Recently, the National Development and Reform Commission ("NDRC") and the Ministry of Housing and Urban-rural Development ("MOHURD") have jointly issued the Guiding Opinions on Accelerating the Establishment of a Sound Progressive Price Markup System for Water over the Quota Consumed by Non-residents in Urban Areas (the "Opinions").
The Opinions expressly state that all places should fully promote the progressive price markup system for water over the quota consumed by non-residents in urban areas by the end of 2020 among non-resident water consumers that have access to water supplied through public water supply pipelines in urban areas. As to the water volume brackets and the criteria of price markup, the Opinions propose setting up three brackets at least for the water volume in general, stating that the increased water price for the second bracket should be at least 50 percent higher than that for the first bracket, while the price for the third bracket should be doubled at least, and that specific water volume under each bracket and the degree of price markup could be determined by local places themselves. Additionally, it is required that so-called "two high and one excessive" industries, implying industries consuming enormous amount of energy, causing heavy pollution and troubled by excessive production capacity, be subject to a higher price markup, in order to weed out backward capacities at a more rapid pace, reduce the discharge of sewage and promote industrial structural transformation and upgrading. Furthermore, areas deficient in water should heighten the price markup criteria according to local realities. In principle, the laddering price markup for water over quota consumed by non-residents is only limited to the tap water price, not covering the water resources fee, sewage treatment fee and other surcharges.