The Sewage Charging Scheme, introduced in April 1995, requires a polluter to pay for the cost of sewage services provided according to the quality and quantity of wastewater discharged. Since the introduction of the scheme, the charges have been kept at the same level. However, in response to the economic downturn, the Government reduced part of the Sewage Charge and Trade Effluent Surcharge (TES) from 1 April 2002 to 31 March 2003 and from 1 August 2003 to 30 November 2003.

Customer Enquiries
In 2003/04, we received and provided satisfactory answers to about 9,700 telephone enquiries, 3,400 written enquiries and 220 enquiries at our service counters. The number of enquiries in 2003/04 had increased as compared with the past years mainly because a large scale survey on business classifications was conducted in the year.

Figure below presents a breakdown by the types of written enquiries received in 2003/04. In 2003/04, we achieved to provide a full reply to customers within one month from the date of receipt of a written enquiry for more than 99% of the cases (Performance target is 95%).

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 number of applications for reassessment of the TES rate and the discharge factor in 2003/04 are 638 and 64 respectively. The number of cases approved for reassessment of TES and discharge factor in 2003/04 are 571 and 41 respectively. The distribution of applications for reassessment of TES rate (COD reassessment) in 2003/04 by business classification is shown in Figure below.

Business Reclassification

If a customer has changed his/her business type or considers that the business classification assigned was incorrect, he/she should submit an application for review. In 2003/04, 364 such cases were processed.

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 2003/04, 1,467 new TES accounts were identified (including those resulted from the survey of business classification).

Billing and Consumption Statistics
There are about 2.59 million water accounts of which about 2.39 million are liable to pay sewage charge.

In the non-domestic category, about 17,000 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 the below Figure.

Since April 1998, we have stepped up actions to recover bad debts. As at 31 March 2004 there are 969 active accounts and 1,287 closed accounts with overdue amount of $5.0 million and $14.8 million respectively. In 2003/04, about 2,000 disconnection orders and 1,040 letters before legal action were issued with about 140 cases referred to Department of Justice for legal action. As a result, a total of over $5.66 million was recovered.

Revenue and Expenditure
The revenue and expenditure in the Sewage Services Operating Accounts for the past five years are summarized in the Table below.

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. However, the revenue from SC and TES for 2001/02, 2002/03 and 2003/04 were lower than that of the preceding two years due to the granting of concessions as announced in the 2002 Budget Speech, and as part of the package of relief measures due to the outbreak of the Severe Acute Respiratory Syndrome (SARS) in 2003. On the other hand, the overall expenditure for 2003/04 has reduced by $2 million as compared with 2002/03. As a result, the deficit of sewage services was $1,021 million for 2003/04.

* It includes the mediation settlement of $750 million relating to the contractual disputes between the Government and the sewer tunnel contractors.
# The figures for 2003/04 are provisional only and are subject to endorsement by the Sewage Services Accounts Committee. The finalised Sewage Services Operating Accounts for the year ended 31.3.2004 will be posted on DSD's website upon endorsement by the Sewage Services Accounts Committee.