Water, Sewage & Effluent March-April 2018 | Page 39

and accountability of the water service. A regulator must be able to apply enforcement strategies that achieve the best possible outcomes whilst keeping the costs and burden as low as possible. (This can be achieved through a combination of punitive measures as well as incentives.) In a final development, the IER can scrutinise investment plans of the water institutions and proposed sources of funds for these institutions. The National Treasury and the DWS are expected to fund the establishment costs, with users paying the running costs in the form of the economic regulator charge. If all goes according to plan, the IER can be up and running within the next two to four years. The IER can create a balance in the representation of the interests of government, institutions (service providers), and users. It is essential that the economic regulator be competent and credible. This can only be achieved if it can act in a neutral or unbiased and non- discriminative manner towards its customers, and understands the business that is regulated, through a proficient and effective process with measurable outcomes. u innovations Poor management of municipal water and sanitation services — interrupted supply, water quality, and high levels of water that is unaccounted for. • Weak tariff setting and billing in many municipalities; for example, cases where the municipal tariff is lower than the rate paid to a water board that supplies bulk water. Clearly not a viable situation. • Value for money in use of capital grants (such as the Municipal Infrastructure Grants, or MIG, and the Regional Bulk Infrastructure Grant, or RBIG). • High levels of debt within the sector. The result to the above-mentioned challenges has led to unsustainable services, non-viable institutions, degrading infrastructure, and water users not receiving the services they are entitled to — and paying for. This is a direct violation of the basic human rights as enshrined in the South African constitution, while stifling economic growth. The NDP recommends clear separation of the accountability lines between a minister and the administration (which includes the regulator). Therefore, the current intention is to establish an objective regulator with structural as well as financial independence. Structurally separate from the central governmental structure (whereby a regulator’s decision can only be overruled by a pre-designated arbitrator). Financial independence can be achieved with the IER funded by an earmarked, secure, and adequate source. The IER will set as its target to assess the tariff-setting process and approve these throughout the water value chain. This means regulating tariffs such as the water resource tariff (currently unregulated), the bulk tariffs for potable as well as wastewater (currently only partly regulated), resource management charges imposed by the catchment management agencies, and retail tariffs (water and sanitation in municipalities). In addition, the scope can be extended to address service quality and ensure compliance with national norms and standards. The regulator will monitor cost implications of compliance with service quality standards. Above all, the regulator should protect consumers by monitoring and ensuring efficiency of supply. The IER will act in the public interest by transparency of information Above all, the regulator should protect consumers by monitoring and ensuring efficiency of supply. • About the author Helgard Muller is a regular contributor to Water, Sewage & Effluent (WSE). His vast knowledge in policy and regulations while at the Department of Water and Sanitation adds huge value to WSE. Water Sewage & Effluent March/April 2018 37 • • easier to simply increase rates and tariffs to make books balance instead of efficiency gains. There is anecdotal evidence of an irrigation board who stated that they would like to pay but struggle to get a bill out of the DWS. Water boards are the bulk providers in the water sector. Tariffs set by these state-owned enterprises (SOEs) are insufficiently regulated within DWS as the DWS Minister is both a shareholder and a regulator of these SOEs. This is another conflict of interest and aggravated by poor corporate governance within some water boards. There is insufficient investment in maintenance, refurbishment, and replacement of national water infrastructure. The 2017 SAICE Infrastructure Report Card for South Africa allocated a ‘D minus’ for bulk water resources, with critical comments such as “insufficient maintenance and neglect of renewal, partly due to funding shortfalls. Systems are in general operated too close to failure”. Water resources infrastructure is an invaluable national asset and must be properly cared for.