Water crisis

Quite knowingly, consumers must perceive the tariffs as fair, affordable and stable, and rates must be equitable across customer classes.
Water crisis

Starting this year, the monthly water bills of end-users of either Maynilad Water Services Inc. or Manila Water Company — for Metro Manila and nearby provinces — will rise an average of P7.87 per cubic meter following the approval of the Metropolitan Waterworks and Sewerage System Regulatory Office. 

How come this "injurious" year-end announcement appears to have an anesthetic effect upon us and the regulator even justifies it on behalf of these big monopolies — after it approved only last year a "rate rebasing" for the period 2023-2027?

It sounds insane for these two monopolies to have been granted 25-year concessions for water service delivery if every year water rates must be increased. While both Maynilad and Manila Water went into capital expenditure spending in 2023 for various projects to ensure an adequate water supply this year, the El Niño phenomenon as allegedly contributory to the price hike is more likely misplaced.   

It would seem that the ordinary Juan or Juana dela Cruz among us now share a common fear of anything that starts with the letter "M" as in Meralco for electric bills, Maynilad or Manila Water for water bills, Metro Rail Transit for transport fares. However, there ought to be a pre-reviewed, if not pre-audited, "tariff rate adjustment formula" in currency beyond any self-serving claim of capex spending by the concessionaires.

The question at hand is how are we setting the water tariffs? If the tariff form or design aims at a specific objective like in lieu of capex spending initiated for water projects, the end-users sure have the right to know whether in fact consumers are getting high quality water at an affordable and stable price. It is quite understandable for the suppliers of water to cover all the costs of water improvement and have a stable revenue base.

But who could best explain that the level and cost of fees for water and wastewater services benefit consumers and suppliers alike? There must be something about this rate-setting process that has escaped most of us given that the usual narrative is about how much in billions of pesos water concessionaires have spent to provide several hundred million liters of water daily.

Let nothing attract suspicion that the new water tariffs are driven more by management decisions on the part of the supplier; political decisions on the part of the regulator; yet the social decisions on the part of the consumer are simply set aside. Quite knowingly, consumers must perceive the tariffs as fair, affordable and stable, and rates must be equitable across customer classes.

Congress must therefore review the water policy since water is considered an economic good by most countries of the world. There ought to be a more acceptable pricing policy in the water sector. Not remotely, the regulator tends to fall into regulatory capture rather than protect the higher public interest.

Henceforth, a respectable knowledge of the full cost of the water supply is the most important ingredient for water policy formulation. We agree that "under no circumstances should the price of water be allowed to sink below the full supply cost," but strike a balance where it must.

Since water is a sustainable resource and no amount of El Niño will dry up the wells, how difficult must it be to exact a fair and reasonable rate increase? It's hoped that increased water fees do not strain anyone's willingness to pay given that, ideally, households should spend about 1 percent of their income on water. 

Basic economics requires that the price of a service be at least as high as the cost of providing that service. We trust these big concessionaires to have the best interest of the consuming public in mind.

Still, there ought to be an integrated pricing of the resource supplied from all sources — at prices not too high nor too low.

Daily Tribune