Tariff Methodology

MS BELEN JUAREZ of National Water Resources Board presents NWRB’s 5-year tariff methodology, adopted in 2005, and which aims to help water service providers (WSPs) plan their business and attain full cost recovery. The tariff methodology has the following main features:  (a)  Tariff is computed based on agreed levels of service;  (b) Requires the submission of a 5-year Business Plan with detailed proposed OPEX and CAPEX;  (c) Use of Excel-based tariff model, computation of average ROI to reduce price shocks and; (d) Mechanism for disallowances and upward adjustment in succeeding tariff proposal. In setting tariff goals, levels of tariff should be established in consultation with customers in terms of hours of service, water quality, non-revenue water and service coverage and pressure.  Part of 5-year tariff methodology is water supply planning and projection of demand and supply levels (volume and sold and population to be served, determine required investments and determine operating expenses to be incurred).  For NWRB, the key operational and financial and performance indicators are:  Collection Performance (Collection Efficiency; Collection Period); Production Efficiency (Non-Revenue Water; % Metered); Personnel Management (Staff/1,000 Connection);  Cost Control (Operating Ratio);  Liquidity (Current Ratio);  Profitability (Net Income Ratio);  Sustainability (Debt to Equity Ratio; Debt Service Ratio).

AttachmentSize
5-yr-TariffMethodology_nwrb-jan09.pdf311.11 KB