Want to have electricity? – pay for water!
04 November, 2010
Want to have electricity? – pay for water!

Georgian consumer has to pay for all communal services simultaneously starting December 1, 2010. Otherwise they can face blackout. According to the new mechanism of bill-payment approved by parliament early in this October, any Georgian citizen who has unpaid bills for any of four communal service including electricity, gas, water, and cleaning, will be cut of electricity. Economic analysts believe this is an outrage of consumers’ rights and rude interference of the state in business.
Unpaid communal bills are an endemic

problem of Georgia starting its first year of independence.
This non-bill-obedient stratum of population incorporates three sub-groups however. One group consists of socially vulnerable people who do not pay because they cannot afford. It is an open secret that more than 56% of Georgian population is below the poverty level including pensioners, IDPs, and other socially vulnerable people. However, there still exists another part of population that does not pay for mentality problems: they just hate to spend on what they consume and do not give a damn for free market principles. This group is quite smart and invents different schemes of misuse of gas and electricity.

The third sub-group includes consumers who have disputes with the distributor companies over suspiciously big liabilities consumers allegedly owe to companies. The problem is that communal service distributor companies operating in Georgia are quite smart as well and try to streamline their financial losses on the expense of consumers. They demand for bigger liabilities allegedly accrued during the years when the communal service system was not meterized.
Gas and electricity distribution companies solved the unpaid bill problems however through metering and they cut out reluctant bill-payers off gas and electricity. But water distribution and sanitary service still face problems. City Hall that provides the city by sanitary service abolished liabilities for sanitary service this year. However it still fails to raise due tolls. Georgian Water and Power company (GWP), Tbilisi water distribution company, that has not implemented the overall metering process as of yet still cannot handle with the unpaid bills irrespective it suggested restructure of liabilities. GWP plans to get though with the individual metering by the end of 2015, however till that time the company obviously may face financial losses due to unpaid bills.
To support the GWP and City Hall to train non-obedient consumer to acquire bill-payment habit Georgian government made an amendment to the law on gas and electricity and adopted a unified bill that includes accounts for all the communal services. Georgian National Energy, Gas and Water (GNERC) Regulatory Commission, was assigned to create an administrator body for execution of coordinated communal bills.

Telasi, Tbilisi electricity distribution company owned by Russian-based RAO AES, along with Czech-based Energo-Pro, electricity distributor company of regions and Tbilisi outskirts, were chosen as administrators. And all Tbilisi resident consumers who turn out reluctant to pay for water and sanitary service starting December 1st, 2010 will be cut out of electricity. It means that almost all socially vulnerable people scarcely affording to pay for gas and electricity and ignoring water and sanitary service as a rule, face imminent blackouts. The new communal-bill-enforcing mechanism will be mandatory to Tbilisi consumer at the first stage, but the practice will cover regions gradually.
According to Davit Ebralidze, a legal expert and former energy Ombudsman of GNERC, this coordinated bill initiative is an unprecedented practice outraging consumers’ and business rights alike. Moreover, GNERC that is created to protect the market and consumer from monopolist companies wrong activity on the one hand, and protect companies on the other hand from the state interference and unfair competition seems as a redundant structure that fails to implement its function.
Moreover, GNERC misuses its rights when puts an administrator for collecting the sanitary service bill with the gas, water and electricity as much as GNERC is not responsible for regulation of the sanitary service that is up to the City Hall to handle with.
“GNERC lost its function and transformed into a notary in fact that registers governmental decisions [instead of opposing unfair decisions violating consumers’ and business interests],” Ebralidze told Georgian Journal. “Initiative to force one private company to cut out its consumer in favor to other private company is a crack-down on business and rude state interference in the private sector activity. Why Telasi for example is supposed to cut out consumer that paid electricity-bills for unpaid water-bills? It may inflict economic losses to Telasi. It seems like if you enter the market to buy a bread and they will not allow you to buy it without buying some other things.”

Guram Chalagashvili, Head of GNERC, argues that GNERC implements its functions in due manner and protects both consumer and business.
“No violation of consumers’ or business rights takes place actually,” He told Georgian Journal. “GWP cannot administer bill-payment because it cannot cut out non-obedient consumers. Telasi has the most developed and streamlined system that makes possible to implement administration of this new payment mechanism therefore we chose it as administrator. Energo will be administrating in the outskirts of Tbilisi that recently joined the town and I do not think that administrators may face any financial losses.”
Both Energo-Pro and Telasi refrain to make comments. None of them appealed to GNERC however to be granted by administrator functions. The GNERC’s decision is compulsory and not optional, Chalagahsvili elaborates, and they have to conclude contracts to this end with the GWP and City Hall till November 1st, 2010. Whether or not administrators are supposed to be paid for their service is not clear as of yet. Chalagashvili is not aware of this trinket and presumes companies will solve this between themselves.

Valeri Pkhakadze, Ombudsman of GNERC, is in tune with Chalagashvili. He does not see any violation of consumers and business rights in the questioned initiative as far as it is focused to punish non-obedient bill-payers. He expects increase of complaints however after this initiative enters into effect. 
“We can with the similar success empower specially trained gun-men to beat non-obedient consumers at the entrance of their houses to force them to pay bills,” Soso Tsiskarishvili, an economic analyst, said.
“Why Telasi/Energo-Pro do not remonstrate this decision?” Nodar Khaduri, an economic analyst, inquires. “Maybe they and GWP have similar owners?”

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