Jun 20, 2018 News
– company ordered to increase meter installations to reduce losses
The Public Utilities Commission (PUC), in a major decision announced yesterday, has approved increases in rates and tariffs for the state-owned Guyana Water Inc. (GWI), following an application by the company in January 2018.
The last approved increases occurred over a decade ago, in 2005.
With regards to the rates, PUC announced that residential consumers, who have meters, from October 1, 2018 will be paying a fixed charge of $250 monthly with consumers in the $60- $90 category to pay $86 per m3. All other consumers will pay a monthly consumption charge of $112 per m3.
From October 1, 2019, the fix charge will be $500 monthly
Unmetered residential consumers will pay a monthly fixed charge of $250 with the monthly consumption charge to be $1,100.
From October 1, 2019, the monthly fixed charges will go up to $500 with the monthly consumption charge of $1,450.
For pensioners, whether they have meters or not, there will be no monthly fixed charges.
However, metered pensioners will from October 1, 2018 pay a monthly consumption charge of $86 for each. From October 1, 2019, the charge will increase to $112 for m3.
On the other hand, unmetered pensioners will have to pay a monthly consumption charge of $740.
For non-residential unmetered consumers, from October 1, 2018, the monthly fixed charge will be $250 with the consumption charge to be $125 per m3.
The monthly fixed charge in this category, from October 1, 2019, will increase to $500 with the monthly consumption charge to be $150 per m3.
In the unmetered non-residential, the categories include small commercial and small industrial; medium commercial and medium industrial; large commercial and large industrial. For these, from October 1, 2018, the monthly fixed charge will be $250. However, the monthly charges range from $2,200 to $21,000 monthly.
GWI was also approved monthly charges for the sewerage tariffs category.
Residential and pensioners will pay $417 while non-residential will see charges of $2,860.
Under the Ancillary Charges, significantly, the residential tamper fee will now be $30,000 with the non-residential moving to $65,000.
However, the regulator warned that as conditions to the granting of the increased rates for the various categories of users, GWI will be required to meet certain targets and to report its performance to the Commission bi-annually, commencing from the 1st January 2019.
Among the major conditions, GWI will have to reduce its non–revenue water.
From this year, it will have to be reduced to 1.5 percent; in 2019, this will increase to 2.5 percent while in 2020 the figure will be 3 percent.
From 2020 onwards, it will be 4% until non-revenue water accounts for less than 15% of total production of GWI, said urged in its decision.
The hearings into the rates and tariffs increase were held earlier this year with heated arguments from consumer advocates and the company.
The hearings were held at Cara Lodge, Quamina Street. Representing PUC were Chairperson, Dela Britton; Commissioners Maurice Solomon and Rajendra Bisessar. The other PUC officials were Vidiahar Persaud – Secretary/Legal Officer and Moorsalene Sankar – Financial Analyst 1.
For GWI, the officials making their case during the hearings were Dr. Richard Van West Charles, Managing Director; Nigel Niles – Executive Director – Corporate Services; Jaigopaul Ram – Executive Director – Finance; Ramchand Jailall – Executive Director of Project Implementation and
Partnership Building; and Marlon Daniels – Executive Director – Customer Relations.
Among the consumers advocates making contributions were Patrick Dial of the Guyana Consumer Association.
PUC explained that the decisions were made after careful consideration of the views expressed by the various stakeholders, including GWI Officials, Consumers Association and the members of the public.
The first increase will be made effective from 1st October, 2018 while the final increase will be made effective from 1st October, 2019.
“The implementation of the increases in a graduated format is an attempt to alleviate the financial burden on the consumers when compared to the last implemented charges as awarded under Order 3/2005.”
On 9th January, 2018, GWI submitted to the Commission an application in which it sought approval for adjustments to existing tariff bands; introduction of new tariff bands; introduction of a fixed charge; reduced tariffs for pensioners over the age of 65 years; increases in existing ancillary charges and the introduction of new ancillary charges.
PUC said that it had directed, after demands by consumer advocate Ramon Gaskin, among others, for audited financial statement for the year ended 31st December 2016 to be submitted.
“The audited financial statement was submitted to the Commission at the hearing which was held on the 11th April 2018 and it confirmed the company’s claim that it is operating at a significant loss.”
PUC said that in the year 2005, there was an increase in GWI ‘s tariffs, but thereafter no further adjustments were made to the Company’s tariffs.
“Notwithstanding Government’s substantial subventions to the Company since 2005 to the present, the company has been unable to cover its operations, maintenance and depreciation charges. Further, lack of funds caused the mandated service standards as contained in its licence to be unattainable and as a consequence resulted in poor quality of service in specific areas.”
PUC stressed that from the onset, it wishes to note that the application for an increase in rates would not return the company to profitability. Government subventions may still be required for the company to achieve its objectives as detailed in its 2017-2021 Strategic Plan.
Currently approximately half of the consumers’ portfolio is un-metered.
“Unmetered consumers and non-revenue water translate to several millions of dollars in losses annually to the company, however, there must be a recognition that the resultant phenomenon was that the tariffs were well below the economic cost of its operations and thus led to a progressive deterioration of infrastructure and quality of service.”
The company CEO had reported during the hearing that more than 25,000 inactive consumers are on its database, meaning that they are not billed.
“One of the reasons proffered was disconnection by the Company for non- payment and illegal reconnection by the recalcitrant consumer. The view was also expressed that many non-residential consumers on the consumer data base may have been erroneously classified as residential consumers thus affecting the financial interest of the company.”
PUC urged that an updated consumer database is necessary to ensure the accuracy of charges and collections of all rates from its legitimate consumers, which will in turn improve its revenue collections.
PUC ordered that GWI to start installing more meters to customers.
From October 1, to December 31, 2018, the company is being ordered to deliver and install 5,000 meters.
Next year, a total of 12,000 meters will have to be installed. This would increase to 20,000 annually from 2020 until all customers have water meters.
Concerning GWI database, the regulator ordered that the company take steps to continuously sanitize to reflect legitimate debtors.
This should be accomplished no later than 30th June 2019.
“Collection rates on annual billings should increase incrementally each year to a level of 96% by the end of December 2020,” PUC also ordered.
PUC urged that the water company also visited disconnected customers every two months to ensure that they are not illegally reconnected.
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