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- Introduction
- Reassessment of TES Rate and Discharge Factor
- Business Reclassification
- Billing and Consumption Statistics
- Revenue and Expenditure



The Sewage Charging Scheme, introduced in April 1995, requires a polluter to pay for the cost of sewage services provided in accordance with the quality and quantity of wastewater discharged. To keep the charge at a modest level, the charges were set to recover only the operating and maintenance costs of the public sewage facilities, while the capital costs of building these facilities will continue to be borne by the Government. Since the introduction of the scheme, the charges have been kept at the same level. However, in response to the economic downturn, the Government decided to reduce the Sewage Charge and Trade Effluent Surcharge (TES) for one year starting from 1 April 2002. The Sewage Charge will be reduced by an amount not exceeding $200 and $800 for domestic and non-domestic accounts in a 12-months period, while TES will be reduced by 30%.

In 2001/02, we received and provided satisfactory answers to about 7,200 telephone enquiries, 2,300 written enquiries and 200 enquiries at our service counters. Figure 5.1 shows the number of verbal and written enquiries received since April 1995. There was a slight increase in the number of enquiries since 1999/2000. This may be due to the increase in number of newly identified TES accounts and our stepped up actions to recover bad debts. The figures for 2001/02 are similar to those for
last year.

Figure 5.1 Number of enquiries received from customers since 1995

Figure 5.2 presents a breakdown by the types of written enquiries received in 2001/02. Similar to previous years, most of the written enquiries are related to billing matters. An initial written reply is issued within two working days to confirm receipt of the enquiry and to inform the customer that the necessary follow-up investigation work on the enquiry has already begun. In 2001/02, we continued to achieve the target of providing a full reply to customers within one month from the date of receipt of a written enquiry for 95% of the cases.

Figure 5.2 Written enquiries received in 2001/02 by types

Reassessment of TES Rate and Discharge Factor

Non-domestic consumers may apply for reassessment of the TES rate or discharge factor if they consider that the effluent strength or discharge factor of their discharge is lower than the corresponding values specified in the Ordinance. The discharge factor is the volume of water discharged as a percentage of the volume of water supplied. The number of applications for reassessment of both the TES rate and the discharge factor has increased this year as shown in Table 5.1. The distribution of applications for reassessment of TES rate (COD reassessment) in 2001/02 by business classification is shown in Table 5.2.

Charging Parameters Number of applications received in the year
2000/01 2001/02
Effluent Strength (COD) 549 670
Discharge Factor 35 47
Table 5.1 Number of applications for reassessment of TES rate and discharge factor in 2000/01 and 2001/02

Trade Classification No. of accounts applying for COD reassessment
Restaurants 558
Slaughtering, preparing and preserving meat 86
Food processing 6
Paper recycling 6
Soft drink/Breweries 5
Bleaching and dyeing 7
Dairy products 2
Total 670
Table 5.2 Distribution of COD reassessment applications in 2001/02 by business classification

Among all COD reassessment cases, 26 were withdrawn for either technical or individual reasons and 41 cases were rejected. In 2001/02, 576 cases had been successful in demonstrating that the pollution level of their effluent is lower than the generic effluent strength of their respective trades. More than 80% of the applications for COD reassessment had come from restaurant accounts. In addition, 47 cases had demonstrated that their discharge factors are less than 85% of the values specified in the Regulations for the respective trades. Most discharge factor reassessment cases are related to sewage charge (SC) only.

Business Reclassification

The business classification of a TES account is normally assigned according to that reported during the application for a water metre. If a customer has subsequently changed his/her business type or considers that the business classification assigned was incorrect, he/she should submit an application for review. The number of applications for business reclassification handled since April 1995 is shown in Figure 5.3. In 2001/02, 273 business reclassification cases were handled.

From time to time, some TES chargeable water accounts have not been registered because of incorrect business classifications in the water account records. Actions have been taken to identify business accounts which according to the law should pay TES but were not charged for TES in the past. In 2001/02, 633 new TES accounts were identified. The total numbers of accounts identified in the past years are shown in Figure 5.4.

Figure 5.3 Business reclassification applications handled since 1995


Figure 5.4 Number of new TES accounts identified since 1995

Billing and Consumption Statistics

There are about 2.49 million water accounts of which about
2.28 million are liable to pay SC. The department will determine whether a premise is connected to public sewerage and, therefore, liable to pay SC while the Water Authority will handle the maintenance of account details and billing matters on our behalf. About 8,400 corrections were made to the sewer connection status of the accounts in 2001/02.

In the non-domestic category, about 15,400 accounts are liable to pay TES as they operate one of the 30 trades designated in the Sewage Services (TES) Regulation. The distribution of TES accounts by trade types is shown in Figure 5.5.

In 2001/02, about 62,700 TES bills were issued, including 684 bills for newly identified accounts. We have also processed 149 applications for payment by auto-pay and 128 by monthly instalments.

Since April 1998, we have stepped up actions to recover bad debts. As at 31 March 2002, there are 888 active accounts with overdue amount of $5.3 million. The recovery actions include issuance of reminders and water disconnection orders. In 2001/02, about 1,400 disconnection orders were issued and as a result $5.6 million was recovered.

For closed accounts with default payment, an action plan on recovering debts was formulated and implemented accordingly.As at 31 March 2002, there are 1,218 closed accounts with overdue of $17.2 million. In 2001/02, about 1,000 letters before legal action were issued and about 100 cases had been referred to Department of Justice for legal action. As a result, over $1.8 million was recovered from overdue closed accounts. The statistics on water consumption, payment, and contributor patterns in relation to the charges are shown in Appendix G.

Figure 5.5 Distribution of TES accounts by trade types in 2001/02

Revenue and Expenditure

The revenue and expenditure in the Sewage Services Operating Accounts from 1995/96 to 2001/02 are summarized in Table 5.3. The account for the year ended March 31, 2002 is shown in details in Appendix H.

The total revenue from SC and TES has been quite steady in the past years, mainly because the level of charges has remained static since the introduction of the charging scheme. In 2001/02, as a result of the settlement of the contractual disputes of the sewer tunnel contracts, $750 million due from the contractors was included as other revenue. Taking away this amount, the overall revenue would be lower than that in the previous years. This is mainly due to the effect of the concessions for SC and TES as announced in the 2002 Budget Speech. On the other hand, the overall expenditure has increased by $95 million in 2001/02 as compared with 2000/01 due to newly completed sewerage infrastructures coming into operation. As a result, the deficit of the sewage services operating account was $33 million in 2001/02.

Sewage Charge Revenue ($M)
TES Revenue ($M)
Other Revenue ($M)
Overall Revenue ($M)
Overall Expenditure ($M)
Balance ($M)
Table 5.3 Summary of Sewage Services Operating Accounts since 1995

*It includes the mediation settlement of $750 million relating to the contractual disputes between the Government and the sewer tunnel contractors.