Karl Blythe and Winston Hay THE OFFICE of Utilities Regulation (OUR) yesterday publicly aired a range of concerns about the performance of the National Water Commission (NWC), after the monopoly failed to live up to performance targets.
The OUR was concerned enough at some areas that it has asked NWC's external auditors to probe the fund set up to provide money for new water pumps and meters, after wide variations in spending were reported by NWC.
The OUR said several areas of operations were of concern, including the company's skills at collecting bills or the amount of receivables the NWC had outstanding and the speed at which it was repairing and replacing water pumps.
In a special bulletin on the NWC's results for the year to the end of March 31, 2000, the Winston Hay-led OUR was critical of the water monopoly but said it was pleased at end-of-year efforts to improve.
"While there were early concerns about the company's commitment to meeting the performance targets, the OUR is encouraged by the end of year results as they reflect that serious efforts are now being made by NWC to secure improvements in efficiency and service delivery", according to OUR's comments.
However, the report details a range of problems.
The NWC was supposed to develop a plan to reduce energy costs by June 1999. The plan is yet to materialise. The OUR said the NWC should concentrate on energy efficiency as electricity account for a sizeable portion of its total costs, some 18 per cent of total operating costs as of March this year.
The NWC was also expected to cut its gross receivables, the amount of money owed to it by primarily customers and government departments by 50 per cent by March 2001. At October 1998 the NWC had $2.8 billion in receivables outstanding. Instead, at the end of March 2000, there was some $3.3 billion, "on the road" owed to the NWC. In January, the Financial Gleaner reported that just months after the start of a high profile drive by Water Minister Dr. Karl Blythe to get NWC customers to pay up their bills on time, it had emerged that Government agencies continue to be among the worst payers of water bills in the country.
In the year to the end of March 1999, the National Water Com-mission (NWC) has had to increase its bad debt provisions for various public sector entities by 81 per cent from $140 million to $253 million.
In all, provisions for customer-
related bad debts, including Government agencies, rose from $1.56 billion to $1.81 billion, a 16 per cent jump.
NWC saw an increase in the amount of consumer account receivables, bills still to be paid but were not yet delinquent, in total. Consumer accounts receivables rose from $638 million at the end of March 1998 to $888 million a year later, after provisions of $1.81 billion.
The NWC has now completed one year under the tariff regime that was put in place in March of last year. The "K factor" which accounts for 4 per cent of all bills to provide funds for metering and pump replacement programmes is an important component of the tariff and has become a subject of contention. The K Factor is expected to be disbanded sometime after March 2001.
Reports from the NWC show that a total of $154.7 million was collected from consumers through the K factor between March 1999 and March 2000. This came from K-factor billing of $171.9 million.
However, the total spending for the year on programmes funded from the "K factor" was $25.6 million more than collected at $180 million.
The OUR said: "A matter of concern to the OUR has been the variation in the figures reported each quarter and especially those related to expenditure on the pump programme. For instance, the period up to December 1999, NWC had reported that expenditure on the pump programme was $82.8 million. However, the end of year figure reported by NWC now stands at $71.4 million".
As a result, the OUR has asked for the NWC's external auditors to conduct an audit of the K factor fund and its related projects.
After representations made by the NWC, the OUR has agreed to certain changes in the way the performance target is interpreted regarding the number of meters installed. This now means that meter installations pertaining to the metering target will now include replacement meters funded through the K factor and meters installed for new supplies through operating revenues.
As the performance target requires that 85 per cent of all active accounts must have functioning meters by March 2001, this implies that the NWC will have to fit 100 per cent of new accounts with meters.
The pump replacement programme is not as yet prospering. Of the target of 120 pump replacements by March 2000, only 61 pumps were installed between October 1998 and March 2000. $71.4 million as total expenditure is planned for this programme.
NWC saw operating revenue rise from $3.44 billion in 1998 to $3.74 billion in March 1999. After taking out expenses and interest charges it registered an operating profit of $116 million, up from a loss of $8m the previous year.
