Tariff Policy. The Municipal Finance Management Act, 56, 2003 requires Vaal Central Water to comply with set conditions and timeframes as stipulated in Circular No. 23, as issued by National Treasury. The Water Services Act, in accordance with Section 40 further requires that tariffs need to be set. The Department of Water and Sanitation, YLD LWV 5HJXODWRU\ VHFWLRQ LVVXHG WKH ³5HJXODWRU )UDPHZRUN´ VWLSXODWLQJ WKH UHTXLUHPHQWV LQ GHWH structure. The Department of Water and Sanitation and National Treasury also issued additional regulations and norms and standards. The consultation processes are followed on an annual basis with Stakeholders in support of the submission for the tariff approvals. The Entity considers the budget under normal forecasted water demand conditions in accordance with the Guidelines. Tariffs for each scheme is considered and alternative considerations will come as integration is implemented. The Entity continues to align the current models used to determine the tariffs structures as the two water boards had common principles but also had differences, depending on the areas of service and the overhead components. The conditions in the Bulk Water Supply Agreements between the Entity and Municipalities are considered and incorporates it in the budgets and tariff structures. There is a need to ensure that the agreements be revised as to accommodate the current conditions. The regulated tariff recovery method is considered in line with the regulation issued by the DWS where restrictions are implemented. It intends to recover overhead costs as far as possible. Cross subsidization through tariffs The Entity practise partial cross subsidisation depending on its area of supply. The Framework dictates the requirements which is incorporated in its budget, tariff structure and business model. It is recognised that the actual cost of provision of water to remote rural areas and smaller towns, is higher than to densely populated urban areas. The rural areas are also poorer areas than the urban centres. A differentiated tariff structure was implemented where a business case is required for a geographical area with separate water sources. Cross subsidisation is applied within such areas. The Entity continues cross subsidisation through transferring funds for operational requirements, due to unsustainable tariff structures in the Northern Cape ±Namakwa area. The extended areas from the disestablishment continue to be ringfenced so as to monitor the performance and t...
Tariff Policy. 10.1. The parties to this Performance Contract agree that the current NWSC tariff is not a full cost recovery tariff and has a distorted structure. The tariff policy must therefore be reviewed based on the following principles:
