ACCESS BY CONSUMERS TO ESSENTIAL SERVICESenergy, water and sanitationACCESS BY CONSUMERS TO ESSENTIAL SERVICESenergy, water and sanitationGeneva, 2022 2022, United Nations All rights reserved worldwideRequests to reproduce excerpts or to photocopy should be addressed to the Copyright Clearance Center at .All other queries on rights and licences, including subsidiary rights, should be addressed to: United Nations Publications405 East 42nd StreetNew York, New York 10017United States of AmericaEmail: publicationsunWebsite: shop.un/ The findings, interpretations and conclusions expressed herein are those of the author and do not necessarily reflect the views of the United Nations or its officials or Member States. The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city, or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. This publication has not been formally edited.United Nations publication issued by the United Nations Conference on Trade and DevelopmentUNCTAD/DITC/CLP/2021/4ISBN: 978-92-1-113033-1eISBN: 978-92-1-001342-0Sales No.: E.22.II.D.5iiiAccess by Consumers to Essential Services: Energy, Water and SanitationNOTEUnder its overall mandate on trade and development, the United Nations Conference on Trade and Development (UNCTAD) serves as the focal point within the United Nations Secretariat for all matters related to competition and consumer protection policies. The work of UNCTAD is carried out through intergovernmental deliberations, research and analysis, technical assistance activities, advisory services, seminars, workshops and conferences. ivAccess by Consumers to Essential Services: Energy, Water and SanitationACKNOWLEDGEMENTSThis report, entitled Access by Consumers to Essential Services: Energy, Water and Sanitation, was prepared, under the overall guidance and supervision of Teresa Moreira, Head of Competition and Consumer Policies Branch of the United Nations Conference on Trade and Development (UNCTAD), by Robin Simpson, international consumer protection expert and lead consultant and Arnau Izaguerri, Economic Affairs Officer of the UNCTAD Competition and Consumer Policies Branch.The report benefited from insightful comments and references from Juan Lus Crucelegui, Ebru Goke-Dessemond and Graham Mott of UNCTAD; Sabrina Aronovitch; Juliana Bedoya Carmona, World Bank; David Goldstein, United States Natural Resources Defense Council; David Pollock; and Stephen Thomas, Public Services International Research Unit of University of Greenwich. UNCTAD led the production of the report: Jacqueline Bouvier assisted in formatting, and Magali Studer was responsible for the cover design.vAccess by Consumers to Essential Services: Energy, Water and SanitationTABLE OF CONTENTSNOTE . IIIACKNOWLEDGEMENTS . IVI. INTRODUCTION . 1II. INTERNATIONAL POLICY FRAMEWORKS . 3A. The United Nations guidelines for consumer protection . 3B. Sustainable Development Goals . 5III. FEATURES OF NETWORK SERVICES . 6A. Energy . 6B. Water and sanitation . 7C. Access and inclusivity . 8D. Affordability . 11E. Consumer rights . 12IV. COMPETITIVE MARKETS . 17A. Competition in the market . 17B. Competition for the market . 19C. Regularization of the informal sector . 22V. RECONCILING ACCESS AND SUSTAINABILITY. 23A. Electricity . 231. Supply side structural options . 232. Demand reduction through energy efficiency . 24B. Water and sanitation . 261. Supply-side efficiency . 262. Demand-side efficiency . 273. Supply-side structural options . 27C. Fiscal options for demand reduction . 28D. The human rights approach . 28VI. CONCLUSION AND POLICY CONSIDERATIONS . 29REFERENCES . 33NOTES . 351Access by Consumers to Essential Services: Energy, Water and SanitationI. INTRODUCTIONThe International Covenant on Economic, Social and Cultural Rights1 recognizes that “the ideal of free human beings enjoying freedom from fear and want can only be achieved if conditions are created whereby everyone may enjoy economic, social and cultural rights, as well as civil and political rights”. In 2010, the United Nations General Assembly explicitly recognized the human right to safe drinking water and sanitation and acknowledged that these are essential to the realization of all human rights.2 In 2015, the General Assembly identified clean water and sanitation as Sustainable Development Goal 6 and affordable and clean energy as Sustainable Development Goal 7 of the 2030 Agenda for Sustainable Development. 3Also in 2015, the United Nations General Assembly adopted the revised United Nations guidelines for consumer protection (the guidelines), 4 which are universally recognized as a valuable set of principles for setting out the main characteristics of effective consumer protection legislation, enforcement institutions and redress systems. They aim to assist interested United Nations Member States in formulating and enforcing domestic and regional laws, rules and regulations that are suitable to their own economic, social and environmental circumstances, while encouraging the sharing of experiences in consumer protection.The first two “legitimate needs” recognized by the guidelines in paragraph 5 are “access by consumers to essential goods and services” and “the protection of vulnerable and disadvantaged consumers”. Paragraph 77 recommends that Member States “should promote universal access to public utilities and formulate, maintain or strengthen national policies to improve rules and statutes dealing with provision of service, consumer information, security deposits and advance payment for service, late payment fees, termination and restoration of service, establishment of payment plans and dispute resolution between consumers and utility service providers, taking into account the needs of vulnerable and disadvantaged consumers.”The guidelines are the only international instrument agreed at the global level on consumer protection and, although not binding in the legal sense, they carry the moral authority derived from their adoption by consensus in the General Assembly and have been widely implemented by UNCTAD member States.5 The fifth session of the Intergovernmental Group of Experts on Consumer Protection Law and Policy, convened by UNCTAD and held on 5 and 6 July 2021, discussed the consumer protection needs of vulnerable and disadvantaged consumers in connection with public utilities. Those discussions were supported by an UNCTAD secretariat note under the same name, which informs the present report. 6 The coronavirus disease (COVID-19) crisis highlighted the importance of consumer policies to protect citizens from vulnerability and exclusion. In April 2020,7 UNCTAD gathered evidence of initiatives from consumer protection agencies in the first wave of the pandemic. Many countries suspended the payment of public utility bills, energy and water, for vulnerable consumers, such as those who lost their jobs because of the pandemic. Examples include Argentina, Brazil, France, Portugal and Spain the last two having widened suspension of service cuts for non-payment still further, including fixed and mobile telephony, Internet and cable television. Gentilini U et al. (2021) recorded the “waiving or postponing payments for utilities and other financial obligations adopted in an astounding 701 cases across 181 countries”.8 Government intervention is clearly proving necessary to meet consumer needs in public utilities, and its extent is an implicit global recognition of their importance. This recognition has grown during the COVID-19 crisis as the health risks of confinement have become more apparent even when not directly related to actual infection. The Sustainable Development Goal 6 tracking report for 2018 stated that “handwashing with soap and water is widely recognized as a top priority for reducing disease transmission”. It further reported that: “Poor WASH (water supply, sanitation and hygiene) contributes to undernutrition, which is endemic among the poor in sub-Saharan Africa and Asia, where many people live in insanitary conditions and do not get enough calories, protein, and micronutrients in their diet.” Sadly, only 27 per cent of the population in least developed countries had access to such basic handwashing facilities.9 COVID-19 has rendered network extension more difficult. The 2021 Energy Sustainable Development Goal 7 tracking report notes that “the COVID-19 crisis 2Access by Consumers to Essential Services: Energy, Water and Sanitationthreatens progress in some parts of the world. In sub-Saharan Africa, the number of people without access to electricity most likely grew in 2020”. There alone, 85million people will need to be connected each year for universal access to be achieved by 2030. 10The present report aims to provide policy makers with background on the emerging trends and considerations as well as policy options, focusing on the key requirements for inclusive and affordable access. Following this introduction, chapter two provides an overview of the international policy frameworks, namely the guidelines and the Sustainable Development Goals. Chapter three describes the features of the network services of water and sanitation, and energy, and places them in the consumer protection framework of inclusivity, affordability, and rights. Chapter four considers the role to be played by competitive markets and the interplay of competition policy and the regularization of the informal sector. Chapter five contains several policy options in the light of sustainability, including demand and supply-side efficiencies and fiscal options for demand reduction. A brief conclusion follows with a summary of policy considerations.3Access by Consumers to Essential Services: Energy, Water and SanitationII. INTERNATIONAL POLICY FRAMEWORKSThe importance of lifeline services such as water and energy is the focus of many resolutions and declarations at the highest level, including the current Sustainable Development Goals.11 In 2010, the United Nations General Assembly explicitly recognized the human right to safe drinking water and sanitation and the Human Rights Council reaffirmed this recognition. 12 Since 2006, there have been 12 resolutions of the Human Rights Council and four resolutions of the General Assembly on access to water and sanitation as a human right.13 In 2016, a High-Level Panel on Water was convened by the United Nations and the World Bank and its Action Plan was presented to the United Nations General Assembly, and wholeheartedly endorsed by the Secretary General of the United Nations and the President of the World Bank in 2016. The first headline recommendation was: “At local, country and regional levels: ensure universal access to safe water and sanitation. Address gaps in service delivery models, technology and behaviour change which limit access to sustainable drinking water and sanitation for all including the needs of women, girls, people with disabilities, and communities in vulnerable situations, recognizing access to safe drinking water and sanitation services as a fundamental human right”.14Regarding energy, Universal access to modern energy by 2030 was proposed as one of the three key pillars of the Sustainable Energy for All programme, launched in 2011 by the United Nations Secretary General. 15 More recently, Sustainable Development Goal 7 has raised the profile of energy in the United Nations. Energy was not specifically named as a goal at the outset of the monitoring of progress towards the earlier Millennium Development Goals of 20002015.16 Sanitation was also underemphasized.17 Both sectors are fully recognized by the Sustainable Development Goals, whose detailed targets covering quality and safety correspond with the consumer protection dimensions set out in the guidelines. An apparent paradox is that the promotion of access can seem to be incompatible with resource constraints, (particularly in water), and with the need to take urgent measures to prevent further climate change. It can also be argued that such a binary choice is a false one, but that nevertheless, users of these services, particularly in the richer countries, have an important contribution to make towards protecting the environment including the climate. As already mentioned, COVID-19 has shown that it is in the interests of all to protect the health and welfare of those still unserved. The Sustainable Development Goals add a welcome coherence to this debate by fitting these vital sectors into a generic framework, which includes both sustainability and universal coverage. The last revision of the United Nations guidelines for consumer protection in 2015 reinforced this trend.This chapter sets out the general standing of public utility services within the United Nations. Together, the guidelines for consumer protection and the Sustainable Development Goals form a wide policy foundation for consumer protection. In this regard, the guidelines follow their earlier versions, which, in 1985 and 1999, also referred to international targets such as the objective of universal service set for the International Drinking Water Supply and Sanitation Decade which ran from 1981 to 1990, a later version running concurrently with the Millennium Development Goals until 2015. Alignment with international goals has thus been a feature of the guidelines since their first version in 1985. A. THE UNITED NATIONS GUIDELINES FOR CONSUMER PROTECTION The United Nations guidelines for consumer protection contain recommendations that directly address public utilities. Paragraph 69 of the guidelines includes water, energy and public utilities as “areas of essential concern for the health of the consumer”.18 The guidelines are applicable irrespective of whether a public utility service provider is publicly or privately owned. As stated in paragraph 2, they apply to “business-to-consumer transactions, including the provision of goods and services by State-owned enterprises to consumers”. Box 1 contains the relevant text of the guidelines. In respect of energy, Member States are encouraged to “promote universal access to clean energy and formulate, maintain or strengthen national policies to improve the supply, distribution and quality of affordable energy to consumers according to their economic circumstances” (paragraph 76). The reference to universal access is widened in paragraph 77 to public utilities. A degree of pragmatism is expressed about both water and energy services in terms of “the choice of appropriate levels of service, quality and technology”, issues which feature in this paper, and which have taken on greater significance in the context of climate change.BOX 1 Extracts from the United Nations guidelines for consumer protection, 2015 version“Legitimate