Customers of Maynilad Water Services, Inc. will experience a slight reduction in their water bills starting this month until October, following the government approval of the company’s fourth quarter Foreign Currency Differential Adjustment (FCDA).
As for the customers of Manila Water Company Inc., no rate adjustment will be felt after the company decided to defer its FCDA implementation in the fourth quarter.
Metropolitan Waterworks and Sewerage System (MWSS) Chief Regulator Patrick Ty said on Monday, Oct. 4, that the MWSS Board of Trustees (BOT) has already approved the recommendation of the MWSS Regulatory Office (RO) to implement the fourth quarter FCDA of Maynilad.
MWSS-RO’s recommendation was based on its validation and evaluation of the FCDA proposal of the West Zone Concessionaire, which is the application of an FCDA of negative 0.55 percent of its 2021 Average Basic Charge of P36.24 per cubic meter or negative P0.20 per cubic meter. This is a downward adjustment of P0.05 per cubic meter from the previous FDA of negative P0.15 per cubic meter.
As a result, Maynilad residential customers consuming 10 cubic meters or less are expected to see their monthly bills go down by P0.18. Those consuming 20 cubic meters per month and 30 cubic meters per month are expected to have a decrease of P0.69 and P1.40 respectively in their bills this quarter.
The FCDA approval came months after the respective revised concession agreements (CAs) of Maynilad and Manila Water with MWSS were approved and released. Among the highlights of the agreements, which are to take effect no later than 18 November 2021, are the imposition of a tariff freeze until December 31, 2022 as well as the removal of the FCDA.
Ty clarified that “the implementation of the FCDA this quarter has been approved for Maynilad as the proposed downward tariff adjustment has been deemed greatly beneficial to the public.”
As for Manila Water, he said the company “has voluntarily deferred its FCDA implementation upon recommendation of the MWSS RO, as it will result in an upward tariff adjustment for its customers.”
The FCDA is a quarterly-reviewed tariff mechanism that allows concessionaires to recover losses or give back gains arising from fluctuations in foreign exchange rates, as payments are made for foreign currency-denominated loans that are used to fund the expansion and improvement of water and sewerage services.
It is a corrective mechanism formulated by the MWSS RO to avoid under recovery or over recovery caused by forex movements.
In June, Business Bulletin reported that the MWSS-RO reached out to the government panel that revised the CAs between MWSS and the water concessionaires, and clarified with the panel whether or not the FCDA can still be implemented during the latter part of this year.
Business Bulletin also learned at that time that both Maynilad and Manila Water already submitted their respective FCDA applications for the July to September period.