3. Submissions by the water boards The water boards provided the following information in relation to proposed water tariffs: |Water Boards|Input | |Albany |The consultation process was met with the relevant | | |organisations as prescribed by the legislation. Amatola | | |Water can absorb increases between 10% and 15%. The | | |Department of Water Affairs advanced R2.7 million to | | |assist with refurbishment. Plant refurbishment has a | | |10-year maintenance contract factored into it. | | |Furthermore, electrical power saving methodologies has | | |been implemented and there was potential to increase water| | |volumes through private eco estate and housing needs of | | |Ndlambe. | |Amatola |Amathole and Buffalo City municipalities agreed to 8.8 % | | |increase in December 2009, as well as with National | | |Treasury and SALGA in 2010. The recent merger with Albany | | |Coast Water Board (as result of non-viability of the | | |entity into Amatola could provide of the necessary | | |economies of scale. The board needs to borrow R100 million| | |for its CAPEX Programmes and explore other forms of | | |funding. | |Bloem |Municipalities agreed to a 10% increase and above which | | |was accepted by the National Treasury. Tariff increases | | |for 2010/11 reflected an increase of 7% before reduction | | |of tariffs for 2009/10 by 5%. Expected increases for | | |inflation were higher, while operational and maintenance | | |expenditure was also higher. The proposed tariff resulted | | |in the downscaling of required CAPEX projects. It also | | |impacted on National Treasury requirements regarding the | | |debt service ratios. | |Botshelo |Botshelo Water Board proposed a 16% increase on the | | |proposed tariff for 2010 to cater for electricity, | | |maintenance, security and chemical price increases. | | |Botshelo incurred what was perceived to be a relatively | | |high charge of R1.67 per kilo litre at the major plants of| | |Mafikeng and Mmabatho. In order to discuss the tariff, | | |Botshelo held a consultative meeting with its three bulk | | |water clients and the outcome was submitted to National | | |Treasury for approval. The R 3.80 tariff would enable | | |Botshelo Water to fulfil its functions, obligations and | | |duties and would ensure security and sustainability of the| | |plants and water provision. The majority of end users in | | |Botshelo jurisdiction had access to 6 kl of Free Basic | | |Water (FBW) per household per month and was likely to | | |remain unchanged. Impacts of the tariff could be off-set | | |by better control of water losses and improved cost | | |recovery on the part of municipalities. | |Bushbuckridg|In an effort to recover costs and make the Board | |e |financially viable, proposed tariffs would off-set the | | |costs of raw water charges and costs relating to staff, | | |labour, energy, chemicals and maintenance. The proposed | | |tariff for 2010 was R3.45 which consisted of a fixed cost | | |component (salaries and administration) as well as a | | |variable cost component (raw water, electricity, chemicals| | |and maintenance). This would be reviewed in 2010/11. A | | |proposed tariff increase of 12.46% would be imposed for | | |the period July 2010 -June 2011 and was lower than the | | |sector average increase. | |Lepelle |Factors for tariff increase include; Increase in raw water| | |charges, increase in electricity costs, labour costs and | | |capital investments. The board faced the following | | |challenges in tariff setting: | | |Bulk | | |Ageing Infrastructure | | |Exceeding abstraction Permits (high demands) | | |Over laden treatment plant (upgrades) | | |Deteriorating raw water quality | | |Non payment of services by WSAs | | |Reticulation | | |Poor cost recovery and water demand management | | |Ageing internal reticulation infrastructure | | |Default on payment by consumers | | |Lack of maintenance | | |Unauthorised/illegal connections | | |Insufficient Water Demand Management | |Magalies |The Board considered numerous factors in determining the | | |varying tariff increases. The operational costs were | | |determined by the costs of raw water, staff and labour | | |costs, electricity costs, cost of chemicals, maintenance | | |costs, refurbishment costs and depreciation. Challenges in| | |the tariff setting included the tumultuous economy and the| | |reduction of consumer activities, which impacted the Capex| | |programmes. Consumers opposed the tariff increases and | | |municipalities could not afford the implementation of the | | |Capex programmes. | |Mhlathuze |The department requested a 12.6% tariff to the supply of | | |bulk water. The Board approved and proposed an increase | | |to the department, as follows: | | |22% for purified water | | |18% for raw water | | |10% for effluent. | | |The department approved tariff as proposed. | | | | | |The Board encountered the following challenges during | | |consultation: | | |Negative economic conditions experienced by client played | | |a major factor during the consultative process. | | |A lower rate was expected by the Board's clients. | | | | | |But, the tariffs were proposed due to aging infrastructure| | |which requires high capital expenditure; capital cost to | | |be recovered through tariffs over 20 years; high energy | | |cost increases, customer contracts; and unresolved | | |objections to tariff increase. | |Namakwa |The NWB requested a 43% increase on tariffs. The tariff | | |would be R9.14 and the shortfall would be 81 cents. During| | |consultation processes, the Nama Khoi Municipality | | |requested a 10% tariff increase. The Department of Water | | |Affairs approved the 43% tariff increase and urged the NWB| | |to bring the increase closer to 12%. The NWB warned that | | |the tariff increase would result in less water consumption| | |and would hinder cost recovery | |Overberg |The higher the water use, the higher the unit cost of the | | |tariff. The use on the sliding scale is based on the | | |number of households as supplied by and agreed with the | | |municipality. The effective cost of water and the water | | |tariff is therefore in the hands of the municipality - it | | |requires careful and sound planning and management from | | |their side | | | | |Pelladrift |The tariff set by the Board includes 26% increase due to | | |increases in electricity costs and 7 % increase in raw | | |water tariffs, salaries and aging infrastructure. | |Rand |The RWB proposed a tariff increment of 14.1%, which was | | |based on the cost of raw water, chemicals and other costs.| | |The increase was approved by National Treasury and | | |Department of Water Affairs, but tough negotiations with | | |customers were expected and an independent regulator was | | |requested to assist in this regard. | |Sedibeng |The 12% tariff increase is recommended for maintenance and| | |operating of the infrastructure and assets. The tariff | | |increase considers the possibility of enhancing the | | |financial viability of the organisation in order to | | |generate sufficient revenue to continue with the | | |development of water infrastructure whilst operating and | | |maintaining the existing one. The Board constantly invests| | |and considers activities that seek to acquire more assets | | |and assist in the operation and maintenance of water | | |infrastructure as it focus on developing water supply | | |services to the communities. | |Umgeni |After consulting with relevant people, Umgeni Water | | |presented two tariff options. Consultations with the South| | |African Local Government Association (SALGA) and the | | |National Treasury with a 6.5% tariff increase resulted in | | |a final submission to the Minister of Water and | | |Environmental Affairs on 25 January 2009, which was later | | |tabled in Parliament in 2010. |