MANILA, Philippines -- Starting July 3, a household consuming 30 cubic meters of water monthly in the east zone of Metro Manila will have to pay an additional P4 every month, according to Manila Water Co. Inc.

These households will thus have to pay P392 for their monthly bills, up from the previous P388, said Jeric T. Sevilla, Manila Water corporate communications manager.

In an interview, Sevilla said that this increase was due to an adjustment of the company's Foreign Currency Differential Adjustment (FCDA) component to –P0.13 a cubic meter from –P0.34 a cubic meter.

"This is an upward adjustment of 21 centavos per cubic meter, the impact of which will only be minimal," he said.

Sevilla said all of Manila Water's customers -- residential, semi-business, commercial and industrial -- could expect an average of one-percent increase in their monthly bills.

However, in line with the government's program to protect low-income households, residential customers consuming 10 cubic meters of water or less every month will be exempt from the adjustment, Manila Water said in a disclosure to the Philippine Stock Exchange on Wednesday.

According to the disclosure, "water rates for Manila Water customers will be adjusted due to the continuing weakening of the peso versus other foreign currencies."

Sevilla said that this tariff adjustment was the result of the depreciation of the peso based on the exchange rate of P40.67 : $1 to P42.90 : $1.

The disclosure further stated that the FCDA was a tariff mechanism "which allows Manila Water to recover its foreign currency losses or pass on foreign currency gains, resulting from payments of concession loans and foreign currency-denominated borrowings, which were used to fund its service expansion and improvement."

Sevilla said that the FCDA was likened to a "discount" which the company would repay its customers, and hence the negative sign in the water bills.

With the adjustment of the FCDA to –P0.13 a cubic meter, this, in effect, means that the difference will have to be shouldered by the consumers, as reflected in the increase in water rates, said Sevilla.

The adjustment, which is revenue neutral according to Sevilla, has "no impact on the projected net income of the company."

Households consuming 20 cubic meters monthly will have to pay P193 a month, up from the previous P191, said Sevilla.

"Adjustments will follow if peso continues to weaken or if it will appreciate. We review the FCDA on a quarterly basis to check on the corrections in the markets," Sevilla said.

In January 1 this year, Manila Water raised its average all-in water tariff to P33.42 per cubic meter from P20.54. This means an increase of P62 in the monthly bills of households consuming 30 cubic meters of water.

Average all-in tariff refers to the mean of all the tariffs plus add-on costs related to Manila Water's four customer types.

The tariff adjustment, however, will be spread out within the next five years -- from 2008 to 2012, Sevilla said.

These adjustments are meant to help fund the firm's P187-billion service improvement plan over the next 15 years. The plan "aims to provide 24-hour water supply to customers, mitigate the effects of natural calamities, and expand water and wastewater services in the east zone, Sevilla said.

The tariff increases will also ensure water supply reliability in the east zone, Sevilla said.

Manila Water said that the firm would look for new water sources aside from Angat Dam in Bulacan province from where Metro Manila gets 97 percent of its water supply, repair, rehabilitate and lay down pipes to avoid leaks, and expand its wastewater program.