Deferred water rate adjustments could ‘pile up’ in next rate rebasing round in 2023 —MWSS

The rate increases deferred by water concessionaires Manila Water and Maynilad this year will be added to the next rate rebasing round which will take effect in 2023, the Metropolitan Waterworks and Sewerage System (MWSS) said Thursday.

To recall, Maynilad Water Services announced in November 2020 that it is forgoing the rate increases it is qualified to implement this year as well as the inflation increase, which are already approved by regulators, to ease the burden of the economic impact of COVID-19 pandemic to its customers.

The supposed 2021 rebasing adjustment for Maynilad for its overall rate is P1.95 per cubic meter and P1.03 per cubic meter for CPI (consumer price index) inflation increase.

Manila Water Company, likewise, deferred its P2.00 rate adjustment for 2021 as well as the inflation-factored increase as it heeded the “government’s call to help mitigate the impact of the disruption of economic activity on most Filipino.”

The deferred adjustments are under the current rebasing period, which began in 2018 and will end in 2022.

Pursuant to the concession agreement of the water companies with the government, rate rebasing is a process, done every five years, that determines the level of rates for water and sewerage services that permits the water concessionaires to recover over the life of the concession, until 2037, its operating, capital maintenance and investment expenditures.

The rate rebasing scheme is also a way to provide appropriate incentives to benefit both the customers and the concessionaires.

Asked how the deferred rate adjustments will affect the next round of rate rebasing, MWSS chief regulator Patrick Ty said, “They deferred it already so it will now be added in the next rate rebasing or the fifth rate rebasing.”

“Since those two rate adjustments or second and third tranches were deferred, these will now be added in the next rate rebasing,” Ty said at a virtual press briefing.

“Let's say for example, they are still required to do all these capex projects. Let's say they are supposed to spend that P100 billion and they're still going to be required to spend that P100 billion for capex projects, then that project will just be moved to the next rate rebasing and it will pile up,” he said.

However, the MWSS official said the concessionaires’ applications for rate adjustments will not automatically be approved.

“It's not automatic that it will be given because please take note you have to also check if during the rate rebasing we also check if there's going to be a rollback,” Ty said.

“If there's under spending, then there's also going to be a rollback in the water rates or in the basic charges. It will balance out,” he said, adding that “for example, in case that either of the two concessionaires are unable to do a project, then there should be a reduction in water rates.”

Ty said all of the factors will be taken into consideration in the next rate rebasing study, which it plans to start next year.

Asked further is there will be a sudden spike in water rates in 2023 due to the rate rebasing, the MWSS official said, “No because the MWSS Regulatory Office is here to protect the interest of the public to ensure that there will be no spike.”

“If there's going to be an increase, it should be a gradual increase only because we need to protect the interest of the public,” Ty said.

Manila Water provides water and wastewater services to the eastern part of Metro Manila, particularly the cities of Mandaluyong, San Juan, Pasig, Marikina, Taguig, the municipality of Pateros, and portions of Makati, Manila and Quezon City, as well as the province of Rizal.

Maynilad, meanwhile, currently serves customers in the cities of Caloocan, Las Piñas, Makati, Malabon, Manila, Muntinlupa, Navotas, Parañaque, Pasay, Quezon, Valenzuela.

It also services certain areas in Cavite such as the cities of Bacoor, Cavite, and Imus; and the towns of Kawit, Noveleta, and Rosario.—AOL, GMA News