WARM DEPLORES METRO MANILA’S VERY HIGH WATER RATES, LACK OF EFFECTIVE SEWERAGE AND SANITATION LOW TRANSPARENCY IN WATER RATE SETTING, CALLS FOR STRONG GOVERNMENT ACTION AND STRICTER REGULATION WATER FOR ALL REFUND MOVEMENT The biggest water consumer group in metro manila Rizal, Cavite and other areas has called upon the Metropolitan Waterworks And Sewerage System (MWSS) to urgently look into the lingering problem of high water rates and other malaise that are affecting not only their members, but the rest of the other consumers as well. WARM further challenged MWSS to adhere to the “daan matuwid” governance principle of President Benigno S. Aquino III and improve its regulation systems. This was after WARM received complaints from a significant number of its member, not to mention the clamor of various homeowners association, condominium dweller group and subdivision owners. a. THE TALE OF VERY HIGH WATER RATES To date, the actual impacts of high national economic growth to the average Filipinos remain meager. This is because any increase in income is merely substituted by spiraling costs of basic utility bills, one of which is water. Hence, it is about time to meticulously examine the annual determination of the Return on Rate Base (RORB) of 12% as prescribed by the Public Service Law for any annual rate adjustments and for find out if there has been any inadvertence that may have been committed by past MWSS Regulators in order to reform the existing Rate Rebasing Exercise; In the international practice of Rate Rebasing Exercise for any Concession Agreement that affects public interests, general consumers and/or the government, long-term or annual Business Plans for Infrastructure Development, Maintenance, Capital Expense Recovery and Related Charges are submitted to determine its adherence to regulatory caps and monitor concessionaires’ future cash flows. Balancing actual cash flow vis-à-vis the RORB cap will then redound to balance in consumer and concessionaire/capitalist interests. However, the Business Plans are not supposed to be used as basis for water rate setting for the year immediately succeeding or within the rate adjustment period as this forms part of the capital expenditures of the Concessionaires. Hence, every Business Plan submitted must only be used as basis for rate setting in the forward future after all the listed Infrastructure Developments, Maintenance Expenses, Capital Expense Recovery and Related Changes have already been completed, prudently incurred and satisfactorily being used already by the paying public. The most important component in the formula in the computation of the annual RORB is the annual Audit of the Asset Registry completed by the concessionaire in accordance with the business plan. An annual audit of the asset registry as well as of actual performance is MUST DO’s by regulatory functionaries to effectively compute the annual RORB and evaluate the need for annual or periodic water rate adjustments. However, in the case MWSS, WARM research showed that since 30 July 2004 after COA’s Audit of ASSET USED IN OPERATION, where Manila Water was discovered to have had an actual Rate of Return of 40.92% over and above the 12% Public Service Law Cap of 12%, it was evident that: a) There has been no annual Audit of Asset used in operation, and no Asset Registry is at hand in MWSS; b) Hence, there has been no Annual Determination of the RORB where annual water rate adjustment must be based; c) COA was excluded from doing an annual audit of assets prudently incurred and used in operation by the concessionaires; d) That, whatever Business Plans submitted by the Concessionaires, Maynilad and Manila Water solely determined the basis of monthly billings and collections from consumers; e) Whether for reasons of negligence, inadvertence or sheer conspiracy, MWSS allowed the business plans to be used as basis for water rates within the year of submission. Hence, major components of the business plans, even if not prudently incurred, not yet used in operation and have never existed have been included in the monthly billings and collections charged to consumers; WARM laments the legal issue now pending at the Quezon City Prosecutor’s Office between some consumer groups and the concessionaires pertaining to this practice for the last 15 years that have led to advanced collection of major water infrastructures that have yet to see the light of day, and may have to be transferred to the ombudsman to include high official of MWSS. b. ON EFFECTIVE SEWERAGE AND SANITATION WARM believes that the high time to implement International Standards on Sewerage and Sanitation in the way water and sewerage users are charged by concessionaires. A review of MWWS’ Concession Agreement with the two (2) concessionaires Maynilad and Manila Water revealed that Metro Manila water consumers are actually being billed based on international criteria that are currently being applied like Japan, Singapore, Taiwan, And others with similar credit ratings. However, the high water rates in these countries are justified not only because of their per capita income, but more so, because they employ good, effective, and sophisticated sewerage and sanitation systems. For one, the sewerage system in these countries are well-placed and all effluents from households, subdivisions, condominiums, buildings and commercial establishments are connected to tightly sealed sewerage pipes and conveyed directly to specified Sewerage Treatment Plans (STP) providing safe discharge to water bodies. However, in the case of MWSS, Maynilad and Manila Water they use only combined drainage-Sewer system and Sludge Siphoning through their septic tank mobile suction systems that are both primitive, abandoned, not totally guaranteed and is environmentally unsafe, hence, the spread of rats, cockroaches, mosquitoes and other water borne diseases from leptospirosis, dengue, diarrhea, and the likes, even if we suffer from payment of water sewerage and sanitation under international rates. WARM finds further that allowing Maynilad and Manila Water to use our existing Metro Manila Drainage System – which are designed only to carry drains for surface and rain waters – to be combined with sewer effluents from households, condominiums, building and commercial establishment is dangerous to the health of Metro Manila communities and residents in the long term. Manning Formula states that concrete pipes designed only to carry surface or rain waters would not be able to withstand long-term electro-chemical and chemical reaction of sewer effluents, hence, its crown would eventually collapse that will lead to unhealthy smell, environmental degradation and prevalence of pests and other disease-carrying insects in our roads, drainage, manholes, households and buildings, hence, the spread of more diseases and cause of deaths. On the area of real estate development, the absence of effective sewerage and sanitation system is likewise putting stress on the cost of infrastructures to condominium, subdivision, homes and commercial developments and builders are obliged by cities to put up the Wastewater Treatments per project, even as the concessionaires are the ones that benefit from the charges already inputted in sewerage and sanitation fees from our monthly water bills. Metro Manila Cities, no matter what best they do to improve the environment, will not achieve international competitiveness in terms of living standards, health, and balanced environment as long as effective sewerage and sanitation systems are absent, and for as long as MWSS Regulators allow this continuing bad practice for our sewerage and sanitation system. c. ON LOW TRANSPARENCY IN WATER RATE SETTING WARM challenges the MWSS Board of Trustees and MWSS Regulators to disclose their Annual Audits, Status Collections allowed and other data for the following items: a) Laiban Dam b) 15 cubic meter per second (cms) Angat Dam Water Irrigation Replacement c) Wawa Dam d) Earthquake Contingency Fund e) Income Taxes collection from Consumers despite 6 years Income Tax Holydays granted by BOI to both Maynilad and Manila Water. f) 300 million liters per day (MLD) Putatan Pumping Plant which is still under construction and questionable deals with National Irrigation Administration; g) Pinugay Sewerage Treatment plant in Antipolo which despite having been paid by Consumers is not yet used in operation. h) Other Sewerage and Sanitation Projects i) 10% Environmental Fees j) Self dealings between and among the affiliates of Maynilad and Manila Water in violations of our existing anti-competition laws, EO 45 and other applicable laws. We challenge the MWSS Board of Trustees and the MWSS rRegulators to disclose their book of annual Return on Rate Base Determination, Annual Audit of the Asset Registry of MWSS, Maynilad and Manila Water, and Annual Audit of Performances of the assets used in operation; We challenge the MWSS Board of Trustees and MWSS Regulators through their Financial Regulation Division who is directly responsible for regulatory accounting, rate adjustment accounting and economic function accounting to open to the public detailed costing of cost water by Maynilad and Manila water and the Return on Rate Base allowed to them annually that served as their basis for Water Rate Approvals; We urge MWSS to be open to the public in their regulatory governance; WARM volunteers to be a public participant of the Rate Rebasing Exercise of MWSS in the spirit transparency representing the water consumers; WARM supports the Water Advocacy Groups, namely, ALYANSA NG MAMAMAYANG NAGHIHIRAP (ALMANA),Congresswoman Bernadette Herrera-Dy of Bagong Henerasyon Party-list, Electricity-Water Alliance for Refund and Reform, Waterwatch coalition, Intercessors for the Philippines (IFP), MWSS Employees Association, and Ms. Aurora Pijuan of the Bloggers Group, Capt. Nick Faeldon and the rest of the water consumers who are all in search for the truth as to “WHY IS OUR WATER BILLS SO EXPENSIVE NOWADAYS?”
Posted on: Sat, 06 Jul 2013 06:38:12 +0000
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