Manila Water rates to increase in April

Some consumers can expect to pay more for their water supply next month after the Metropolitan Waterworks and Sewerage System (MWSS) announced a slight adjustment in the rates of Manila Water Co. Inc. and Maynilad Water Services Inc.

During a virtual briefing on Thursday, MWSS chief regulator Patrick Lester Ty said his agency’s board of trustees had approved the two water concessionaires’ foreign-currency differential adjustment (FCDA) for the second quarter.

Manila Water will raise its FCDA by 0.84 percent or 5 centavos per cubic meter to 24 centavos/cu.m. from 19 centavos in the first quarter and add this to its 2021 average basic charge of P28.52/cu.m.

This will result in the Ayala-led firm’s residential customers consuming 10 cu.m. or less seeing a 27-centavo increase in their monthly bills; those consuming 20 cu.m., 60 centavos; and 30 cu.m., P1.22.

Meanwhile, Maynilad will reduce its FCDA by 0.41 percent or 15 centavos/cu.m. in its 2021 average basic charge of P36.24/cu.m.

As a result, the Pangilinan-led company’s home customers consuming 10 cu.m. or less will see 8 centavos cut from their monthly bills; those consuming 20 cu.m., 10 centavos; and 30 cu.m., 20 centavos.

FCDA is a tariff mechanism, reviewed quarterly, that allows the two companies to recover losses or give back gains from fluctuations in foreign-exchange (forex) rates, as payments are made for foreign currency-denominated loans used to fund the expansion and improvement of services.

It is also corrective mechanism formulated by the MWSS Regulatory Office to avoid underrecoveries or overrecoveries caused by forex movements.

“The reason there is an increase in Manila Water and rollback for Maynilad is because there are significant portions of the loans of Manila Water are in Japanese yen and euros. Since the yen and euros appreciated against the Philippine peso… it caused an increase in [Manila Water’s] FCDA,” Ty explained.

“[For] Maynilad, majority of their loans payable for this quarter are in US dollars. The peso appreciated against the US dollar, which caused the rollback of P0.01/cu.m.,” he said.

Deferred rates to pile up?

The adjustments came after Manila Water and Maynilad waived in November scheduled rate hikes for 2021, particularly the rate rebasing and upward adjustments in the consumer price index (CPI), to help customers alleviate the impact of the coronavirus pandemic.

The move raised worries that these postponed increases would pile up.

Although Ty said this would indeed “pile up” in the fifth rate rebasing in 2023, he assured consumers that rates won’t suddenly spike.

“If there’s going to be [an] increase, it should be a gradual increase, only because we need to protect the interest of the public,” the official told reporters.

Rate rebasing involves determining the charges of concessionaires for their services based on their performance, expenses, earnings, unrecovered investments and service improvement plans.

CPI adjustments refer to the annual inflation adjustment that happens every January. It takes into account the increase in aggregate prices as measured by the CPI, among others.
Ty said this office would wait for the revised concession agreement between the government and the two concessionaires before starting the rate rebasing process.

“But if we are forced to start the preliminary things for the rate rebasing for next year, we will factor that in that there might be new terms and conditions and adjust it accordingly.”