1Implementation of Water Services Economic Regulation DWA WP10540Framework for Economic Regulation of Water Services in Municipalities

14 June 2013

Index*

Water pricing chain*22 May 2013

Water pricing chain*22 May 2013

Problems in water pricing chain Water Services*

Water Revenue Management Process

Economic Regulation of Water ServicesDWA role: Act as regulator of water services from a national perspective WSAs and WSPs (municipalities) have a role to play at local government level*No part of the water value chain is subject to formal economic regulationConstitution provides for national government to regulate water servicesMinister does not have authority to regulate water tariffs directlyCannot set or approve tariff levelsMust rely on Norms & Standards for WSIs (Section 10 of the Water Services Act)Price or economic regulation is not the only type of water services regulation

Functions:Consumer protectionService quality regulationPrice or economic regulationCompetition regulation

Tasks:Set rules & make approvalsMonitor, analyse & publishEnforce, decisions & intervene

DWA Functions & Tasks (National level)

DWA Functions & Tasks (National level)

Impact of Economic Regulation on WSAs & WSPs

Impact of Economic Regulation on WSAs & WSPs

Limitations of existing Section 10 Norms & Standards

New Norms & Standards for WSAs & WSPs

Water Tariff Models (WTM)

DWA legal mandate Regulate water services; can not set or approve tariffs at municipal levelMonitor and enforce compliance by providing means to set tariffs according to Norms and Standards

Using a WTM for setting tariffsMost municipalities fail to manage water services effectively; setting of tariffs a major taskNot advisable to prescribe a WTM for municipalities due to a lack of capacity, competency, etc. within municipalities to implement and operate a WTMProgressive approach should be followed whereby municipalities first implement, and comply with, prescribed Norms and StandardsNorms and Standards contain pro-forma templates or work sheets that will force municipalities to follow prescribed processes

Role of Water Tariff Models (cont.)Various WTMs developed or in process of being developed for determining municipal water tariffs

Debt Management Process

Debt Management Process (cont.)

THANK YOU*

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