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Independent regulator for island’s water supply mooted

Bermuda could get an independent regulator for its water supply — setting charges to allow suppliers to maintain infrastructure, an open forum on the sector was told.

The Ministry of Public Works held an online forum on water and waste water services to field public opinion on how the sector should be regulated.

But there was no answer on whether getting a water regulator might result in consumers’ bills going up or down, public works engineer J. Tarik Christopher added.

He said service providers had to compete in most countries, with the regulator granting approval based on “a reasonable rate of return”.

“Depending on how much water you use and the water service provider you get it from, the total cost of water could go up from now or it could go down,” Mr Christopher said.

“In either case, this regulation is seeking to ensure that the quality of the service improves and that the public can have more power in holding service providers to account.”

Water supply across Bermuda comes through a patchwork of providers, the forum heard, ranging from the private Bermuda Waterworks headquartered in Devonshire to the Bermuda Land Development Company, or the Ministry of Public Works.

While the Government is “not looking at creating a very rigid regulatory structure”, Mr Christopher said, the aim was for water providers to get “rates that allow them to enhance investment in their infrastructure, to expand their networks and add more connections”.

“Right now it’s very difficult to invest in the existing infrastructure if we don’t have that revenue or income stream coming from appropriate rates.”

He noted that, at present, water providers were able to choose which neighbourhoods they served.

The forum also addressed the issue of water discolouration, which flared up in 2016 for residents of Prospect, Devonshire and persisted two years later.

The problem was attributed to ageing cast-iron pipes.

In the forum last night, Mr Christopher said oversight of water suppliers would come with “an appropriate tariff enabling them to improve on their current network”.

“Some of our customers are being served by water infrastructure that’s coming to the end of its life.”

He was joined by John Ikeda, a water supply and sanitation specialist with Catalpa, a regulatory policy consulting firm hired by the Bermuda Government for an overhaul of the management of the island’s water supply.

Mr Ikeda said the goal was to offer consumers the best rate possible.

Regulators in most countries set water charges based on “the cost of service” and to prevent monopolies from setting exorbitant rates.

He added: “In other cases, if it’s a public provider and it’s the Government itself that sets the rates, what I’ve seen in a lot of countries is there’s pressure to keep the rates low because it keeps people happy.

“In the long term, what happens is that utility does not have the resources to rebuild their network, to expand service and provide quality water.

“So the quality of service continues to decline until the utility collapses. I’ve seen that in a lot of different countries.

“I don’t think right now we can say for any given person whether their bill will go up or down.

“What we do know is there’s going to be a system in place to make sure that the tariff is at the most efficient level possible, that people are getting the quality of service they pay for, and there’s a process for them to escalate complaints if they feel they’re not being billed fairly.”

Mr Ikeda said consumers could have recourse to an independent body to review complaints and push for a fair outcome.

An extensive revamp of water and waste water at the island’s East End was launched in 2020 by the Ministry of Public Works with the Bermuda Land Development Company, as the start of what was planned to be an island-wide renovation.

“We’re looking to identify these risks, so we can provide solutions and recommendations to the Cabinet and Government to modify the regulatory structure,” he added.

As the island’s demand for water rises, and climate change affects rainfall, Bermuda’s consumers are likely to become increasingly reliant on a piped supply.

Both speakers addressed the concern of water outages.

Mr Christopher said it was “likely we would look at setting a minimum up-time requirement for service — basically, the maximum time that the service can be down”.

“They are going to have to have systems that are upgraded and operating at their maximum, and they’re going to need resources to do that.”

He said the oversight was aimed at “ensuring service providers are reinvesting in their infrastructure, to ensure their down times are minimised”.

Mr Ikeda said regulation would be about “putting consequences behind it, and making sure it’s enforced”.

“It creates incentives for service providers to upgrade their network and focus on that service quality.”

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Published September 29, 2022 at 7:40 pm (Updated September 29, 2022 at 7:40 pm)

Independent regulator for island’s water supply mooted

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