BWSL submits plan to increase rates

The Island Newspaper, Ambergris Caye, Belize            Vol. 13, No. 42            November 13, 2003

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Belize Water Services Limited (BWSL) has submitted documentation to the Public Utilities Commission (PUC) to commence a Full Tariff Review Proceeding (FTRP), as required by Belize law, in order for the company to raise water and sewerage rates in the country. The BWSL five-year Business Plan requires the company "to increase its income by around 30% - a substantial portion of the increase will need to be derived from adjustments to the existing tariff structure." This action comes on top of the 20% rate increase already suffered by many as a result of BWSL changing water meters from Imperial gallons to US gallons.

    According to BWSL, the investment plan documented in their 26-page report is essential to improving service to their customers. The water company lists a number of substantial improvements they have accomplished over their nearly three-year transition period, including increased water storage in San Pedro.

    Through this business plan, BWSL reportedly, "seeks to minimize the impact of tariff increases on social groups least able to afford significant increases." These four social groups, entitled "customer classifications" and their consumption levels include: "1A" - Social (using 500 gallons or less), "1B" - Low Consumption Band (500-2,500 gallons), "2" - Commercial (2,500-8,000 gallons) and "3" - Industrial (8,000 or more gallons). The following figures represent the percentage of consumers the category comprises and the rate increase percentage proposed for each: 1) Social -14% - 14.47% increase, 2) Low Consumption - 49% - 18.03% increase, 3) Commercial - 32% - 29.22% increase, and 4) Industrial - 5% - 41.52% increase.

    The BWSL business plan explains that the proposed tariff structure combines a number of unique circumstances, and therefore, certain geographic areas such as San Pedro will incur elevated tariffs. Subsequently, a revised schedule (and increase) of other charges (connect, disconnect, re-connect, illegal connect and deposits) for water and sewerage is proposed as well. The following information reflects the charges and/or fees proposed for San Pedro customers: Disconnection - $40; Reconnection - $15; New Connection Fee for Water - (Groups 1A & 1B) - $127.50, (Groups 2 & 3) $637.50; New Connection Fee for Sewerage (1A & 1B) - $375, (2 & 3) - $1,125; Illegal Connection Fee (Groups 1A & 1B) - $302.40, (Groups 2 & 3) - $453.60; Customer Deposit Water - $200; and Customer Deposit Water and Sewerage - $300.

    Under the proposed tariff structure, SP consumers will also be required to pay a minimum charge per month, which supposedly will bring these customers "in line with the remainder of the country." The minimum monthly water charge proposed in SP (up to the first 1,000 gallons) will be $10 for Social and $22 for Low Consumption consumers (the other two classifications do not apply). Thereafter, any water consumption in excess of 1,000 gallons would be charged as follows: 1001-1500 $23, 1501-2000 $24, 2001 - 2500 $25, 2501 - 3000 $26.50, 3001-4000 $28, 4001-5000 $29.50, 5001 - 6000 $31.50, 6001-7000 $33.50, 7001-8000 $37.50, and 8000 or more $37.50.

    In a summary of the plan, BWSL mentions the costs saved by choosing not to invest in a new reverse osmosis plant in San Pedro. Instead, the company negotiated a contract with Belize Water Limited to provide bulk supply to San Pedro (re: BWL article, October 16th, 2003, in The San Pedro Sun).

    A number of challenges to BWSL operations were also pointed out, such as the condition of the existing infrastructure at the time of purchase. The plan noted that, although the average water pressure increased 10 to 20 PSI, especially in Belize City, that these improvements resulted in significant increases in leakage. Illegal connections, coupled with leakage in the lines, account for almost 50% of the water the company produces. The report later stated that, "At the present levels, illegal connections are costing the company around BZ$1 million per annum. The cost burden caused by those who take water without payment is an unfair imposition on those who are legitimate customers, who now must pay to make up for these losses. BWSL explained that, "Gains made in reducing leakage and theft of water (known collectively as Non-Revenue Water or NRW) latterly, now need to be reinforced with some legislative changes if the business is to maintain a low cost structure in the future."

    The report continued to elaborate on the changes in operating expenses, which are directly impacted by NRW. As a result, the costs associated with maintaining the existing pipeline will increase considerably until the overall quality of underground "assets" has been improved by making new investments.

    The plan stated that, until the company was financially capable of investing the significant resources and cash required to bring sewerage services to the majority of customers, it would renovate the existing sewerage assets. In reference to the San Pedro Sewerage System, this amounted to replacing all the electrical control panels, which were badly corroded due to the island's environment. The next, and ongoing, island project was said to be the replacement of five "lift pumps," in the sewerage system, "which will also be completed during year three of the transition period."

    Other island improvements included a new, elevated storage tank which was constructed to facilitate increased water storage, and more importantly, to control water pressure in this district.

    A release issued by the PUC last week stated that the Water Industry Act No. 1 of 2001 established their organization as the regulator of BWSL. The Act empowered the Commission to assume the role of economic regulator of the industry, thereby determining tariffs and establishing quality of service standards to be employed by BWSL. The 25-year license issued to BWSL by the Commission, set terms and conditions under which BWSL must operate. These included authorized service areas and procedures for the establishment of Standards of Performance and Codes of Practice.

    Since 2001, the Commission has served as regulator for BWSL, as the fully privatized water provider in a transition period, which ends in March 2004. When privatization of the water company came into being, it was with the explicit understanding that it would not require an increase in tariffs and charges during this period. The Commission was tasked with drawing up bylaws to establish the methodology and processes for setting tariffs. It also established procedures for Full Tariff Reviews and Annual Tariff Reviews, a regulated 12 percent rate of return for BWSL, as well as methodology for funding water supply to New Property Development.

    The Full Rate Review Proceeding commenced in October 2003 and could last five months, as prescribed by law. During the process, the PUC must consult with consumers and interested parties regarding its deliberations, in order to arrive at a final position on the tariffs.   

    In accordance with the review, the PUC held a public meeting in Belize City on Monday, November 10th, 2003, to hear comments on matters relating to the plan. The general public has until November 30th, 2003 to submit written comments and may obtain copies of the BWSL plan at the PUC main office, located at #63 Regent Street, or at BWSL headquarters on Central American Boulevard, in Belize City.

    According to a release issued by BWSL last week, the PUC will issue an initial written decision on the tariffs to be applied in "Full Tariff Period," together with the reason for the decision, by December 15th.

    Several dates are listed as deadlines for BWSL and other interested parties to object to or submit written comments regarding the decision announced by the PUC. The Commission must issue a final decision on the matter by April 17th, 2004.

    Additionally, throughout the review proceedings, the public will have access to all information as prescribed by Statutory Instrument No. 67 of 2002. An updated copy of the FTRP scheduled shall be maintained at the PUC office and at BWSL headquarters at the aforementioned locations. Up-to-date information may also be obtained by visiting the PUC website at
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