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Consumer group wants water rate hikes revoked

Consumer group Laban Konsyumer, Inc. (LKI) has contested the rate hikes of two water concessionaires Manila Water Company, Inc. and Maynilad Water Services, Inc., and urged Metropolitan Waterworks and Sewerage System (MWSS) to revoke the orders allowing the water rate increases.

Effective January 1, 2019, Manila Water imposed P0.64 per cubic meter while Maynilad imposed P1.48/cm. based on the MWSS Resolution 2018-12-CA and 13-CA and MWSS Board Res. 2018-190-RO and 191-RO.

Manila Water is the sole provider of water and wastewater services to more than six million people in the East Zone of Metro Manila.

Maynilad is the water and wastewater services provider of cities and municipalities that form the West Zone of the Greater Metro Manila Area in the Philippines.

In an appeal letter dated January 4, and filed the same day to MWSS Chairman Atty. Frank J. Demonteverde, LKI president Atty. Victorio Mario A. Dimagiba asked MWSS to recall, repeal and
revoke the above water rate hikes for Maynilad and Manila Water citing errors in “facts and law.”

Dimagiba questioned the adoption of the 5.7 percent consumer price index (CPI) or “C” stressing it is wrong. The “C” means the percentage change in the CPI for the Philippines as published by the National Statistics Office between July of the weighing year and July of the prior year.
LKI stressed that the prior year between July 2017 and July 2018 or the weighing period, the percentage change in the CPI was 3.3 percent only.

“It was grossly erroneous to use the July 2018 5.7 percent CPI,” Dimagiba pointed out.
On a month-to-month basis, the percentage change in the CPI between July 2017 and July 2018 is 3.7 percent. The average of the CPI between July 2017 and July 2018 is four percent.

However, in the business plans submitted by Maynilad and Manila Water during the 5th Releasing Period, they incorporated the inflation for the period of 2018-2022.

For Maynilad, the projected inflation (Chapter 8 of financial planning) used for the business plan for 2018 was three percent based on 2018 prices. But beginning 2018, the tariff was adjusted by the Rebasing Adjustment.

LKI explained: “For Manila Water, Annex 16-Basic ADR computations, Annex 17-Key Cost Adjustment and Annex 18- Financial Model are left blank pages in the MWSS website. LKI cannot identify the inflation used by Manila Water. Thus when the Board approved the basic charge for the 5th Rate Rebasing Period as recommended by the Regulatory Office, the approved 5th Rate Rebasing included the inflation submitted by Maynilad of three percent for the period of 2018-2022.”

Dimagiba further explained that “an added 5.7 percent inflation in the basic charge for 2019 is not just and reasonable. And yet, for 2019 consumers are not paying any added rate hike in accordance with the approved installment payment scheme of the 5th Rate Rebasing Period.”

LKI has also incorporated its December 16, 2018 as well as the reply of the Regulatory Office of December 19, 2018 (advance copy by email and hard copy sent by registered mail) as integral part of this appeal.

In the letter, LKI wrote that “the charter of the MWSS had been modified by the Revised Administrative Code of 2017 as amended.”

It added that “under Chapter 6, Section 25 of the Code, the MWSS is an agency attached to the Department of Public Works and Highways. The requirement of public hearing in rate fixing of public utilities is a cardinal rule of administrative law and is embedded in the MWSS responsibility to fix rate as they deem just and reasonable. The MWSS is not an exception to the basic and cardinal rule of due process of law.”