MWSS threatens to suspend Maynilad’s water rate hike
Aconflict is brewing between Maynilad Water Services, Inc. (Maynilad) and Metropolitan Waterworks and Sewerage System (MWSS), something that may be beneficial to the customers of the west zone concessionaire.
Right now, MWSS is planning to suspend the implementation of Maynilad's staggered four-year rate hike under the fourth rate rebasing period, which could result to lower rates for the customers of Maynilad moving forward.
In a surprising turn of events, MWSS Chief Regulator Patrick Ty said Maynilad has filed a dispute notice against its approved water rate increase for the mandatory rate rebasing.
Rate rebasing is a review of water utilities' past performance and the projection on their future cash flows.
Done every five years, the review is supposed to set the water rates at a level that would allow both Maynilad and Manila Water Company, Inc. recover their expenditures and earn a rate of return.
It was in early September when the petition of Maynilad for an increase of 5.73 per cubic meter (/cu.m) for its rate rebasing has been approved.
To be implemented on a staggered basis over the next four years, such decision supposedly allows Maynilad to increase its rates by 0.90/cu.m starting this month.
But since Maynilad is now questioning the approved rates, MWSS-Regulatory Office is now set to recommend to the MWSS Board of Trustees to suspend the tariff adjustment that the Manuel V. Pangilinan-led company is allowed to implement.
“There will be an arbitration. In relation to this, we are studying the possibility of temporarily suspending the effectivity of the water rate increase for Maynilad pending the arbitration proceedings,” Ty said in an interview with reporters.
"We will exhaust all legal remedies in order to settle the case. We will make sure that we will prioritize the interest of the public," he added.
In a separate interview, Maynilad President Ramoncito S. Fernandez said the company "had no choice" but to file a dispute notice as it is technically the only way to preserve the company's right to recover corporate income taxes (CIT).
"If we don't file, we might be construed to have waived our claim on the recovery of income taxes, a right that was affirmed with finality in the first arbitration case. In all other respects, we intend to maintain our amicable relationship with MWSS including abiding with our business plan and approved tariff schedule. We remain committed to our concession," Fernandez said.
To recall, Quezon City Regional Trial Court (QC RTC) earlier released a decision favoring Maynilad over its petition asking MWSS to honor the Appeals Panel’s December 2014 final award in an arbitration case, which allowed the company to include its CIT in its future cash flow.
For his part, Ty said it has always been the position of MWSS that it is not right for water utilities to pass on the CIT to consumers.
"We are studying the suspension of tariff adjustment under rate rebasing. We need to decide by next week Thursday. Maynilad is questioning the decision of MWSS-RO and MWSS Board of Trustees and we are preparing for our defense.