Manila Water not allowed to pass on financial penalties to consumers – MWSS

Published October 11, 2019, 5:51 PM

by Martin Sadongdong & Antonio Colina

By Madelaine Miraflor 

Metropolitan Waterworks and Sewerage System (MWSS) Chief Regulator Patrick Ty assured that there will be no immediate water rate increase as a result of the Supreme Court ruling imposing financial penalties against Manila Water Company, Inc. and Maynilad Water Services, Inc.

Metropolitan Waterworks and Sewerage System (MANILA BULLETIN)
Metropolitan Waterworks and Sewerage System (MANILA BULLETIN)

Ty made the statement in response to the recent statement of Manila Water that consumers will have to bear an exponential 780-percent increase in water rates or as much as P26.70 per cubic meter if the recent Supreme Court ruling on sewerage projects will be implemented.

Manila Water was particularly referring to the decision of the Supreme Court that reversed an earlier ruling allowing the concessionaires to finish their sewerage projects until 2037, or over 18 years, instead of just five years.

The new ruling said the concessionaires violated Sec. 8 of the Clean Water Act, which requires them to connect all existing sewer lines of households, subdivisions and establishments by 2009, or five years from the time the law took effect.

For failing to comply, the concessionaires were fined almost P1 billion each, representing the daily fines from 2009 to August 2019.
In a press briefing, Ty clarified that Manila Water is not allowed to pass on its financial penalties to consumers.

He also said that for whatever additional cost Manila Water will bear by fast-tracking its sewerage projects in order to comply with the new Supreme Court ruling, the Ayala-led company will not be allowed to pass it on to consumers until the next rate rebasing.

Done every five years, rate rebasing is a review of the water utilities’ past performance and projection of their future cash flows. Its purpose is to set the water rates at a level that would allow companies to recover their expenditures and earn a rate of return.

The next rate rebasing will be in 2023 since the previous rate rebasing review was only conducted last year.
Right now, both Manila Water and Maynilad have already filed their separate motions for reconsideration against the Supreme Court ruling.

Start paying the fine

Meanwhile, Buhay Partylist Rep. Lito Atienza said instead of threatening the public with unfair water rate increases, Manila Water and Maynilad should start paying up the fine imposed by the High Court for violation of the Clean Water Act.

“This is the height of arrogance! Instead of complying with the Supreme Court order, they are now threatening consumers with an oppressive hike in water rates unless the high tribunal reverses its ruling,” stated Atienza, a former environment secretary in a press statement issued yesterday.

“This is tantamount to blackmail,” Atienza added.

Instead of threatening to increase water service rates, Atienza said the erring water firms should start explaining to the public where their respectrive collection of “environmental fees” from water consumers were spent.

Previously, several lawmakers, including Bagong Henerasyon partylist Rep. Bernadette Herrera, said the environmental fees collected by Maynilad and MWC may have reached several billions of pesos a few years ago.

“For the past 22 years, they have been charging consumers a so-called “environmental fee” purportedly to put up sewer lines connecting all households to the wastewater treatment facilities,” said Atienza.

He explained that sewer waste coming from Metro Manila go directly to bodies of water such as Laguna de Bay and Manila Bay due to the lack of water treatment facilities that the water firms were tasked to put up in compliance with the law and their concession agreement with the MWSS.

“This is precisely why essential needs such as water should never be privatized and put in the hands of businessmen whose sole motivation is profit,” Atienza said. (with a report from Ben Rosario)