GEDDES... application for a 44 per cent rate increase was rejected mainly because of the NWC's failure to meet performance targets

Jamaicans will this Thursday start paying almost 30 per cent more for water as the Office of Utilities Regulation (OUR) has granted a 23 per cent increase in rates to the National Water Commission (NWC) and approved the introduction of a five per cent charge - called a K-Factor - which the water company said it needed to fund the rehabilitation of its network in order to increase efficiency.

But the decision has not gone down well with the NWC, which had applied for a 44 per cent rate hike which, it had argued, would help it meet the cost of providing and improving service.

"We are particularly disappointed because the request we had made was based on empirical data and compelling arguments," Charles Buchanan, the NWC's corporate public relations manager, told the Observer. "We had also gone all across the country and made our case to customers, many of whom, after hearing and seeing the situation under which we had to operate and provide them with a costly service. had recognised that we were deserving of an increase."

"We won't be receiving the revenue base which we believe is necessary to cover all our costs of operating and to effect the kinds of improvement, rehabilitation, restoration projects which are necessary. Every parish across the country would have seen us identifying some area of improvement, some major project work which we had wanted to do," Buchanan said.

Yesterday, David Geddes, the OUR communications manager, said the application for a 44 per cent rate increase was rejected mainly because of the NWC's failure to meet performance targets.

"The OUR in its tariff determination for the five-year period 2008-2013 approved a 23 per cent increase in rates and imposed more stringent guaranteed standards, including a penalty for wrongful disconnection and a reduced time span for reconnection of service and meter change," Geddes said.

"The revised guaranteed standards also include increased penalties for breaches of the guaranteed standards and the automatic compensation to customers for some breaches of the standards," added Geddes.

In a release yesterday, the NWC pointed out that its application for a 44 per cent increase was based on a number of compelling issues, including that the existing rates failed to cover the cost of providing service and that there have been "enormous" increases in operational costs since the last tariff adjustment in 2004.

The commission also said that its infrastructure was in "desperate" need of replacement or rehabilitation and that improvement and expansion in service are costly.

But the OUR said it determined that at the current rate there is a $2.4 billion shortfall to meet the NWC's revenue requirements. It also calculated the commission's total operating cost at $14.2 billion, while its total revenue was projected to be $11.8 billion.

The NWC, in its application, had put its proposed revenue requirement at $16.2 billion.

The NWC provides potable water to just under 460,000 domestic and commercial customers across the island and sewerage service to some 140,000 customers in specific areas of the country.

This is not the first time the NWC received a reduced only percentage of its tariff increase application. In 2004, the OUR granted the water company an 18 per cent increase instead of the 42 per cent increase it had sought.

Increase in rates and imposed more stringent guaranteed standards, including a penalty for wrongful disconnection and a reduced time span for reconnection of service and meter change," Geddes said.

"The revised guaranteed standards also include increased penalties for breaches of the guaranteed standards and the automatic compensation to customers for some breaches of the standards," added Geddes.

In a release yesterday, the NWC pointed out that its application for a 44 per cent increase was based on a number of compelling issues, including that the existing rates failed to cover the cost of providing service and that there have been "enormous" increases in operational costs since the last tariff adjustment in 2004.

The commission also said that its infrastructure was in "desperate" need of replacement or rehabilitation and that improvement and expansion in service are costly.

But the OUR said it determined that at the current rate there is a $2.4 billion shortfall to meet the NWC's revenue requirements. It also calculated the commission's total operating cost at $14.2 billion, while its total revenue was projected to be $11.8 billion.

The NWC, in its application, had put its proposed revenue requirement at $16.2 billion.

The NWC provides potable water to just under 460,000 domestic and commercial customers across the island and sewerage service to some 140,000 customers in specific areas of the country.

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