MWSS: Manila Water cannot pass on charges to consumers

Louise Maureen Simeon (The Philippine Star) - October 12, 2019 - 12:00am

MANILA, Philippines — The Metropolitan Waterworks and Sewerage System said it would not allow Manila Water Co. to pass on to consumers the heavy penalties imposed by the Supreme Court on the utility firm.

MWSS issued the statement after Manila Water warned of hefty 780 percent increase in water rates.

“It is clear in the concession agreement that they cannot recover that and pass it on to consumers. We conduct audit of their books and we will know if they try to insert that,” MWSS chief regulator Patrick Ty said in a briefing yesterday.

“Only prudent and efficient expenses may be recovered. If they have proposed expenses, they would have to submit that and it can only happen in the next rate rebasing by 2022,” he said.

Under the concession agreement, penalties, interest charges on late payments, bad debt provisions and depreciation provisions are not part of expenditures of a company. Expenditures are eventually recovered from consumers.

“It is also not true that this will be immediate, should there be an increase. Any tariff adjustment would have to go through rate rebasing which is done every five years,” Ty said.

The latest rate rebasing for the two concessionaires just finished last year.

“The earliest possible is Jan. 1, 2023 and only then we are going to study any proposal. We will not allow tariffs to suddenly balloon at rates not affordable to the masses,” he said.

Ty warned Manila Water and the other concessionaire Maynilad Water Services Inc. to be circumspect enough on their warnings to the consuming public.

“It causes undue panic and stress because of the perception that penalties will be charged to the public which is totally not true. There is no basis to charge them,” Ty said.

The east zone concessionaire warned of a hefty P26.70 per cubic meter increase in consumers’ water bill.

The price increase will supposedly be charged if the Supreme Court’s decision to fine the water concessionaires for their failure to comply with the Clean Water Act is not reversed.

“If the concessionaires were to compress into five years as the SC ruling wants what was planned as a 40-year project, the hundreds of billions of pesos required would lead to an increase in the water bill of subscribers, leaving them less money for other necessities and triggering higher inflation,” Manila Water said.

“Worse traffic is also to be expected since hundreds of kilometers of roads, including EDSA, which are part of the Manila Water’s east zone, would have to be dug up all at the same time. The daily loss of P3.5 billion caused by existing traffic congestion could balloon significantly,” it said.

In its motion for reconsideration, Manila Water said the SC decision to impose a P921 million penalty for its failure to complete its sewerage projects by 2009, or five years after the law took effect have no basis.

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