Interpretation of Guangzhou tap water price reform, does it have a great impact on residents’ lives?

On April 3, the Guangzhou Municipal Development and Reform Commission released the reform plan of tap water price in downtown Guangzhou, and plans to hold a hearing in the near future.

According to the plan, the scope of price reform is mainly the price of tap water supplied by the municipal water supply company in the water supply service area of downtown Guangzhou (including Yuexiu District, Liwan District, Tianhe District, Haizhu District, Huangpu District, Baiyun District, University Town and so on). In the reform, two schemes are given for comparison and selection. The first scheme is based on the principle that residents’ domestic water consumption is guaranteed at a low profit and other water consumption is reasonably profitable. The principle of the second scheme is that the first step water price of residents’ domestic water is priced at cost and other water is reasonably profitable.

How will the tap water price reform change? What impact will the change have on residents’ and non-residents’ water use? The Guangzhou Municipal Development and Reform Commission issued a detailed interpretation plan.

Q: Why should the existing tap water price mechanism be reformed?

Since the implementation of the current tap water price in Guangzhou in 2012, there is a gap between the current tap water price and the requirements put forward by the state in recent years, such as improving the green development price mechanism and promoting the reform of urban water supply price. Coupled with macroeconomic growth, investment in water supply construction, adjustment of water resource fee collection standards and other factors, the cost of urban water supply has changed greatly. In order to improve the quality of water supply and promote the high-quality development of water supply industry, the reform plan of tap water price in Guangzhou was studied and put forward.

Q: Why didn’t the tap water price reform policy come out after the last round of hearing? Is this a good time?

Guangzhou Municipal Development and Reform Commission organized a hearing on tap water price reform in December 2020. Considering the repeated epidemic in COVID-19, in order to protect people’s livelihood and help enterprises to bail out, the reform of tap water price was not introduced as scheduled. During the COVID-19 epidemic, Guangzhou actively took measures to reduce the water price of non-residents in stages, "non-stop payment of arrears" and other policies to warm enterprises, with a preferential amount of 120 million yuan.

In 2023, Guangzhou’s price situation and the prices of important commodities for people’s livelihood operated smoothly. In 2024, in order to speed up the green transformation of development mode and make resource conservation and ecological environment protection become the endogenous driving force of market players, after careful study, the price reform of tap water was steadily promoted.

Q: How much is the current tap water price standard to be adjusted? How to verify?

According to the relevant provisions of the Measures for the Administration of Urban Water Supply Price (Decree No.46 of the Ministry of Housing and Urban-Rural Development of the National Development and Reform Commission), the urban water supply price is set, based on cost supervision and examination, and approved according to the method of "allowable cost plus reasonable income".The unit pricing cost of this round of tap water is 2.46 yuan/m3 (excluding tax), and the approved permitted rate of return is 5.8%. The average water supply price is planned to be adjusted from 2.53 yuan/m3 (including tax) to 3.4 yuan/m3 (including tax).

Q: How much is the water price for classified users to be adjusted?

There are two comparison schemes for classifying user water prices, namely:

Option 1:The three ladder water prices of domestic water are adjusted from 1.98 yuan/m3, 2.97 yuan/m3 and 3.96 yuan/m3 to 2.60 yuan/m3, 3.90 yuan/m3 and 7.80 yuan/m3 respectively; Add residents’ combined water price, and the standard of residents’ combined water price is 2.86 yuan/cubic meter; The price of domestic water for non-residents was adjusted from 3.46 yuan/cubic meter to 4.56 yuan/cubic meter; The price of special water is adjusted from 20 yuan/m3 to 25 yuan/m3.

Option 2:The three ladder water prices of domestic water are adjusted from 1.98 yuan/m3, 2.97 yuan/m3 and 3.96 yuan/m3 to 2.46 yuan/m3, 3.69 yuan/m3 and 7.38 yuan/m3 respectively; Add residents’ combined water price, and the standard of residents’ combined water price is 2.71 yuan/cubic meter; The price of domestic water for non-residents was adjusted from 3.46 yuan/m3 to 4.81 yuan/m3, and the price of special water was adjusted from 20 yuan/m3 to 25 yuan/m3.

Q: How are the two comparison schemes for classifying water prices of users considered?

The average water supply price of the two mandatory schemes is 3.4 yuan/m3 (including tax), mainly because residents and non-residents share the rising water supply price differently. The first step of residential water price in scheme 1 is basically the same as the adjustment range of non-resident tap water price, which better balances the burden of residents and non-residents; In the second scheme, the residential first-step water price is priced at cost, and non-resident users bear the pressure of more rising tap water costs.

Q: What happened to the price cost of tap water this round?

The current tap water price in Guangzhou has been implemented for nearly 12 years since 2012. Influenced by many factors, such as macroeconomic growth, investment in water supply construction, and adjustment of water resource fee collection standards, the cost of urban water supply has changed greatly.

Among them, in terms of raw water cost, the water resource fee collection standard in Guangdong Province has been adjusted from 0.12 yuan/cubic meter to 0.2 yuan/cubic meter since 2016; In terms of plant and station network construction, the cumulative investment in the past ten years is about 15 billion yuan, including the construction and commissioning of the first phase of the northern water plant and its supporting projects, the promotion of water supply renovation of 71 villages in the city, the completion of the secondary water supply facilities of 109,500 old residential areas and the renovation of 3,123 kilometers of old pipe network, and the smart water supply renovation project.

Q: What other reform measures are there in this round of tap water price reform?

In addition to adjusting the water price of classified users, there are three main reform measures in this round of tap water price reform. They are:

(a) improve the residential water ladder price system.First, the price difference ratio of the three steps of residential water price is adjusted from 1: 1.5: 2 to 1: 1.5: 3 according to regulations. Second, the upper limit of the first step water base for domestic residents with four people (inclusive) is lowered from 26 cubic meters to 21 cubic meters, and the upper limit of the second step water base is lowered from 34 cubic meters to 27 cubic meters. Third, for residents who have not implemented "one meter per household, meter reading to households" (including non-resident users who implement the price of domestic water), 110% of the first-step water price of residents will be implemented.

(two) the implementation of non-residential water (including special water) over quota progressive price increase system.Non-residents (including special water users) will be charged at a price increase of 1, 2 and 3 times of the classified standard water price for the part with water exceeding the quota within 20% (inclusive), 20% to 40% (inclusive) and more than 40%.

(3) Establish a dynamic adjustment mechanism for tap water prices.The first is to establish a linkage mechanism between upstream and downstream prices of urban water supply. When the water resource fee (tax) and raw water price are adjusted, the tap water price is linked in the same direction according to the formula. The second is to establish a periodic supervision mechanism to carry out cost supervision and examination every three years. When the fluctuation of water supply cost exceeds 20%, the price adjustment will be started according to the procedure. The fluctuation threshold of water supply cost in each regulatory cycle after the next round is clearly defined in combination with the corresponding water supply planning.

Q: What is the impact of this round of tap water price reform on residents?

According to estimates, the per capita water charges of the first-step residential users (accounting for more than 80%) and the second-step residential users (accounting for about 10%) in Scheme I will increase by about 3.2 yuan/month and 6.4 yuan/month respectively, while the per capita water charges of the first-step and second-step residential users in Scheme II will increase by about 2.5 yuan/month and 5.4 yuan/month respectively. As for the third-step residential users (accounting for less than 10%), the two schemes have a great impact on the water charges of this kind of users, and the per capita monthly water charges increase by about 20 yuan, which helps to strengthen users’ awareness of water conservation.

Q: How can we ensure that the lives of low-income residents, survivors of martyrs and special care recipients are not affected?

In order to ensure that the lives of low-income residents are not affected, the poor people, survivors of martyrs and special care recipients will remain unchanged according to the original tap water price standard. Specifically:

Each person’s monthly water consumption below 7 cubic meters (including 7 cubic meters) is charged at 0.7 yuan/cubic meter, and the excess is still charged at 1.98 yuan/cubic meter. The above-mentioned user identification standards shall be implemented in accordance with relevant regulations.

Q: What is the impact of this round of tap water price reform on non-residents?

(A) the impact on industrial users

In 2023, the average water consumption of industrial users in downtown Guangzhou was about 839 cubic meters per month. The prices of the above two schemes affect the water fee expenditure of industrial users to increase by 923 yuan/month and 1132 yuan/month respectively.

(B) the impact on business users

In 2023, the average water consumption of commercial users in downtown Guangzhou is about 204 cubic meters per month. The prices of the above two schemes affect the increase of water charges of commercial users by 225 yuan/month and 276 yuan/month respectively. Among them, it is estimated that the water expenditure of catering industry will increase by 126 yuan/month and 154 yuan/month respectively, and the water expenditure of hairdressing and beauty service industry will increase by 28 yuan/month and 35 yuan/month respectively.

Q: What is the impact of this round of tap water price reform on special water users?

The special water price of both schemes is adjusted from 20 yuan/m3 to 25 yuan/m3, and the water fee expenditure of such users will increase by 25%.

Q: Will the sewage treatment fee be adjusted together?

According to Sui Fa Gai [2022] No.54 and Sui Fa Gai Gui Zi [2017] No.4, the step water volume of domestic sewage is adjusted with the step water volume of tap water. The step price collection standard of sewage treatment fee is still implemented according to the original charging standard, which is not within the scope of this adjustment.

Q: After the reform, what improvements will be made in tap water supply capacity and service quality?

Based on the 14th Five-Year Plan of Guangzhou Water Development, we will promote raw water projects such as Xijiang Midway Pumping Station, and the expansion projects of North Water Plant Phase II, Nanzhou Water Plant and Suiyun Water Plant to further optimize the allocation of water resources and improve the capacity of water supply system. New water supply trunk lines such as South Line, North Line and Linjiang Avenue will be built to speed up the transformation and upgrading of the old pipe network and improve the water quantity and quality supply guarantee capacity; Promote the renovation of shared water facilities in 100,000 old residential areas, implement maintenance and management of outdoor water supply facilities that are handed over to water supply enterprises after renovation, implement water supply grid services, and open up the "last mile" of water supply services; Continue to promote the transformation of water supply in rural areas and villages in the city to help equalize basic public services in urban and rural areas; Continuously improve the convenience of customer service, optimize the online handling process of water business, and enhance the public’s happiness in water use.

Wen Zhen reporter Hang Ying correspondent Sui Faxuan