The municipal water companies are fed up with being the Water Authority's scapegoat and the public's anger over the high water rates. Water Companies CEO Forum chairman Moshe Ashkenazi told "Globes TV" that the forum does not oppose reducing the number of companies, and that it has petitioned the High Court of Justice against the Water Authority over the high water rates.
The for-profit municipal water companies were established three years ago as part of the reform, which removed the handling of the water system from local authorities. With the reform, the government turned water into a product for which the public pays the full price, with no subsidies, including VAT. Over 50 municipal water companies currently operate. It is important to point out that the water companies do not set the water rate; the Water Authority does.
Ashkenazi blames the Water Authority for the latest rate hike, which he says was unnecessary, and which exploited the public's ignorance to get it passed quietly. He says that water rates could easily be cut by 30%, if only the government would stop burdening consumers with costs unrelated to the cost of water itself.
"Globes": Two weeks ago, the Water Authority director said that the water companies were part of the reason for the high water rates, and that he intended to reduce the number of companies. Is he right?
Ashkenazi: "This is part of the spin, which has been going on for a long time. If that is what he thinks, why have two more water companies been established in the two weeks since his remarks? The Water Authority is the agency that sets up the water companies, so I don’t understand why he complains that the companies are driving expenses on one hand, while founding the companies on the other hand. They are exploiting the public's ignorance that it is the Water Authority which establishes the water companies. The companies do not establish themselves."
But it's impossible to deny that we're now paying for 54 CEOs and 54 mechanisms. Without them, we'd pay less, no?
"I think that 54 water companies are unnecessary. It's possible to reduce the number, we think so, but we have no authority to decide on the matter. The Water Authority has to reduce the number of companies.
"The State Comptroller's report explicitly says if the water companies were consolidated, the water rates could be cut 5-7%. We believe that the reduction could be much greater, if other items in the rates, such as the financing of other sectors, such as agriculture, industry, Jordan, and the Palestinians are touched. We share in the cost of supplying water to the Palestinians, and is included in the price of water that the public pays. Add to this VAT and other things, a bit of streamlining at Mekorot National Water Company and the water companies, and you get a big reduction in rates."
How big a reduction can be achieved if the new government takes up the task and implements the measures you've proposed?
"If you remove all the additions put into the cost of water, it will be possible to cut rates by 25-30%, and I haven’t said a rude word."
Why hasn’t this happened? Who's standing in the government's way?
"Ask the question what is the Water Authority responsible for. If the Water Authority is responsible for supplying water to Jordan, farmers, manufacturers, and the Palestinians, and thinks that subsidizing this through the water rates (paid by private consumers - D.H.K.), I think that this is a line that should not be crossed, but we crossed it."
If the Kinneret fills up, should water rates come down?
"There is no connection. The cost rules of supply and demand do not apply to the water market. The moment it was decided to desalinate 600-700 million cubic meters of water a year, it does not really matter how much rain falls. This is the price that we will apparently have to pay."
"The public feels that the government has turned water into a commodity and even seeks to profit from it. After all, the water companies are not NPOs, but profit enterprises, and that everyone except for consumers have an interest in keeping water rates high.
"The water companies also have a clear interest in low water rates. Proof is that, earlier this month, we petitioned the High Court of Justice against the Water Authority over the water rates. We think that the price of water should be equal for everyone. It cannot be like the price for mobile communications. You do not have to talk a lot on your mobile phone or do other things, but water you need and you should pay the real price, and not add all kinds of additions.
"The Water Authority again raised rates, and the call to the public to pay even more is unnecessary; it's too much. It should clean up its own house, and only when all is proper should it again turn to the public. But it seems that the Water Authority thinks that the public is an easy target. The public doesn’t know the formulas, it's confused, it can't understand all the items in the bills, and is told, 'Because of higher energy costs, pay a bit more.' That sounds logical to the public."
Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2013
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