LKI Press Statement 2021-032 require public hearing on rate making of water franchisees


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LKI Press Statement 2021-032

September 3, 2021


Consumer advocacy group Laban Konsyumer Inc. (LKI) and its President Atty. Vic Dimagiba submitted to the Senate CommitteCommit “on behalf of Laban Konsyumer Inc. and all customers of Manila Water and Maynilad Water, our position paper as follows:

1. On tariff and rate making, including the impact of foreign currency exchange rates as   well as inflation and consumer price indices, the MWSS Regulatory Office must be required to conduct a full and fair public hearing with due notices and publication to all stakeholders including the consumer groups.

As a fundamental statement, water is a natural resource and owned by the State.

Dimagiba said “as such the utilization of water resources belong exclusively to the sole control and regulatory powers of the State. There should be changes in the current policy of setting water tariff and rates through a Rate Rebasing process which lacks the basic requirements of due process and hearing, transparency, fairness and integrity.”

 In this connection,”  the  Senate Committee may  adopt the quasi judicial rules of proceedings of the Energy Regulatory Commission in setting power rates to ensure that the water rates should be the least cost to the consumers and assure fair return to the business. Water and electricity are both natural monopolies.”

Laban Konsyumer added that “full public hearing shall enable transparency and integrity in the process of rate making. At the moment, this transparency and integrity are not present in the process of setting water rates. Our proposal is consistent with the position paper we submitted on Senate Bill 2094 dated May 31 ,2021 that proposed amendments to the Public Services Act.

 2. In the determination of the tariff and water rates, all Direct taxes liability of the franchisees should not be passed on to the consumers. Examples of direct taxes are corporate income tax, real property tax, franchise tax, business tax and transfer tax.”

Dimagiba pointed out that “The statutory taxpayer should pay the tax, WITHOUT, transferring the burden to the consumers. This is the decision of the Supreme Court in the case of Maceda vs. Macaraeg issued in 1993.

3. All capital expenditures of the franchisees must also undergo full and fair public hearing as in the case of tariff and rate making. Only those expenses that are directly necessary in the delivery of the water services should be passed on to the consumers. This is a Supreme Court decision in the case of Nasecore vs. ERC, COA and Meralco.”

4. Laban Konsyumer welcomes the disclosure in the Senate Committee hearing that the franchisees business operation is now classified as “public utility “. That disclosure put to rest any issues against  the matter of requiring public hearing in rate making.  There should be  full and public disclosure of the revised concession agreements of March 31, 2021 and May 18, 2021 particularly highlights of the changes that are beneficial to the consumers and impacts on the water rates as well as quality of services of the concessionaires. fine

5. The full disclosure of the revised concession agreements should include the concessionaire’s compliance to the payment of hefty fines  ordered by the Supreme Court for violation of the Clean Water Act in the case of Maynilad, Manila Water and MWSS vs. the DENR.

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