The Water for All Refund Movement, the biggest water consumer group in Metro Manila, Rizal, Cavite and other areas, deplores Metro Manila’s very high water rates, lack of effective sewerage and sanitation, low transparency in water rate setting, and calls for strong government action and stricter regulations. WARM President Rodolfo B. Javellana Jr. has issued the following statement, excerpts of which are herein reproduced.
The tale of very high water rates
“TO date, the actual impact 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 percent as prescribed by the public service law for any annual rate adjustments and to find out if there has been any inadvertence that may have been committed by past Metropolitan Waterworks and Sewerage System [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 their adherence to regulatory caps and monitor concessionaires’ future cash flows. Balancing actual cash flow vis-a-vis the RORB cap will then rebound to balance in consumer and concessionaire/capital 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 Charges have already been completed, prudently incurred and already satisfactorily being used 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 of MWSS, WARM research showed that since July 30, 2004, after Commission on Audit’s [COA] Audit of asset used in operation, where Manila Water was discovered to have had an actual Rate of Return of 40.92 percent over and above the 12 percent public service law cap of 12 percent, 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 and;
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;
On effective sewerage and sanitation
“WARM believes that it is high time to implement International Standards on Sewerage and Sanitation in the way water and sewerage users are charged by concessionaires. A review of MWSS’s concession agreement with the two concessionaires Maynila and Manila Water revealed that Metro Manila water consumers are actually being billed based on international criteria that are currently being applied by 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 sewage 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, mosquitos, 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.
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 rates for the following items:
A) Laiban Dam; b) 15 cubic meter
per second Angat Dam Water Irrigation Replacement; c) Wawa Dam; d) Earthquake
Contingency Fund; e) Income Taxes collection from consumers despite six years
Income Tax Holidays granted by BOI to both Maynilad and Manila Water; f) 300
million liters per day 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 percent Environmental Fees;
j) Self dealings between and among the affiliates of Maynilad and Manila Water
in violation of our existing anti-competition laws, EO 45 and other applicable
laws
“WARM challeges the MWSS Board of Trustees and the MWSS Regulators to disclose their book of annual RORB Determination, Annual Audit of the Asset Registry of MWSS, Maynilad and Manila Water, and Annual Audit of Performance of the assets used in operation.
“WARM challenges the MWSS Board of Trustees and MWSS Regulators through their Financial Regulation Division, which 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.”
This column invites Maynilad, Manila Water and MWSS to explain their side. Are they part of the problem, as WARM claims, or part of the solution?
Calling President Duterte —this is where we need your strong arm and political will. Past administrations cannot be blamed—that’s water under the bridge. But wait—what water?
We have no water!!!