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Framework for Economic Regulation of Water Services in Municipalities 14 June 2013

Implementation of Water Services Economic Regulation DWA WP10540. Framework for Economic Regulation of Water Services in Municipalities 14 June 2013. 1. Index. Water pricing chain. Waste discharge charge. Water resource management charge. 1. 7.

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Framework for Economic Regulation of Water Services in Municipalities 14 June 2013

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  1. Implementation of Water Services Economic RegulationDWA WP10540 Framework for Economic Regulation of Water Services in Municipalities14 June 2013 1

  2. Index

  3. Water pricing chain Waste discharge charge Water resource management charge 1 7 Raw water tariff (water resource development charge) Bulk waste water tariff 6 2 Sanitation charge 5 Consumer 3 Bulk water tariff 4 Retail water tariff

  4. Water pricing chain Waste discharge charge Water resource management charge 1 7 Raw water tariff (water resource development charge) Bulk waste water tariff 6 2 Sanitation charge 5 Consumer 3 Bulk water tariff 4 Retail water tariff

  5. Problems in water pricing chain – Water Services

  6. Water Revenue Management Process

  7. Economic Regulation of Water Services • No part of the water value chain is subject to formal economic regulation • Constitution provides for national government to regulate water services • Minister does not have authority to regulate water tariffs directly • Cannot set or approve tariff levels • Must rely on Norms & Standards for WSIs (Section 10 of the Water Services Act) • Price or economic regulation is not the only type of water services regulation • DWA role: Act as regulator of water services from a national perspective • WSAs and WSPs (municipalities) have a role to play at local government level

  8. DWA Functions & Tasks (National level)

  9. DWA Functions & Tasks (National level)

  10. Impact of Economic Regulation on WSAs & WSPs

  11. Impact of Economic Regulation on WSAs & WSPs

  12. Limitations of existing Section 10 Norms & Standards

  13. New Norms & Standards for WSAs & WSPs • Determine required revenue • Cost recovery • Loan repayments • ROA & net surplus • Establish future water consumption • Differentiate between: • Categories of services • Levels of services • Allocate required revenue to each category • Meter all water supply services • Tariffs for:- • Household use • Industrial & non-household use • Droughts & seasonal (Special tariffs) • Transfers & grants for basic water supply services to indigent registers only • Provide for rising block tariffs, fixed charges • Publish a Consumer Charter • Consult with consumers • Inform stakeholders on assumptions & tariffs:- • DWA • Other (e.g. SALGA, National Treasury) • Disclose to public:- • Website and/or Annual Report • Consumer invoices • Water supply function provides for – • Preparing separate budgets & financial statements • Separate setting of tariffs • Provide for water resource segmentation • Limited cross subsidization allowed • Percentage of water revenues allocated to other functions

  14. Water Tariff Models (WTM)

  15. Role of Water Tariff Models (cont.) Various WTMs developed or in process of being developed for determining municipal water tariffs

  16. Debt Management Process

  17. Debt Management Process (cont.)

  18. THANK YOU

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