Why is our water bill so expensive nowadays?

I was surprised to see my water bill escalate so high in just a few years. The first time I saw a sudden jump (which the public may have easily brushed aside) was sometime around 2009.

I’m pretty sure the water companies are improving the water pipes around the metropolis. They are possibly also working on upgrading their internal systems. Therefore there is a reason for higher rates. But I think they have charged the consumer way too high. They should regulate their costs. Water is becoming ridiculously priced. Calling P-Noy! Please look into this sector and while you’re at it, please look into the electricity rates as well. The public is suffering. We need your help Mr. President.

A family of four in 2009 used to pay an average of P300 per month. Today, the amount has increased to P700 on the average but can soar up to P900. How did this happen? What are all these charges in our billing summary all about? Are we paying for something we do not know?

When the Metropolitan Waterworks and Sewerage System (MWSS) failed to distribute more water to a growing population the government turned to privatization. In 1997, MWSS was awarded to two concession contracts – Manila Water Company (for the East zone) and the Maynilad Water Services (for the West zone). These two companies were expected to be regulated by the Metropolitan Water and Sewerage System (MWSS) Regulatory Office said to be staffed to a large extent by employees of the former public utility.

Reports show that as of 2010, the concession in Eastern Manila is highly successful and has led to significant improvements in access, service quality and efficiency. The population served more than doubled from 3 million in 1997 to 6.1 million in 2009. The share of customers with continuous water supply increased from 26% to more than 98% and non revenue water declined from 63% to 16%. However, the concession in Western Manila failed when the company Maynilad went bankrupt in 2003. After a series of financial, legal and regulatory disputes the concession was bid out again and was bought in 2007 by a consortium of the Filipino construction company DMCI Holdings and the Filipino investment firm Metro Pacific Investment Corporation.

After the tariff increase of 2001 Manila Water began to invest in expanding the water network, including in poor neighborhoods, and achieved a significant increase in access.

Maynilad on the other hand defaulted in the payments of its concession since March 2001 and volunteered to resign its award and for which it was penalized, after arbitration, by calling on its performance bond amounting to US$150 million. The default of Maynilad resulted in an award by the Supreme Court of P8.5 billion in favor of MWSS. However, Maynilad filed for a relief for rehabilitation which resulted in a conversion of the P8.5 billion award to an equity share of MWSS of 16.3% in Maynilad through the intercession of then President Gloria Macapagal Arroyo.

This brings us to the committee report made on the Congressional inquiry that covered the examination of the MWSS. The committee report confirmed the following: a) the revelation of President Aquino in his first State of the Nation Address, that the Officers and Board Members of MWSS were receiving for many years an average of thirty (30) months of salaries by way of bonuses, allowances and benefits, considered scandalous by government standards; b) the conversion and subdivision into housing of portions of Balara and La Mesa Dam to favor employees and officers of MWSS and other agencies of government collaborating with MWSS, such as the Commission on Audit (COA), the Office of the Government Corporate Counsel (OGCC) and the Department of Public Works and Highways (DPWH) only by mere MWSS Board approval – an act that is considered dubious, legally doubtful and in violation of the Constitution.

The committee also found the two concessionaires as falling short of the performance benchmarks of the Concession Agreements. After close to 15 years of privatization, they are hardly on target in the performance of their obligations and commitments: they have not met the target of 100% water coverage that they committed to within 10 years of their contract; the increases in their water rates have been horrendous; they have not achieved their target of uninterrupted, 24-hour water service to all connected customers; and, their 25-year horizon looks dim for a waste program being put in place for the improvement of public health and environmental conditions.

It was also discovered that the Regulatory Office of MWSS is wanting in transparency, diligence and independence, particularly in treating rebasing systems as confidential with the public as blind, in not ascertaining the accuracy of assets that have been employed by the concessionaires and in allowing the inclusion of plans and programs that have not been implemented or incurred to be included in the rate rebasing systems resulting in unnecessary increase in tariff rates.

They also had a rate debasing criteria (to increase rates) which was found to be faulty, dubious, uncertain and disputable. The committee also found misfeasance or non-feasance, complicity or neglect in the recommendatory act of the Regulatory Office and the approval by the MWSS Board, all of which resulted in unduly increasing water tariff rates, unnecessary burdening the consumers and unduly favoring the two private concessionaires. Sanamagan! This sounds like a conspiracy.

The Supreme Court said: “public utilities are essential to the general public. They are enterprises which specially cater to the needs of the public and conduce to their comfort and convenience….Public utilities are purely private and commercial undertakings, albeit imbued with public interest. The public interest involved in its activities, however, does not distract from the true nature of the petitioner as a commercial enterprise, in the same league with similar public utilities like telephone and telegraph companies, railroad companies, water supply and irrigation companies, gas, coal or light companies, power plants, ice plant among others; all of which are declared by this Court as ministrant or proprietary functions of government aimed at advancing the general interest of society.”

By the way, the Committee also unearthed the extension of the 25-year concession to another 15 years, even long before the expiry of the Concession Agreements in 2011 without any hearing, public notice nor regard to the performance of the concessionaires during the last 10 or 15 years, as ostensibly mandated in the Concession Agreements themselves. Susmariosep!

So now that Congress has made a committee report – what’s next? This is a problem. It needs to be resolved. It cannot just be shelved. The public is suffering.

At the end of the day, this shouldn’t be a ‘money-making’ venture for the three entities. They should clean house. There seems to be too much going on inside forcing the public to pay for their inefficiencies. The rates of any public utility service (even if privatized) must be carefully regulated. All we want is a fare rate increase – that’s all!