GWI seeks $1.7B in water rates

Dec 11, 2012 News

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The country’s water provider, GWI, wants an overhaul of its tariff structure that could put $1.7 billion more its coffers, but its new Chief Executive Shaik Baksh was found wanting when called to explain why, recently.
The new tariff structure aims to ensure that all water consumers pay their fair share and would help to dig the utility out of the financial pit it is in. The new tariff structure, which creates new categories of billing, does not necessarily mean that consumers will pay more for water; in some cases consumers may actually end up paying less.

The Public Utilities Commission (PUC) has to approve the new tariffs and met with Baksh and other senior executives of the board yesterday asking them to justify the need for the new tariff structure. But Baksh was forced to return to his office without a clear indication that the new tariff structure would be approved.
Baksh and his team are expected to return with the answers to outstanding questions from the PUC.
After the hearing, Baksh refused to answer questions from Kaieteur News regarding the financial state of the entity.
He could not definitely say how many consumers the utility has and admitted, after prompting by PUC Chair Justice Prem Persaud that the database is in a mess.
Baksh said that the utility has 184,000 consumers, but was later forced into admission that that figured seemed exorbitant.
“We have to clean up the database,” Baksh stated. Justice Persaud said that it was unfair to the public that the utility cannot get its information correct.
With regard to unmetered customers in hinterland areas such as Mabaruma, Port Kaituma, Matthews Ridge, Mahdia, Lethem and Ituni, GWI said that “due to economic reasons” it would not be practical to bill customers through the general system of billing, which means that there will be some level of cross-subsidization by customers on the coastland.
Justice Persaud wanted to know the amount of money that is used in running the water systems in these areas, so it could be known how much consumers on the coast are subsiding hinterland operations.
Baksh attempted to gloss over the question, saying that the operational costs of GWI does not make a distinction between hinterland costs and coastland costs.
Justice Persaud insisted that consumers, some of whom are struggling “to pay through their nose”, should know how much it costs to produce water in the hinterland and how much it costs on the coast.
Stumped on the response of Justice Persaud, Baksh was told by the chairman of GWI, Ramesh Dookhoo, that expenses are in fact isolated, and Baksh then undertook to provide the information to the Commission.
GWI is asking for approval of a consolidated tariff regime that allows for the establishment of a definitive methodology for categorizing customers; differentiation between treated and non-treated water;  billing of unmetered customers at a rate that is closer to the costs of their average consumption; rates for the various Tariff Bands for the supply of Water; approve the Rates for the various Tariff Bands for Sewerage Services; the introduction of ‘Security Deposit’ for new subscribers and customers who would have had their services disconnected for non-payment;  and ancillary service charges, such as a penalty if meters are damaged.
For this year, GWI is projecting loss at $3.4 billion. If the new tariff structure is approved, GWI could halve the amount of its losses.
Currently, operating costs amount to $2.5 billion, and its fuel bill is another $2.4 billion.
Electricity charges, which account for more than 60 per cent of GWI operating costs, burn up the revenue collected by the utility. Baksh said that GWI is attempting to cut the electricity bill, by, among other things, resizing pumps. He told the Commission that current monthly savings from these energy saving initiatives add up to $12 million.
The utility is seeking consideration from the PUC for the introduction of an automatic review of the water rates based on changes in electricity rates.
The proposed formula for such increase is annual cost of electricity divided by total costs multiplied by the percentage of the increase in fuel/electricity. This will be applicable in the absence of a direct Tariff increase approved by the PUC once there is increase in Electricity Tariffs.
Baksh is contending that GWI is looking to make metering more attractive to customers. According to GWI, more than half of the water it sends out through the pipes is not paid for.
The CEO said that expanding metering is the surest way to ensure that everyone who uses water pays, and pays the fair amount.
Baksh said that the utility is attempting to make metering “attractive” to consumers. Currently, only 40 per cent of customers have a meter from which their water usage is charged.
According to GWI’s strategic plan, 95 per cent of customers should have meters by the end of 2016. If that happens, the project is that GWI would be able to meet all of its costs with revenues that are collected through the metering system.

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