News

NWC seeking increase

Friday, October 19, 2018

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THE National Water Commission (NWC) has applied to the Office of Utilities Regulation (OUR) for a review of its current charges, a news release from the OUR said yesterday.

The OUR release said that NWC applied for a review of its current tariff on October 2, 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 allowing 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 $33.9 billion — $26.1 billion for water charges and $7.8 billion for sewerage charges.

The OUR said 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.

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.

Added to that, 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 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 NWC asserts that its tariff submission supports its objectives of improving and expanding potable water and sewerage services.

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