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| Water Rates Manual | | ||
Chapter
7
1. POWER-COST ADJUSTMENT This formula is applied when water is pumped using electricity. PCA = (PCa - PCb) (Bb/Ba) Where: Pca
= Power-Cost Adjustment in P/cu.m. 2. FUEL-COST ADJUSTMENT This formula is applied when water is pumped using fuel. FCA = (FCa - FCb) (Bb/Ba) Where: FCA
= Fuel-Cost Adjustment in P/cu.m. 3. LABOR-COST ADJUSTMENT This formula is applied in the instance of mandatory wage increases imposed either through wage orders released by the National Labor Relations Commission (NLRC) or Congressional action. LCA = ALC - ELC Where: LCA
= Labor-Cost Adjustment in P/cu.m. New
Salary ELC = Existing Labor Cost, in P/cu.m. Current
Salary 4. FOREIGN-EXCHANGE COST ADJUSTMENT This formula is applied when the costs of the materials being used by the district, which are imported, are affected by the fluctuation of the foreign exchange. FEA
= (OER)ER - ER Current
Exchange Rate (Using CB figure) ER = Effective Rate Total
Sales, P 5. ILLUSTRATIVE EXERCISES The following sample exercises will serve as guide in the computation of adjustment of rates. a. Power-Cost Adjustment Computation: Pumping
Total Total Cu.M. November
P219,541.47 390,000 cu.m. 175,804 cu.m. P219,541.47 = P0.56/cu.m. P241,889.86 = P0.62/cu.m. Bb = 390,000 cu.m. Ba = 175,804 cu.m. Adjustment: PCA = (PCa - PCb) (Bb/Ba): PCA = (P0.62 - P0.56) (390,000/175,804) = P0.06 x 2.218 = P0.13/cu.m. Application to Water Billing: Example A : Residential Connection using 25 cu.m. PCA = 25 cu.m. x P0.13 = P3.25 Example B : Commercial Connection using 150 cu.m. PCA = 150 cu.m. x P0.13 = P19.50 Residential Connection Billing (25 cu.m.) Minimum
Charge - P 44.80 11-20
cu.m. 24.50 Commercial Connection Billing (150 cu.m.) Minimum
Charge P 89.60 11-20
cu.m. 49.00 Check: Increase in Power Cost = P241,889.86 - P219,541.47 = P22,348.39 PCA Billing = P0.13 x 175,804 cu.m. = P22,854.52 b. Fuel-Cost Adjustment Computation: Pumping
Total Total Cu.M. November
P306,667.00 931,965 cu.m. 746,175 cu.m. FCb = P306,667 = P0.329/cu.m. FCa
= P350,000 = P0.3755/cu.m. Bb = 931,965 cu.m. Ba = 746,175 cu.m. Adjustment: PCA = (FCa - FCb) (Bb/Ba) FCA = (P0.3755 - P0.329) (931,965/746,175) = P0.0465 x 1.248 = P0.058 say P0.06/cu.m. Application to Water Billing: Example A: Residential Connection using 25 cu.m. FCA = 25 cu.m. x P0.06 = P1.50 Example B : Commercial Connection using 150 cu.m. FCA = 150 cu.m. x P0.06 = P9.00 Residential Connection Billing (25 cu.m.) Minimum
Charge P44.80 11-20
cu.m. 24.50 Commercial Connection Billing (150 cu.m.) Minimum
Charge P89.60 11-20
cu.m. 49.00 Check: Increase in Fuel Cost = P350,000 - P306,667 = P43,333 FCA Billing = P0.06 x 746,175 cu.m. = P44,770.50 c. Labor-Cost Adjustment Salaries
before Wage Order = P189,013.00 Computation/adjustment: LCA = ALC - ELC LCA
= P239,411 P189,013 = P1.383 - P1.092 = P0.291/cu.m. Application to Water Billing: Example A: Residential Connection using 25 cu.m. LCA = 25 cu.m. x P0.291 = P7.275 Example B : Commercial Connection using 150 cu.m. LCA = 150 cu.m. x P0.291 = P43.65 Residential Connection Billing (25 cu.m.) Minimum
Charge P44.80 11-20
cu.m. 24.50 Commercial Connection Billing (150 cu.m.) Minimum
Charge P 89.60 11-20
cu.m. 49.00 d. Foreign-Exchange Cost Adjustment Current
Exchange Rate = P 28.00/US$ Computation/adjustment: FEA = (OER) ER - ER FEA
= P28.00 P904,902 = P1.21 (5.23) - 5.23 = P1.09/cu.m Application to Water Billing: Example A: Residential Connection using 25 cu.m. LCA = 25 cu.m. x P1.09 = P27.25 Example B : Commercial Connection using 150 cu.m. LCA = 150 cu.m. x P1.09 = P163.50 Residential Connection Billing (25 cu.m.) Minimum
Charge P44.80 11-20
cu.m. 24.50 Commercial Connection Billing (150 cu.m.) Minimum
Charge P 89.60 11-20
cu.m. 49.00 | |||
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In
the establishment of water rates, specifically in making projections, allowances
for escalation of cost in relation to power, fuel, labor, and even foreign exchange
are integral components. There are, however, some instances when abrupt increases
in cost of these items are incurred and are not covered by these allowances for
escalation, the experience of which might result to losses in operations. In such
cases, adjustment of rates becomes necessary which should be considered as interim
measure until the next water-rate increase where its effects can be reflected
in the cashflow projection. Illustrated in this subject are standard formulas
to be used for computing the adjustment of rates.