Inflation flagged as water rate hike OK’d

Water prices in Metro Manila will go up starting January after the regulator approved the rate increases sought by the region’s two concessionaires, which could add to inflationary pressures.

The Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office approved a PHP 5.95-per-cubic-meter increase for Manila Water Co., Inc. and PHP 7.32 per cubic meter for Maynilad Water Services, Inc.

The rates will take effect on Jan. 1, 2025, Patrick Lester N. Ty, MWSS Regulatory Office chief regulator, told a news briefing on Thursday.

Customers served by Manila Water in the east zone who consume 10 cubic meters or less will have to pay PHP 24.68 more to PHP 254.83 a month, according to a rate matrix provided by the regulator.

Those who consume 20 and 30 cubic meters will see their monthly bills go up by PHP 54.79 and PHP 111.83, respectively. Low-income customers who consume less than 10 cubic meters will see a PHP 2.87 increase to PHP 91.40 a month.

Meanwhile, Maynilad customers in the west zone who consume 10 cubic meters and below will have to pay PHP 20.08 more, while those who consume 20 cubic meters will see their bills increase by PHP 75.89. Customers who consume 30 cubic meters will pay PHP 155.32 more.

Low-income lifeline customers who consume 10 cubic meters of water will pay PHP 10.56 more to PHP 151.04 a month.

The rate increases would likely add to inflationary pressures, said Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co.

These would increase household expenses and raise the production costs of industries that rely on water. These companies could pass on the costs to consumers by raising prices, he pointed out.

While necessary for infrastructure improvement, these hikes will add to short-term inflationary pressures,” Mr. Ravelas said in a Viber message. “Policy makers will need to monitor and manage these impacts carefully.”

The increase is the third tranche of approved tariffs for the 2023-2027 rate rebasing period. In 2022, the MWSS board greenlit higher rates on a staggered basis for five years starting in January 2023.

Rate rebasing is done every five years, accompanied by a performance review and validation of the two concessionaires’ projected cash flows. It also sets the water rates in a manner that allows the water suppliers to recover their expenditures.

“We monitor their capex (capital expenditure) spending [if] they are actually spending the necessary capex for the rate rebasing,” Mr. Ty told reporters. “Before we allow them to increase their tariff, we will check the actual spending, not just their target.”

“As long as you reach a reasonable target, we will then approve the tariff adjustment,” he added.

Manila Water had spent PHP 32.67 billion of its capex as of November, 81% of the target for 2023 to 2024, he said. Maynilad’s capex spending has hit PHP 47.59 billion, 83% of the target for the two-year period.

In a statement, Maynilad said its commitment to invest over PHP 163 billion to improve the water and wastewater infrastructure in the west zone “necessitates the timely implementation of these staggered adjustments.”

“We remain vigilant in meeting our business plan commitments and are pleased that the corresponding tariff adjustments are being implemented as planned,” it added.

Philippine inflation quickened to 2.5% in November from 2.3% in October, though still within the central bank’s 2.2%-3% forecast for the month.

Manila Water serves the east zone network of Metro Manila, covering parts of Marikina, Pasig, Makati, Taguig, Pateros, Mandaluyong, San Juan, portions of Quezon City and Manila, and several towns in Rizal province.

Maynilad serves the cities of Manila, except San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon. It also supplies water to the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. –Sheldeen Joy Talavera, Reporter