1. WC Water & Sanitation Tariffs A Brief Overview And Effect of the Drought on Future Tariffs

2. Water & Sanitation Tariffs Study
What was Done:
The Water & Sanitation Tariffs of all WC Municipalities for the 2017/18 and 2018/19 Financial year were analysed and compared.
Particular attention was paid to Domestic Consumption tariffs.
Business and Agriculture tariffs ere just too disparate to compare meaningfully.
All the tariffs that follow Exclude VAT.
The names of Municipalities have been obscured in this presentation but will be shown in the final report.
All Tariffs were compared by calculating the water bill for 0 to 100 kl of consumption per month.
Consumption Costs include the Basic Charge

3. Water Tariffs 2017/18
This Slide and the next one is included purely to show the vast differences in tariff structures between municipalities. I will skip through them very briefly.

4. Water Tariffs – 2018/19

5. As can be seen there is a large variance in charges The highest is R5200/100kl and the lowest R500/100kl.

6. Note
Here the highest charge for 6kl is R335 and the lowest is R50.

7. Here 30kl costs between R1000 and R300.

8. This chart is a clear indication that some Municipalities had to make drastic changes to their tariffs to survive in a time of Water Supply Uncertainty.

11. This chart is very telling
This chart is very telling. Two of the municipalities that replied to our request for information regarding the real cost of water to them make a loss on any sales of water above 15 and 30 kl/month respectively and are in effect subsidising high consumers. Other Municipalities effectively subsidise the intermediate consumers and mainly because of the Basic charges all profit from low consumers.
The big question now is how do you recover from a loss making situation without massive increases in tariffs?

12. Water Tariffs 2018/19 – This Study
Tariffs did not properly cover the shift in consumption caused by the severity of the drought and the subsequent restrictions.
Those without Basic Charges introduced them.
The subsidy normally provided by high consumers was lost.
The cost of water to low consumers was increased – Struggling middle class and poor were worst hit – the rich drilled boreholes.
Each Municipality affected by the drought needs to compare the consumption pattern of each consumer before, during and after the drought to properly understand the dynamics and get their tariffing right and bullet proof against future droughts.
The Previous “Surplus” Chart and the poor response to the request for Water & Sanitation costs could indicate that Tariffs might be set without a good understanding of the true unit cost of the water.

13. Water Tariffs 2018/19 – This Study
mSCOA does not appear to conveniently allow the ring fencing of water services costs.
In some cases the Technical and Financial departments are not jointly involved in calculating, modelling and setting of Water Services Tariffs.
There appears to be a need for better coordination of Restriction tariffs and levels in Municipalities that share common bulk water sources.
The highest restriction Level tariff should be set using the Day Zero scenario when the majority of domestic consumers feel insecure and cooperate fully with the call to drop their consumption to less than 10kl/month.

14. Water Tariffs 2018/19 – Some thoughts on the Task of Tariff Setting
Thoughts on Tariff Setting:
It’s a tough job that most hesitate to undertake.
Get it wrong and either the municipality or the consumer suffers.
Get it right and nobody notices except for some old faithful's who always complain.
Involve Mayco in any changes.
Be thoroughly familiar with the laws governing tariffs.
It’s always impossible to cover every eventuality so make sure that your Management and the Political Component understand that things can go wrong and that you shouldn’t be blamed if they do.
It’s a great intellectual exercise trying to do scenario planning and make sure that you have planned for every eventuality but accept that you won’t have – see above.
Make sure you understand the cost of the product and the dynamics of the consumer.
Be intelligently creative. Draw lots of charts to properly understand the different impacts and drivers of different scenarios.
Clearly identify the goals to be achieved by the tariff.
You want to sit back at the end and think, “Well I have helped the poor without driving away the financially secure, yet still achieved all the goals”
If the above doesn’t resonate with you don’t take on the job.

15. Contact Details Ivan Atwell Drought Engineer: Municipal Infrastructure
Department of Local Government
Western Cape Government
7th Floor, 80 St Georges Mall, Waldorf Building, Cape Town
Private Bag X9076, Cape Town, 8000
Tel no: 021 
Cell: