NWC applies to OUR for rate review

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NWC applies to OUR for rate review

Thursday, October 18, 2018

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KINGSTON, Jamaica — The Office of Utilities Regulation (OUR) says the National Water Commission (NWC) on October 2 applied for a review of its current tariff, proposing a 23 per cent and a 38 per cent average increase in revenues for water and sewerage charges, respectively.

The last such review was undertaken in 2013, when the OUR introduced new standards to protect NWC's customers, reducing the K-Factor charge on bills by 13 per cent and allowed an increase of between 13 per cent and 18 per cent on rates.

According to the OUR, the total revenue requirement associated with the latest proposed increases is J$33.9 billion (J$26.1 billion for water charges and J$7.8 billion for sewerage charges).

OUR said, the NWC is also proposing, among other things, the following changes to its rate structure:

a. A consolidation of its residential rate blocks from six to three. The first block, which represents a typical household consumption, would see a five per cent increase in rates.

b. The introduction of a decreasing block tariff for commercial customers with consumption above two million imperial gallons per month (9.1 million liters/month).

c. An increase in the first block of commercial, condominiums and schools' rate categories by 36 per cent for water and 46 per cent for sewerage.

d. The introduction of standby charges for major commercial customers who only use NWC services as backup supply.

e. The introduction of sewerage service charges to reflect NWC's fixed cost of providing customers with sewerage services.

Further, the NWC is requesting that the price cap tariff reset period run for three years (2019- 2021) instead of the customary five year review period, OUR said, noting that the company is also proposing that:

1. The K-Factor variable, which was approved in the 2013-2018 Tariff Determination to finance OUR approved capital infrastructure projects, remains at 16 per cent.

2. The X-Factor, that is the productivity efficiency factor, be set to zero per cent until 2021, when the efficiency gains are to be reviewed.

3. The inclusion of a Z-Factor provision as a special adjustment to the Price Adjustment Mechanism (PAM) to account for exogenous events that affect costs, not due to NWC's managerial decisions and which are not captured by the other elements of the price cap regime.

OUR said the NWC asserts that its tariff submission supports its objectives of improving and expanding potable water and sewerage services, encouraging and improving operating efficiencies and creating the financial viability necessary to sustain its operations.

OUR said, starting October 30, it will host public consultations with NWC customers to get their feedback on the application. Consultations will be done as follows:

- Kingston and St Andrew: October 30 at 6:00 pm at the Meadowbrook High School Auditorium

- Portmore, St Catherine: November 6 at 6:00 pm at the HEART College of Construction Services (formerly Portmore HEART Academy), Waterford, St Catherine

- Morant Bay, St Thomas: November 8 at 6:00 pm at the Morant Bay Anglican Church Hall, 1 East Street, Morant Bay, St Thomas

- Ramble, Hanover: November 13 at 6:00 pm at the Knockalva Technical High School, Ramble, Hanover

- Port Antonio, Portland: November 20 at 6:00 pm at the Ken Wright Terminal Building, Port Antonio Marina, Portland

- May Pen, Clarendon: November 22 at 6:00 pm at the St Gabriel's Anglican Church Hall, May Pen, Clarendon

Utility customers and other interested persons and civil society groups are invited and encouraged to submit their views to the OUR via email at nwctariff@our.org.jm.

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