MWSS: Water rate hike looms due to peso fall
Head office of the Metropolitan Waterworks and Sewerage System in Diliman, Quezon City. (Photo from the MWSS website)
MANILA, Philippines — Consumers in Metro Manila and neighboring provinces may have to cough up more for using water as the fast depreciation of the peso, now inching closer to 60 to a $1, is expected to push up rates come January next year, Metropolitan Waterworks and Sewerage System (MWSS) chief regulator Patrick Lester Ty said on Wednesday.
“It will have an effect definitely, but we will try our best to minimize or at least spread this increase through the next five years,” Ty said in a virtual briefing. “But in the meantime, since we are still under the original concession agreement, all the losses for foreign currency will be included during the rate rebasing that is ongoing right now and that will have an effect in the rates this coming Jan. 1, 2023.”
Ty was referring to the foreign currency differential adjustment (FCDA), a rate-setting mechanism allowing concessionaires Manila Water Co. Inc. and Maynilad Water Services Inc. to recover losses or give back gains arising from fluctuations in the value of the peso against foreign currencies since both water service providers incur foreign loans to finance the expansion and improvement of water and sewerage services.
While the FCDA component was removed from the water bills under the revised concession agreement signed by the Duterte administration with Manila Water and Maynilad, Ty noted that the impact of the peso depreciation would be tackled in the ongoing rate rebasing exercise for both concessionaires for the next five years.
Rate rebasing is a performance review and general tariff adjustment of concessionaires. It determines the maximum rates that Manila Water and Maynilad may recover for their expenditures related to providing water and sewerage services.
Maynilad penalty
“We are waiting for the conclusion of rate rebasing and we will hold a series of public information drive and public consultations this October. By then, we will announce the results of our rate rebasing,” Ty explained.
In a related move, the MWSS Regulatory Office has penalized Maynilad for the “prolonged and recurring” water service interruptions in parts of its franchise area over the last few months.
Maynilad customers affected by the supply cut from May to July this year will receive refunds totaling P9,264,358.
“The penalty will be implemented in the form of bill rebates to affected Maynilad customers by November,” according to Ty. Maynilad was given until December to apply the one-time rebate on the bills of affected customers.
Ty said that Maynilad breached its service obligation of ensuring the availability of water 24/7 at seven pounds per square inch (psi) for at least 15 days in portions of Las Piñas City, Muntinlupa City and Parañaque City as well as Bacoor, Imus, Cavite City, Noveleta and Rosario in Cavite province.
“We investigated all of the excuses or basically the response of Maynilad on why there was a water service interruption. We had this investigated, we conducted interviews with customers and we also met with representatives of Maynilad,” he added.
Maynilad said it would comply with the financial penalty imposed by the MWSS, noting the problem stemmed from the algal bloom that occurred in Laguna Lake that hampered the operations of its Putatan water treatment plants.
Boon to OFWs
While the rapid depreciation of the peso may be bad news for water consumers, Go Negosyo founder Joey Concepcion said at the Laging Handa public briefing that the country’s businesses, particularly micro, small and medium enterprises (MSMEs), were hoping for a recovery with the approach of the holiday season when overseas Filipino workers (OFWs) usually send more dollars to the Philippines.
“Well, to OFWs it’s a big relief because imagine, the dollar used to be equivalent to P53, and now it’s P59, six pesos additional, that’s [more than] 10 percent. So if you earn $3,000 a month, it’s plus 10 percent, so that’s an additional $300,” Concepcion said.
“I’m confident, as we approach the last quarter of this year, that it’s a big thing for businesses. Their sales will increase, especially the MSMEs, when the Christmas season comes,” he added.
In the Philippines, Concepcion said businesses affected by the weakening peso and were experiencing higher costs of production simply pass these on to consumers, but warned that this could not go on for long.
“For manufacturers like us, we can’t keep on increasing prices because what could happen is that business might decline,” he added.
The stronger dollar, Concepcion said, was also the problem of many economies around the world, which followed the interest rate increases by the United States Federal Reserve to battle rising domestic inflation.
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