OUR begins review of NWC tariff application

 

The Office of Utilities Regulation (OUR) has begun its review of the National Water Commission's five-year tariff application covering the 2026-2031 period. 

 

This comes after a preliminary review of the application, after which the OUR wrote to the NWC, indicating that although there are some gaps in the information presented, the regulator has found no substantial grounds to reject the application.

 

The OUR has mandated the NWC to provide additional information to assist in its review. 

 

In the statement on Friday, the OUR said subject to the timely submission of the requisite information, it expects to complete its review of the NWC tariff application and publish its decision by February 2027. 

 

In its tariff application, the NWC has made a number of proposals, including an initial tariff adjustment of approximately 54.9 per cent. 

 

The NWC is proposing an annual revenue requirement of $63.41 billion in the base year 2025-2026, comprising operating expenditure of $50.60 billion, a return on regulatory assets of $10.05 billion and regulatory depreciation of $2.76 billion, compared with its estimated revenue of $40.93 billion at existing tariffs. 

 

This represents an additional annual revenue requirement of approximately $22.48 billion. 

 

If approved by the OUR, the adjustment would result in an overall initial average tariff increase of approximately 54.9 per cent, although the impact on individual customer bills would vary. 

 

In its five-year outlook, the NWC projects that its annual revenue requirement will increase from $64.46 billion in year one to $76.18 billion in year five, while projected revenue at existing tariffs will increase from $41.54 billion to $44.27 billion over the same period. 

 

The NWC also reports a present value revenue gap of 64.3 per cent in its forward-looking analysis. 

 

The NWC proposes to recover 11.50 per cent of its revenue requirement through fixed service charges and standardised billing across all customer categories using the metric system.