New water rates seen to take effect in July

Children watch as water is drawn from a faucet in Quezon City suburban Manila on October 12, 2010. AFP FILE PHOTO

New water rates may take effect as early as the third week of July once regulators wrap up the rate rebasing process this month, according to the Metropolitan Waterworks and Sewerage System.

Emmanuel L. Caparas, acting chief regulator at the MWSS Regulatory Office (MWSS RO), on Thursday said that the government wants the new approved rates to be published in the first week of July. The new rates will be applied 15 days after publication.

Based on the five-year cycles laid out in the concession agreement with Manila Water Company Inc. and Maynilad Water Services Inc., the new rates are supposed to have been adopted at the start of this year.

But Caparas said the plan was delayed because the MWSS had to reorganize the regulating body after the term of some of the members ended in June 2012.

The MWSS had a hard time filling up the posts. In fact, the agency’s board of trustees was forced to install Caparas—himself a member of the board—in an acting capacity as regulatory head.

Some consumers criticized the move, saying it was a conflict of interest.

The MWSS on Thursday held two public consultations in Quezon City, one for Manila Water and another for Maynilad.

Manila Water proposes a rate hike of P5.83 per cubic meter. This will allow it to attain its goal of netting an average income of P5 billion a year over the next 25 years, or until its concession term ends.

The additional amount will also enable the company to recover a total of P426 billion in outlay during the period, which includes P212 billion in capital expenses and P214 billion in operational expenses.

Ferdinand dela Cruz, group director for business operations at Manila Water, said the company is asking for a return—the so-called appropriate discount rate or ADR—of 8.99 percent per year on its investments.

Manila Water was allowed an ADR of 9.3 percent in the 2008 rebasing cycle and some 10 percent in 2003, according to the MWSS RO.

As for Maynilad, company officials said that they are aiming to recover a total of P692 billion in the next 25 years. It is asking for an additional P8.58 per cubic meter on its basic charge.

Maynilad has set aside P188 billion over the next five years or until the end of 2017. This includes P68 billion in capital expenses, P42 billion in operational expenses, P10 billion in concession fees, and P67 billion in opening cash position, which refers to what it has yet to recover at the start of the new rate cycle.

Randolph T. Estrellado, Maynilad chief financial officer, said that, under the proposed rate hike, customers who use up to 10 cubic meters a month will have to pay P30 more.

Those who consume more than 10 cubic meters up to 20 cubic meters will pay an additional P113.48 a month.