• WARM cool to water rate cuts

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    A CONSUMER group doubts if the reported plan by the Metropolitan Waterworks and Sewerage System (MWSS) to reduce water rates next week would benefit end users in the long run.

    “Any downward revisions still do not correct regulatory capture and regulatory failure. Kahit na magbaba o magbawas ang MWSS sa panukalang rate increase, wala dapat increase,” Water for All Refund Movement (WARM) President Rodolfo Javellana said onThursday.

    Javellana argued that unless the MWSS declares both water firms Maynilad Water Services Inc. and Manila Water Corp. as “public utilities,” any adjustment in water rates by the MWSS’ Regulatory Office (RO) is susceptible to “political horse trading.”

    We filed a case in the Supreme Court precisely to demand a complete
    accounting, auditing and refund. It is clear that for 16 years the concessionaires and MWSS officials have been conniving to dupe the consumers,” he said.

    Javellana said the water firms have been hiding under the cloak of being
    mere “agents” of the MWSS and in the process have been raking in billions from advance collections, front loading, overbillings, self dealings and pass-on charges like corporate income tax.

    On Thursday, The Manila Times reported that government regulators are poised to announce next week cuts ranging from at least 98 centavos to P8 per cubic meter in water charges.

    An insider said the five-man Regulatory Office was supposed to pass a resolution reducing water rates today but decided to defer it until next week because “figures” still have to be settled.

    “One thing is sure though, that the water rate hikes being sought by the water firms will be rejected and instead slashed. Rate cuts are in order but we have to be very careful so as not to be accused of being too stringent and later face arbitration, which could be costly” the source told the Times.

    According to him, a draft of the supposed resolution imposes a 98-centavo per cubic meter cut in Maynilad rates and a higher P5 to P8 per cubic meter cut in Manila Water’s.

    But Javellana was cynical, believing that the planned cuts would be questioned by the concessionaires through arbitration, a process allowed under the concession agreement (CA) between the MWSS and the private water firms in 1997.

    It is for this reason that WARM has petitioned the Supreme Court to intervene because “any revisions will still not correct the regulatory capture and failure,” he said.

    “Actually, MWSS can already make that [public utilities]declaration but without judicial pronouncement, it’s subject to political horse trading. In short, we rally need to turn to SC,” Javellana stressed, as he pointed out that two former presidents of both concessionaires are now in the Cabinet of President Benigno Aquio 3rd.

    Javellana said water consumers are afraid that the MWSS being under the state of regulatory capture will simply approve what the concessionaires have applied for.

    He said the concessionaires are the ones directly billing and collecting from the water consumers.

    The group also urged the MWSS-RO deputy regulator for financial regulation to monitor, audit and do an accounting of the concessionaires’ revenue, cost of operation (yearly invested capital expenditures prudently incurred) as well as annual determination of annual return on rate base.

    Javellana said this is needed prior to approving adjustments to determine the 12 percent cap in hiking rates.

    In June, Maynilad and Manila Water sought an increase in their basic charges, citing the need to recover past investments and fund future projects in wastewater management such as the cleaning up of polluted waterways.

    Maynilad, which services 17 cities and towns in Metro Manila and nearby Cavite province, sought a per cubic meter hike of P8.58 while Manila Water, which services eastern Metro Manila, asked for P5.83.

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