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Operating costs in Berlin
Criminal complaint against Berlin's water utility: are water prices too high?
A property owners' association has filed a criminal complaint against Berlin's water utility and the Senate, alleging artificially inflated water prices. With an operating margin of 28 per cent, the question is fair.
Peter Guthmann
The Association of German Property Users (VDGN) filed a criminal complaint on 4 January 2016 against the CFO of the Berlin Water Utilities (BWB), Frank Bruckmann, as well as members of the Berlin Senate. The allegation: drinking water and wastewater prices are based on inflated cost calculations designed to generate unjustified profits at the expense of consumers.
145 million euros in profit, 28 per cent margin
VDGN president Peter Ohm based the suspicion on BWB's financial results. For 2014, the state-owned water utility reported an annual profit of 145.1 million euros, according to finance senator Matthias Kollatz-Ahnen. Nearly 100 million euros of that went directly into the state budget. The operating margin stood at 28.1 per cent.
Ohm called this margin "dreamlike" compared to other commercial enterprises and sees it as evidence of artificially elevated prices.
Legal basis for water pricing
Under section 16(1) of the Berlin Public Enterprises Act (BerlBG), BWB is subject to the principles of equal treatment, equivalence and cost recovery. Prices may not exceed actual costs incurred. Surpluses from overstated advance payments must be returned to customers through subsequent recalculation. According to VDGN, this obligation is not being adequately met.
What it means for property owners
Water and wastewater costs are recoverable operating expenses. Persistently high charges burden service cost statements and can reduce the net rental yield on investment properties in Berlin. In densely populated boroughs such as Friedrichshain-Kreuzberg or Neukoelln, these costs show up noticeably in accounts.
Not the first dispute over Berlin's water prices
This is not a new conflict. In the past, the water utility was already forced to lower prices following legal proceedings. The VDGN's criminal complaint marks a new escalation. Should prosecutors open an investigation and the allegations prove founded, refund claims for past years could follow. That would directly benefit owners of apartments in Berlin.