Shapira deems water prices illogical

Domestic water tariffs are unjustifiably high and require much more comprehensive investigations before fixing them at the current rate, State Comptroller Yosef Shapira argued in his latest report.

The state comptroller reviewed the Water Authority method of setting rates for water and sewage – rates that since a reform in January 2010 have risen by 30 percent, without proper research and reasoning, according to the report. Based on the reform, local authorities also have had to build their own water companies.

The domestic consumer water tariff is determined in a two-pronged fashion – a lower rate for a basic amount of water use and a higher rate for water consumed beyond that amount. However, the process for determining what the basic amount should be is flawed and has not undergone thorough examinations of factors that affect national per capita consumption, according to Shapira. Consequently, there was no solid basis for determining the basic amount was 2.5 cubic meters of water for a year and a half beginning in January 2010, or the determination of 3.5 cubic meters per capita per month in July 2011, he explained.

By completion of the audit in November 2011, the Finance Ministry had not yet determined an arrangement on the matter of increasing discounts for vulnerable populations, such as the poor, the disabled and the elderly. In March 2012, the Finance Ministry approved about NIS 42 million, and the Water Authority said it was preparing to implement the decision in July 2012.

As far as the water companies are concerned, by November 2011, 137 authorities combined efforts to form 52 local water companies, and 48 authorities still needed to do so. A goal of the Water Authority is having local authorities consolidate such companies – create 13 for the remaining 48, for example, which could save the country NIS 500m. and potentially reduce prices by 7%, according to a report generated by an external adviser to the Water Authority. However, a year has passed since the expert submitted the report and the Water Authority’s council has not brought up the matter for discussion, Shapira said.

In response to the report, a Water Authority statement welcomed what the office deemed a “thorough, insightful work,” but explained that the authority has already begun to identify many of the deficiencies cited in the report and is working to repair the vast majority.

Regarding the special needs population, the Water Authority adopted the Finance Committee’s decision and will be doubling the amount of people eligible for the discounts to 250,000, according to the statement.

As far as the domestic water prices are concerned, the layout of determining rates in 2010 changed from being a result of agreements at a discussion table to relying on a professional economic model, the Water Authority explained. Aiming to minimize rates as much as possible, the authority conducts regular tests and also accounts for the costs associated with service providers, according the statement.

“The authority is actively working to prevent the rise of water prices and aspires even to lower it, with great effort and by coping with increases in electricity and energy costs, which influences the price of water,” the Water Authority said.