Water Services Act, 1997 (Act No. 108 of 1997)NoticesNorms and Standards for Tariff Setting, 2024 - effective 1 April 2026Norms and Standards in respect of Tariffs for Bulk Water Services10. Benchmarking of unit costs |
| (1) | As part of its submission described in sub-regulation 6(i), a bulk WSP shall provide its budget and cost items for the previous two years and per scheme or per management unit in the format as listed in the tables in Annexure A and B to enable for benchmarking of bulk WSPs. |
| (2) | The following budget and cost items must be included in the tables described in sub-regulation 10(1): |
| (a) | Raw water: The cost at which raw water is supplied to the bulk WSP by the CMA or another water institution: |
| (i) | bulk WSPs are charged the unit charge on water abstracted while it must recover the charge from its customers on the volume of water supplied to its customers after losses; and |
| (ii) | raw water unit charge (tariff) must be factored up to an equivalent rand per kilolitre (R/KL) of water sold. |
| (b) | Direct staff and labour costs including their transport: The all-in-cost of staff directly responsible for the operation and maintenance of the scheme(s), including:— |
| (i) | pension and medical aid contributions as well as any allowances paid either to these staff members or on their behalf; and |
| (ii) | cost of transport inclusive of the fuel used by the direct staff and labour. |
| (c) | Direct electricity and energy: The full cost of electricity, including both the capacity and usage charge, used for pumping or purification of water or for lighting and other purposes at the plant; |
| (d) | Chemicals: The full cost of chemicals used for treating the water; |
| (e) | Operations and Maintenance: The cost of repairs, routine maintenance of the plant and equipment for the system with the exclusion of labour related costs; |
| (f) | Refurbishment: The cost of substantial repair or replacement of plant and equipment which is budgeted separately and is not included under routine maintenance costs; |
| (g) | Depreciation: Calculated in accordance with acceptable South African accounting standards. |
| (h) | Overheads (direct and indirect): The allocation of a portion of the head office and other off-scheme or indirect costs to the benchmarked scheme, including: |
| (i) | overheads associated with head office staff, accommodation and transport; and |
| (ii) | depreciation of head office buildings, furniture and equipment and vehicles and other off-scheme related assets; and |
| (i) | Net finance charges: The interest payable on loans and other liabilities less the interest earned on investments and other assets. |
| (3) | A WSP may group small schemes geographically and benchmark them as a management unit against similar sized management units or schemes. |
| (4) | Projections of major cost drivers, such as the cost of energy, chemicals, staff and overheads, shall be based on the previous year's tariff inputs made by bulk water service providers to the Department responsible for water and sanitation:— |
| (a) | projections will factor in the effects of economic variables such as CPIX that is annually published by accredited institutions and |
| (b) | projections will inform the tariff calculations used and any substantial deviations from CPIX should be specifically motivated for. |