1. The Role Of the Water Sector Economic Regulator &
Water and Sanitation By-Laws
Presented by: Ms Dikeledi Mofokeng Maswanganye
Directorate: Retail Water Price Regulation
Date: September 2017
PRESENTATION TITLE
Presented by:
Name Surname
Directorate
Date

2. Contents Purpose The role of the Regulator Regulatory tools
Introduction
Water Value Chain
Definition of ESR
Challenges leading to the establishment of ESR
Objectives of ESR
Functions and Tasks of ESR
Regulatory tools
Water & Sanitation By-Law
Legislation that regulate the development of by-laws
Challenges at WSAs
Contents of By-laws
Water Services By-laws provisions
Processes

3. PURPOSE To share with the WSAs the role of the Economic Regulator
To share the framework of Water and Sanitation By-laws
Establish a link between the ESR and Municipal By-laws

4. Introduction
Section 27(1)(b) of the Constitution provides for the right of access to sufficient water to everyone in SA – given effect by Section 3 of the Water Services Act (at least basic level of water services)
Section 27(2) provides for the role of the State in ensuring that the rights are realised.
The DWS then manages and protects water resources, allocates water for various uses, develops and enforces relevant policies,
Whilst local government in terms of schedule 4B of the Constitution is responsible for water services limited to potable water and sanitation. Have both executive and legislative authority over the function, develops relevant bylaws and policies to manage the provision of the services.
Section 27(2) has created monopoly out of the State over the entire water value chain: Entry to the market is barred, high possibility of price distortions and inefficiencies, consumer/user exploitation due to lack of choices,
The DWS is a regulator for raw water/potable bulk while local gov’t regulates water services,
However the Minister monitors all water services institutions in terms of s62 of WSA

5. DEFINITION: ECONOMIC REGULATION
a form of government intervention designed to influence the behaviour of traders, service providers and individuals in the market mainly in the absence of a competitive environment.
imposition of rules by gov’t, backed by the use of penalties intended specifically to modify the economic behaviour of individuals and firms,
variables as Prices, output, rate of return (in the form of profits, margins or commissions), disclosure of information, standards and ownership ceilings are among those frequently used.
SOCIAL REGULATION involves the government’s oversight of the quality and safety of goods/services and oversight of the conditions under which those goods and products are manufactured

6. Water Value Chain

7. CHALLENGES LEADING TO THE STRENGTHENING OF ER
Existence of natural monopolies in the sector and ineffective self-regulation
Insufficient investment in maintenance, refurbishment and replacement of infrastructure.
Poor management of services – interrupted supply and poor water quality,
High levels of unaccounted for water as result of theft, wastage, unbilled water.
Limited provision of water services, particularly in sanitation.
inappropriate tariff setting and billing.
Value for money in the utilisation of Municipal Grants funding.
High levels of debt: national and provincial government to local government water services; and between the Department and the Raw water Users.

8. OBJECTIVES OF ESR
To protect water institutions and consumers from inappropriate short-term decisions.
To enable the public sector to carry out long-term policy objectives.
Encourage the provision of efficient, affordable service (productive efficiency).
Ensuring alignment between standards for service delivery (consumer protection) and charges/tariffs and funding requirements
Ensuring the affordability of services to low income groups (social/equity objectives).
Providing an effective dispute resolution mechanism.

9. Functions and tasks of Economic Regulator
The implementation strategies and plans include the following tasks as part of the implementation plans:
Rules and approvals: Tasks are reflected in more detail as part of the regulations and strategies.
Tools for monitoring, analysing data and information, and publishing reports: Tasks are reflected as part of the Norms and Standards for Tariffs, the Municipal Tariff Database (MTDB) that has been expanded to also include raw water and Water Boards.
Enforcement of decisions and making the required interventions: Tasks include Economic Regulation taking action after benchmarking tariffs and other compliance information against regulations, as well as ensuring debt and disputes are effectively dealt with in the water value chain.

10. Impact of Economic Regulation on WSAs & WSPs

11. Why Municipalities?
Bulk water tariff in terms of s42 of MFMA for WBs customers
Contracts/SLAs in terms of s19 WS Act, MS Act and s116 of MFMA for all contracted WSA’s
Revenue collection, credit and debt management in terms of WBs policies and municipal bylaws/policies.
Retail water tariffs in terms of s10 WS Act, MFMA and MSA relative to cooperative relationship with ESR
Dispute resolution in the water sector,
Local Regulation (within the WSA by the WSA) as a constitutional obligation of WSA, in terms of S154 of the Constitutional. The development, promulgation and implementation of municipal by-laws

12. Purpose of Municipal By-laws
By laws are promulgated to give effect to respective policies.
Every policy at municipal level must have a legal backing.
By laws respond to all questions why certain things are done in a particular manner in that municipality.
Regulatory compliance

13. Definition
Legislation passed and enacted by a Municipal Council, or
Instrument through which a municipality exercises its legislative authority
An expansion of certain sections of an Act in order to make that Act more applicable at local level
bylaws must never conflict National/ Provincial. Legislation, where this happens national super cedes the bylaws(s156(3) of The Constitution)

14. Legislation that regulate the development of by-laws
S156 Constitution of the Republic of South Africa, Act 108 of 1996(executive authority to develop bylaws)
S75 & 98 of Local Government: Municipal Systems Act, 32 of 2000 (Tariff and Credit Control and Debt Collection By-Laws)
S21 of Water Services Act, Act No 108, 1997 (Water Services By-Laws)
Provincial legislation, and

15. Challenges at WSA’s
No consultation before by-laws and policies are approved
Effecting policies based on draft by-laws or outdated by-laws
Implementing by-laws that are not covering all activities of the municipality
Some by-laws have very little or no measures in place that may deter residents from contravening the provisions in the by-laws.
Huge debt owed to municipalities by consumers for services rendered.
Unauthorized, illegal connections and reconnections by residents
Water & Waste water quality non-compliance
Pollution mainly by uncontrolled industrial effluent discharges.

16. Contents of By-laws
Credit Control and Debt Collection By-Laws
Water Services By Laws
Water Services Tariff By-laws
Indigent By-Laws
Water Services Intermediary and Provision of Services to Residents on Privately Owned Land By-Laws
Water Conservation and Water Demand Management By-Laws

17. Processes
Draft by-laws, be approved for consultation by resolution of the Municipal Council
Notice calling for public comments, be published in the official languages determined by the Municipal Council
Same notice be published in the Provincial Gazette (for a period of at least 14 calendar days); Local Newspapers and Radio broadcast
On expiry of the period allowed for public comments, all comments received, be reviewed and if necessary, amendments be effected to the by-laws;
Draft by-laws be submitted to the Municipal Council for promulgation;
The by-laws are published in the Provincial Gazette and be effective on publication or on a future date stated.

18. Questions or more information
1) Ms Sizani Moshidi
Chief Director (Acting)
Tel:
2) Mr Humbulani Nevondo
Director Retail/ Bulk Water Pricing
Tel:
3) Ms Dikeledi Mofokeng-Maswanganye
Chief Development Expert- Retail Water Price Regulation
Tel:

19. THANK YOU