1. Pricing Strategy for raw water use charges and Norms and Standards for
Water Services Tariffs
PRESENTATION TITLE
Presented by:
Name Surname
Directorate
Date
Presented by: Sizani Moshidi
Acting Chief Director: Economic & Social Regulation
Date: October 2016

2. CONTENTS Background Mandate to regulate Changes and amendments
Key principles
Implementation

3. background
Pricing strategy in terms of s 56 of NWA and Norms & Standards for tariffs (s10 of WSA) both provide a pricing framework for any use of water from the water resource and supply of potable water respectively.
While the Pricing strategy seeks to address the following –
Recovery of costs for water resource management and sustainable infrastructure asset management
Funding of catalytic water infrastructure to support social and economic development
The Norms & Standards for tariffs seeks to ensure that pricing is transparent, affordable, sustainable and economic ensuring access of water to everyone.
The two pricing frameworks are under review to close-in gaps that have been identified over the implementation of the current versions although some areas have been postponed like removal of Agric tariff capping, tariffs for emerging water sectors.
Revisions are also meant to create room for Economic Regulation of the water sector as per the NDP

4. Need to regulate tariffs- reasonable tariffs over the value chain without passing inefficiencies.

5. MANDATE TO REGULATE TARIFFS

6. Economic regulation: Functions & Tasks

7. Changes from PREVIOUS VERSION OF PRICING STRATEGY
*Changes to the Water Use Categories

8. AMENDMENTS TO PRICING STRATEGY – SUMMARY OF CHARGES per user sector

9. AMENDMENTS TO NORMS & STANDARDS
The areas that have been revised and added into the Norms and Standards are as follow:-
Differentiation: Differentiate between water services institutions to also include other sector entities like mines as WSPs, bulk potable water, retail water and sanitation.
Accounting for costs: Defines and introduces detailed cost structures to promote transparency.
Tariff setting procedures: Provides clear guidelines
Disclosure: Defines disclosure requirements to enhance disclosure of information among the stakeholders
Improvement and clarification of definitions of terms to avoid vagueness: Aligned definitions with existing terminology, legislation and regulations as used in the legislation and other policies.

10. KEY PRNCIPLES
Based on sound principles and aim to provide a greater degree of transparency on how raw water and water services are priced. The following key principles are considered in the ultimate outcome of the revised documents.
Affordability
Equity
Transparency and predictability
User pays and recovery of costs
Polluter pays
Differential charges and capping of water use charges
Fiscal support
Ecological sustainability
Accountability
Efficiency
Multi-year tariffs

11. IMPLEMENTATION Measurement of Water Use
Water charges currently based on registered water use and review emphatic on metering.
Indexation of Charges
Striving to increase the tariffs within the applicable price indices between CPI (Consumer Price Index) and PPI (Production Price Index)
Treatment of Reserve Funds for Depreciation and FIBC
Depreciation charge revenue may serve as a stabilization reserve for refurbishment
FIBC income may serve as a provisioning reserve for betterment and development of social and economic stimulus development projects nationally.
Multi-Year Charges
DWS (and CMAs) will introduce a system of multi-year charges
Approval of tariffs
Minister approves tariffs and table to Parliament
Economic Regulator reviews and advises Minister on the tariffs.

12. IMPLEMENTATION Multi-Year Charges
DWS (and CMAs) will introduce a system of multi-year charges
Approval of tariffs
Minister approves tariffs and table to Parliament
Economic Regulator reviews and advises Minister on aspects such
Education and awareness
Guidelines on the use of the documents will be developed to clarify on the implementation.
Raising awareness on the stance of economic regulation within the water sector.

13. THANKS