Water district asked: ‘Keep discounts’

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Monday, December 30, 2013

THREE mayors and several organizations are opposing the decision of the Metropolitan Cebu Water District (MCWD) to remove the five percent discount from most water consumers.

MCWD announced on Sunday it will apply the discount only to payments made on or before the due date, and only for the water consumed in excess of 50 cubic meters per month. No discounts will be applied on the franchise tax, purchased water adjustment (PWA) and power cost adjustment (PCA).

Most households consume less and will not qualify for the discount.

Consolacion Mayor Teresa Alegado said that MCWD is getting bulk water supply from her town and it’s unfair for her constituents to be deprived of the discount, which would be tantamount to a rate increase.

Alegado said she will review the memoranda of agreement (MOA) between MCWD and the previous municipal administration to determine how much profit MCWD incurred in sourcing water from the town.

Talisay City Mayor Johnny delos Reyes was dismayed upon learning about MCWD’s announcement in a paid ad in Sun.Star Cebu on Sunday. He said the water utility also sources water from his town at a low price.

“I can sense that MCWD is not any more focused on service to the people, but on profit. If that is the case, we will demand a higher price for bulk water supplied to MCWD,” Delos Reyes said.

Alegado and Delos Reyes both believe MCWD should not collect franchise tax because that is their obligation to the government, and not that of its consumers.

Cebu City Mayor Michael Rama, who holds the power to appoint the MCWD chairman and directors, was also surprised by the announcement.

“These are matters deserve to be looked into. I’m having my legal department study it to come up with comments,” Rama said.


MCWD has 160,000 service connections with a total average daily consumption of 180,000 cubic meters.

When sought for comment, MCWD Corporate Communications Manager Charmaine Rodriguez said that MCWD has not increased its water rates since July 1, 2006 and has charged one of the lowest rates in the country, at P13.60 per cubic meter.

But Ramie Inopiquez of Kadamay Sugbo pointed out MCWD’s rate of P13.60 is only up to the first 10 cubic meters. Beyond 10, the prices go higher.

Inopiquez also said it’s natural for MCWD to have lower rates because it was created to serve the people and, second, water rates in Metro Manila and other parts of the country have risen after their water systems were privatized.

Rodriguez, however, said that while prices of power and fuel have increased several times, MCWD has been absorbing the increases in the cost of producing water for the last seven years, for the benefit of residential consumers.

“In the present rate structure, the big consumers are subsidizing the consumption of small consumers. Each service connection should consume an average of 44 cubic meters a month for MCWD to recover the cost of producing water. At present, a residential consumer uses an average of 24 cubic meters a month. That translates to a discount of less than P20,” Rodriguez said.


Rodriguez said the Local Water Utilities Administration (LWUA) approved the new tiered discount scheme.

“The discount is a privilege, not a right. It is given to those who pay on or before the due date but surprisingly, not all MCWD residential consumers avail themselves of it. Most of those who availed of it are the big consumers, so this new discount system aims to strike a balance,” Rodriguez said.

Mayor delos Reyes observed, for his part, that MCWD is no longer producing water but sourcing it from bulk suppliers.

He said that poor families cannot pay on time because they prioritize spending on their daily food needs.

“I strongly suggest to retain the existing five percent discount on water bills paid on time regardless of consumption level but they may impose higher penalty charge on unpaid bills,” said business leader Prudencio Gesta, a former president of the Cebu Chamber of Commerce and Industry (CCCI).


Gesta added that the systems loss is a major issue that the district should address aggressively to collect more, instead of simply increasing rates.

“They should campaign more against unauthorized or illegal connections to generate more income. They should not pass on to the water consumers their service inefficiency on systems loss but should work harder to minimize it,” Gesta said.

CCCI Executive Director May Ybanez said the mandate of MCWD is to provide potable and affordable water to the people in the name of service, not profit.

“Removing the five percent discount and passing on to consumers the franchise tax, PCA and PWA is not sensitive to the call of times,” Ybañez said. (The PCA and PWA are adjustments relative to the cost of purchasing power and water.)

“MCWD was created solely to serve the people and not to rake in high profits. I think it’s appropriate to review the MCWD mandate,” she added.

Robert Go, chairman of the Economic Development Committee of the Regional Development Council (RDC), asked what law has allowed the MCWD to pass on to consumers the franchise tax, PWA and PCA.

“If MCWD is allowed by law to pass on the franchise tax to the consumers, then they can. And because it is a utility and monopoly, it does what it wants according to the law. But in a competitive business, franchise tax is absorbed by operators because of competition,” Go said.

Napoleon Sentillas, chairman of the Council of Leaders in Cebu City Cooperatives, described the removal of the discount and the passing on of other costs to consumers as anti-poor.

“The authorities should look into MCWD’s operational expenses and the salaries and bonuses of officials. By doing so, we can have an idea on why MCWD is badly in need of more money,” Sentillas said. (Sun.Star Cebu)

Published in the Sun.Star Cebu newspaper on December 30, 2013.

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