Thu | Feb 9, 2023

Richmond customers brace as water supplier requests 244% hike

Published:Thursday | December 8, 2022 | 1:29 AMJudana Murphy/Gleaner Writer

Richmond Environmental Services Limited (RESL), which supplies water to Richmond Development and its immediate environs in Richmond, St Ann, has submitted a tariff application to the Office of Utilities Regulation (OUR) seeking an average increase of 244 per cent for water and sewerage rates.

The rates proposed by RESL for water, sewerage, and service are lower than those of the National Water Commission (NWC), which supplies 190 million gallons of potable water each day to its more than 400,000 registered customers.

RESL’s current rate per 1,000 litres for up to 16,000 litres of water and sewerage is $50, and $25, respectively. The proposed new rates are $130 and $65, while NWC’s are $140.08 and $161.79.

RESL is also seeking to introduce a service charge to provide for maintenance costs of the current water-distribution and sewerage-treatment system, ranging from $715 to $6,000.

The limited liability provider of water and sewerage services also plans to adopt the Price Adjustment Mechanism (PAM) model used by the NWC to modify rates and charges when there are changes in foreign exchange, electricity prices, and inflation.

In a letter dated August 17, 2022, under the signature of director Frederick S. Bennett, the company said Richmond Development Company Limited (RDCL) made significant investments in the water and sewerage system to service the communities it developed in Richmond.

Though RDCL maintains ownership of the network as a whole, RESL has the responsibility for the maintenance and general upkeep of the entire system, including all its associated parts, fixtures, and fittings.

The company also stated in the letter that neither RDCL nor RESL has directly recovered any infrastructure costs in excess of US$2.5 million from purchasers of residential lots within its development.

“The current replacement cost of any of these above infrastructure is more than 1.5 times the historical cost,” RESL said.

The company told the OUR that the overall increase in rates being sought is required to ensure that the business carries on as a going concern.

“Improved revenues will allow the company to reverse years of accumulated losses [and] stop the growth of year-to-date losses due to consistent increase in input costs. For the first quarter of 2022, electricity costs have increased by 23 per cent compared to the similar quarter in 2021,” RESL wrote.

“Further analysis revealed significant increases in our electricity costs from 2017 to 2021, twenty-four per cent for the water treatment plant, and 50 per cent for the sewerage treatment plant,” .

The company also shared that more revenues would allow them to act on planned capital improvements and invest in better technologies, repay debt, and improve working capital. It also expects to improve operating effectiveness and efficiencies.

The last tariff increase granted to RESL by the OUR was approved in April 2020.