Regulator reviews proposed water rate hike, tariff cut

The hike in rates being sought by the two water concessionaires is not a certainty, according to the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS RO).

The regulator pointed out that the two concessionaire’s proposals for tariff adjustment as are still being evaluated.

Emmanuel L. Caparas, acting chief regulator at the MWSS RO, said that the rate rebasing, which happens every five years, entails the possibility not only of rate hikes but of tariff cuts as well as.

Some consumer groups have already complained about the proposed projects of Manila Water Company Inc. and Maynilad Water Services Inc., Caparas said. The critics claimed that the water concessionaires failed to deliver on their projects. Others are insisting on a refund, citing unjustified collections.

The consumers groups are opposing any increase in basic charges. But the water concessionaires are proposing just that—a hike of P5.83 per cubic meter for Manila Water, and P8.58 per cubic meter for Maynilad.

“The rate rebasing process [will] address these assertions,” Caparas said, pointing out that the consumers have been arguing for a rate cut, while the concessionaires are pushing for an increase in basic charges.

“We are auditing the concessionaires’ performance for the previous five years against their commitments for that rate rebasing period,” he explained. “We are also taking into account what they need to do for the remainder of their concession term.”

Originally set at 25 years, the concessions have been extended by 15 years to 2037.

Caparas reiterated that there is no indication yet on whether the rates will go up or down, and that regulators are still evaluating the matter. The MWSS RO aims to wrap up the process within the month.

Christopher D. Chuegan, acting department manager of tariff control and monitoring at the MWSS RO, explained that the tariffs framework would take into account the concessionaires’ capacity to meet their obligations in providing water and sewerage services and managing the assets used in such services.

A third factor in tariffs is that cash flows must be “prudently and efficiently incurred.”

Chuegan said that the tariffs are future receipts from customers divided by future billed volume.

Future receipts include a concessionaire’s cash position at the beginning of a rate rebasing cycle, the net value of past and future expenses, and the cost of money.

Future billed volume is based partly on forecasts about demand and consumption which are, in turn, affected by factors like the number of connections, the available facilities and the projects implemented.

The Bagong Alyansang Makabayan and the Water for the People Network slammed the public consultation held last week, saying the event was “not transparent.”

Bayan secretary general Renato M. Reyes Jr. noted that representatives of concessionaires were unable to supply data when asked.

“We are deliberately being kept in the dark,” Reyes said. “What they want is to surprise us at the last minute, when the deal is done.”

But some community leaders are thankful for simply having water services available to them. One even expressed willingness “to endure higher rates than to go back to having no water at all.”