Consumer group contests water rate hike’s inflation assumptions

CONSUMER GROUP Laban Konsyumer, Inc. (LKI) said on Thursday it will continue to contest the water rate increases imposed on the east and west zone of Metro Manila as it claims the move from the water regulatory office was done without the required public consultation.

“The Chief Regulator took it upon himself to answer our pleading without conducting the much-needed consultation and hearing from the stakeholders. Our group pleaded to reduce the 5.7% inflation assumption adopted by the system for 2019,” LKI said through Victorio Mario A. Dimagiba, its president.

He was referring to Patrick Lester N. Ty, chief regulator of the Metropolitan Waterworks and Sewerage System (MWSS), who in a letter to the consumer group rejected LKI’s letter contesting the rate hike.

The increase took effect on Jan. 1, 2019, at P0.64 per cubic meter for Manila Water Co., Inc. and P1.48 per cubic meter for Maynilad Water Services, Inc.

In a subsequent letter to MWSS Board of Trustee Chairman Franklin J. Demonteverde, LKI and its president said that “there is a need to mutually agree on the fundamental matter.”

LKI said under section 3(h) of the MWSS Charter under Republic Act No. 6234, the agency “shall fix water rates as the System may deem just and equitable.”

“Mr. Chairman, we concede that the fixing of rates by the Government through its authorized agents involves the exercise of reasonable discretion, but the Government has no power to fix rates that are unreasonable or regulate them arbitrarily,” it said.

He said it is the group’s belief that if the regulator’s discretion is to search for a reasonable and equitable formula to temper the price increases, the Philippine Statistics Authority’s core consumer price index (CPI) for the relevant period should have been an inflation rate of 4% for 2019 instead of the adopted 5.7%.

LKI cited the relevant periods as July 2017 at a CPI of 110.6 and July 2018 with a CPI of 115.6.

“Be that as it may, however, we maintain that the 2019 inflation can be a much lower figure from 3.3% to 4% contained in our letter,” it said.

Mr. Dimagiba said his group is requesting the intervention of Mr. Demonteverde to call a public consultation for a just an equitable interpretation of the agreement with the water concessionaires on the definition of the “C” factor of the rates adjustment formula. The “C” factor is percentage change in the CPI that is used as one of the components in computing the rate increase.