A global service quality index to evaluate the performance and sustainability in water supply utilities ANTÓNIO A. L. S. DUARTE 1 ; GISELA M. C. RODRIGUES 1 ; RUI A. R. RAMOS 1 1 Department of Civil Engineering University of Minho Campus de Gualtar, 4710-057 Braga PORTUGAL aduarte@civil.uminho.pt http://www.civil.uminho.pt Abstract: - Water supply systems are a structural part of public utilities and as such are vital to the general well- being, public health, safe drinking water use, economic activities and environment protection. The principal objective of regulation is to protect the interests of users by fostering quality in the services provided by utilities and ensuring a fair balance in the charges levied, guaranteeing the essentiality, equity, indispensability, feasibility and cost-effectiveness principles. The use of performance indicators is widely recommended as a measure of the utility’s effectiveness and efficiency. In Portugal, the regulation of service quality is conducted by ERSAR (Portuguese Authority for the Regulation of Water and Waste), which has decided to define its own set of performance indicators that is less comprehensive than those adopted by the IWA (International Water Association). Currently, the adopted system does not provide a quantitative and integrated evaluation leading to an overall ranking of utilities’ performance and sustainability. The aim of this paper is to contribute for the improvement of the Portuguese performance assessment system, through the development and application of a complementary methodology to define a global index of service quality (GISEQ) for a given water supplier in order to achieve accurate performance rates. This methodology allows a truly quantitative evaluation in which each performance indicator represents a criterion to be considered and judiciously weighted, based on the results of an on-line questionnaire proposed to a selected set of academic and professional experts. The GISEQ values are calculated as a weighted linear combination of the normalised scores of each performance indicator, which is one of the most common aggregation procedures available in the context of multicriteria evaluation. The criteria normalisation process essentially based on fuzzy sets defined for each indicator, considering the established ERSAR or legislation standards. An innovative approach to weights definition was also performed as well as a sensitivity analysis of GISEQ values to different weighting methods. Key-Words: - Water supply systems; performance indicators; multicriteria analysis; weighting methods; service quality index (GISEQ). 1 Introduction Being the water “market” a natural monopoly, regulation must, mainly, protect the interests of the user, based on a benchmarking strategy that promotes the quality of the water supply service and assuring the balance of the ruling tariffs. The regulatory action must incorporate the utilities' economic and service quality assessment based on a benchmarking strategy, and its public divulging, guaranteeing the equity, indispensability, feasibility, sustainability and cost-effectiveness principles. Economic regulation should be viewed as the most important form of regulating the behaviours permitted to operators since it is known that monopoly prices tend to be higher than those in competitive markets, and securing lower prices that, at the same time, ensure the economic and financial sustainability of operators. Economic regulation also includes the evaluation of operators’ investments as these directly affect the well-being of society. Users’ interests are best served by an appropriate investment policy that is the key to ensuring long term continuity of the service and maintenance of service levels. Therefore, it must take into account the need to safeguard the economic viability and the legitimate interests of utilities by ensuring the proper remuneration of invested capital irrespective of its nature (public or private, municipal or multimunicipal), while also safeguarding the environment and contributing to the implementation of governmental policies. Due to the complexity of service quality assessment, the use of performance indicators is essential as a WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT Antonio A. L. S. Duarte, Gisela M. C. Rodrigues, Rui A. R. Ramos ISSN: 1790-5079 759 Issue 12, Volume 5, December 2009