THE National Water Commission's (NWC's) hopes for the Office of Utilities Regulation's (OUR) approval of a tariff increase by June is resting, precariously, on its ability to separate accounts for water and sewerage services to customers.

Currently, all NWC customers connected to the sewerage service, as well as private sewer pit users within 100 yards of an NWC sewage main, pay exactly 100 per cent of their water bill for sewerage rates,monthly.

There have been complaints about this over the years from the customers, although the NWC has insisted that its sewerage service would cost more than water.

In its 2011/12 annual report, tabled recently in Parliament, the OUR said that it had directed the commission to initiate the separation of accounts for water and sewerage services charged at the same rate.

"The OUR has taken the position that these charges should be calculated separately and cost reflective tariffs developed for each component," it said.

"This separation of accounts is a prerequisite for the next NWC tariff review, scheduled for April 2013. It will inform the proper allocation of costs between the NWC's water and sewerage activities, and will enable the OUR to determine the appropriate tariffs," the report added.

The NWC has acquired the services of a foreign consultant, Castalia Strategic Advisors, for a fee estimated at about $25 million to help it prepare its application for the rate increase, which will include information on the cost of its sewerage service. But the commission's Vice-President for Marketing and Communications David Geddes told the Jamaica Observer yesterday that separating the accounts was a tedious thing. "It's not something you can do overnight," he stated.

He admitted, however, that the NWC believes the Castalia report, expected next month, will assist the process, but he cautioned that the information would not be "the end-all" of the process as it could only provide the basis.

Indications are that the NWC is relying on the information on service costs provided by Castalia to convince the OUR how difficult, and costly, the system of separate rates would be, including the need for introducing meters to measure the use of its sewerage service.

The NWC says it needs to increase rates because its costs have been going up sharply since the last increase in 2008. It will be depending on Castalia to help it determine the level of increase and to convince the OUR to grant this increase. The OUR says that its focus is on the delivery of affordable potable water, expanded and integrated sewerage services, significant reductions in water losses and continued expansion of the service.

It said that a major concern continues to be the extent of water losses, "the so-called non-revenue water, that continues to be experienced by the National Water Commission, and the consequent need for greater efficiencies in the delivery process through improvement in the infrastructure".

The OUR says its implementation of the K-Factor Fund, through a tariff component, is to fund special capital-intensive projects aimed at improving the NWC's efficiency.

The fund is disbursed with OUR approval specifically for projects intended to reduce losses from non-revenue water, and to improve the infrastructure for sewage treatment and disposal.

The OUR says there are challenges with the management and disbursement of the K-Factor funds and therefore its direct involvement and control could not be excluded.