of electricity, gas and water social bonuses for economic hardship 

With this measure, the Authority regulates the technical procedures for making available the information – necessary for the automatic recognition of electricity, gas and water social bonuses for economic hardship, as identified in Resolution 63/2021/R/ com – from INPS to the Integrated Information System Operator, also the related security measures and the time frames according to which INPS sends to the Acquirente Unico the certified Single Declaration (“Dichiarazioni Sostitutive Uniche”) from 1 January to 30 April 2021. Based on the Resolution, the Authority also becomes the Controller of the personal data processing relating to the process for the automatic recognition of social bonuses.

Resolution 366/2021/R/com of 3 August 2021: provisions on the automatic recognition of the water social bonus, the gas social bonus for indirect domestic customers and the electricity economic hardship social bonus for electricity end customers connected to distribution networks not interconnected with the national electricity system 

The resolution provides updates on the privacy profiles relating to the bonus management, in particular detailing the liability profiles of the individuals concerned. With reference to the water bonus, the competent territorial water managers registered in ARERA’s Water Territorial Database (ATID) are responsible for processing the personal data for the identification of water user beneficiaries of the relevant tariff subsidy, and are responsible also for liquidation of the subsidy; AU is instead responsible for identification of the territorially competent water manager and the so-called verification of uniqueness.
On the other hand, any measures to protect the right to receive the social water bonus in the event of non-operator accreditation are postponed to subsequent provisions, subject to verification of the actual level of accreditation of water operators with ATID.

Resolution 609/2021/R/idr of 21 December 2021: extension of the Integrated Water Service regulations (TIMSII) 

The resolution was approved at the end of December 2021, on completion of the process triggered by the launch of the procedure (Resolution 83/2021/R/idr of 2 March 2021) and the consultation (405/2021/R/idr 08/09/2021, which Acea Ato2 participated in by presenting its positions and proposals through the Acea group). This is a very complex measure, which includes amendments to: TIMSII (Resolution 218/2016/R/idr), to the technical quality regulation (Resolution 917/2017/R/idr), and to the provisions on the transparency of invoicing documents (Resolution 586/2012/R/idr).
The provisions generally take effect from 1 January 2022, but there are different deadlines for the various related obligations; specific updates to the Service Charter and User Regulations are also required.
As regards TIMSII-related innovations, what is worth mentioning is the equivalence of the validated meter-reading by the user with the meter-reading by the operator’s personnel; there is also now the option of communicating the user meter-reading at the operator’s branches and the obligation to declare non-validation in the bill if the usual methods of communication with the user are not available.
Again as regards metering procedures, two specific new standards take effect from 1 January 2023 (Minimum number of attempts to take the meter reading and Minimum notice time for attempts to take the meter reading from end users with a non-accessible or partially accessible meter). These measures will be incorporated, together with the related automatic indemnities, into the Service Charter when the specific regulatory scheme is updated. The registration obligations will also then be updated.
A further important aspect is the introduction of specific protections for the user regarding hidden losses, with defined minimum levels of protection: access for consumption of at least twice the average daily consumption; time frame for re-access to protection to be no more than three years from the date of issue of the abnormal consumption invoice; protection applied also for subsequent invoices for at least three months; exemption from sewerage and treatment tariffs for the volume above the reference average daily consumption; for the water pipeline service, a tariff of no more than half of the basic tariff applied to the volume beyond the reference average daily consumption, with the deductible on billable volumes capped at 30%. The instalment arrangements provided by Resolution 655/2015/R/idr (RQSII) shall also be applied). The Service Charter and User Regulations must be updated to include the protections applicable in the event of hidden losses, within six months of the date of adoption of the measure; these protections must also be explained when the contract is signed and must be described on the operator’s website, with the dedicated link on the bill, by 30 June 2022.
Additional information to be shown on the operator’s website, with a link in the bill and with the same deadline, is provided for by EU Directive 2184/2020, regarding water intended for human consumption; also obligatory is the data for the average annual consumption of end users in the managed territory, broken down by user type.
Particular attention is paid to grouped users, to help promote consumption awareness among indirect users. A certain amount of information must be provided annually (initially through the condominium administrator or other contact person); the operator must also, within 6 months from the measure’s effectiveness date, provide condominium users with a tool to calculate the breakdown of amounts billable to the individual apartment units. This must accessible to all participants (condominium administrators/contact persons, individual indirect users, accounting companies).
With reference to newly constructed buildings, AGBs are obliged to extend user regulations with the option to enter into, where technically possible, a separate supply contract for each individual building unit.
A unique and geolocalised identification code will also be assigned to each contracted user by 31 December 2023.
Finally, new indicators for the regulation of contractual quality are to be introduced from 1 January 2022. performance indicators for the reliability assessment of the values of the M1macro-indicator - Water losses (Share of user volumes measured and Share of process volumes measured, replacing the current indicator Share of volumes measured), constituting the assessment inputs for assigning points and forming the rankings of the bonuses/penalties incentive mechanism; indicators of the spread of the most innovative technologies for monitoring use (Share of user/process volumes with measurement via remote meter reading).

Resolution 58/2021/R/idr of 16 February 2021: simplification of the procedures for the provision of resources, pursuant to Resolution ARERA 425/2019/R/idr, for the implementation of the interventions in the first passage of the national water sector interventions plan – water pipelines section 

Based on the ongoing health emergency, the resolution introduces measures to simplify the procedures for Resolution 425/2019/R/ idr, in order to ensure the timely provision of the resources required for the design and implementation of the interventions contained in Annex 1 of the DPCM of 1 August 2019 referring to the “Adoption of interventions in the first passage of the national water sector interventions plan – water pipelines section”. More specifically, the provision of funding for the portion exceeding the advance and any portions already disbursed, is done prior to having checked that the conditions have been complied with, based on the amounts effectively spent and reported to the reference Entity.
In 2021, several resolutions were also approved (294/2021/R/idr, 582/2021/R/idr, 583/2021/R/idr, 584/2021/R/idr) whereby the Authority authorises CSEA to disburse funding instalments subsequent to the first one (for a total of more than € 5 million) for the implementation of the interventions of Annex I to the dPCM of 1 August 2019 “Adoption of interventions in the first passage of the national water sector interventions plan – water pipelines section”.
With Resolution 633/2021/R/idr, the Authority instead ordered nine operators to comply with the obligation to use a minimum proportion of 80% of the total spending of projects funded under the first part of the water pipelines plan, to be reached within two years of the disbursement of the resources. The ACBs in question explained the delayed implementation of the interventions referring to the issues that had arisen, such as the restrictive measures imposed because of the pandemic, disputes during the awarding of contracts and execution of works, contractors’ failure to act, and the resetting of project specifications. The Authority gave a compliance deadline of 30 November 2022.
As regards the reservoirs section of the National Plan, the Authority expressed a favourable opinion (Opinion 389/2021/I/idr) on a dPCM scheme for the rectification of intervention No. 22 reported in Annex 1 of the dPCM 17 April 2019 (adoption of the first passage of the interventions), necessary because another work in the same region (Molise) had been reported by simple material error).

Consultation 465/2021/A of 29 October 2021: ARERA strategic framework 2022-2025 

The consultation document presents ARERA’s guidelines for the Strategic Plan, with the definition of the strategic objectives and the main lines of action for the 2022-2025 period, taking into account the evolving context of the national and European reference sector.
The key elements of the Strategic Framework are consumer protection and awareness through tools and communication, digitalisation, a “just” and sustainable energy transition across the energy and environmental sectors, improved infrastructure, services and competition.
The Strategic Framework structure and contents - the latter subdivided into themes cutting across all sectors with in-depth studies on individual sectors - are arranged on two levels: the strategic objectives, which embody the overall strategy based on the current and medium-term scenario, and the intervention lines, which outline the Authority’s planned main measures and actions to achieve each strategic objective.
Acea Ato2 took part in the consultation within the Acea group, both by participating in the hearings on 22 and 24 November and by sending a written statement.

Resolution 610/2021/R/idr of 21 December 2021: extensions and amendments to ARERA Resolution 547/2019/R/idr concerning the invoicing of amounts for consumption dating back more than two years 

The measure concludes the procedure for compliance with judgements 1442, 1443 and 1448 of the Lombardy Regional Administrative Court (TAR) of 14 June 2021 concerning the invoicing of amounts for consumption dating back more than two years, launched by ARERA with Resolution 461/2021/R/idr and developed with Consultation 462/202/R/idr. Acea Ato2 participated in the consultation by sending its comments and proposals as part of the joint document prepared for the Acea group water companies.
In the aforementioned judgments, the Lombardy Regional Administrative Court did, on the one hand, acknowledge that the prescriptive content of Resolution No. 186/2020/R/idr was in line with the legislative amendment of the 2020 Budget Law (whose effect is that the two-year limitation period also applies when the user erroneously or fails to record consumption data) and with the Civil Code’s general principles on limitation periods, and also considered the issue of constitutional unlawfulness raised by the applicant companies to be manifestly unfounded; on the other hand, however, it did find uphold the complaint about ARERA’s failure to launch the consultation process and consequently annulled the measure in question.
In the light of the above, ARERA, with Resolution 461/2021 of 26 October 2021, launched a procedure aimed at reinforcing the clarity, transparency and certainty of the current regulatory framework concerning end user protection in cases of the invoicing of amounts referring to consumption dating back more than two years; a further aim was to guarantee adequate information to the end user in cases where the integrated water service operator believes it can invoice amounts referring to such consumption dating back more than two years, assuming, in those cases, that there is an obstacle to the limitation period accruing under the relevant primary and general legislation.
Following the aforementioned consultation, ARERA, with Resolution 610/2021 updated the information obligations stated in Resolution 547/2019 in favour of end users deemed worthy of stronger protection (domestic users, micro-businesses and professionals), thus making a distinction between the two cases of accrued or non-accrued limitation. In the first case, the operator must supplement the invoice by inserting a note informing of the existence of consumption dating back more than two years, which is not obligatorially payable, and inviting the user to communicate their wish to contest the limitation period concerning the amounts in question. On the other hand, in the event of invoicing of amounts referring to consumption dating back more than two years for which the limitation period has not expired and due to the presumed existence of obstructive causes pursuant to the primary and general reference legislation, the note must indicate the reason and inform of the option of complaining in writing.
The provisions on complaints (Resolution 655/2015/R/idr) have been consequently adapted, specifying that the operator’s response to any complaint must outline the reasons that led to the request for payment, and must also give information for resolving the dispute.
However, in the event of arrears relating to unpaid amounts for consumption dating back more than two years, for which, even though the conditions exist, the limitation period has not been contested, the operator much attach to the default notice the information that such amounts may not be paid, and shall invite the user to communicate their wish to contest the limitation period. The new rules will be effective for invoices issued in the first billing cycle following the date of publication of the measure.
The resolution also changes the annual deadline for the ABGs to submit the report required by art. 2 of Resolution 311/2019/R/idr as part of their monitoring activities on cases in which the procedure for water supply limitation or promotion of selective disconnection of condominium users is not technically feasible, setting it at 28 February each year. In this regard, ARERA issued a communique of 01 December 2021 making available the template for the report relating to the year 2021.

 Brief 86/2021/R/com of 02 March 2021: Regulatory Authority for Energy, Networks and Environment brief regarding the proposal for the National Recovery and Resilience Plan (NRRP) 

In this Brief, the considerations and proposals were submitted for the Commissions 10a Industry, commerce, tourism, 5a Budget and 14a Policies of the European Union Senate, referring to the NRRP, in the version approved by the Council of Ministers on 12 January 2021. The brief concentrated on the aspects that are most pertinent to the Authority’s sphere of responsibility, referring to certain aspects of Mission 2 “Green revolution and ecological transition”, relating to the major issues of the circular economy and energy transition, in relation to the goals of the Green Deal (reduction of climate-changing emissions by 55% by 2030 and achieving climate neutrality by 2030), and in particular, the “Green Business/Agriculture and circular economy”, “Renewable energy, hydrogen and sustainable mobility” issues, and finally the “Protection of the territory and water resources”.
Over a third of the total Plan’s resources are intended for Mission 2, “Green revolution and the ecological transition”; the Authority in this regard noted the significant imbalance between the resources intended for the energy sector compared to the environment.
With regard to the governance of the NRRP, the Authority drew attention to the European Commission’s specification of identifying an independent public body to conduct the validation, and in this respect, offering its support to institutional entities that will be carrying out this function, within the scope of their respective responsibilities.
With specific reference to the water sector, the protection of the territory and water resources falls within the scope of Mission 2, aimed at generally strengthening the resilience of water systems against climate changes, by improving the ecological and chemical quality status of bodies of water and the management and effective allocation of water resources among the different uses/ sectors. Among the relative actions, the Authority focused specifically on those referring to IIS, noting the priorities in terms of investments and reforms. With regard to investments, these focus on the extraordinary maintenance of reservoirs and procurement systems, the completion of major water projects, the reduction of network leaks, also promoting the development of smart networks, the strengthening of sewerage and purification infrastructure, also in consideration of the four EU procedures pending against Italy for the infringement of Directive 91/271/EEC. In respect of the reforms, priority is given to the simplification of the regulations relating to the National Intervention Plan for the water sector and strengthening of governance, with the purpose of promoting the full implementation of the ISS projects.
Finally, the Authority noted that in the update to the “water pipelines” section in the National Plan, it emerged that additional investments of around € 10 billion would be required over the next five-year period; in this regard, the need to reformulate the resources allocated is required, with additional funding in the form of contributions, and taking into account the potential and leverage provided by the Guarantee Fund.

Report 295/2021/I/idr of 6 July 2021: thirteenth report pursuant to art. 172, paragraph 3-bis of Legislative Decree no. 152 of 3 April on “Environmental Regulations” 

The report, submitted by the Authority to Parliament twice yearly, aims to provide an up-to-date overview of local structures, governance and changes in integrated water service assignments.
The scenario emerging from this edition can be summarised as follows: 

• final completion of the process of local authorities joining the relevant bodies in all territorial areas of the country and consolidation in the process of rationalising the number of OTAs, currently at 62; 
• the need to complete the paths begun, and since hindered by the continuing epidemiological Covid-19 emergency, towards the goal of full operation of the Area Governing Bodies, especially in some territorial divisions, to work off the accumulated delays in the process of full implementation of the Integrated Water Service; 
• the need to continue the process of rationalisation and consolidation of the management landscape in accordance with the provisions of current regulations, given the widespread existence (albeit gradually and steadily diminishing) of operators who no longer operate under the law — some of them involved in awarding procedures already initiated by the area governing body — and who currently provide services but have no legal title pursuant to regulations in force at the time.

Attention is also given to the still potentially critical areas of differing kinds, particularly in Southern Italy, where the so-called Water Service Divide continues to be a problem. These situations, and the consequent system overhaul to strengthen the managerial govern ance of the integrated water service, as proposed by the Authority, are described in detail in the dedicated Report 331/2021/I/idr, which is discussed below.

Opinion 554/2021/I/idr of 02 December 2021: Opinion to the Minister of Sustainable Infrastructure and Mobility on the draft Ministerial Decree on Investments in Primary Water Infrastructure for the Security of Water Supply of Investment 4.1, Mission 2, Component C4 of the NRRP 

The Authority hereby issues, pursuant to art. 1(516) of Law 205/17 (as amended by Decree-Law 121/21, converted by Law 156/21), a favourable opinion on the draft decree transmitted by the Ministry of Sustainable Infrastructure and Mobility on 30 November 2021.
The measure resolves to issue a favourable opinion on the draft decree forwarded by the MIMS on “Investments in primary water infrastructure for the security of water supply” of Investment 4.1, Mission 2, Component C4 of the National Recovery and Resilience Plan (NRRP).
In the preamble to the ARERA opinion, it is also pointed out that with Resolution 284/2020/R/idr, ARERA launched the procedure for identifying the second list of works relating to the water pipelines section of the National interventions plan for water sector interventions, providing for the definition of a single plan based on a multi-year programme for the 2021-2028 period, to which the entirety of the residual resources provided for by art. 1 c. 155 of Law 145/18 should be allocated. In relation to this initiative, the Authority received 1,208 projects/interventions for a total of more than € 10 billion.

Resolution 130/2021/A/ of 30 March 2021 “Reporting on activities carried out for the 2019-2020 period and revision for 2021 of the ARERA strategic framework for the three-year period 2019-2021”. In line with the content of the Strategic framework for the three-year period 2019–2021 (Resolution 242/2019/A9) and the relative commitments referring to accountability and transparency, Annex A reports on the activities carried out in implementing the strategic objectives over the two-year period 2019-2020, providing the progress status and reasons for any variances in terms of the original time frames envisaged 

More specifically, it outlines the different measures characterising the 23 strategic objectives, breaking down the relevant interventions, grouped according to the three strategic areas (Transversal themes, Environment Segment and Energy Segment), each of which is broken down further into 3 strategic lines.

Resolution 503/2021/R/com of 16 November 2021: further measures in electricity, gas and integrated water services to support populations affected by the earthquakes of 2016 and 2017

 As a result of Consultation 368/2021/R/com, the measure extends the tariff benefits set out in Resolution 252/2017/R/com in favour of supplies and users under emergency solutions (SAE and MAPRE); operators may only suspend these benefits following a request for termination or transfer of usership, but not in the case of transfers for mortis causa.
The measure also extends the provision of Resolution no. 277/2021, which states that for the entire duration of the benefits, the resident domestic tariff will be applied both to the home that is uninhabitable and to any users/supplies where the one domicile is established after the earthquake event, without the registered residence being transferred.
This case (the only one that could affect Acea Ato2) has so far not been observed in the managed territory.

With regard to consumer protection, in the first half of 2021, the Conciliation Service published its Annual Report on the activities carried out, with the relevant press release dated 5 February 2021. Also of note is the publication of a resolution whereby ARENA proposes projects to the Ministry of Economic Development that would benefit consumers funded by the Authority’s sanctions fund, pursuant to Art. 11-bis of Decree- Law 35/05.
With regard to the 2020 Conciliation Service Report, the document notes that in 2020 the ARERA Conciliation Service made it possible for customers and users to obtain or save over € 10.3 million, by resolving disputes with regulated service operators (water, electricity and gas sector) and guaranteeing full operations and continuity during the health emergency; the Report also underlines that a new “Conciliation Service” app will shortly become available, providing direct access to a reserved area to resolve disputes more simply, by using the new mobile version of the platform on one’s own smartphone or tablet.
Of specific interest is the information that the number of applications grew in 2020, going from the 16 thousand in 2019 to over 18 thousand, with 70% of the agreements between parties on procedures finalised. The highest concentration of conciliation applications was in the Lazio and Abruzzo regions, followed by Calabria, Basilicata and Campania.
The majority of the applications refer to cases related to the electricity (10,054) and gas (4,794) sectors; this is followed by the water (2,332) and dual fuel (1,330) sectors. An attempt at reconciliation is mandatory before approaching the courts in the energy sectors, whereas it is still optional in the water sector. The total amount of € 10.3 million in 2020 (amount expected to increase once the procedures still pending are completed), represents for example, the amounts reimbursed to customers, indemnities, the recalculation of incorrect billing or the waiver of default expenses or interest by suppliers. This number, which is constantly increasing and has doubled compared to the 5.6 million in 2018, is subdivided almost in half between non-domestic (51%) and domestic (49%) customers, even though the applications submitted by households is higher in terms of numbers (over 70% of the total).
The matters most often dealt with refer to billing, especially in the gas and water sectors, contracts, in particular for the supply of dual fuel, claims for damages especially in the electricity sector, and net metering for prosumers. Furthermore, in around 68% of all applications sent, consumers preferred to be represented by a proxy (for example, a consumers’ association). Finally, it should be noted that around 20% of applications were not accepted, mainly because the customer decided not to complete the application or for procedural reasons (missing documentation, deadlines, scope of application).

Regarding the project proposals to benefit consumers, with Resolution 483/2020 published on 4 February 2021, the Authority formulated a proposal to the Ministry of Economic Development to allocate a portion of € 1.6 million to the cost equalisation fund 46 account relating to the provision of the water bonus, which is supplemented by the UI3 tariff component, so as to reduce the requirement of the account for 2020, and reduce the charges in respect of IIS users. The fund to finance projects for the benefit of electricity, gas and IIS consumers was established in terms of Italian Decree-Law 35/2005 and the sanctions imposed by ARERA are currently channelled into the fund. Likewise, with Resolution 901/2017, ARERA had proposed allocating an amount of € 1.2 million). to the UI3 Account for 2018; the proposal was accepted by the Ministry in terms of the Decree dated 5 April 2018.

Finally, it should be noted that an historic agreement was signed on 7 April 2021 between seven major companies in the energy, water and district heating sectors (Acea SpA, A2A SpA, Edison Energia SpA, Enel Italia SpA, Eni Gas e Luce SpA, E.ON Energia SpA, Iren SpA) and 20 consumer associations belonging to the National Consumers and Users Council – CNCU. For the first time in Italy, based on the positive experiences gained in recent years, a Single Protocol was signed with the aim of relaunching joint negotiations, strengthening the alternative resolution instruments for disputes, by consolidating dialogue between companies and consumer associations and strengthening the relationship of trust with consumers. In particular, based on this Protocol, Parties “undertake to promote and develop joint negotiations, as a significant means to resolve disputes out-of-court and to affirm co-existential justice”.

Still on the subject of consumer protection, the approval of Resolution 301/2021/E/com of 13 July 2021 partially amended Resolution 142/2019/E/idr, thereby reducing from 300 to 100 the minimum number of resident inhabitants served, above which the operator is obliged to participate in the procedures activated at the ARERA Conciliation Service. Following the change in scope, the Authority also updates the table of operators obliged both to participate in the procedures and to fulfil the disclosure obligations already reported in the aforementioned Resolution 142/2019.
The measure also extends to the integrated water service the shortened rules for calling the first meeting of the parties before the Conciliation Service: the convening period is reduced from 10 to 5 days from notification of the parties, in cases where the user attaches the default notice to the request for conciliation, indicating the date from which any limitation/suspension/deactivation of the supply may be made, for invoices that have been promptly contested with the complaint.
The Authority establishes that the provisions of the resolution applicable to the water sector shall take effect from 1 January 2022, thus giving the operators concerned a reasonable time to perform the fulfilments required for enabling access to the IT platform of the Authority’s Conciliation Service. Lastly, there will be a further monitoring period (at least once a year) to check the state of implementation of the regulatory changes introduced, also by calling further meetings of the technical panel already established by Resolution 55/2018/R/com.

With Resolution 343/2021/A of 3 August 2021, ARERA approved the proposal for the “Update of the Consumer Counter Project 2021-2022” submitted by Acquirente Unico on 20 July 2021, taking account of how the new automatic bonus recognition rules would affect the Consumer Counter’s activities; in particular, the update proposal sets out an additional spending forecast for the period 1 January 2021 – 31 December 2022; the figure is 11% higher than the forecast already approved for the two-year period and amounts to a maximum of over €15 million. There may be updates to this estimate, which AU will send to ARERA by 30 September 2021.

Increased awareness of consumer protection has resulted in the presentation, in the Chamber of Deputies, of the proposal to set up a Parliamentary Commission of Inquiry on Consumer and User Protection (Doc. XXII, No. 56). The Report states that this is the first time the creation of a Commission on this subject has been proposed, and that its main purpose is to gather data and information that could form the basis for future legislative or policy measures.
It is envisaged that the Commission will investigate the main and most recurrent forms of unfair practices and unethical behaviour damaging to consumers and users, and will check the effectiveness of the protection instruments and of the work of consumer associations at national and local level.
The Commission will also be tasked with carrying out wide-ranging monitoring activities on the state of implementation of existing consumer and user protection legislation, and will verify its effectiveness in terms of both prevention and sanctions. A further goal is to make consumers and users more knowledgeable about the institutions and rules that exist for their protection, in order to make them more aware of their rights and of the instruments at their disposal to prevent or stop unjustified abuses. The proposal was submitted on 3 June 2021 to the Chamber, which approved the text on 13 October 2021 with 410 votes in favour and 1 abstention; the announcement of the setting up of the Commission was officially made by the President of the Chamber on 2 December 2021.

Finally, please note the half-yearly report on the Conciliation Service’s activities for the first half of 2021 (the data is updated to 20 September 2021), published on ARERA’s website in the last quarter of 2021.
The Report shows that in the first half of 2021, 11,376 conciliation requests were submitted. Of these, 2,112 were related to the water sector, 5,420 to the electricity sector, 2,847 to the gas sector, with the remainder relating to Dual-Fuel and Prosumer customers.
As regards the topics covered by the questions in the water sector, 75% concerned billing, 4.9% contracts, 4.8% metering, 3.5% arrears and suspension and 3.3% connection and works. The regions with the highest number of applications are Sardinia, Lazio, Campania and Liguria, followed by Calabria, Basilicata, Apulia and Molise. At the end of the conciliation procedure, 4,108 customers were asked to take part in a satisfaction questionnaire; 95% of them said they were satisfied with the service received. We now await the publication of the 2021 Annual Report.

With Resolution 197/2021/R/idr dated 11 May 2021, ARERA approved the tariff provisions for the third regulatory period (fouryear period 2020-2023), adopted by the Mayors’ Conference of Ato 2 Central Lazio - Rome Ato 2 SpA with Resolution 6/20 at the meeting of 27 November 2020. Pending approval by the Authority, the tariff prepared by the Governing Body in compliance with paragraph 7.3, letter b) of Resolution ARERA 580/2019/R/ idr (MTI-3), was applied. The main points of the tariff provision are as follows: 

• Placing of the management in the regulatory scheme related to the 5th quadrant pursuant to paragraph 5.1 of Annex A (MTI-3) of Resolution 580/2019/R/idr (high investments with respect to the value of the existing infrastructures and average per-capita Guaranteed Revenue Constraint (GRC) higher than the national average figure determined by ARERA); 
• Works programme for the four-year period 2020-2023 for over € 1,300 million)., with new investments for around € 90 per capita per year; an additional amount of around € 3,200 million is envisaged for the subsequent period 2024-2032; 
• Tariff multiplier theta (to be applied to the tariff in force at 31/12/2015) of 1.020 for 2020, 1.078 for 2021 and for the following two years of 1.139 and 1,202 respectively. The theta multipliers for 2022 and 2023 may be redetermined following the biannual update, as provided in art. 6 of Resolution 580/2019/R/idr; 
• Use of what is not spent of the solidarity contribution collected in the whole of 2019 (more than € 5.6 million) to reduce the tariff adjustments due for 2020 and 2021; 
• Adoption of the value of the Ψ parameter of 0.45 (the maximum value provided for in Resolution 580/209/R/idr is 0.8) for the purposes of determining the component for the financing in advance of new investments (FNInew); 
• Portion as per paragraph 36.3 of Annex A of Resolution 580/2019/R/idr, aimed at integrating the national mechanism to improve the quality of the integrated water system (to be paid to CSEA and included in billing documents with the relevant reason) of € 0.4 cents/mc applied to water pipeline, sewerage and purification volumes with effect from 01/01/2020.

After the tariff approval by ARERA, in July the Operational Technical Secretariat accepted the prescriptions expressed in Resolution 197/2021/R/idr, in particular adjusting the RDT (Tariff Data Collection) calculation file to the Authority’s prescriptions and, for consistency, doing likewise with the accompanying Report and the report on quality objectives and the Action Plan/Strategic Works Plan. The main changes consist of a variation in distribution of some Guaranteed Revenue Constraint (GRC) components for the years 2022 and 2023 and the updating of the calculation methods for some technical quality indicators. However, there is no change in the tariff multiplier values for the 2020-2023 four-year period compared to what was approved by the Mayors’ Conference.
The aforementioned resolution of the Conference of Mayors no.6/2020 also updated the implementation regulation for the integrated water bonus for the Ato 2 Central Lazio - Rome. As extraordinary measures and up to 31/12/2021 (unless extended), the new provisions introduced allow users admissible at the moment of the request for the contribution with ISEE (Equivalent Economic Situation Indicator) within the limits set by ARERA exclusively to cover earlier arrears, in addition to the ordinary amount to have access to a further once-off amount up to three times the ordinary value.

Those entitled are direct users (holders of a residential household account) and indirect users (household users in an apartment complex) with the following requisites:

a. ISEE indicator up to € 13,939.11 and household of up to 3 members;

b. ISEE indicator up to € 15,989.46 and household with 4 members;

c. ISEE indicator up to € 18,120.63 and household with 5 or more members.

Under their own responsibility and based on specific certification by the relevant offices, the Municipal Administrations also have the power to authorise the supply for individual users in situations of proven particular economic/social hardship, increasing the ISEE threshold for admission for this specific case.
The amount of the “local” bonus, consisting of the payment of a once-off annual contribution recognised in the bill (in the case of indirect users in the apartment building utility bill), is calculated as the expenditure corresponding to the fixed and variable fees for water, sewerage and purification for a consumption of up to 40 cubic metres per year for each member of the household, for direct and indirect users with ISEE up to € 8,265 and 20 cubic metres per year for each member of the household for other eligible users, based on the tariff in force during the reference year. The bonus is valid for one year and is paid in a single payment, normally within 6 months from the date of submission of the application.
It is worth noting finally the approval, with Mayors’ Conference Resolution No. 4-21 of 1 July 2021, of the Regulations for users of the integrated water service in OTA 2 Central Lazio – Rome, updated with the supplements necessary to implement the legislative innovations introduced ope legis.

In 2013 Acea Ato2 filed an appeal against Resolution 585/2012 (MTT) and subsequent resolutions that amended and supplemented the contents (Resolutions 88/2013, 73/2013 and 459/2013).
The appeal was partially upheld by the regional administrative court of Lombardy 2528/2014, against which both Acea Ato2 and ARERA have appealed.
At the public hearing held on 29 September 2015, the suspension of the pending judgement and the postponement of the decision to a later date were ordered. This followed the outcome of the technical office consultancy arranged for the appeals proposed in 2014 by Codacons and the associations Acqua Bene Comune and Federconsumatori, considering the existence of a relationship of dependence-consequentiality between the decision of the appeal by ARERA and the decision on appeals promoted by the Consumer Associations, focusing in particular on the tariff component relating to the financial charges of the IWS manager, i.e. on the formulas and parameters implemented in art. 18 of Annex A of Resolution ARERA no. 585/2012 of 28 December 2012 (TTM), considered as a reintroduction of the criterion of “adequacy of invested capital” that had been eliminated by the outcome of the 2011 referendum.§
The expert committee, appointed in October 2015, filed the report on 15 June 2016, concluding that the formulas and parameters aimed at calculating the interest rate of reference are considered reliable and reasonable in terms of national and international regulations and the component of risk coverage considered in the Resolution.
On 15 December 2016 the final hearing of the proceedings was held and on 26 May 2017 sentence no. 2481/2017 was published with which the Council of State, accepting the conclusions of the panel of experts, reaffirmed the full legitimacy of the tariff methodology adopted by ARERA. As a result, it rejected the Codacons and Acqua Bene Comune/Federconsumatori appeals mentioned above, with consequent confirmation of the contested sentences.
The subsequent hearing before the Council of State was set for 20 September 2018.
Following the hearing, held as planned on the scheduled date, the 48 Council postponed the discussion of the judgement, inviting the parties to file some briefs (to be presented by 19 December 2018) to make sure that there were no delays in resuming the appeal proceedings.
At the hearing in question, however, the judge had not set the date of referral, which was instead established only in the early days of 2019. At the hearing held on 13 June 2019, part of the grounds for appeal were waived and the Council of State ordered the acquisition of the expert’s report submitted by the aforementioned parties (Codacons, Acqua Bene Comune, Federconsumatori) in order to submit it to the parties for oral arguments. The hearing after that was set for 2 April 2020. Owing to the Covid-19 emergency the new public hearing was set for 10 December 2020 inviting the parties to: 1) file documents by 19 November 2020; 2) file briefs by 24 November 2020; 3) file replies by 28 November 2020. The hearing at the Council of State was brought forward to 22 October 2020 inviting the parties to: 1) file documents by 1 October 2020; 2) file briefs by 6 October 2020; 3) file replies by 10 October 2020.

A partially favourable judgement, no. 8079/2020 16 December 2020:

• accepted Ato 2’s appeal related to non-recognition of the CCN in relation to other water activities, the only ground for the appeal that the Company had decided not to waive; 
• rejected the Authority’s appeal related to financial expenses on adjustments, with reference to which already the Lombardy Regional Administrative Court (RAC) had found in favour of Ato 2; 
• accepted the said Authority’s appeal concerning the ground on non-enforceable receivables.

As of the date of this report, the appeals filed by Acea Ato2 with the Lombardy Regional Administrative Court against Resolution no. 643/2013/R/idr (MTI), Resolution no. 664/2015/R/ idr (MTI-2) and Resolution no. 580/2019/R/idr (MTI-3) are still pending.
With regard to Resolution 643/2013, it should be noted that on 8 May 2014 additional grounds were presented for the cancellation of ARERA decisions no. 2 and no. 3. On 9 December 2014 additional grounds were presented for the cancellation of Resolution 463/2014/R/idr. Pending the scheduling of the hearing, in April 2019 the notice of the hearing was received (the administrative process was cancelled due to the inactivity of the party). Following this communication, on 20 June 2019 Acea Ato2 presented the request for the scheduling of the hearing together with the new power of attorney signed by the Chairperson. The hearing was therefore set for 22 February 2022. As of today the final judgements have not been issued.

With regard to Resolution no. 664/2015, it should be noted that in February 2018 Acea Ato2 extended the appeal originally proposed, submitting additional grounds of appeal against ARERA Resolution no. 918/2017/R/idr (biennial update of the tariff arrangements for the integrated water service) and against Annex A of Resolution no. 664/2015, as amended by the aforementioned Resolution no.918/2017. As of today we are waiting for the hearing on the merits to be scheduled.

In February 2020, Acea Ato2 also challenged Resolution 580/2019/R/idr which approved the Tariff Method of the integrated water service for the third regulatory period (MTI-3), reiterating many of the reasons for previous appeals in tariff matters and introducing new ones related to specific aspects introduced for the first time with the new tariff methodology. Other subsidiaries and/or investees of the Acea Group that have challenged MTI-3 are Acea Ato5, Acea Molise and Gesesa (which had not previously challenged the resolutions relating to the TTM, MTI and MTI-2).
Resolution 235/2020/R/idr for the adoption of urgent measures in the integrated water service, in the light of the Covid-19 emergency was also appealed. We are awaiting the scheduling of the hearing.

With regard to the developments concerning the redefinition of the Hydrographic Basin Optimal Territorial Areas (ATOBI), provided for by Lazio Regional Decree 218/18, we await developments on the regional law proposal to modify the current governance, submitted to the Region by the Technical-Scientific Committee – which was established for this purpose. We also await news on the setting up of the Institutional Consultation Committee attended by the delegates of the Mayors’ Assemblies of all the OTAs.
Worthy of note in this regard is the publication, in the BURL no. 73 of 22 July 2021, of Regional Council Resolution no. 10 of 14 July 2021 concerning “Amendments to the Optimal Territorial Areas no. 1 North Lazio - Viterbo and no. 2 Central Lazio - Rome, pursuant to art. 3 of Regional Law no. 6 of 22 January 1996 (Identification of Optimal Territorial Areas and organisation of the Integrated Water Service, implementing Law no. 36 of 5 January 1994)”, which involves the transfer of the Municipality of Campagnano from Ato 1 to Ato 2 Central Lazio - Rome.

Also of note are the publication (BUR Lazio Region No. 33 of 1 April 2021) of the Notice for the adoption of Water Management Plan (PGDAC) and Flooding Risk (PGRAAC) projects relating to the Central Apennines river basin district. This refers to the second update of the PGDAC and first update of the PGRAAC, made available on the basin Authority’s website for consultation and the submission of comments, together with the calendar for information meetings and the initiatives for the consultation and circulation of the Plan projects, in order to receive comments from the various stakeholders involved.

In addition, the Regional Landscape Territorial Plan (PTPR) (BUR no. 56 of 10 June, Supplement no. 2) was published and approved by the Regional Council on 24 April. The plan had already been approved in August 2019, but had not passed the review by the Constitutional Court after the appeal submitted by the Government; the resolution was in fact rejected because it did not reflect the prerequisites of the Cultural Heritage and Landscape Code (Urban Code). which require that the PTPR is drafted on the basis of joint planning between the Region and Ministry of Culture.

We also note that the Committee for Economic Planning and Sustainable Development (CIPESS) approved the Development and Cohesion Plan for 18 Regions and Autonomous Provinces, including the Lazio Region. The resolution of 29 April 2021 on the Lazio Region was published in the Official Gazette No. 198 of 19 August 2021.

Finally, the “Regional Plan for the construction and upgrading of water and sewerage networks and wastewater treatment plants for the 2021-2023 three-year period” was approved by Council Resolution No. 905 of 9 December 2021, published in the Lazio Region Official Gazette No. 117 of 16 December 2021. The funded works are reported in annex “A” of the measure and broken down by OTA; in particular, Ato 2 provides for more than 13 interventions, including the Municipality of Rome, for a total amount of more than € 2 million. The measure also provides that, under penalty of forfeiture of funding, the entity implementing the works must be identified as the manager of the IWT of each OTA and that, if the municipality where the works are to take place is still the owner of the water service, the actual service and all its components must be transferred to the single manager of the Ato.

Finally, it should be noted that after the observation period, ARERA published some resolutions to be highlighted.
Resolution 18/2022/R/idr of 18 January 2022: Extension of the deadline for concluding the procedure to comply with Council of State ruling No. 5309/2021 on the tariff regulation of the integrated water service from 31 December 2021 to 15 March 2022.

With Resolution 373/2021/R/idr, ARERA initiated a procedure for compliance with the Council of State’s ruling 5309/2021 on the renewal of the enquiry — concerning only the above mentioned profiles — underlying the tariff determinations set out in Resolution 104/2016/R/idr (Approval, for the purposes of calculating adjustments under the tariff method for the MTI-2 second regulatory period, of the tariffs for the Sarnese Vesuvian Optimal Territorial Area for the 2012-2015 period).

Resolution 69/2022/R/idr of 22 February 2022: Launch of the procedure for quantitative assessments, relating to the 2020-2021 two-year period, provided for by the IWT contractual quality incentive mechanism, which is expected to be completed by 31 December 2022.

The procedure is divided into the following two stages: 

• stage a) identification of the management entities for which there is a complete set of information for the definition of the Stage III ranking (class A - maintenance goal, level of excellence), and for the attribution of bonuses and penalties in all Stages. In particular, bonus factors will only be attributed in this stage if:
  - the AGB has transmitted the tariff structure documents (paragraph 5.3 of Resolution 580/2019/R/idr) or, in the event of the AGB’s failure to act, the operator has transmitted the tariff update request documents to the Authority. If such document transmissions do not take place, the following shall be assumed in order to calculate the penalty referred to in paragraph 96.4 of the RQSII: OpExQC,i a = 0 and VRGi a = 0, so that the penalty will only be equal to the incentive QC (share of the revenue of the UI2 component allocated to Stage I and II bonuses) divided by parameter N;
  - the AGB produces the relevant validation report (issued in accordance with the procedures set out in the Communique of 1 February 2022) showing that the AGB has checked that the information and data sent by the operator match the additional data available to the competent entity, and that the information and data in the “Summary by Macro-indicators” used to apply the incentive mechanism have been positively validated;
  - the operators concerned have paid the UI2 equalisation component to CSEA.
• Stage b) attribution of the penalties associated with Stages I and II for all management entities that have not sent, within the Authority- set deadlines, the data necessary for the assessment of the contractual quality objectives. Note that for these management entities, the follow-ups provided for in art. 2, paragraph 20, letter c), of Law 481/95 (administrative fines for non-compliance with ARERA measures, with the option, in the event of repeated breaches, of suspension of business activity) may be evaluated. The Authority specifies that the parameter N to be applied to the penalty calculation denominator (formula referred to in paragraph 96.4 of the RQSII) is the same as that quantified in step a) and is therefore equal to the number of operators for which a complete set of information is available. Not included in this point are those entities that suffer persistent problems in starting the necessary planning and management organisation activities with application of the convergence regulatory scheme (art. 31 MTI-3).

A later provision will deal with the determination of the portion of revenues from the UI2 component earmarked for bonuses for the years 2020 and 2021, also taking into account the application of the technical quality incentive mechanism referred to in Title VII of the Technical quality regulations for the SII (RQTI) for the same two-year period.