Yesterday, the Public Utilities Commission (PUC) met for the third hearing on the Guyana Water Incorporated’s (GWI) application for a hike in rates, where attendees raised concerns over the measurement of water consumption, with the rate for pensioners being the most questioned.
Members of the public now have until April 20, at 3:30 pm to submit their views on the company’s proposal for a rate increase. The commission will then have 60 days to deliberate and rule on the matter.
The dominant view expressed yesterday was that pensioners should be billed for their water consumption at the same rate as everyone else.
GWI in its latest application for a rate increase has asked for a $500 fixed maintenance fee for all consumers, except pensioners.
It was also proposed that pensioners, whose average water usage once they live alone or with one other person was calculated to be 10m3 per month, be charged $74 per m3 (equating to $740 per month for unmetered customers). However, in the case that a pensioner’s consumption exceeds 10m3 for that month they will be made to pay the proposed residential rate of $112 per m3 for every additional cubic meter.
Consumer rights activist Pat Dial, who has been present at every one of the PUC’s hearings on the matter, opined that the proposed system for billing pensioners appeared to be problematic in its complexity, and suggested that the company should retain its old system for charging pensioners.
Making reference to a water subsidy that was previously provided to pensioners, Dial suggested that it would be simpler to charge per normal and apply same.
“How you have it, that breakdown there, is that you are going into the details of the consumption, and that will be not only time consuming but difficult. And I think that financially in terms of the subsidy or whatever it is, it’s about the same amount of money and I think it would be easier that way,” Dial suggested.
Dial further opined that in certain areas (he referenced Albouystown, which he stated he’s familiar with) it would be difficult to execute such a system given the number of persons in the household. He held to his position that the company should simply charge based on what shows up on the meter, and apply the subsidy.
GWI CEO Richard Van West-Charles clarified that the application of subsidies falls within the ambit of the Ministry of Social Protection and not GWI.
Another attendee, Randolph Jackman of Hutsonville New Hope, also shared Dial’s view, commenting that the charges should be the same across the board and if there was need for a subsidy to be applied then it should be done.
“But if there is not, well you will not be entitled to be using water and other residents to be paying for you,” stated Jackman.
“…All Guyanese are entitled to good water. All. In all the regions, throughout the country. Pensioners too. But they all have to pay. If they can’t pay for whatever reason, because of poverty or so, [then there’s] Central government…” Financial Analyst Ramon Gaskin weighed in.
“…I think pensioners should pay like everybody else. I’m a pensioner. I’m willing to pay the full rate like everybody else. And if I can’t pay, I’ll go to the Central government or talk to my children. Very simply. It’s too complicated to exempt all these pensioners. Now who living in this house and how many people living in the house and all that stuff is confusion. Everybody pays the same rate. Non-discrimination based on age. Uniformity of rates, it’s in the Act,” he asserted.
On the point for the need of uniformity in rates, Gaskin also opposed the idea of rural customers being charged lower rates than those in the urban areas.
“I know they’re doing a lot of work and the work in Region 7, 8 and 9, I don’t get the impression you’re getting money from the consumers. Of course they’re entitled to water like everybody else. But who’s going to pay for it? Me? Region 4 should pay for 7, 8 and 9? I don’t think that is right. And the Act is clear: uniformity of rates and non-discrimination in rates. It cannot be done,” he stated, suggesting that if necessary, the issue should be taken to Central government, as “if Central government can help them with electricity” then they can also assist with water.
It had been PUC Commissioner Rajendra Bissessar who initially raised concerns about the hike of the rural fees, in addition to questions surrounding the application of a fixed charge for consumers who cannot afford the service; the fairness in the proposal of similar payments for consumers for untreated water as was being charged for treated water; and the charges for commercial unmetered consumers, who are being asked to pay based on the size of their properties.
Bissessar also suggested that perhaps non-residential customers should have a higher fixed rate.
“In some places, such as the Essequibo Coast, such as Ithaca, such as Edinburgh, the iron content is very high and therefore one has to introduce some form of treatment…Where there is access to surface water such as in Central Georgetown, Linden… and in Bartica, one has to use more than one chemical to treat that water. And that has a cost,” Dr Van West-Charles explained, addressing the question of the fixed maintenance rate.
“When we look at the cost Mr Bissessar, that bottle in front of you on the market is $100 with a volume of 100ml. GWI’s cost for 220 gallons is $64. And most of the people that you’re talking about will purchase that 100ml for $100. But you have to understand that this is a network and you have to maintain the network. If not, you are going to have problems with respect to…sustainable supply to customers, which will impact on quality,” he related, opining that $500 for ensuring that citizens have a better quality and supply of water that is not a burden but a “shared responsibility”.
In terms of customers paying equally for treated and non-treated water, Dr Van West-Charles explained that the water in the wells are “microbiologically safe” and that treatment is required for the removal of iron and hydrogen sulphide.
As for the rates to commercial customers, Dr Van West-Charles related that most commercial users are metered, but in cases where their meters stop working, they will be treated as unmetered customers, and charged according to the size of their properties. The rates are based on what has been deemed the average consumption rates for businesses depending on their size.
Another Commissioner, Maurice Solomon, suggested that the figure be adjusted so that those who fell within the VAT exemption threshold bracket before, will again. He opined that if the proposed rates are implemented, everyone will fall within the VAT bracket.
In relation to Solomon’s concerns, Dr Van West-Charles stated that the implementation of VAT was based on the consumption rate only, but the Director was asked to confirm this by attendees who challenged the validity of that position.
Chairman of the PUC Dela Briton expressed that she was not “entirely convinced” of the readiness of Hi Affinity, the billing software used by GWI.
The Director related that the software is in place, and had been adjusted to allow VAT collection. However, he noted that following a high turnover, they are in the process of training staff, but assured that they would be ready within three months.
Poor returns on investment
“I don’t think you need any more money from the commission. And I’d be very upset if the commission were to grant more money to GWI in the face of these stats. I’d be quite upset and I’d have to do whatever is necessary to resist it. They don’t deserve it,” Gaskin stated firmly, making reference to the company’s 2016 accounts.
Gaskin once again drew attention to the company’s financials, prefacing his comment with the observation that GWI had not yet supplied the financial information for 2017.
However, with regards to the 2016 statements, which he noted he had received the night before, he criticized the spending pattern of the entity, reiterating that the company was spending more on operations but appeared to be collecting less in revenue.
“I’m concerned about GWI itself as a company and the way it is managed and they come to the commission for a raise. GWI is receiving in 2016, less revenue on the measured water…this is a big problem for any company…you can’t run a business like that,” Gaskin criticized.
He noted in his observations that there had been an increase in basic wages from 800 million to one billion from 2015 to 2016, and that the money spent on water quality raised from $159 million to in excess of $400 million.
“It’s good to have good water and all of that but it’s a business you’re trying to run still and you have to get much more tough with this,” he advised.
Dr Van West-Charles, positing that those examining need to consider the position the company was in with regards to water quality, once again explained that more money was being spent on infrastructural development and on staff to monitor plants on a 24-hour basis. He noted too that the cost of chemically treating water was not zero rated, adding that the company was in discussion with the Guyana Revenue Authority to make the items exempt.
“…if ExxonMobil doesn’t have to pay VAT I don’t see why you should pay or anybody should pay. And duty—duty and taxes on import of chemicals; you should be exempt the same way how ExxonMobil is exempt…If he can grant them, he can grant you, that’s a big company,” Gaskin commented.
Gaskin’s view that GWI should not be granted their rate increase was not shared by audience member George Cave, who has also attended the hearings consistently and has been very vocal in his concerns about the rate proposals.
“I believe that GWI should be given some more money. The reservations I had from day one about how they looked after the small amount they had—in my view inadequately— could we trust them with more money, I asked that question on day one. I want to ask, suggest, recommend to the PUC that you seriously consider giving them more money. Water is expensive and out of nothing comes nothing. There are some technical difficulties in regards how to shift the money here and there…but I honestly in my bones feel that GWI should be given more money,” Cave stated yesterday.