Tuesday, 2 March 2010

Connection fees

In parts of the UK the Energy Saving Trust is being funded by the Department of Energy and Climate Change to pilot the Pay As You Save (PAYS) scheme which “is an innovative finance solution that will give households the opportunity to invest in energy efficiency (such as solid wall insulation) and microgeneration technologies (such as solar panels) in their homes with no upfront cost. Householders will make repayments spread over a long enough period so that repayments are lower than their predicted energy bill savings, meaning financial and carbon savings are made from day one [emphasis added].”

Why do I draw attention to this? Well, it’s actually a lesson for water and sewerage utilities in developing companies how not to charge massive upfront connection fees – especially for the poor. In a manner somewhat analogous to PAYS, customers can simply either repay a loan for their connection fee as a small monthly surcharge on their water and sewerage bill (simplified sewerage, of course) or pay a slightly higher tariff. Read what the Asian Development Bank has to say on connection charges here.

No excuses: improve health of the poor in high-density urban areas by piping water into their homes and taking the wastewater out!