Energy and Water Utilities Regulatory Authority (EWURA) Seeks to Integrate Climate Change Impact Assessments into Water Authorities' Business Plans

The Energy and Water Utilities Regulatory Authority (EWURA) of Tanzania is proposing significant reforms to the regulatory framework governing water utilities. Key among these are the extension of the water tariff review cycle from three to five years and the mandatory integration of climate change impact assessments into water authorities' business plans. These proposed changes, deliberated during a stakeholder working session in April 2025, aim to enhance efficiency, transparency, and sustainability within the water sector. For legal practitioners, these developments signal a shift towards longer-term strategic planning for regulated entities and introduce new environmental compliance considerations in tariff applications and operational mandates.

The Energy and Water Utilities Regulatory Authority (EWURA) stands as a pivotal institution in Tanzania's economic landscape, tasked with the technical and economic regulation of the electricity, petroleum, natural gas, and water sectors. Its mandate extends to ensuring fair regulation that positively impacts both service providers and consumers. Recently, EWURA has initiated discussions on substantial amendments to the regulatory framework governing water utilities, signaling a forward-looking approach to sector governance.

At the heart of these proposed reforms, deliberated during a stakeholder working session in April 2025, are two critical changes: the extension of the water tariff review cycle from the current three years to five years, and the integration of climate change impact assessments into the business plans of water authorities. These proposals are not merely procedural adjustments; they represent a strategic pivot towards fostering greater efficiency, transparency, and long-term sustainability in the provision of water services across Tanzania. This article delves into the legal and practical implications of these proposed changes for legal professionals advising entities within the water sector.

The thesis of this article is that EWURA's proposed amendments to the water tariff application and business plan guidelines will necessitate a re-evaluation of strategic planning, financial forecasting, and environmental compliance frameworks for water utilities. Practitioners must understand the legal basis for these changes, their procedural requirements, and the substantive obligations they impose to effectively guide their clients through the evolving regulatory landscape.

EWURA was established under the Energy and Water Utilities Regulatory Authority Act, Chapter 414 of the Laws of Tanzania (EWURA Act, Cap. 414), with its operations commencing in September 2006. The Authority is an autonomous multi-sectoral regulator, responsible for a broad spectrum of functions including licensing, tariff review and setting, monitoring performance, formulating and enforcing quality codes and standards, resolving disputes, and promoting consumer protection.

Specifically concerning the water sector, EWURA's mandate for tariff setting is detailed in instruments such as the Energy and Water Utilities Regulatory Authority (Water Tariff Application and Rate Setting) Rules, 2020 (Government Notice No. 849 of 2020). These rules outline the procedures for licensees to apply for tariff reviews and for the Authority to conduct inquiries and issue tariff orders. Historically, the tariff review cycle for water utilities has been set at three years, providing a regular interval for adjusting charges based on operational costs, investment needs, and economic conditions. The framework also emphasizes transparency, requiring public notices and stakeholder engagement during the tariff review process.

The proposed extension of the water tariff review cycle from three to five years represents a significant shift in regulatory philosophy. Under the current framework, as stipulated in the Energy and Water Utilities Regulatory Authority (Water Tariff Application and Rate Setting) Rules, 2020, licensees typically apply for tariff reviews every three years. The rationale behind the proposed extension, as articulated by EWURA, is to enhance efficiency, transparency, and sustainability in water services. For regulated water authorities, a five-year cycle could offer greater predictability and stability in revenue streams, facilitating longer-term investment planning and reducing the administrative burden associated with more frequent applications. However, it also means that utilities will need to be more robust in their initial tariff proposals, as adjustments to unforeseen economic fluctuations or operational cost changes will be less frequent, potentially requiring extraordinary tariff applications as provided for in the existing rules.

Equally impactful is the proposal to integrate climate change impact assessments into the business plans of water authorities. This move reflects a growing global and national recognition of climate change as a critical factor affecting water resources and infrastructure. For legal practitioners, this introduces a new dimension of environmental compliance and risk management into the utility sector. Water authorities will likely need to demonstrate how their operations, infrastructure development, and service delivery strategies account for climate change vulnerabilities and adaptation measures. This could involve detailed environmental impact assessments, water resource management plans that consider changing rainfall patterns, and investments in resilient infrastructure. The legal basis for such integration stems from EWURA's broad mandate under the EWURA Act, Cap. 414, to ensure sustainable provision of services and to make rules on matters it deems necessary to give effect to the Act.

The stakeholder working session held on April 24, 2025, to deliberate on the Draft Regulations for Tariff Application and Setting and the Fourth Edition of the Business Plan Preparation Guidelines for 2025, underscores EWURA's commitment to participatory regulation. This consultative approach is crucial for ensuring that the final regulations are practical, equitable, and widely accepted by all affected parties. Legal professionals should actively engage in such consultation processes, providing input on behalf of their clients to shape the regulatory landscape. The emphasis on adhering to approved business plans and fulfilling legal obligations for regulatory fees, as highlighted by EWURA's Director of Regulatory Economics, Mr. Msafiri Mtepa, reinforces the importance of robust internal governance and compliance frameworks for water authorities.

While the proposed changes aim to foster sustainability and efficiency, potential challenges may arise. A longer tariff cycle, while offering stability, might make it harder for utilities to quickly recover from unexpected cost increases or to fund urgent infrastructure upgrades without resorting to extraordinary reviews. Furthermore, the integration of climate change assessments will require significant technical expertise and financial resources from water authorities, particularly smaller ones. Legal advice will be critical in navigating these complexities, ensuring that business plans adequately address climate risks and that tariff applications appropriately reflect the costs associated with climate resilience measures.

EWURA's proposed reforms to extend the water tariff review cycle and integrate climate change impact assessments mark a significant evolution in Tanzania's utility regulation. These changes, while promising enhanced efficiency and sustainability, will demand a proactive and sophisticated approach from water authorities and their legal advisors. Practitioners must closely monitor the finalization of the Draft Regulations for Tariff Application and Setting and the Fourth Edition of the Business Plan Preparation Guidelines for 2025, as these will codify the new requirements.

Moving forward, legal professionals should advise clients on the necessity of developing robust, long-term business plans that not only project financial needs over a five-year horizon but also comprehensively integrate climate change vulnerability assessments and adaptation strategies. Compliance with these evolving regulatory expectations will be paramount to ensuring the continued financial viability and operational effectiveness of water utilities in Tanzania. The proactive engagement with EWURA's consultative processes will also remain crucial for shaping a regulatory environment that balances the interests of service providers, consumers, and the broader environmental imperative.