New Administrative Contract with the City of Tallinn

The Services Agreement, signed with the City of Tallinn upon the privatization of AS Tallinna Vesi, expired at the end of 2022. Also in 2022, the Company delivered all 97 contractual levels of service agreed in that agreement. The new Administrative Contract with the City was entered into for the period of 01/12/2022-30/11/2032. At the same time, AS Tallinna Vesi was appointed as the water undertaker within the main licensed territory of the public water and sewerage system in Tallinn until 30 November 2032. The new Administrative Contract is aimed at ensuring high-quality water services for city residents and entrepreneurs, adherence to the principles of environmental protection, and increased attention to investments in order to ensure the continuous rehabilitation of networks and the sustainability of the company.

Increasing levels of investment

We aim to grow investments in fixed assets to secure sustainable infrastructure and continuity of the service. In 2022, we invested €25 million in our capital assets, increasing, amongst other things, the volume of reconstructed water pipes and sewers to 19 kilometres.

A number of ongoing projects continued in wastewater treatment process, such as the reconstruction of effluent outlet tower, the civil reconstruction works in the main wastewater pumping station at Paljassaare and the reconstruction of aeration tanks at the Wastewater Treatment Plant. In addition, a new point of reception for sewage sludge from septic trucks was completed and the new raw sludge thickeners were installed. In Water Treatment Plant at Ülemiste, we continued the reconstruction of filters. Reconstruction of Velodroomi pumping station and installation of UV equipment in several pumping stations will help to improve water quality in our water networks.

Investments made by AS Tallinna Vesi allow to provide high-quality drinking water not only today, but also in the future and keep the environment around us pure.

Going green

In addition to investments in water and wastewater assets, properly maintained water and sewerage network, we have taken action to reduce Company’s environmental impact. Today, the electricity energy used at our facilities and in treatment processes is produced from renewable sources.

In 2022, we prepared a Climate Impact Reduction Plan for the Company and set ourselves several ambitious targets. The most ambitious target is to produce at least 50% of all electricity and heat needed within the Company by 2030. The first step was done by signing a contract at the end of last year for the installation of a combined heat and power plant on the Wastewater Treatment Plant at Paljassaare. Both electricity and heat produced from biogas, which is generated in wastewater treatment process during the stabilization of sewage sludge, will be fully used for the own use of the treatment plant and it will cover up to 70% of the plant’s current average annual electricity demand.

This will reduce not only the costs of electricity but also the pressure on the environment and will improve the operational continuity of the plant in case of electricity interruption.

At the end of the year, we started installing remote water meters for our customers, following Company’s regular water meter verification program. In five years or by the end of 2026, all existing water meters in Tallinna Vesi’s service area will be replaced with smart meters.

Customers who have a smart water meter installed, will no longer have to report their water meter reading. The main advantage of smart meters is the speed and accuracy of data transmission, as well as security and reliability. In addition to consumption data, the smart meter also communicates information about any failures and possible leakages. This in turn helps to save clean water and resources needed for treating water.

Sustainable financial position

The activities of Tallinna Vesi highly depend on the surrounding environment. In 2022, the Company’s financial results were most affected by high inflation rate and surge in energy prices. Since electricity accounts for about 25% of our production costs, the Company had to increase the price for water services to cover its justified costs. The price for water services in Tallinn and Saue increased by 26 cents per cubic meter in average starting from the fourth quarter.

Compared to the last year sales revenue increased, but due to the increased costs, the net profit decreased. The biggest impact on costs came from the increase in the market price for electricity, which led to an increase in electricity costs. Increased sales revenue of water services in 2022 was influenced both by the change in the volume of water consumption in hospitality and entertainment sectors and by the price increase on 1st of October.

We continued with the established dividend policy also in 2022.

Quality of water remains high

The quality of drinking water in Tallinn remained stable at a high level. 99.84% of water samples taken from consumers’ tap during 2022 were compliant with all requirements. Last year, we took a total of 3,086 water samples from consumer’s taps. Only 5 of them were non-compliant. High-quality tap water is ensured with the continuous development and maintenance of the water network.

Treated effluent quality from the Wastewater Treatment Plant at Paljassaare was at a high level in 2022, being again fully compliant with all the set requirements. In order to assess the efficiency of the treatment process and the quality of the treated effluent, the concentration of pollutants in influent and in effluent leaving the plant are constantly monitored. The team at the Wastewater Treatment Plant put in a lot of effort to deliver very high standards of treated effluent. The nitrogen and phosphorus removal rates were over 90%.

Satisfied customers

In addition to the quality of our product and services, we provide high quality customer service. In 2022, we upgraded our customers self-service platform to make it even more convenient for customers to use. It is essential for us to have regular feedback on the quality of our customer service and the services we provide. In 2022, based on the monthly feedback collected from more than thousand customers, we received an average rating of 4.2 on a 5-point scale and the percentage of satisfied customers was at 83%. The feedback we collect provides us with a valuable input for improving the customer service quality and the services we provide and for making improvements in our business processes.

Outlook for 2023

In 2023, we aim at continuing to provide high-quality service to the inhabitants of Tallinn and businesses by keeping the Company’s sustainable financial position and increasing investments in our assets. The Company will focus on the reconstruction of pipelines and the opportunities of using renewable energy solutions to develop sustainable infrastructure and ensure continuity of the service.

The investment plan for next years will be based on the Tallinn public water supply and sewerage development plan that is prepared together with the City of Tallinn. The pipeline reconstruction program for it, was prepared in cooperation with the Tallinn Technical University.

This year, we carry on with the installation of remote water meters for our customers. A number of major investment projects are ongoing and about to start in all main production lines of AS Tallinna Vesi.

For Tallinna Vesi’s subsidiary Watercom, 2022 was a good year in terms of volume and profit margin of services sold outside the Group. The company successfully launched a new manhole repair service and at the end of the year an ice pigging equipment was delivered, which allows to clean water pipes with ice by applying the most innovative technique currently used in Northern Europe. We are optimistic that the success of our subsidiary will continue in the future, and we believe that Watercom also has the potential to develop both existing and new services.

I would like to thank the entire dedicated team in Tallinna Vesi and Watercom, colleagues from Utilitas and the City of Tallinn, and all our customers, consumers and cooperation partners for their long-term and professional cooperation.

Aleksandr Timofejev
Chairman of the Management Board