In the second ESAWAS Strategic Plan for the period 2016-2018, under Objective 2 ‘to facilitate experience and knowledge transfer’ a key focus area is to ‘Undertake technical regulatory exchange programmes’. The technical exchange programmes are meant to bring together technical experts in a particular regulatory area to a single podium to share experiences and therefrom develop good practices for use by members.
In fulfilment of the Strategic Plan Objective, ESAWAS held a technical regulatory exchange workshop on Tariff Setting from 28th -29th July, 2016 in Lusaka, Zambia.
Tariff Setting is a core activity of the regulator. The tariff setting practice invariably affects the make-up of the sector in terms of sustainability, affordability and quality of service provision. Hence regulators have an interest to adopt good practices in tariff setting that will foster efficiency and viability of providers while guaranteeing an affordable and quality service for the consumer.
The technical exchange meeting aimed to identify good practices in the following areas:
· Key principles in setting tariff structure e.g. affordability, equity, equality etc
· Tariff setting procedures and process
· Costs to be covered by revenue, i.e. cost items, recording realised/incurred costs (accrual accounting?), approach for projections (assumptions, inflation etc)
· Performance indicators in tariff setting e.g. collection efficiency, NRW etc
· Revenue calculations – recording realised revenue and consumptions, approach for projections (assumptions, NRW)
· Method of tariff/price calculation, i.e. price-cap, rate of return, cost-plus etc
· Tariff Structure components and calculation – fixed charge, meter charge, sewer charge, other charges
· Tariff implementation
· Evaluating impact of tariff
The recommendations made from the meeting were:
· Develop an ESAWAS handbook for tariff setting that will outline in detail the good practices.
· Develop an ESAWAS WSS Regulatory Accounting Guideline to harmonise cost items and their treatment.