Abstract
On 2018 October 02, the National Water Commission (NWC/Commission) submitted a request to the Office of Utilities Regulation (Office/OUR) for a review of its tariffs and service standards (Tariff Application). In the Tariff Application, the NWC, among other things, requested a reduction in the price cap tariff period from five (5) years to three (3) years (January 2019 to December 2021) and a total revenue requirement of J$33.9 billion, excluding a return on equity.
The Tariff Application was deficient in many respects, and in particular, a cost of service study was not included. In light of this, the Office concluded that it would not accord with good regulatory practice to put in place a five (5) year tariff. Consequently, the Office has approved an interim tariff for a twenty four (24) month period.
The approved interim tariff is conditioned on the NWC’s undertaking to carry out specific studies and to provide key inputs in a new tariff application. The inputs include the following:
- A cost of service study (based on criteria set by the OUR);
- An asset re-valuation study (based on criteria set by the OUR, if a study conducted by
NWC’s consultants, Ernst & Young, proves to be unsatisfactory); - A credible five (5) year financial plan; and
- A corporate governance plan.
