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 Services7. Revenue requirements for the provision of bulk water services |
| (1) | A WSP must determine its tariffs so that its revenue is sufficient to: |
| (a) | recover all reasonable costs directly and indirectly associated with the operation, maintenance, refurbishment and development of bulk water services and all costs associated therewith; |
| (b) | generate sufficient cash flow to redeem the entity's loans that are related to the bulk water services over a reasonable period of time with careful consideration over the principle of intergenerational equity; |
| (c) | achieve a reasonable rate of return on capital (per annum) which has been reasonably invested for the provision of bulk water services as set out in the Shareholder Compact (in the case of water boards) or Water Services Development Plan in the case of water services authorities; and |
| (d) | generate a reasonable net surplus per annum as a percentage of total revenue in consultation with its customers; |
| (2) | Reasonable costs referred to in sub-regulation 7(1)(a) may include the following (and which must be disclosed when determining tariffs): |
| (a) | Employee related costs; |
| (b) | Remuneration of board members; |
| (c) | Depreciation; |
| (d) | Finance charges; |
| (e) | Purchases including raw water, chemicals and electricity; |
| (f) | Maintenance; |
| (g) | Refurbishment, excluding any overheads and labour; |
| (h) | Other expenditure; and |
| (i) | Indirect costs allocated to the water services function by the WSP. |
| (3) | A WSP must from time to time apply its own discretion when determining either form which the tariff may take from the following options: |
| (a) | a volume-only bulk potable water charge, or a fixed capital charge that is independent of consumption together with a volume charge; or |
| (b) | a single tariff for its whole supply area; or |
| (c) | a separate tariff for each bulk water supply scheme or management area. |
| (4) | A WSP may determine different tariffs for:— |
| (a) | different users of bulk water services and differentiate between different geographic areas, taking into account, among other factors, the socio-economic and topographic features of each area; or |
| (b) | different types of bulk water services such as the supply of bulk raw water and the supply of bulk potable water. |
| (c) | Tariff increases may be smoothed over time to take into account projected future infrastructure development costs. |