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Implementation of Water Services Economic RegulationDWA WP10540

Implementation of Water Services Economic RegulationDWA WP10540

Framework for Economic Regulation of Water Services in Municipalities

14 June 2013

Index

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Water pricing chain

7

3

2

1

5

4

6

Consumer

Water resource management

charge

Raw water tariff (water resource

development charge)

Bulk water tariff

Retail water tariff

Bulk waste water tariff

Waste discharge

charge

Sanitation charge

3

22 May 2013

Water pricing chain

7

3

2

1

5

4

6

Consumer

Water resource management

charge

Raw water tariff (water resource

development charge)

Bulk water tariff

Retail water tariff

Bulk waste water tariff

Waste discharge

charge

Sanitation charge

4

22 May 2013

Problems in water pricing chain – Water Services

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Water Revenue Management Process

Economic Regulation of Water Services

• 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

Functions:o Consumer protectiono Service quality regulationo Price or economic regulationo Competition regulation

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• 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

Tasks:

o Set rules & make approvalso Monitor, analyse & publisho Enforce, decisions & intervene

DWA Functions & Tasks (National level)

DWA Functions & Tasks (National level)

Impact of Economic Regulation on WSAs & WSPs

Impact of Economic Regulation on WSAs & WSPs

Limitations of existing Section 10 Norms & Standards

New Norms & Standards for WSAs & WSPs

DWA legal mandate Regulate water services; can not set or approve tariffs at municipal level Monitor and enforce compliance by providing means to set tariffs according to Norms and

Standards

Using a WTM for setting tariffs Most municipalities fail to manage water services effectively; setting of tariffs a major task

Not advisable to prescribe a WTM for municipalities due to a lack of capacity, competency, etc. within municipalities to implement and operate a WTM

Progressive approach should be followed whereby municipalities first implement, and comply with, prescribed Norms and Standards

Norms and Standards contain pro-forma templates or work sheets that will force municipalities to follow prescribed processes

Water Tariff Models (WTM)

Role of Water Tariff Models (cont.)

Various WTMs developed or in process of being developed for determining municipal water tariffs

Debt Management Process

Debt Management Process (cont.)

THANK YOU

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