TARIFF GUIDELINES

JUNE 2023
WASREB/MR/TR/TG/01

TARIFF GUIDELINES

JUNE 2023
 TABLE OF CONTENTS

TARIFF GUIDELINES ...................................................................................................................................

TABLE OF CONTENTS .............................................................................................................................. i
Abbreviations ........................................................................................ Error! Bookmark not defined.
List of Figures .......................................................................................... Error! Bookmark not defined.
List of Tables ........................................................................................................................................... iii
Definition of Terms ................................................................................................................................ iv
1.0 Introduction ............................................................................................................................... 1
2.0 Tariff Policy ................................................................................................................................. 2
2.1 Tariff Objectives ..................................................................................................................... 2
2.2 Guiding Principles ................................................................................................................. 3
2.3 Interaction of Objectives: .................................................................................................... 3
2.4 Chosen Approach for Tariff Regulation ............................................................................. 4
2.5 Types of WSPs ........................................................................................................................ 4
Wasreb distinguishes between five types of WSPs. ....................................................................... 4
3.0 Types of Tariff Adjustments ....................................................................................................... 5
a) Regular Tariff Adjustment (RTA) ................................................................................................... 5
b) Automatic Tariff Adjustment (ATA) ............................................................................................. 5
c) Extra Ordinary Tariff Adjustment (ETA) ........................................................................................ 6
4.0 Tariff Adjustment Process ......................................................................................................... 6
4.1 Notice of Tariff Correction ......................................................................................................... 7
4.1 Submission and approval of Tariff Adjustment Proposals ................................................ 7
5.0 Information to Submit to WASREB ........................................................................................... 8
5.1 Calculating the O&M Expenditure of WSPs/WWDAs ....................................................... 8
5.1.1 O&M Expenditure of the Applicant ............................................................................ 8
5.1.2 Regulatory Levy............................................................................................................. 8
5.2 Repayment of Debts ............................................................................................................ 9
5.3 Investments and Depreciation ............................................................................................ 9
5.4 Production and Billed Volumes of Water ........................................................................... 9
5.5 Tariff Structure ........................................................................................................................ 9
5.6 Variable Charges Based on volumetric (usage) ............................................................ 10
5.7 Rising Block Tariffs for Metered Residential Customers ................................................... 11
5.8 Multi-Dwelling Units (MDUs) ................................................................................................ 11
5.9 Sanitation Service Tariffs ..................................................................................................... 11
5.10 Tariffs at Water Kiosks and Standpipes ............................................................................. 12
5.11 Tariffs for Commercial and Administrative Consumers .................................................. 12
5.12 Miscellaneous Charges ...................................................................................................... 12
5.13 Tariff Indexation ................................................................................................................... 12
5.14 Documents Required for the Tariff Adjustment Proposal ............................................... 13
6.0 Process of Tariff Analysis ......................................................................................................... 14

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 6.1 Tariff Composition: .............................................................................................................. 14
6.2 Steps of Tariff Application .................................................................................................. 15
6.3 Cost Analysis of WWDA/WSP ............................................................................................. 16
6.3.1 Justified Costs for WSP/WWDA .................................................................................. 17
6.3.2 Total Allowed Costs for WSP Type 1 .......................................................................... 17
6.3.3 Repayment of Debts – Total Allowed Cost (TAC) for WSP Type 2 ......................... 17
6.3.4 Increase of Tariff towards full cost recovery – TAC for WSP Type 3 ....................... 18
6.4 Performance Monitoring .................................................................................................... 18
6.4.1 Monitoring of Performance of WSPs/WWDAs .......................................................... 18
6.4.2 Key Performance Indicators ...................................................................................... 19
6.4.3 Performance Targets .................................................................................................. 22
6.5 Balancing the Adequate Tariff Level................................................................................ 22
6.5.1 Non-Revenue Water (NRW) ....................................................................................... 22
6.5.2 WSPs with Metering Ratio Below 100% ..................................................................... 23
6.5.3 Collection Efficiency ................................................................................................... 23
6.5.4 Determining the Average Tariff ................................................................................. 23
7.0 PUBLIC CONSULTATION .......................................................................................................... 24
7.1 Pre-Consultation Process ................................................................................................... 24
7.2 Procedure of Public Consultation ..................................................................................... 24
7.3 Agenda of the Public Consultation Meeting .................................................................. 25
a. WSP Post Consultation Process .............................................................................................. 25
7.4 Public Notification of Approved Tariff .............................................................................. 25
8.0 Tariff Implementation and Monitoring ................................................................................... 25
8.1 Tariff Implementation ......................................................................................................... 26
8.2 Tariff Monitoring ................................................................................................................... 26
8.3 Default on Tariff Conditions ............................................................................................... 26

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 List of Tables

Table 1: Tariff Approval Process ................................................... Error! Bookmark not defined.

Table 2: Typical Tariff Structure ................................................................................................... 10

Table 3: Level of Cost Coverage and Cost Components...................................................... 21

Table 4: KPI Benchmarks ............................................................................................................. 22

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 Definition of Terms

‘Utility’ means a water service provider licensed by WASREB to provide water services

‘Water Services’ means the supply of water, sewerage services and all other incidental
services.

‘Tariff’ means the justified price charged for water service to cover the reasonable cost of
providing the service.

‘Non-Revenue Water’ means water produced but not billed by way of physical or
commercial losses.

‘Personnel Expenditure’ refers to salaries, allowances, allowable pension, and service.

gratuities payable to employees in the course of their employment

‘Operations and Maintenance (O&M) expenditure’ means all justified recurrent

expenditure incurred by a utility during its business.

‘Justified’ means allowable under the water services regulations and standards to enable
the sustainable provision of water services.

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1.0 Introduction

The Water Services Regulatory Board (WASREB) is a regulatory state corporation

established by the Water Act 2002; this law was repealed by the Water 2016
operationalized in April 2017. Section 70 (1) of the Water Act 2016 established WASREB with
the principal object to protect the interests and rights of consumers in the provision of
water services, while ensuring other stakeholders’ interests are also safeguarded.

Accordingly, WASREB sets standards and enforces regulations that guide the sector in not
only ensuring that consumers are protected and have access to efficient, affordable, and
sustainable services but also, providing for the financial sustainability of Water Service
Providers (WSPs), by allowing financing of operations, capital cost recovery and a return
on capital that services-through ongoing investments.

Wasreb’s statutory mandate is provided for under Section 72 of the Water Act 2016. The
regulator sets, monitors and reviews rules and regulations to ensure water services
provision is affordable, efficient, effective, and equitable. The powers and functions of
WASREB under the Act are to:

a) Determine and prescribe national standards for the provision of water services
and asset development for water services providers.

b) Evaluate and recommend water and sewerage tariffs to the county water
services providers and approve the imposition of such tariffs in line with
consumer protection standards.

c) Set license conditions and accredit water services providers.

d) Monitor and regulate licensees and enforce license conditions

e) Develop a model memorandum and articles of association to be used by all

water companies applying to be licensed by the regulatory board to operate
as water services providers

f) Monitor compliance with standards including the design, construction

operation and maintenance of facilities for the provision of water services by
the water works development bodies and the water services providers

g) Advise the Cabinet Secretary on the nature, extent and conditions of

financial support to be accorded to water services providers for providing
water services

h) Monitor progress in the implementation of the water strategy and make

appropriate recommendation

i) Maintain a national database and information system on water services

j) Establish a mechanism for handling complaints from consumers regarding the

quality or nature of water services

k) Develop guidelines on the establishment of consumer groups and facilitate

their establishment

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 l) Inspect water works and water services to ensure that such works and services
meet the prescribed standards

m) Report annually to the public on issues of water supply and sewerage services
and the performance of relevant sectors and publish the reports in the
gazette

n) Make regulations on water services and asset development which shall

include business, investment and financing plans to ensure efficient and
effective water services and progressive realization of the right to water
services

o) Advise the cabinet secretary on any matter in connection with water services

p) Make recommendations on how to provide basic water services to

marginalized areas.

Among the key functions of the WASREB as stipulated in Water Act 2016 Section 72 (b)
is to ‘…. evaluate and recommend water and sewerage tariffs to the county water
services providers and approve the imposition of such tariffs in line with consumer
protection standards. The objective is to establish tariffs that balance commercial,
social, and ecological interests by ensuring access to all while allowing Water Service
Providers (WSPs) and Water Works Development Agency (WWDAs) (offering bulk
supply) to recover justified costs.

The Regulatory Board will apply these Guidelines when setting the Customer Tariffs
charged by Water Service Providers (WSPs) in their Service Areas. The WWDAs and the
WSPs must follow these guidelines when submitting Tariff Adjustment Proposals for
consideration by the Regulatory Board.

Compliance with these Guidelines is a condition of the Licence for Provision of Water
Services granted to the WSPs and WWWDAsby the Regulatory Board. The Guidelines
have been developed to be consistent with the model Licences developed by the
Regulatory Board. The Regulatory Board recognizes that WSPs differ by category and
size and has developed different requirements accordingly.

2.0 Tariff Policy

This tariff policy will guide the entities of both national & county governments and other
interested parties in developing tariffs as aligned to the laws and regulations applicable.

2.1 Tariff Objectives

The five objectives below will guide tariff setting for water supply and sanitation:

1) Financial sustainability
2) Access to safe water as a Human Right
3) Efficiency
4) Conservation
5) Simplicity.

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 2.2 Guiding Principles

Tariff setting will be guided by the National Values and Principles as set out in Article
10 of the Constitution together with principles, together with Articles 43,60,69 & 232 the
requirements in the WA 2016 and Water Service Regulations and shall be guided by
the following principles: -

1. Sustainability
In setting tariffs, we must be cognizant that water is a finite resource which will be
used efficiently and mindful of the needs of the current and future generations and
in cognizance of maintaining the environmental reserve to ensure inter-
generational and intra-generational existence.
2. Inter-governmental consultation and co-operation
Where necessary to the tariff process, the National and County Governments
should conduct mutual relations based on consultation and cooperation.
3. Respect, protection, and fulfilment of human rights
The tariff-setting process will respect, protect, and fulfil the human right to clean
and safe water in adequate quantities and the human right to reasonable
standards of sanitation.
4. Affirmative action, equity, inclusivity, and equality
The tariffs will seek to enhance opportunities for vulnerable members of our
population.
5. Consumer protection
The National Government shall develop tariffs for the protection of water
consumers which county governments shall enforce and implement.
6. Efficiency and value for money
Every effort should be made in maximizing output per unit of public resources in
water services provision and in maximizing the expected outcomes across the
value chain.
7. Financing of functions
All water functions assigned at both levels of government should be adequately
financed from levies.
8. Ring-fencing
Revenues generated from charges, fees, permits, and tariffs in the water sector
should be used to promote water activities concerning the sub-sector only.
9. Public Participation as guided by CoK (2010)
10. User Pays Principle
Water resources will be recognized as an economic and social good and the
application of the most efficient pricing model to ensure full cost coverage while
meeting the social, economic, and environmental costs.
11. Good governance
Integrity, transparency, and accountability are mandatory constitutional principles
set out in Art.10 and should be mainstreamed across the sector.

2.3 Interaction of Objectives:

The described objectives and guiding principles might be perceived as conflictive in their
simultaneous achievement. The appropriate use of this guideline should allow the
achievement of divergent objectives at the same time. The tariff structure can be
designed e.g., to balance financial sustainability with affordability by including cross-
subsidies between consumer groups and allowing for a lifeline tariff for the poor.

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 2.4 Chosen Approach for Tariff Regulation

The circumstances of Water and Sanitation services in Kenya influenced the Tariff
approach adopted by the Regulator:

WASREB has chosen an approach which aims at ensuring that the WSPs cover their
recurrent costs and allow for improved sustainable access to safe water for the poor. The
immediate objective of tariff negotiations is to reach coverage of Operations and
Maintenance costs while at the same time, performance improvements are achieved.
Tariff adjustments will not be made without consideration of the ability to pay, especially
for the poor and marginalized communities.

As a second step, the objective will be to move to the achievement of full cost recovery
to ensure long-term sustainability. Once most WSPs reach full cost recovery, an advanced
regulatory approach will be adopted.

2.5 Types of WSPs

Wasreb distinguishes between five types of WSPs.

Type 1 – WSP in Urban Areas

The water services provider in this category is required to meet Full coverage of Operations
and Maintenance between 100% and 150%.

• WSP should meet the capital and operation and maintenance costs of providing
the licenced water services without recourse to public funds and may be able to
service debt obligations.
• The aim is to ensure WSP’s able to realize the discharge of financial debts.
• The increase of tariffs in this category is strongly tied to the achievement of
acceptable performance levels.

Type 2 – WSPs in Rural, Low-Income & Peri-Urban Areas

The water services provider in this category is required to meet Full coverage of Operations
and Maintenance cost achieved but may not be able to meet capital costs and
repayment of debts.

• The preferred position is to enable the water services providers in this category to
meet the operation and maintenance costs of providing the licenced water
services without recourse to public funds.
• WASREB aim to propose a Tariff level, for this category which will be able to help
the utility to discharge financial debts, considering the ability to pay consumers
and the performance and cost structure of the Provider.
• The increase of tariffs in this category is strongly tied to the achievement of
acceptable performance levels.

Type 3 – WSPs in Rural, Low-Income

The water services provider in this category is required to meet the operation and
maintenance costs of providing the licenced water services and where necessary, there
can be recourse to public funds.

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In this category, the economic viability of the provider is a priority concern of WASREB,
and consultative discussions may be necessary to secure subsidies from relevant
governments.

The aim is to ensure the subsidy is performance-based and increases access to

marginalized persons and enhances equity in service provision.

Type 4 – Bulk Water Suppliers 1

The bulk water supplier can meet the capital and operation and maintenance costs of
providing the licenced water services without recourse to public funds; and

Type 5 – Bulk Water Suppliers 2

The bulk water supplier is unable to meet the capital and operation and maintenance
costs of providing the licenced water services and will require recourse to public funds.

3.0 Types of Tariff Adjustments

a) Regular Tariff Adjustment (RTA)

An RTA is a comprehensive review of the tariff undertaken no more frequently than a set
period of years, a duration called the tariff period. The tariff period is typically three to five
years to coincide with the planning cycle of the applicant. The approved RTA remains the
same during the tariff period.

The Regulatory Board may set a shorter tariff period (not less than one year) in the event
of an expected major change in the operating environment of the applicant in the short
term, or insufficient data by the applicant.

The Forms required for submission of an RTA Proposal can be found in the Annex.

b) Automatic Tariff Adjustment (ATA)

The ATA is a comprehensive review of the tariff undertaken no more frequently than
three to five years to coincide with the planning cycle of the applicant but the tariff
changes every twelve months, during the Tariff Period, in line with inflation (Consumer
Price Index). The annual changes to the tariff are determined by an index that is linked
to the performance of the Applicant.

The conditions attached to ATA are as follows:

1. WASREB will implement an index of at least 50% of the overall inflation rate and
not greater than the overall inflation rate;

2. The formula is to be applied to Applicants with at least 10,000 connections and

which have a regular tariff approved after 1st July 2017, for the duration of the
validity of the current tariff; and are not dependent on subsidy.

3. Upon attainment 150% O&M cost coverage, the utility’s tariff is to be capped
and indexation will not apply.

The indexation formula for tariffs is outlined in Annex 2.ATA may apply to Bulk Water
Supply applicants as determined by the Water Services Regulatory Board.

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 c) Extra Ordinary Tariff Adjustment (ETA)

At any time before the regular tariff review, a water services provider may, for good cause
shown to the Regulatory Board, apply for an extraordinary tariff review. An application for
an extraordinary tariff review shall, in addition to meeting the requirements for a regular
tariff review, satisfy the Regulatory Board that, due to a change in circumstances which
could not have been foreseen during the last regular tariff review or for some other
justifiable reason, a tariff review is necessary to ensure a sustainable water service. An
extraordinary tariff review, shall if approved by the Regulatory Board, be gazetted, and
apply only until the end of the regular tariff period.

4.0 Tariff Adjustment Process

The process for Tariff adjustments is initiated by the WSP or BWSP (applicant). It
shall follow the following process:

1. Preparing a tariff adjustment proposal in the prescribed format.

2. The WSP/ BWSP shall seek a resolution from the BOD on the proposed tariff
adjustment.

3. The WSP shall seek a no objection from the respective County Government
for its intention to seek a tariff adjustment.

3.1 BWSP shall be required to have conducted a stakeholder

Consultation with the respective county Governments and WSPs
regarding the proposed tariff adjustment. Evidence of this will be
submitted together with the application in step 4, together with a
draft Bulk Water Supply Agreement (BWSA).

4 . The WSP/ BWSP shall submit the “Tariff Adjustment Proposal” to the
Regulatory Board, in the prescribed format accompanied by documents
listed in Annex 3

5 . Upon receipt at WASREB, the Application will be screened for

completeness and sufficiency of the supporting documents. If complete &
sufficient, the application shall move to the evaluation stage.

6 . At the evaluation stage, the application will be assessed to determine:

6.1 whether the costs proposed are justified,

6.2 whether the projections made in the application are realistic and

6.3 whether the proposed tariff structure is affordable to the consumers

and will ensure utility sustainability. (See Annex 4 for costs admissible
for tariff adjustment)

6.4 During evaluation, the applicant may be asked to revise the

application or provide additional information.

7 . Following successful evaluation, the applicant and WASREB will hold a tariff
negotiation meeting.

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 8. Following a successful tariff negotiation meeting, WASREB will inform the
applicant with a copy to the County Government, the outcome of the tariff
negotiation and the proposed tariff structure.

9. WASREB will carry out Public Consultation on the proposed tariff as per the
requirements of Section139 of the Water Act 2016.

10. WASREB will consider the input of the public consultation and determine
whether the proposed tariff will be referred back to the WSP or be
presented to the WASREB Board of Directors (BoD) for Approval.

11. Upon approval by the BoD, WASREB shall gazette the tariff with a a30
days’ notice for implementation by the WSP.

This process shall take a maximum of six (6) months from the receipt of a
complete application.

4.1 Notice of Tariff Correction

If the Regulatory Board identifies an error in the computation of the approved Tariff
Adjustment or in the gazette notice, it shall send a Notice of Correction to the
WSP/BWSP. The notice will indicate the error and require the WSP/WWDA to
correct the error in the next billing cycle, or where the error has resulted in
overcharging customers, to deduct the over charge from the customers’ next
water bill.

The notice of tariff correction shall be published in the Kenya Gazette and shall
take effect from the date of gazettement.

4.1 Submission and approval of Tariff Adjustment Proposals

The WSP/WWDA may submit a Regular Tariff Adjustment Proposal for each Tariff
Period during the Tariff Submission Period. The timing for the submission of Proposals
is as follows:

The windows to make tariff applications to the regulator will be defined as follows:-
• New Applications - Open All Year Round
• Indexation – 5th of July
• Extra-Ordinary Tariff Adjustment – Open All Year Round
• Regular Tariff Adjustment - Window 1:- February to March Deadline: last
business day in March.Window 2: August – September, Last Business Day
in Sep

➢ The Regulatory Board will only receive Tariff Adjustment Proposals as

guided above each year. A WWDA/WSP that fails to submit within this
period, must wait with their proposal submission until the following
application period.

➢ Approved Tariff adjustments may include modifications and

conditionalities set by the WASREB. The Regulatory Board will provide the
revised figures in writing and provide a justification for the revisions. If the
WWDA does not accept the decision of the Regulatory Board, it can
request that the Regulatory Board review the decision. This request must

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 be made to the Regulatory Board within fifteen (15) working days and be
accompanied by a justification for why the case should be reconsidered.

➢ The WSP must give one (1) month notice to the Customers before
implementing the Tariff Adjustment.

➢ The WWDA (bulk Suppliers) must give WSPs one (1) month notice before
implementing the Tariff Adjustment.

➢ The broad composition of the Directors of the Regulatory Board from

both the private and public sector allows a balanced decision on the
final tariff approval.

5.0 Information to Submit to WASREB

5.1 Calculating the O&M Expenditure of WSPs/WWDAs

The Regulatory Board requires the applicant to document costs of service provision of past
years and to propose, and provide justification for, estimates of how much it will cost to
deliver, in an efficient and cost-effective manner, the volume and quality of water services
required by customers. The applicant should project their O&M costs for the current and
for the entire period for which the tariff adjustment shall apply. Based on the projected
O&M costs further analysis will be done to determine the average tariff.

Wasreb requires the tariff applicants to provide operational data on service provision of
past years. The applicants must also propose, and justify, estimates of how much it will cost
to deliver, in an efficient and cost-effective manner, the volume and quality of water
services required by customers. The WSP/Bulk Provider should project their O&M costs for
the current and for the entire period for which the tariff adjustment shall apply. Based on
the projected O&M costs further analysis will be done to determine the average tariff.

5.1.1 O&M Expenditure of the Applicant

Operation and Maintenance Expenditure (O&M Expenditure) refers to the day-to-day

costs of running a utility or bulk supply. Applicants must document historic costs and
estimate future O&M as part of the Tariff Adjustment Proposal they submit to the
Regulatory Board. In general, the Regulatory Board will allow the applicant to recover all
O&M Expenditure that is reasonable and necessary to provide efficient service to
customers during the Tariff Period. Reasonable and necessary O&M Expenditure may
include, but is not limited to, the categories shown in Annex 3a.

5.1.2 Regulatory Levy

The Water Act 2016 Sections 89(1)(2) and 130 confers to Water Services Regulatory Board
(Wasreb) powers to prescribe license fees payable by various licensees on the issuance
of the license and at prescribed intervals thereafter.

Applicants will be required to pay a regulatory levy to the Regulator as per Gazette Notice
12188 of 2018 or any future adjustment notices.

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 5.2 Repayment of Debts

If the applicant has achieved 100% coverage of O&M costs, it should present information
on its debts (if existing) and present a debt amortization plan. Debts could exist directly for
the applicant or on the level of the WWDA – directly assigned to the applicant. Debts are
in these cases already existing debts. New debts will be covered under investments (5.3).
The repayments of debts are strongly affecting the liquidity of the companies. Depending
on the height of the financial repayment burden the applicant might be able to cover
the repayment of debts and at the same timestartg to calculate investments and/ or
depreciation and therefore qualify as a WSP Type III.

5.3 Investments and Depreciation

Only applicants that already cover 100% of their O&M cost and that are repaying loans
have to fill in the information on Investments and Depreciation (detailed information
should be supplied through the investment plan). For the calculation of Investments and
Depreciation, the plan of WASREB towards full cost recovery should be considered. The
Applicant may apply for a higher tariff increase, if accompanied with the necessary
information and the affordability of tariffs by consumers can be proved.

All investment proposals submitted to Wasreb for consideration should be

accompanied by relevant design/layout plans and bills of quantities as applicable.

5.4 Production and Billed Volumes of Water

The applicant shall provide clear and realistic historical and projected figures for water
production. The applicant is also required to provide historical data on billed volumes
of the previous years.Any estimated quantities must be based on the latest available
actual figures.

The applicant will be required to provide consumption patterns of their various

consumer categories as well as within the anticipated bands of the proposed tariff as
per the template in the tariff annexes. Any major deviations (increases or decreases) in
one consumption category require explanation.

To justify the consumption pattern, Wasreb may request monthly billing data for specific
years to be submitted in a prescribed format.

5.5 Tariff Structure

The Tariff Structure describes how different costs of water and sanitation services are
charged to the different customers. It specifies how much (in each category of
customers (Customer Class) pays for these services. The tariff structure should be used
to design a “pro-poor” policy that allows for the provision of a lifeline tariff for poor
households. This can be done by a “social block tariff”, charging a lower percentage
of the average tariff (e.g., 50-70%) for the consumption of up to 6m³. The applicant must
propose a method for pricing the services that will meet the tariff objectives. As part of
this pricing method, the WSP’s must propose:

1) An average tariff and a tariff Structure that determines how expenditures

making up the total O&M costs will be recovered, for example,

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 ➢ Through variable charges, per m3 of water service provided.

➢ Through “block” structures, with variable charges that change once a

customer’s usage exceeds a certain volume.

➢ Through a fixed charge for a water service connection.

2) Customer Classes that reflect the different costs imposed on the system
by customers’ different usage patterns, different utilization rates, different
equipment requirements, or different administrative requirements.

3) A Tariff Structure that shows (in KES.) how much each customer class will
pay for each unit of water consumed, for each connection type, and
each month of service. When the Regulatory Board approves a license,
the tariffs in place when the applicant’s license is issued will typically
remain in effect (referred to as the “Initial Tariffs”) until new tariffs have
been approved by the Regulatory Board.

The Regulatory Boards has established consumption blocks for the different
consumer categories, and these are included in the tariff annex.

Table 1 Below is a typical retail tariff structure for a WSP.

Typical Tariff Structure

Customer Category Consumption Block in M³ Ksh.
Domestic 1-6 45
7-20 50
21-50 70
51-100 80
101-300 95
300 and above 130

Table 1: Typical Tariff Structure

For Bulk Supply, a fixed bulk rate will be applied. As part of this pricing method,
the applicant must propose an average tariff that determines how expenditures
making up the total O&M costs, debt repayment and asset renewal will be
recovered.

Example of Bulk Tariff: Ksh. 30 Per M3.

5.6 Variable Charges Based on volumetric (usage)

The applicant will be required to meter all their customers. The WSP shall not bill
any customer on zero consumption but only on actual volume consumed as per
the conditions of the license. There will be no monthly meter rent and standing
charges. The utility will cater for meter replacement and servicing as
complementary to their O+M Costs.

Where the applicant has not achieved 100% metering, they must propose a fixed
monthly charge for customers without meters (Un-metered Customers) and
conditions will be prescribed for the to achieve 100% metering within specific
timelines, failure to which penalties shall be imposed.

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 5.7 Rising Block Tariffs for Metered Residential Customers

Wasreb prescribes applicants to propose a rising block tariff for metered

residential customers, where higher tariffs apply for customers that consume
beyond a threshold volume or each month (for example 6 m3/month). With a
rising block tariff, the price per unit of water consumed must be lowest for the
first block of consumption and higher in the subsequent blocks.

The Regulatory Board will consider block structures other than rising block,
provided the WSP provided affordability studies or other information which
supports an alternative structure and can prove that consumers pay according
to volume consumed. The Regulatory Board requires WSP’s to propose tariff
structures, including consumption blocks.

5.8 Multi-Dwelling Units (MDUs)

To implement equity in pricing, on gated communities and multi-dwelling housing

units served by a single connection, a tariff may be prescribed at a flat cost
recovery rate. This shall apply if the units do not incorporate individual metering.
The applicant will be required to provide information on any such connections
including the billed volumes by these to facilitate development of a workable tariff.

5.9 Sanitation Service Tariffs

If the applicant is directly involved in providing sewered sanitation services, they

must maintain separate cost centres i.e., have a distinct cost centre for Water
Supply services and a distinct cost centre for sewered sanitation services. Where
the applicant’s costs bundle both water supply and sewerage services, it shall
apportion administrative and overhead costs between the two services as
appropriate, ensuring that the sum does not exceed the total administrative costs.

As part of the tariff structure, the applicant will propose a pricing structure that may
have: a fixed sewerage charge for all households with sewerage connections,

1) a volumetric sewerage charges. Because sewerage

metering is not practical for residential customers, the
volumetric charge can be based on a percentage of the
water usage volume, this is calculated at 75% of the total
water usage, or

2) a combination of both a fixed charge and volumetric

charge.

Applicants that offer or facilitate the development of on-site sanitation services

will be eligible for a special sanitation surcharge reflecting real costs that may be
included to the tariff. As part of its Business Plan, the applicant must propose the
type of services to be provided and estimate the costs. The applicant may also
propose a sanitation surcharge to cover these costs as part of its Tariff Adjustment
Proposal. As part of the Business Plan, the applicant must propose performance
targets related to on-site sanitation and demonstrate achievement of these
targets.

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 5.10 Tariffs at Water Kiosks and Standpipes

For Informal settlements where a household connection may not be possible,

Water Kiosks and Standpipes may be utilized. For these, the water price per
cubic metre should not be higher than the social block of the tariff. This price
should already include the margin of the kiosk operator but should not be
significantly higher than the social tariff for household connections. The
applicant has the obligation to ensure that the Kiosks/ Standpipes charge the
consumers as per the tariff to be determine. Other income generating activities
of the kiosk operator should be promoted to enhance operational incentives,
but not be conflictive with the core-business of provision of the water service.

5.11 Tariffs for Commercial and Administrative Consumers

The water tariffs applied to commercial, industrial and administration customers

should be at full cost recovery. The lower block is expanded to range from 1 –
50 m3. The subsequent blocks are incrementally priced to give an incentive for
water conservation.

5.12 Miscellaneous Charges

These shall be prescribed as per a standard template provided by Wasreb.

5.13 Tariff Indexation

WASREB has developed an indexation formula for adjustment of water tariffs to be used
by defined water service providers.

The formula is intended to achieve the following:

a) Ensure uniform liquidity during a utility’s tariff period.

b) Avert steep tariff increases at subsequent tariff reviews thereby shielding
consumers from steep price increases every other tariff period.
c) Improve the credit worthiness of utilities to enable them access loans for improving
service delivery, since potential debt repayment will be safeguarded from
inflationary pressure on O&M

The prices determined using the formula shall be the prices of water. The determined
prices are proposed to become effective on the 15th day of July every year and shall
remain in force until the 14th day of July the following year.

The price in Kenya shillings per m3 of water is proposed to be determined as follows:

I. Tariff (T0) is composed of the following components.

𝑻𝟎 = 𝑶&𝑴 + 𝑫𝑺 + 𝑨𝑹 + 𝑰
Where:
O&M = Operations and Maintenance component
DS = Asset Debt Service Component
AR = Asset renewal Component
I = Investment Component
II. New Tariff to be calculated as follows;

12
 𝑻𝟏 = 𝑶&𝑴 (𝟏 + 𝑰𝑾𝒕 ) + 𝑨𝑹 + 𝑫𝑺 + 𝑰
Where:
𝑻𝟏 = New Tariff
𝑰𝒘𝒕 = Index for water services at time t
III. The Index for water services at time t is calculated as follows:
𝑰𝒘𝒕 = 𝑿(𝑰𝒕 )
Where:
𝑰𝒕 = Overall inflation rate at time t
𝑿 = Performance Adjustment on the overall inflation rate at time t
The performance Adjustment (X) is calculated as follows;
𝑻𝑵𝑹𝑾𝒕 𝑻𝒑𝒆𝒕
𝑿={ + }
𝑵𝑹𝑾𝒕 𝑷𝑬𝒕
Where:
𝑇𝑁𝑅𝑊𝑡 = Target for Non-revenue water for time t
𝑁𝑅𝑊𝑡 = Actual Non-revenue water at time t
𝑇𝑝𝑒𝑡 = Target personnel costs to O&M for time t
𝑃𝐸𝑡 = Actual Personnel costs to O&M at time t
WASREB will implement 𝑰𝒘𝒕 at least 50% of the overall inflation rate It and not greater
than the overall inflation rate;
𝟎. 𝟓(𝑰𝒕 ) ≤ 𝑰𝒘𝒕 ≤ 𝑰𝒕

The formula is proposed to be first applied to only the large and very large water utilities
which have a regular tariff approved after 1st July 2017 and are not dependent on
subsidy, only for the duration of the validity of the tariff.

Upon attainment 150% O&M cost coverage, the utility’s tariff is proposed to be capped
and the formula shall not be on this utility’s tariff.

5.14 Documents Required for the Tariff Adjustment Proposal

To facilitate the preparation of a tariff adjustment proposal, standard formats

have been developed. With the aim to enable a fast reply to a Tariff Adjustment
Proposal, all WWDAs/WSPs must adhere to the standard formats.

WASREB expects the WWDA’s/WSP’s to hand in both, a hard and a soft copy of
the Tariff Adjustment Proposal. The standard formats will be provided in
electronic version. The WWDA must submit the following documents for a Tariff
Adjustment Proposal of any WSP:

1) Tariff Adjustment Proposal:

➢ Annex 1: Justification for Tariff Adjustment Proposal
➢ Annex 2: General Data
➢ Annex 3a: Analysis of WSP Expenditure
➢ Annex 3b: Analysis of WWDA Expenditure
➢ Annex 4: Debt Amortization Plan for WSP/WWDA
➢ Annex 5a: Performance Analysis WSP

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 ➢ Annex 5b: Performance Analysis WWDA
➢ Annex 6: Calculation of average Tariff
➢ Annex 7: Revenue Projections / Tariff Structure
➢ Annex 8: Tariff Schedule
➢ Annex 9: General Performance Assessment
➢ Annex 10: Tariff Proposal Submission Checklist
➢ Annex 11: Tariff Study:

All WSPs with a minimum monthly turnover of KES 120 million and any other WSPs identified
by the Regulatory Board, must prepare a tariff study as part of the Regular Tariff
Adjustment Proposal. The WSP may contract a third party to prepare the study on their
behalf. The minimum requirements of the study are described in the Annex.

The tariff study should contain an Affordability Analysis which should prove that
households do not spend more than 3-5% of their monthly in-come for water and
sanitation services of the WSP.

2) Business Plan (Current version) and Summary of Implementation Status for the WSP,
including Capital Investment Plan (as required in Business Planning Guidelines).
3) Financial Statements (Audited Statements required) for the WSP/WWDA

Annex 11 must only be provided by WSPs that have a minimum monthly

turnover of K E S 120 million and any other WSPs identified by the Regulatory
Board. The tariff study contains an Affordability Analysis which should prove that
households do not spend more than 3-5% of their monthly in-come for water
and sanitation services of the WSP.

6.0 Process of Tariff Analysis

6.1 Tariff Composition:

Generally, the tariff approved by the Regulatory Board consists of the following
costs. As well are displayed the classification of WSP’s in the three different
categories and the costs associated with each category:

14
 WSP TYPE 1
ENSURING WSP WSP TYPE 2
OPERATIONS GROWTH STAGE - WSP TYPE 3
INCREASING ACCESS
IMPROVE QUALITY OF
SERVICE & SUSTAINABILITY

OPERATIONS &
MAINTENANCE (O&M)
OPERATIONS &
MAINTENANCE (O&M)

OPERATIONS &
MAINTENANCE (O&M)

INVESTMENT

INVESTMENT

DEBT REPAYMENT

DEBT REPAYMENT

ASSET RENEWAL

The Regulator will assess and approve costs according to each cost category.
The approved tariffs allow the WSP/ WWDA to generate the necessary revenues
to cover the projected justified costs incurring in each category. WWDA’s/WSP’s
are not allowed to shift expenditures between the different cost categories
without previous approval of the WASREB.

Asset Renewal will only be allowable for WSPs/WWDAs that have achieved over
150% O+M cost coverage.

6.2 Steps of Tariff Application

The Regulatory Board will follow a standardized process for Regular Tariff
Adjustments.

The process has seven steps:

15
 The water service provider formally requests to the regulatory board for a
new or a review of the tariff

The regulatory board allows the provider to provide CAPEX and OPEX data
in a prescribed format

From the submissions by the WSP, the board undertakes a review of costs
and analysis including consumption patterns and projected revenues based
on the agreed performance benchmarks.

A joint validation session is held between the WSP and the board. Only
justified costs are allowed. Tariff conditions are also outlined.

Upon conclusion of the review process, the WSP is allowed to proceed and
invite consumers and stakeholders into a public participation forum to seek
endorsement for the tariff changes.

The regulatory board may then approve and gazette the tariff for
implementation.

The board monitors implementation of the tariff with the conditions

attached therein.

6.3 Cost Analysis of WWDA/WSP

The Regulatory Board will decide the extent to which O&M Expenditure of
WSP’s/WWDAs are “reasonable and necessary” for the provision of efficient
services. This will be done to ensure that consumers are only paying for justified
costs and are protected against excessive tariffs. The current level as well as
potential increases will be analysed in detail, as personnel and general
administration costs. The Regulatory Board will not only analyse the WSPs/WWDAs
costs, but also compare the cost of WSPs with other similar WSPs and the cost of
WWDAs with other WWDAs. If the explanations given by the WSP/WWDA are not
satisfactory to convince WASREB that the current level of increases is justified, they
may propose deductions from the projected costs. The reasons for deductions
shall be clearly explained.

In certain cases, the Regulatory Board may “fast-track” the process of the tariff
application, consistent with the process described in these Guidelines. “Fast
tracking” means the Regulatory Board will streamline the approval process and
exercise less scrutiny on specific expenditure terms. WSPs that will be eligible for
fast-tracking may include those that are not yet recovering O&M costs and
repaying their debts, small rural schemes, and WSPs that are meeting or

16
exceeding performance targets. Fast tracking will be at the discretion of the
Regulatory Board.

6.3.1 Justified Costs for WSP/WWDA

The analysis of the projected O&M costs of the WSP/WWDA might lead to
deductions. The Justified costs are calculated as follows:

WSP/WWDA Cost Analysis

Deductions
Projected for Justified
O&M cost Unaccepta O&M cost
ble cost

6.3.2 Total Allowed Costs for WSP Type 1

The total allowed costs for WSP include as well the Regulatory Levy and are
calculated as follows:

Total Allowed Cost for WSP-Type1

Total Allowed
Justified O&M
Cost For WSP
cost
Type 1

6.3.3 Repayment of Debts – Total Allowed Cost (TAC) for WSP Type 2

Depending on the amount of debts, repayment costs will be added to the Total
Allowed Cost. The Regulatory Board will verify, if the level of repayment is
appropriate and the burden on the tariff is affordable to the consumers. The level
of repayment should on the other hand allow a quick repayment of debts in
order to improve the liquidity situation of the WSP/WWDA in the long run. The
following formula applies for WSPs Type 2:

17
 Total
Justified Debt Allowed
O&M Investment Cost For
Repayment
cost WSP Type
2

6.3.4 Increase of Tariff towards full cost recovery – TAC for WSP Type 3

It is the aim of WASREB to allow tariffs to be set to reach full cost recovery after the
WSPs have achieved 100% O&M cost coverage and are able to repay debts. The
preconditions are that the ability to pay, as well as, that the O&M costs are within
reasonable limits and performance is acceptable.

Following the assessment of costs, performance and debts, the Total Allowed
Costs justified costs for WSP type 3 are described below;

Total
Justified O&M Debt Allowed
Investment Asset Renewal
Cost Repayment Cost For
WSP Type 3

For the purpose of simplicity, it is assumed that full cost recovery is reached when
the revenue covers about 150% of O&M cost. Full cost recovery means, that
additionally to the coverage of O&M costs and the payment of debts,
depreciation (Capital Works Maintenance) and new investments (New Capital
Works) are realized.

Asset renewal will only be allowable in situations where the WSP/WWDA has
achieved an O&M coverage of more than 150%.

6.4 Performance Monitoring

The performance analysis will concentrate on certain indicators to determine

whether there are deviations from the agreed performance.

6.4.1 Monitoring of Performance of WSPs/WWDAs

The Regulatory Board will verify the WSPs/WWDAs progress against Minimum
Service Levels, agreed performance indicators in the license, targets agreed in
the last Tariff Approval and other agreements.

18
The following indicators as minimum requirements will be taken into account in
the performance analysis of WSPs:

1. Water Coverage (%)

2. Sanitation Coverage (%)
3. Drinking Water Quality
4. Hours of supply
5. Non-Revenue Water (NRW)
6. Metering Ratio
7. Staff Productivity (Staff per 1000 connections)
8. Personnel Expenditure as Percentage of O&M costs (%)
9. O&M Cost Coverage (%)
10. Revenue collection efficiency (%)

The following indicators as minimum requirements will be taken into

account in the performance analysis of WWDAs:

1. Drinking Water Quality

2. Hours of supply
3. Personnel Expenditure as Percentage of O&M costs (%)
4. Revenue collection efficiency (%)
5. O&M Cost Coverage (%)
6. Non-Revenue Water (NRW)
7. Staff Productivity (Staff per 1000 connections)
8. Metering Ratio

6.4.2 Key Performance Indicators

1) Water Coverage - This refers to the number of people served with drinking water
expressed as a percentage of the total population within the service area of a utility.
It is critical in tracking the progressive realization of the right to water regarding the
accessibility component in the normative content of the right to water.

2) Sanitation Coverage - This refers to the number of people with access to improved
sanitation facilities as a percentage of the total population within the service area of
the WSP. It measures performance about the provision of sewered and non- sewered
sanitation. Improved sanitation facilities include flush or pour-flush to piped sewer
systems, septic tanks, ventilated improved pit latrines and traditional pit latrines (with
a squatting slab).

3) Drinking Water Quality - These measures the potability of the water supplied by a
utility. It is a critical performance indicator since it has a direct impact on the health
of consumers. This is a weighted composite indicator measuring compliance with
residual chlorine standards (40%) and bacteriological standards (60%). The two sub
indicators are also composed of two components each, namely:

i. The number of tests conducted as a percentage of the number of tests

planned in accordance with the Guideline on Water Quality and Effluent
Monitoring (GWQEM) weighted at 67%.

ii. ii. The number of samples within the norm as a percentage of the total

19
 number of tests conducted weighted at 33%.

WASREB continues to monitor monthly reporting on water quality by the utilities and
all utilities are required to put in place a water safety plan within the first year of
issuance of a license

4) Hours of Supply - This refers to the average number of hours per day that a utility
provides water to its customers. It measures the continuity of services of a utility and
thus the availability of water to the customer. It is an important indicator on quality
of service and shows the extent to which the utility is making progress towards the
fulfilment of the human right to water and sanitation in terms of availability.

5) Non-Revenue Water - This is the difference between the amount of water put into
the distribution system and the amount of water billed/unbilled as authorized
consumption. It comprises of both commercial (apparent) losses and physical (real)
losses. It is an operational indicator contributing to the sustainability question of the
utilities and therefore is a significant measure that facilitates evaluation of the
efficiency of operations by the utilities.

6) Metering Ratio - This quantifies the number of connections with functional meters as
a proportion of the total number of active water connections. Metering of
connections is designed to ensure that billing is based on actual consumption and
hence customers only pay for what they use. As part of routine maintenance, the
utility is expected to test the functionality of these meters on a regular basis, either
by sampling them for calibration or by replacing the old ones through the
implementation of a metering policy.

7) Staff Productivity (staff per 1,000 connections) - This refers to the number of personnel
employed per 1,000 connections (total active water and, where applicable, sewer
connections). It assesses the effectiveness of employee utilization. The size of a
utility, the nature of human settlement (distance between connections and number
of towns served), the skills mix and extent of outsourcing for services and whether a
utility provides water alone or water and sewerage services together, among other
things, all which have an impact on employee productivity.

When it comes to evaluating employee productivity, Large utilities are expected to

gain from economies of scale. As a result, category-specific benchmarks exist
depending on the utility’s size.

8) Personnel Expenditure as a Percentage of O+M Costs - Personnel costs as a

percentage of overall O&M costs determines if personnel costs are proportionate
to overall O&M costs as defined by sector benchmarks.

Revenue Collection Efficiency Revenue Collection Efficiency measures coherence

between collected revenues relative to billed amount. The indicator is a reflection
of the effectiveness of the revenue management system in a utility. Importantly,
only the collected amount can reliably fund the operations on the WSP.

9) Operation and Maintenance Cost Coverage – This is a measure of utility’s ability to

break-even in its operational costs, while relying on internally generated revenue.
This indicator is a proxy measure for financial stability and resilience from external
shocks. For instance, in the wake of COVID-19, the level of O+M Cost Coverage

20
 directly translated to utilities’ ability to sufficiently provide services amidst the crisis
linked to the pandemic. Essentially, an O+M coverage above 150% positions a utility
at full cost coverage implying the financial muscle to meet its O+M costs, service
debt and renew its assets.

For a utility to be self-sustainable, the following levels of cost-coverage defined in

Table 2 have to be met.

Cost Components % O&M Cost Coverage

O&M Cost 100%
O&M Cost + Debt Service + Minor Investment 101-149
Full Cost Recovery ≥ 150

Table 2: Level of Cost Coverage and Cost Components

10) Revenue Collection Efficiency - This is a measures coherence between collected

revenues relative to billed amount. The indicator is a reflection of the effectiveness of
the revenue management system in a utility. Importantly, only the collected amount
can reliably fund the operations on the WSP

The scoring limits and the benchmarks of the KPIs are presented in Table 3.

SECTOR BENCHMARKS
KPI CLUSTER

Not Acceptable
INDICATORS

Acceptable
Good
QUALITY OF SERVICE

1 Water Coverage, % >90% 80 - 90% <80%

2 Drinking Water Quality, % >95% 90 - 95% <90%

3 Hours of Supply, Population >100,000 21 - 24 16 - 20 <16

No.
Population <100,000 17 - 24 12 - 16 <12

4 Personnel Large and Very Large <20% 20 - 30% >30%

Expenditure as Companies
OPER ECONOMIC EFFICIENCY

Percentage of Medium Companies <30% 30 - 40% >40%

O&M Costs, %
Small Companies <40% 40 - 45% >45%

5 O+M Cost Coverage, % ≥150% 100 - ≤99%

149%
6 Revenue Collection Efficiency, % >95% 95 - 85% <85%
BILITY
AINA
ATIO

SUST
NAL

7 Non-Revenue Water, % <20% 20 - 25% >25%

21
 SECTOR BENCHMARKS

KPI CLUSTER

Not Acceptable
INDICATORS

Acceptable
Good
8 Staff Productivity Large & Very Large <5 5-8 >8
(Staff per 1000 Companies
Connections), No.
Medium & Small (less <7 7 - 11 >11
than 3 towns)

Medium & Small (3 or <9 9 - 14 >14

more towns)
9 Metering Ratio, % 100% 95 - 99% <95%

Table 3: KPI Benchmarks

6.4.3 Performance Targets

The WSP should attained all the agreed performance improvement targets agreed in
the license issued and the tariff gazette. The progress of the utility on the KPI will be
continuously monitored by the regulator. Non-compliance will attract the necessary
enforcement action as stipulated in the Water Act.

6.5 Balancing the Adequate Tariff Level

In the calculations for the average tariff, both efficiency criteria, “collection
efficiency” and “non-Revenue water” are taken into account. By applying the
agreed benchmarks for each criterion in the calculations as outlined below, the
WSP/WWDA are automatically penalized if they fail to achieve the set
benchmarks.

6.5.1 Non-Revenue Water (NRW)

The following calculations show how the average tariff (excl. collect efficiency) is
derived:

For these calculations, the individually agreed benchmark for NRW is used. If the
actual NRW still exceeds the benchmark, it reduces the actual quantity billed, thereby
increasing the “Projected Average Cost (per m3)”. The average tariff would then
be too low to cover the “Projected Average Costs”. Hence, each WSP has a clear
incentive to meet the agreed benchmark.

This mechanism assumes that the demand for water is not yet satisfied. This implies
that an increased amount of water available for distribution will increase the
amount of water consumed. The assumption is believed to be realistic in the

22
current set-up, at least for the next few years due to the low pressure in most
networks and the considerable urban population still unserved in most towns.

Satisfied Demand for Water

In cases where the assumption of a non-satisfied water demand is not true, NRW
above the benchmark would be compensated by a higher quantity produced,
while the quantity billed would be assumed to be constant. A higher quantity
produced entails increased actual production costs compared to the projections.
Again, the average tariff would then be too low to cover the “Actual Average
Cost”, thereby setting again an incentive for the WSPs to achieve the benchmark.

6.5.2 WSPs with Metering Ratio Below 100%

Each WSP shall improve the metering ratio as quickly as possible at least
according to the agreed benchmarks. Despite this, it is recognized that most of
the WSPs currently have a metering below 100%. The above-described
mechanisms, however, functions only for metered connections. In order not to
give an advantage to WSPs with low metering ratios, the below described
formulas apply to WSPs with metering ratios below 100% to account for cases
when these WSPs fail to meet the agreed benchmark for NRW.

“Actual NRW” is defined as “Total Quantity of Water Produced” minus “Total

Quantity billed”. To get at least a clear figure for the quantity produced, each
WSPs is requested to install bulk and district meters as soon as possible. This will
be reflected in the individual benchmark for metering ratio.

6.5.3 Collection Efficiency

While the equation is generally binding, it implies a collection efficiency of 100%.

However, it is recognized that most WSPs will not be able to collect 100% of the
billed amount. Incentives shall be set to continuously increase the collection
efficiency.

Therefore, the following benchmarks will be set in consideration of the

current levels of each individual WSP:

Newly established WSP’s are expected to reach a collection efficiency of 85%

within two years after the commencement of operations.

6.5.4 Determining the Average Tariff

The following steps are followed to consider the benchmark collection efficiency:

23
7.0 PUBLIC CONSULTATION

Section 139 of the Water Act 2016 imposes a requirement for public consultations in
relation to any application made or action proposed to be taken under this Act. It also
provides for the procedure of public consultations.

7.1 Pre-Consultation Process

1. The applicant shall develop an appropriate license review application and obtain a
‘No Objection’ from the respective County Government
2. The WSP shall submit the application to WASREB.
3. WASREB reviews the application and gives guidance on the content of the
application and areas that require review or adjustment. This guidance may be
given in (a) meeting(s) between the WSP and WASREB where agreed action points
are signed by all parties.
4. Once a suitable date and venue has been agreed on, the WSP shall have the public
consultation in the area where the WSP provides service.

7.2 Procedure of Public Consultation

1. The regulator shall publish a notice, in relation to the application:

I. In at least one national newspaper of daily circulation; and
II. In at least one Kenyan radio station broadcasting in that locality.

The notice shall—

a) Set out a summary of the application or proposed action.

b) State the premises at which the details of the application can be obtained.
c) Invite written comments on or objections to the application.
d) Specify the person to whom any such comments are to be submitted; and
e) Specify a date not earlier than thirty days after publication of the notice by which
any such comments are required to be received and specify a date not earlier
than 20 days after the publication of the notice the date of the public consultation
meeting. The publication/ notice inviting public comments on tariff application
shall be run by WASREB.
2. The notice shall also be published in posters to be displayed prominently in the
offices of the WSP and in strategic places such as markets and places of worship
in the service area of the WSP.
3. Letters shall be written to the key stakeholder groups inviting them to the public
consultation meeting. Stakeholders are persons who have a relevant interest in the
company's business. The following stakeholders shall be invited to the stakeholder
meeting.
I. Consumers with or without connections but residing in the service area of
the WSP.
II. Residents – through the relevant residents’ associations and include the
informal settlements
III. Main consumers of water in commerce, industry, and agricultural sectors
IV. The County Government
V. The Relevant Water Works Development Agency

24
 VI. The government administrative agencies including County Commissioners,
and chiefs.
VII. Active civil society groups in the area
VIII. Women organizations in the area
IX. Churches / mosques in the area

The key management staff of the WSP must attend the consultation meeting.

7.3 Agenda of the Public Consultation Meeting

The agenda will include presentations on the following:

1. Introduction – where all presents are acknowledged, as well as, the purpose of the
meeting
2. WSP profile- shareholders, Board of Directors, staff, area of coverage, targets set.
3. Relationship with County Government and WWDA
4. WSP performance in the last five years
5. WSPs costs and obligations under the Water Act 2016. Emphasis should be given
on activities under the service needs plan and capital works plan of the WSP and
the shortfalls experienced.
6. Necessity of tariff adjustment indicating what will be funded by the adjustment.
7. The proposed adjustment in tariff structure and level
8. Interactive session with audience and questions answered. Audience must
understand that views are sought so that all concerns can be considered by
WASREB in licensing the WSP. The consultation process is not to seek permission.

a. WSP Post Consultation Process

The regulator shall prepare the report of the public meeting and have legible attendance
list for the public consultation meeting, with the names, signatures, and contacts of all
attendees.

WASREB shall perform analysis on the application received and consider the sentiments
received at the WSP and WASREB in assessing the information submitted.

WASREB shall decide and if satisfied with the application, approve a suitable tariff.

7.4 Public Notification of Approved Tariff

WASREB shall publish the approved tariff and the reasons for the decision in the Kenya
Gazette.

1. WASREB CEO shall sign the notice of tariff adjustment.

2. A One-month notice period must always be issued.
3. The WSP shall make this gazette notice available on its website and prominently
display it at their premises.

8.0 Tariff Implementation and Monitoring

Upon approval of the Tariff Adjustment by the Regulatory Board, the WWDA shall
notify WSP and direct the WSP to implement the tariff adjustment.

25
 8.1 Tariff Implementation

The WSP shall give Customers one month notice prior to a tariff increase. The WSP
shall notify customers by placing announcements in the newspaper and
including a notice with the Customer’s water bill.

In addition, the WSP shall ensure that the documentation of the current tariff is
available to all Customers during business hours. The WSP shall post copies of
the Tariffs in various locations to which the public has access to including, but
not limited to the utility’s website, pay stations, public affairs offices of the WSP,
water kiosks, and other public facilities where public notices are posted.

8.2 Tariff Monitoring

Wasreb shall monitor the correct implementation of Tariffs as described in this

guideline and shall notify the WSP of any deviation. If the Regulatory Board finds
that the WSP adopts a tariff that is more than the Tariff Adjustment Approval, it
shall issue a Notice of Correction to the WSP.

In case the WSP has overcharged customers, it shall correct the tariff in the next
billing cycle and issue a refund for the amount overcharged to each customer
affected by the incorrect application of the approved Tariff Adjustment. The
WSP must also publish an apology to consumers in newspapers, and post copies
on public notice boards and kiosks.

The Regulatory Board reserves the right to bring the WWDA and WSP to court for
charging excess tariff and may revoke the license issued.

8.3 Default on Tariff Conditions

WASREB shall monitor the correct implementation of Tariffs .

If WASREB finds that the WSP adopts a tariff that is in excess of the Tariff Adjustment Approval, it shall issue a
Notice of Correction to the WSP, and send a copy to the County Govt.

In case the WSP has overcharged customers, it shall correct the tariff in the next billing cycle and issue a refund
for the amount overcharged to each customer affected by the incorrect application of the approved Tariff
Adjustment.
The WSP must also publish an apology to consumers in newspapers, and post copies on public notice boards and
kiosks.

WASREB will levy penalties for continued non – compliance with tariff conditions as per Kenya Gazette Notice
No. 12188 of Nov 2018 .

The Regulatory Board reserves the right to bring the WSP to court for charging excess tariff, and may revoke the
license

26
5th Floor, NHIF BUILDING, NGONG ROAD
P.O. Box 41621, 00100, NAIROBI, KENYA
Tel: +254 (020) 27335561
+254 709 482 000
Email: info@wasreb.go.ke
Website: www.wasreb.go.ke