Discussion and guidelines for the utilisation of additional and reduced depreciation in the calculation of fees in the German sewage management

Abstract

In the German sewage management the calculation of fees varies depending on the federal state. Often, e.g. in North Rhine-Westphalia, implicit costs can be included in the calculation. Thereby, the operating life of each asset needs to be estimated. But the operating life expectancy and the real life can differ. As a result additional as well as reduced depreciation can occur. Due to the lack of further options it is not possible to compensate the resulting differential amount. For this reason the municipalities can be confronted with challenging tasks. This paper critically analyses, if and as well how options based on the local rates act and on the basic principles of pricing public contracts on a total production cost basis can be utilized in the investigated context in order to reduce the resulting challenges, like problems concerning the coverage of costs.