Tue | Jan 28, 2020

Water rates to go up in January

Published:Tuesday | December 10, 2019 | 5:11 PM
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The Office of Utilities Regulation (OUR) is reporting that ​​rresidential and commercial customers as well as schools and condominiums will see an overall increase of about 4% in water rates as a result of its approval of tariff increases for the National Water Commission (NWC).

The adjustment became effective on December 9.

In a statement today, OUR explained that, on average, customers paying water as well as sewerage rates will see an overall increase of between 15.5% and 17.8%.

The regulator further explained that most of NWC’s customers do not pay for sewerage.

The new rates will be reflected in customers’ bills starting in January.

The utility regulator says this is an interim tariff for 24 months as the NWC did not supply all the information requested by the OUR, including a cost of service study and an asset valuation report, needed for a full tariff assessment.

The OUR, in its assessment of the NWC’s tariff application, found weaknesses and major data gaps in the submission.

Consequently, it was determined that it would not now be prudent to establish the normal five year tariff.

The OUR says the NWC will be expected to formally apply for a full tariff review months after the effective date of the determination notice.


Residential customers

NWC proposal: 29.2%
OUR approved: 4.3%

NWC proposal: 31.5%
OUR approved: 4.4%

NWC proposal: 31.1%
OUR approved: 4.3%

NWC proposal: 32.6%
OUR approved: 3.7%

Water and Sewerage

NWC proposal: 42.1%
OUR approved: 16.6%

NWC proposal: 45.6%
OUR approved: 17.8%

NWC proposal: 41.1%
OUR approved: 17.3%

NWC proposal: 39.8%
OUR approved: 15.5%

The OUR also made other decisions pertaining to the NWC’s application, including the following:

1) Based on the NWC’s objective to hasten the pace of non-revenue water (NRW) reduction, the OUR has approved its request to increase the K-Factor from 16% to 20%. However, the OUR has mandated that the NWC refines the priority and the sequencing of its projects and present a revised slate of NRW projects to the OUR for approval within 3 months of the Determination Notice issue date. The K-factor, which appears as a line item on customers’ bills, is used to finance capital projects.

2) The consolidation of residential tariff structure from six blocks to four. The NWC had requested a reduction to three blocks. However, the OUR determined that in the absence of more detailed information it would be more prudent to consolidate to four blocks, based on usage.

3) The OUR has approved the introduction of a ‘standby charge’ for major commercial customers that retain NWC’s service connection only as backup supply.  The OUR recognises that NWC incurs a cost in making additional capacity available for these occasional consumers, therefore it is only fair that these customers should pay the incremental cost commensurate with the convenience. 

Among the requests the OUR did not approve are:

* The introduction of a sewerage service charge to reflect NWC’s fixed cost of providing customers with sewerage services

The NWC had proposed the introduction of this new charge for customers who have been disconnected from the NWC’S water supply for non-payment of bills, but still benefit from sewerage services. The OUR takes the view that while the proposal is in principle reasonable, the NWC’s proposal has not passed the concept stage and requires further development.

* The introduction of a new regime for charging commercial customers who use water as an input to their operations, but who do not return all water as wastewater to the NWC’s sewerage network.

NWC wanted this charge to replace the Economic Development Wastewater Tariff (EDWT), which allows a lower sewerage rate for these customers. The OUR takes the view that the proposed methodology which places the emphasis on volumes instead of the rate is feasible but the NWC did not present an implementation strategy. Accordingly, the EDWT shall remain in effect.

* The NWC’s proposal to apply a late payment interest charge to commercial accounts that remain unpaid seven days after the due date of the bill.

The OUR took the view that the proposal was not presented in sufficient detail, and has asked the NWC to develop and present a proposal to the OUR within six months of the effective date of this determination notice for the OUR to take a final decision regarding this issue.

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