Tariff setting for water resource protection by ASADASTarifa para la protección del recurso hídrico (TPRH) de la Asociaciones Administradoras de Acueductos Comunales del país (ASADAS)

7593:

"(...) Article 30.-Request for setting or changes of tariffs and prices: Public service providers, legally constituted consumer organizations, and public entities and bodies with legal authority to do so, may submit requests for setting or changes of tariffs. The Regulatory Authority shall be obliged to: "receive and process these petitions, only when, upon submission, they meet the formal requirements established by the Regulation. This Authority may modify, approve, or reject these petitions. According to the circumstances, tariff settings shall be of an ordinary or extraordinary nature.

Those that contemplate cost and investment factors, in accordance with the provisions of subsection b) of Article 3 of this law, shall be ordinary in nature. Providers must submit an ordinary study at least once a year. The Regulatory Authority may carry out ordinary modifications ex officio and must grant the respective hearing as mandated by law. Extraordinary fixations shall be those that consider important variations in the economic environment, due to acts of God or force majeure, and when the conditions of the automatic adjustment models are met. The Regulatory Authority shall carry out these fixations ex officio (.)".

"(...) Article 284.- The proceeding may be initiated ex officio or at the request of a party, or only at the request of a party when the law so expressly or unequivocally provides (...)".

On this subject, through Legal Opinion OJ-103-2001 of July 24, 2001, the Office of the Attorney General of the Republic (Procuraduría General de la República, PGR) carried out an analysis of Article 30 of Law N°7593 and Article 284 of the LGAP. To that effect, regarding what is relevant, it indicated:

"(.) Both Article 30 of Law 7593 and Article 284 of the LGAP simply establish the ways of initiating administrative proceedings, which may be initiated either at the request of a party, as a direct derivation of the right of petition enshrined in Article 27 of the Political Constitution, or ex officio, when the law expressly requires it or when the public interest so requires. It is not, therefore, (...), the consecration of a discretionary power. On the contrary, the ex officio initiation of administrative proceedings shall constitute a regulated power insofar as there is an express provision of the law in that sense or, as indicated previously, reasons of public interest require it. The interested party could request that the Authority make the ordinary fixation, but such action is not indispensable, since Aresep can carry out the fixation ex officio (...)".

By virtue of the foregoing and under the protection of the cited regulations—which highlight the power of the Regulatory Authority to carry out ordinary modifications ex officio, granting the respective public hearing—the Intendencia de Agua has the power to determine whether the ex officio fixation of rates is appropriate, for the satisfaction of the public interest, as well as the harmonization of interests between providers and users as pointed out by Law N°7593 itself. All of the foregoing in accordance with the principles of legality, officiousness, public interest, financial equilibrium, cost-of-service, continuity, environmental sustainability (sostenibilidad ambiental), reasonableness of rates, and price control.

Consequently, the Intendencia de Agua is competent to technically analyze the appropriateness of carrying out an ex officio rate adjustment for public services related to the water sector, following the rate procedure regulated in Law N°7593 and its respective Regulations.

Now then, having demonstrated that the regulatory entity is assisted by the power to analyze and determine whether or not a rate adjustment is appropriate. It is important to note that in Law N°7593 itself, a series of requirements are established, which form a necessary filter to be able to access the rate adjustment.

In this sense, Article 33 of Law 7593 establishes as an obligation for proceeding with the rate adjustment that the providers have complied with (for which it is important that they accredit it) the provisions established in previous rate fixation resolutions or in previous interventions carried out by the regulatory entity in the exercise of its powers.

For the sector related to the Asociaciones Administradoras de Sistemas de Acueductos y Alcantarillados Comunales (Asadas), special emphasis is placed on compliance with the mandates issued through resolutions RE-0010-IA-2024 of February 21, 2024, which requests information from the Asadas, and resolution RE-0011-IA-2024 of February 26, 2024, through which the Regulatory Quality Seal (Sello Regulatorio de Calidad) is implemented; as well as resolution RE-0010-IA-2025 "SIMPLIFICATION AND STANDARDIZATION OF THE NECESSARY GUIDELINES FOR THE IMPLEMENTATION OF THE REGULATORY QUALITY SEAL FOR PUBLIC DRINKING WATER AND SANITATION SERVICES IN THE COUNTRY ESTABLISHED THROUGH RESOLUTION RE-011-IA-2024" Compliance with the obligations of the providers thus becomes a core element necessary for the rate adjustment, given the duty of verification that the regulatory entity has in the materialization and exercise of the principle of legality that shelters administrative action.

• C)On the use of the Tariff Methodology for the Protection of Water Resources (Metodología Tarifaria para la Protección del Recurso Hídrico, MTPRH), Resolution RE-0098-JD-2023 By having a methodology for the rate fixations corresponding to protection of water resources, which was published in the Official Gazette (Diario Oficial la Gaceta) on Monday, October 23, 2023, the Intendencia has a precise instrument for this type of fixations, so the model will adjust perfectly to the objectives of the Intendencia de Agua.

In this way, in Scope No. 201 of Gazette No. 195 of the year 2023, we can find in the "Por Tanto" the following:

1. General objective Establish a rate methodology that defines the conditions so that providers of the aqueduct service can generate the income that allows them to cover the necessary costs to carry out projects oriented towards the protection of water resources.

2. Specific objectives a. Promote projects to improve the availability, sustainability, and quality of water in the supply sources of the water resource of the aqueducts of the public service providers.

b. Contribute to mitigating the impact and adapting to climate change on the supply sources of the water resource through the application of this regulatory instrument.

IV SCOPE The methodology has the following scope:

a. It applies to all ordinary rate fixations, for the protection of water resources, whether at the request of the service providers or in ex officio actions by the Regulatory Authority.

b. It applies to the providers regulated by Aresep that provide aqueduct services, throughout the national territory; it does not consider municipalities.

c. It applies to the current rate structure of the aqueduct service and therefore does not contemplate changes to said structure.

IV. OPERATIONAL AND FUNCTIONAL DIAGNOSIS OF THE ASADAS

The Regulatory Authority for Public Services (Autoridad Reguladora de los Servicios Públicos, Aresep), frames the exercise of its competencies and powers, based on Law N° 7593 and its Regulations, Decree N°29732-MP, instruments according to which Aresep shall be the institution responsible for regulating and overseeing that public services are provided optimally, with adequate criteria of quality, continuity, timeliness, reliability, and price. The regulated services contemplate very diverse sectors such as remunerated passenger transport, network infrastructure services such as energy supply, aqueducts, and sewerage, among others.

In accordance with the foregoing, the Regulatory Policy of Aresep establishes a series of guidelines aimed at achieving public value, such as the principle of efficiency ".demands correct planning, the maximization of available resources, rationality in the prioritization and allocation of expenditure and investment, the setting of standards, specialization, doing things well at the lowest possible cost." Likewise, the policy within its approaches establishes continuous improvement, which "promotes the constant improvement of institutional management, following best practices and the search for the frontier of knowledge for the development of adapted and timely regulation to the context, following effective and efficient mechanisms, valuing different regulatory approaches such as comparative regulation, seeking to achieve the public value of regulation".

Additionally, said policy incorporates within its intervention axes in the pillar of regulation that promotes efficiency, in specific objective 3, the following: Develop a regulation that provides the necessary signals to bring the provision of public services towards the path of efficiency and effectiveness, both individually, by sector or industry, considering the principle of efficient cost-of-service, the application of comparative regulatory approaches, and the exercise of a timely regulatory model, supported by best practices and the articulation of policy instruments.

On the other hand, the Regulatory Policy on Access to Drinking Water and Wastewater Sanitation establishes as a technical objective the reduction of supply losses to drinking water consumers.

In light of the foregoing, and as a complement to the scope of this rate study, focused on defining a rate signal for the activity of water resource protection provided by the Asociaciones Administradoras de Acueductos Comunales (Asadas), the aim is to define:

• i)A homogeneous rate signal for all Asadas, which shall contemplate size, location, operational and administrative conditions, ii) a homogeneous rate structure for the aqueduct services regulated by Aresep in which the rate categories, consumption blocks, type and descriptions of each of the proposed rates are identified in accordance with Law N° 7593, the Public Policy, the Regulatory Policy and Normative defined by the Regulatory Authority, as well as consumption patterns, sector needs, and regulatory accounting.
• iii)A rate structure that incorporates new modalities of service provision (residential hourly, bulk water, large residential water consumers) as well as the enablement of the pre-paid aqueduct service.

In this sense, and in pursuit of generating the structural, operational, administrative, and rate conditions necessary for the optimal provision of the aqueduct service by the Asociaciones Administradoras de Acueductos Comunales (Asadas), a more specific analysis is carried out of certain core aspects that affect compliance with the principles of continuity, quality, quantity, and sustainability of the public service.

Among the aspects intended to be focused on in the analysis associated with the regulated public service are the following:

1. Participation of Asadas in the sector 2. Structural challenges of the Asadas 3. Operational weaknesses of the Asadas 4. Water losses in Asadas 5. Water availability in the Asadas 6. Oversight of water quality in the Asadas 7. Evolution of rates for the protection of water resources over time 8. Rate Structure in Asadas.

The relevance of this analysis, aside from having a baseline to determine the regulatory impact on the regulated aqueduct service provided by the Asadas, lies in having a rate signal that responds to the signals of quality, continuity, quantity, and optimal provision of the service of interest, in accordance with the provisions of the Law of the Regulatory Authority for Public Services, Law N°7593.

1. Participation of the Asadas in the sector According to the National Household Survey (Encuesta Nacional de Hogares, ENAHO), Costa Rica in 2023 had 5,261,853 inhabitants; this population must be served by the different public service providers of the country, always with the aim of achieving 100% national coverage.

In Costa Rica, regarding drinking water and sanitation, the provision of said public service is carried out as follows:

. The Instituto Costarricense de Acueductos y Alcantarillados supplies 50% of the population and covers 7.50% of the national territory, . The Empresa de Servicios Públicos de Heredia supplies 5% of the population and covers 0.16% of the national territory, . The Asociaciones Administradoras de Acueductos Comunales (Asadas) offer the service to 25% of the population and in terms of territoriality, they cover 90.8%.

. The Municipalities supply 16% of the population and in terms of territory, they cover 1.76%.

. The remaining uncovered percentage of the population (3.8%) is served by a series of committees or informal organizations or through individual solutions, as detailed in the following graph:

Graph No. 1 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Costa Rica. Population by aqueduct service provider.

July 2023 As observed in the previous graph, the Asadas as a whole are the second largest operator of aqueduct services in terms of population supplied; however, in terms of territorial coverage, the distribution is very different.

As can be seen in the following map, the Asadas are the largest operator in terms of territorial coverage, since, according to information from ENAHO, the majority of the population served by AyA is located in urban areas where population density is higher (87.3%). Conversely, 63.6% of the population served by the Asadas is located in rural areas, which are characterized by having low or very low population density, and only 36.4% of their served population lives in urban areas. Given the foregoing, it is extremely important that this group of operators carry out activities related to the protection of water resources in order to ensure the sustainability of the resource over time and to supply drinking water to future generations.

The following map shows the 8 Asadas that currently have approved rates for the protection of water resources, which, although representing an effort made by these operators to formalize the charge for carrying out protection activities, is relatively insignificant with respect to the 1372 Asadas providing the service. Given the foregoing, it is extremely important to carry out a generalized rate fixation that provides resources to begin surveying data for prioritizing restriction zones and vulnerability assessments in springs (nacientes) and aquifers, establishing a technically founded baseline to advance in the subsequent protection actions.

Map No. 2 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 In accordance with the analyzed data, only 8 Asadas nationwide have an approved rate for the protection of water resources, representing only 0.58% of the total 1372 existing Asadas in the country. These Asadas are: Asada Río Blanco in Limón, Asada El Tanque in San Carlos, Asada La Argentina in Pocora, Asada Sucre in San Carlos, Asada Río Celeste in San Carlos, Asada Aguas Zarcas in San Carlos, Asada Rosales in Desamparados, Alajuela, and Asada San Juan de Puriscal in San José. In contrast, the remaining 99.42% of the Asadas do not have a formal rate scheme for the protection of water resources, highlighting a significant gap in the implementation of mechanisms oriented towards the conservation of this resource.

Although Costa Rica is a privileged country regarding the availability of water sources, as can be seen in map 2, where the abundance of resources is evident, the current situation generates significant concern. This situation highlights the urgency of adopting generalized measures that promote the systematic protection of aquifers and springs (nacientes) throughout the entire national territory, thus guaranteeing their long-term sustainability. Given the foregoing, it is essential to move towards a generalized rate fixation that allows obtaining the necessary resources to identify, with scientific foundations, the restriction zones and to evaluate the vulnerability of water sources. These actions will not only contribute to establishing a baseline with a technical foundation but will also allow implementing effective protection strategies that ensure continuous, timely, and quality access to drinking water, especially in the rural communities served by the Asadas.

In addition to guaranteeing access to drinking water for thousands of inhabitants, these associations dedicate significant efforts to the conservation of water sources, the protection of hydrographic basins, and the promotion of sustainable practices in their communities. Their work includes key activities such as reforestation, monitoring of water quality, environmental education, and the implementation of preventive measures to avoid contamination of water sources.

In this context, the protection of water resources must be seen as a fundamental pillar for the country's sustainable development. Although it is currently a relatively abundant resource, the lack of concrete actions and effective conservation mechanisms could cause its disappearance in the future, seriously affecting communities and environmental balance. Below, maps of water sources by region are shown.

Map No. 3 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 Map No. 4 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 Map No. 5 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 Map No. 6 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 Map No. 7 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Water sources 2023 When disaggregating the Asadas by size according to the number of subscribers, the Asada comprised of the subscriber range between 151 and 300 shows the highest frequency with 21.05% of the total, followed by Asadas comprised of between 50 and 100 subscribers with 17.33%, and in third place are those with fewer than 50 subscribers with 15%.

Additionally, 77% of Asadas have fewer than 500 subscribers. Only 7.57% of the Asadas are in the range of over 1000 units. The "NA" category, which represents data not available or not applicable, covers 3.71% Graph No. 2 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Costa Rica. Asadas by their subscriber range.

Period 2023 ND: no information.

Source: Intendencia de Agua, Aresep with data from SAGA - AyA.

The following table presents the Asadas, their location, taking the office as a reference, and by subscriber range. It is observed that the province of Alajuela has the highest number of Asadas (327), followed by Guanacaste (289) and San José (259), while the province of Heredia has the lowest number with 42 Asadas. It is relevant to note that 43 of the 104 Asadas recorded with more than 1000 subscribers are located in the province of Alajuela.

Table No. 1 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Costa Rica. Asadas by subscriber range per province.

Period 2023 Subscriber Range San José Alajuela Cartago Heredia Guanacaste Puntarenas Limón Total

ND: no information.

Source: Intendencia de Agua, Aresep with data from SAGA-AyA.

2. Structural challenges of the Asadas 2.1 The Asadas as organizations that provide a service by delegation.

The Constitutive Law of the Instituto Costarricense de Acueductos y Alcantarillados (AyA), Law N° 2726 of April 14, 1961, and its reforms, recognized in its Article 2.g the possibility for the Institute to agree with local organizations on the joint administration of the water service.

Thus, by the year 1989 at the Institute, the constructive responsibility in rural communities was assumed by the Construction Directorate (Dirección de Construcción, DICO), which administered the Community Aid Program through a specific Department.

Subsequently, by the end of 1990, the process of constructing water supply systems was strengthened, with a parallel process of training and guidance for the communities, in addition to the establishment of legally constituted entities, which already assume the provision of the service in a delegated manner, through an agreement signed with AyA.

In that context, starting December 2000, the Regulations for the Asociaciones Administradoras de los Sistemas de Acueductos y Alcantarillados (Asadas) were promulgated, through Executive Decree No. 29100-S of November 9, 2000, published in Gazette No. 231 of December 1, 2000, formally establishing a series of norms that favor and strengthen the delegation of the administration, operation, maintenance, and development of the systems to the Asadas, financing their operation with resources coming from the rates authorized by Aresep for the service they themselves provide. These Regulations have been modified, with the currently valid one being the Regulations for Asadas, Executive Decree 42582-S-MINAE published on September 4, 2020, in the Official Gazette La Gaceta No. 223, Scope No. 233.

This delegation operated based on Article 2 of the Constitutive Law of the Instituto Costarricense de Acueductos y Alcantarillados (AyA) itself, N° 2726, according to which "The institution is authorized to agree with local organizations on the administration of such services or to administer them through mixed-integration administrative boards between the Institute and the respective communities, whenever this is convenient for the better provision of services and in accordance with the respective regulations." This authorization allows the delegation of the responsibility for administering the aqueduct and/or sanitary sewer system to the Asadas, on which the Constitutional Chamber (Sala Constitucional) has ruled, indicating that it is a "clear figure of a public service management concession, in which—despite the law's silence on this matter—it is indisputable that the Instituto Costarricense de Acueductos y Alcantarillados must retain, inevitably, the powers of supervision and intervention necessary to guarantee the validity of the fundamental principles of public service, namely: continuity, efficiency, adaptation, and equality in the treatment of users (Article 4 of the General Law of Public Administration)." (Judgment No. 2006-01651 of sixteen hours and thirty-nine minutes on February fourteenth, two thousand six).

Notwithstanding the silence of Law N°2726, the current Regulations for Asadas, N°42582-S-MINAE, impose on AyA, as the delegating body, the obligation to exercise all activities inherent to the control, surveillance, oversight, evaluation, standardization, sectoral planning of drinking water and wastewater sanitation services, and direction of the management carried out by the Asadas, (Article 3).

Also, these Regulations N°42582-S-MINAE enshrine the duty of AyA to oversee the provision of the service by the Asadas, as well as to advise them in the provision of said service. (Articles 28 subsections e), f) and k), 31 subsection c), 35, 37 subsections e), f), h) and l), 47 subsection g), 49, 52 subsections b) and c), 60 and 64 subsection c).

It is worth noting that, based on the power given to AyA by Law N°2726 to delegate the operation of the service, at the national level, an important change occurred in the administration and organization of rural aqueducts, as the transformation of the Comités Administradores de Acueductos Rurales (CAAR), governed by Law No. 3859 on Community Development, into Asadas was established, in accordance with the Associations Law (Ley de Asociaciones) No. 218, of August 8, 1939, duly registered in the Registry of Associations.

Note that the transformation operated and that the Asadas provide a public service does not delegitimize their nature as private legal entities, insofar as their creation and operation are governed by the Associations Law, to which they must submit the requirements and demands required by said regulations.

It should be noted that since 2008, through opinion C-061-2008 of March 4, the Office of the Attorney General of the Republic had recognized that the Asadas "constitute legal entities of a private nature that carry out tasks of public interest since they provide the community with a public service—which does not modify their private character—and that, as such, they must be organized in accordance with the guidelines established in the Associations Law." To further elaborate, the Office of the Attorney General of the Republic, in its opinion C-131-2022, reiterated that, despite being a private legal entity, in view of the purposes of said associations, the activity of the Asadas is of public interest, as they provide a public service to the community.

It is in this context of the public interest that the developed activity represents that the legislator has sought to create a series of tools to facilitate the provision of service by the Asadas, given their responsibility to provide a public service under adequate conditions of quality, continuity, and reliability.

In fact, the Attorney General's Office recognizes in the cited opinion, when analyzing the statement of reasons for bill 17375, which served as a preamble to Law 8776, that from this it is inferred that the legislator's intention with that general declaration of public interest was for the Asadas to have the capacity to count on financial resources to face the responsibility of supplying and administering the drinking water service (folio 3 of the statement of reasons). In this sense, the proponents considered that the Asadas "lack economic resources to develop the effective work delegated by the Instituto Costarricense de Acueductos y Alcantarillado (sic), a task they assume free of charge, with worn-out and obsolete infrastructures, which currently need to be renewed and whose maintenance cost is quite high, and in most cases, local income is insufficient to cover such demands" (folio 4).

It was as a result of this detected need that the general declaration of public interest of the Asadas and their tax exemption was issued, which was later reinforced with the approval of Law N°10075 of December 15, 2021, which sought this exemption broadly, including the payment of stamps and fees, value-added tax, and property tax. Likewise, they were exempted from any payment for environmental canon fees (canon ambiental) and discharge canon fees (canon de vertidos), administered by the Ministry of Environment and Energy (Ministerio de Ambiente y Energía, MINAE), as well as from the regulatory canon fee by the Regulatory Authority for Public Services (Aresep) and from any selective consumption tax and taxes on the importation of vehicles, equipment, and work materials (Articles 2 and 3 of Law 8776 and its amendment).

Although the preceding examples represent efforts and actions undertaken in the right direction, the reality is that in practice these have fallen short in equipping the Asadas with the necessary tools for them to carry out, on their own initiative, adequate management of the public service entrusted to them.

2.2 Delegation Agreement As described above, by virtue of the authorization granted by the legislature to AyA in Article 2, subsection g of Law No. 2726, the Asadas formally become administrators of public activities once they sign the delegation agreement (convenio de delegación) with AyA.

Notwithstanding the foregoing, even when the Institute delegates the administration, operation, maintenance, and development of potable water and sanitary sewer systems, it cannot delegate the oversight of the Asadas’ performance, including legal, financial, and accounting areas, among others. It must be remembered that AyA is also subject to the control exercised by the Office of the Comptroller General of the Republic (Contraloría General de la República, hereinafter CGR).

It is worth noting that previously, by regulatory provision, the Delegation Agreement signed by AyA with the Asadas had to be countersigned (refrendado) by the CGR prior to its entry into force. However, through Resolution No. 05916 DCA-1915, of June 8, 2007, issued by the Administrative Contracting Division of the CGR, it was affirmed that the delegation agreements signed by AyA with the Asadas are excluded from the countersignature procedure of the comptroller entity.

Currently, given that this CGR countersignature requirement has been eliminated, the level of control exercised over the delegation of service provision to new Asadas is somewhat disorganized, creating situations where a new Association is authorized to provide service to a community with an insufficient number of inhabitants to sustain the service.

It should be recalled that, in practice, the main source of income for these associations is the rate set by ARESEP and paid by the users of the public service. This is because the Asadas cannot pursue profit as part of their activity, since, according to Article 7 of the Asadas Regulation No. 42582-SMINAE, they must “have as their sole and specific purposes: the provision of potable water supply and wastewater sanitation services, contributing to the integrated management of water resources, and providing hydrant services by special law.” 3. Operational Weaknesses of the Asadas According to report IN-0109-IA-2021, the Water Superintendent’s Office (Intendencia de Agua) carried out a qualitative and quantitative analysis aimed at classifying the Asadas according to particular characteristics, and by applying statistical processes, it was possible to group them as homogeneously as possible. This would serve as a point of comparison among the Asadas and as input for developing regulatory instruments to help assign rates and goals appropriate to each group and to generate mechanisms to promote such improvements.

For the cluster analysis, information reported in the SAGA-AyA from 1373 Asadas was taken; only 12 variables that were well represented were used, and four groups were obtained as the optimal number for analysis, designated as clusters A, B, C, and D. Cluster A was defined as the group with the best results in practically all variables, while Cluster D consists of those with the lowest levels relative to the group in most variables. Clusters B and C represent Asadas with intermediate conditions according to these variables.

Although the cluster analysis performed could only include 2 variables associated with aqueduct infrastructure, the Water Superintendent’s Office, through inspections, field verifications, and monitoring, has detected differences in aspects such as management, operation, and available infrastructure. This highlights the regulator's responsibility to strengthen the sector's aqueducts through regulatory mechanisms to improve or enhance them, providing specific resources that allow the Asadas to have a sustainable aqueduct system that guarantees quality.

In addition to the analysis described in the preceding paragraph, through information collection for updating the Asadas’ aqueduct rate and as a result of non-compliance with the submission of information required for the Regulatory Quality Seal established in Resolution RE-0011-IA-2024, the Water Superintendent’s Office at the end of 2024 conducted inspections of some of the Cluster A Asadas, identifying issues such as the following:

. Lack of information and understanding regarding the information that must be submitted to the Superintendent’s Office.

. Lack of financial statements and anomalies in the recording of accounting accounts.

. Lack of auxiliary ledgers allowing for greater detail in accounting records.

. Discrepancies between income reported in billing systems and that recorded in the financial statements.

. Use of resources from the aqueduct rate for water resource protection activities.

. Unauthorized charges by ARESEP as part of the billing for regulated services.

. Use of resources from the aqueduct rate for the purchase of properties in the absence of technical studies demonstrating their suitability for the protection and conservation of water resources for human supply.

. Lack of accounting separation between regulated activities.

Given the foregoing, and although each aqueduct and system possesses particular characteristics, infrastructure, technology, planning, and inputs are directly related to the operation, quality, and reliability of the public service. For this reason, the Regulatory Body expects each operator to eventually have, provided it is technically feasible, at least the following elements:

. Hydrological, hydrogeological, and socioeconomic studies.

. Computer equipment.

. Appropriate vehicle, machinery, and tools.

. Warehouse.

. Appropriate intake structures.

. Monitoring and control of sources.

. Level measurement and overflow control systems.

. Remote monitoring and control system.

. Water loss management program.

. Advanced metering infrastructure.

. Security and emergency alert systems.

. Communication equipment.

. Fencing/Enclosures.

Currently, a large number of Cluster “A” Asadas have some of the elements listed above, given their management capacity and resources; however, they still have room for improvement in seeking to reduce water losses and promote rational use of the resource, among other things.

The Community Aqueduct Management Associations (Asociaciones Administradoras de Acueductos Comunales, Asadas) play an essential role in the management and distribution of potable water for our communities. However, a recurring challenge is the lack of knowledge about the characteristics and vulnerabilities of the aquifers that feed their systems, the subsurface characteristics, and the dynamics that influence the quality and quantity of the available water resource.

This lack of knowledge generates significant risks, since intakes and springs (nacientes) are exposed to multiple vulnerabilities: contamination from human activities, decreased flows due to climate change, and depletion due to inadequate or unplanned exploitation. Each of these threats compromises not only the sustainability of the resource but also the well-being of the communities that depend on it.

For this reason, incorporating hydrological and/or hydrogeological studies is not a luxury but an urgent necessity. These studies make it possible to understand how the aquifer is recharged, its extraction capacity, and the potential threats to its stability. Furthermore, they help identify critical areas requiring immediate protection and design strategies for the efficient and sustainable use of water.

With this information, the Asadas will be able to make informed decisions, better protect their sources, and guarantee the continuity and quality of service for future generations. Because caring for water is caring for life, and with the right knowledge, we can do it more effectively.

As the Asadas that make up the other clusters are analyzed, deficiencies in human, financial, and material resources become apparent, having a direct impact on aqueduct management and public service.

According to report IN-0109-IA-2021, a series of target objectives were defined for each of the clusters. This process represents the basis for improvement for the Asadas, which includes a series of investments according to each cluster, helping to improve the service provided and revenue. For example, 100% implementation of service micro-metering and good subscriber records, along with the application of the authorized rate, will allow service providers to quantify consumption more accurately and define cross-checks between billing income and consumption recorded by each subscriber.

The proposal developed in this report incorporates some objective elements set forth for the different clusters according to report IN-0109-IA-2021 in order to generate, in the medium term, a substantial improvement in their operational and management capacities.

4. Water Losses in the Asadas Non-Revenue Water (Agua No Contabilizada, ANC) is a term used to describe water that is lost or unaccounted for in water supply systems. According to Alegre et al. (2018), it is the difference between the annual volume entering the system and the billed authorized consumption. In this sense, non-revenue water includes real losses and apparent losses, as well as unbilled authorized consumption.

Water can be lost for various reasons, which are generally classified into two main groups:

a. Physical or real losses: those that prevent water from reaching customers, such as leaks in pipes, damaged pipes, material obsolescence, etc.

b. Apparent or commercial losses: water that reaches the subscribers but, for various reasons, is not billed, resulting from illegal connections, measurement errors, water theft, special permits for unbilled connections in informal settlements (precarios), or others.

The following graph presents the behavior of the ANC percentage for Asadas that have undergone an individual rate study, whether for Aqueduct, Sewer, or Water Resource Protection Tariff (Tarifa para la Protección del Recurso Hídrico, TPRH) services. Additionally, the average ANC of the operators that make up the Association of Regulators of Drinking Water and Sanitation of the Americas (ADERASA) is attached, with the aim of visualizing the existing gap between similarly sized potable water operators.

Graph No. 2 Community Aqueduct Management Associations (Asadas).

Percentage of water loss (ANC) in the network for Asadas with individual rate studies.

Period 2021-2024 As can be observed, it is evident in this case that potable water service providers in recent years have presented water loss percentages well above the average of operators registered by ADERASA.

In this sense, for a service user, the existence of significant water loss records has short, medium, and long-term implications, as these distort the average price, transferring a series of productive inefficiencies to the service's cost and expense structure, which entails excessive expenses and investment. This is because not only must there be water, hydraulic, and storage capacity to capture, convey, and distribute a flow of which only about 30% has been billed, but also the problem of water unavailability needed to meet current and future demand must be addressed, translating into inevitable service continuity problems due to inefficient use of the resource, which is finite.

In the medium and long term, the sector's efforts must focus on trying to maintain a balance of the resource in the aquifers and not generate water stress; this is to minimize the risk of salinization, contamination, and drought of the aquifers.

It is the providers' responsibility to carry out responsible and controlled extraction that includes monitoring and measurement of the resource, including the installation of meters at springs (nacientes), ensuring that this does not exceed the resource's recharge. This is essential, considering that current efforts to improve service coverage and continuity are aimed at addressing population growth and unmet demand.

Furthermore, the existence of excessive loss levels forces the extraction of flows greater than those utilized, whether from surface or underground sources, which generates an overexploitation of the resource beyond the real needs of the users, as well as significant impacts and consequences. Therefore, the proposed rate setting must balance the provider's interest in attending to the public service with the user's interest in receiving it with quality and continuity, yet affordably and sustainably over time. For this, having a new rate system for the sector must go hand in hand with the necessary investments to reduce the incidence of water losses and control the supply and demand of the water resource.

In conclusion, having technical studies that allow understanding the aquifers feeding the Asadas’ water intakes, their recharge zones, their vulnerability and risk of contamination, and their recharge behavior, enabling responsible resource extraction, is one of the main reasons for this rate analysis, requiring fresh resources for these activities.

5. Availability of Potable Water in the Asadas The “Report on the availability of potable water service in Costa Rica 2023” from the General Directorate of User Service (Dirección General de Atención al Usuario, DGAU) of ARESEP, based on a random sample of 411 Asadas, has highlighted the lack of water capacity as one of the most relevant reasons for the rejection of potable water service requests. This reason is identified as the third most frequent cause of rejection nationwide, with a total of 60 rejections distributed unevenly across the country's different regions.

Graph No. 3 Community Aqueduct Management Associations (Asadas).

Distribution of ASADAS by reason for rejection Source: Report on the availability of potable water service in Costa Rica 2023, DGAU.

The stacked bar graph, which presents the reasons for rejection by region, clearly reflects that, although lack of piping and lack of infrastructure are also prominent reasons, the lack of water capacity is a crucial factor affecting regions such as the Central Region and the Central Pacific, with 20 rejections each for this cause. In contrast, in the Huetar Caribe and Huetar Norte regions, the impact of the lack of water capacity is much lower, with only 4 and 0 rejections, respectively.

This suggests that some areas face greater difficulties in terms of water resource availability, possibly due to high demand or the depletion of surface sources like springs (nacientes). It is important to note that 65.29% of Asadas depend on springs as their main supply source, which highlights the vulnerability of these sources to seasonal variability in water capture.

According to the data presented, only 52.58% of Asadas have conducted water capacity studies with technical advice from AyA, indicating disparities in resource planning and management at the regional level. This scenario underscores the urgent need to strengthen technical analyses and sustainability strategies to avoid a greater number of rejections due to insufficient water capacity. The growing demand, coupled with the overexploitation of water resources in some regions, highlights the importance of improving infrastructure and optimizing water resource management to ensure adequate coverage of potable water service nationwide. If appropriate measures are not taken, the situation could worsen over time, mainly affecting areas with higher demand pressure.

6. Oversight of Water Quality in the Asadas In the context of Quality Oversight in Asadas, the Regulatory Authority of Public Services (ARESEP) has been carrying out a Verification Program for the Potable Water Quality provided by the different supply system operators in the country since 2013, based on the functions conferred upon ARESEP by Law No. 7593, specifically Article 5, which establishes the duty to ensure “... compliance with quality, quantity, reliability, continuity, timeliness, and optimal provision standards.” When considering water production sources (Springs, Wells, Rivers) as a fundamental part of the aqueduct service, and coupled with their exposure to various emerging contaminants such as agrochemicals or hydrocarbons that put water quality at risk, it becomes necessary to allocate resources that complement the quality programs in the aqueduct service, with a focus on water resource protection.

In addition to impacts from emerging contaminants, it is known that in several areas of the country, water supply sources are affected by factors of mineral origin, such as the presence of iron, manganese, arsenic, and aluminum, or also impacts resulting from climatic conditions that produce non-conformity in parameters such as apparent color or turbidity, not to mention fecal contamination from livestock activities.

Therefore, within the quality control plan, aqueduct service operators must allocate the necessary resources to maintain a record of water quality at the production sources, which can complement hydrological and/or hydrogeological studies for decision-making regarding water resource protection, or, failing that, the search for new supply sources to replace those that have been affected by some contaminant and whose integrity has been compromised.

Thus, this proposal for the water resource protection tariff must recognize the quality analyses to be carried out at the water sources.

In the context of Quality Oversight in Asadas, the Regulatory Authority of Public Services (ARESEP) has been carrying out a Verification Program for the Potable Water Quality provided by the different supply system operators in the country since 2013, based on the functions conferred upon ARESEP by Law No. 7593, specifically Article 5, which establishes the duty to ensure “... compliance with quality, quantity, reliability, continuity, timeliness, and optimal provision standards.” 7. Evolution of Water Resource Protection Tariffs Over Time Regarding the tariff signals for the water resource protection service provided by the Asadas, the figure below shows the evolution that has occurred in terms of the rate settings made by the Superintendent’s Office up to the 8 currently in effect. This shows that the first Asada to complete the request for this tariff was Río Blanco de Limón, which occurred in 2021; since then, various approaches have been made with Asadas interested in submitting the request, and currently, around 5 Asadas are in the process in addition to the rates already set.

Figure No. 1 Community Aqueduct Management Associations (Asadas).

Rate Settings for the water resource protection service Period 2021-2024.

Because the rate settings are quite recent, no loss-of-purchasing-power factor that could affect the Asadas with the corresponding setting has yet been identified. However, considering the Asadas population in the country mentioned previously, there is a large visible risk regarding the financial capacity of operators that have not processed this tariff request, namely that water resource conservation might not be included in their investment plans, or even that resources from other services might be used for this purpose, causing impacts on the quality, availability, and quantity of the service provided by these Asadas.

The graph below presents the tariff projections corresponding to the settings already mentioned for the 2025-2027 period, highlighting significant variations in the rates of these Asadas. For example, while the tariffs of some, such as Asada San Juan de Puriscal, show sustained growth, others, such as Asada El Tanque, present a drastic drop towards 2027. This mainly responds to each operator's five-year water resource protection investment plans, their cost structure, and also the expected growth in both subscribers and consumption.

In turn, this disparate behavior evidences the complexity of tariff adjustments and the urgency of guaranteeing sufficient income for the maintenance and improvement of services.

Graph No. 1 Community Aqueduct Management Associations (Asadas).

2025-2027 Tariff Projection for ASADAS with a Focus on Water Resource Protection 8. Tariff Structure for Asadas The tariff structure is defined as the instrument by which prices are established according to the type of consumer, geographic area, demand periods, or other distinctions as applicable, this set of prices being what allows for obtaining service revenue.

This tool is composed of tariff categories that classify consumers according to their characteristics and the uses given to the service demanded by subscribers, according to the intensity with which they have used the service. This was defined by Resolution RE-0028-IA-2024 and its amendments; this tariff scheme allows for recovering the necessary income for the Asadas through a progressive and equitable approach.

a. Type of tariff The type of tariff through which the transfer of costs and expenses associated with the provision of the water resource protection service is carried out is by means of a variable charge, which is the amount the user must pay for each unit of water consumed or service used. This responds to the need derived from the operator's operation and maintenance costs for an optimal and efficient service provision.

b. Tariff categories The tariff categories allow subscribers to be classified according to their properties in the use of the service and the conditions under which they find themselves when demanding it. The tariff categories are as follows:

- Residential Tariff (T-Re): includes dwelling houses and apartments intended for the exclusive use of permanent or long-stay accommodation (sleeping, basic needs and personal hygiene, preparing and consuming food).

- Large Consumers Tariff (T-GC): applies to all large consumers of the aqueduct service (vertical condominiums, horizontal condominiums, apartments, hamlets for both residential and mixed use) whose consumption is measured via a main meter (macromedidor) by the service provider, in accordance with the Technical Regulation in force by ARESEP.

- Commerce and Services Tariff (T-CS): Incorporates companies classified in the commerce or services sector, according to the classification of economic activities (ISIC code). In these establishments, the aqueduct service is used for the purpose of selling finished products or providing services. This category also applies to all government establishments, including the Central Government and community centers (halls), except hospitals, clinics and Ebais, public companies, and decentralized Institutions.

Furthermore, it must be applied to the supply of potable water in motels, hotels, or short-stay lodging (vacation accommodation), hospitals and private clinics, and other establishments related to for-profit activities that require a municipal license to operate.

Potable water consumption for common areas that have their own metering.

- Industrial Tariff (T-In): Applies to companies classified in the industrial sector according to the classification of economic activities (ISIC code) used by the Central Bank of Costa Rica (BCCR). The service is used for the purpose of manufacturing products from raw materials or assembling them for sale.

- Preferential Tariff (T-Pre): includes activities of a social nature, which are registered with legal personality. This category comprises the following activities:

Education: only for teaching centers belonging to the state public education sector (preschool teaching centers, primary education schools, special education schools, secondary education high schools, technical secondary education high schools, university colleges, universities, and public libraries, including facilities dedicated exclusively to public educational activity). Restaurants, sodas, student residences, photocopy centers, and others are excluded from these categories; even if they are under the name of educational entities, they will not benefit from this tariff and must be placed in the corresponding category.

- Religion: applies to legally constituted church temples whose service is under the name of the legal entity carrying out the religious activity; any other activity not directly related to religious worship will be excluded from the tariff.

- Protection of children and the elderly: covers homes and nursing homes for the elderly and/or disabled persons, state-promoted daycare centers, and public homes for children, which must be charitable and non-profit, legally constituted, and whose service is under the name of the legal entity carrying out the activity.

- Care of the indigent: covers establishments for the care of homeless persons or those suffering from drug addiction, which operate for non-profit purposes and are legally constituted, and whose service is under the name of the legal entity carrying out the activity. Assistance and relief institutions: includes those whose purpose is social assistance for low-income groups or the protection of people in case of disasters or crisis situations. All are charitable and non-profit. In these cases, the tariff will be applied exclusively to buildings and other properties expressly used for the cited purposes.

- Hospitals and Clinics: only applies to hospitals, clinics, and Ebais of the Costa Rican Social Security Fund (Caja Costarricense de Seguro Social).

c. Consumption blocks Aspects such as consumption distribution, income concentration, and number of subscribers are taken into account, which was complemented by analyses conducted by the IDB and ECLAC and information from INEC. With this, the following consumption blocks are defined as representative according to the consumption behavior of each proposed category, as seen in the following image:

Figure No. 2 Community Aqueduct Management Associations (Asadas).

Proposal for a tariff structure d. Fixed services For subscribers whose corresponding measurement is not carried out by means of a water meter (hidrómetro), a single tariff charge for fixed services is established according to the tariff category to which they belong.

Pursuant to the provisions of resolution RE-0028-IA-2024 and its amendments, operators must seek to reduce this type of service until achieving 100% metering of their subscribers; this is because the presence of fixed services implies that service provision is not being optimized in accordance with the criteria of efficiency and effectiveness in management and resource use, as established in the current technical regulation for the provision of aqueduct, sanitary sewer, and hydrant services, as detailed below.

- Fixed Service Tariff (Tarifa de Servicios Fijos, T-SF): Fixed services are those in which subscribers do not have a water meter, so they are assigned a specific amount or a linear fixed tariff according to the type of tariff category to which they belong. This tariff is provisional or temporary, for a maximum period of 6 months, in order to allow providers to install water meters or suspend the service.

e. Bulk Water The tariff for the water resource protection service is defined for the bulk water purchase-sale transactions carried out by the Asadas, with the following detail:

-Bulk Water Purchase-Sale Tariff: purchase-sale of raw or potable water in large volumes Likewise, according to resolution RE-0028-IA-2024, the following stages in the value chain are defined:

-Conveyance Tariff (Tarifa-Conducción, T-C): interconnection for carrying out water purchase-sale transactions that occurs in the pipeline section intended to convey water from the source to the distribution tank or treatment plant.

- Treatment Tariff (Tarifa-Tratamiento, T-T): interconnection for carrying out water purchase-sale transactions that occurs downstream of the potabilization process, involving all physical, mechanical, and chemical elements and processes (desander, primary sedimentation tank, dosers, coagulation, flocculation, sedimentation, filtration, disinfection, among others) that will make the water acquire the necessary characteristics to be suitable for consumption.

- Distribution Tariff (Tarifa-Distribución, T-D): interconnection for carrying out water purchase-sale transactions that occurs in the pipe system responsible for delivering water from the storage tanks to the users' consumption points.

f. Prepaid Modality Regarding the prepaid or advance payment modality, according to resolution RE-0028-IA-2024 and its amendments, this allows users to pay for water consumption in advance, regardless of the tariff category. This means that customers may purchase a certain quantity of cubic meters of potable water before they can use it.

Once the purchased water quantity is exhausted, the prepaid meter counter stops functioning; however, before the entire volume of purchased water is consumed, it issues a series of alerts to inform the user of the remaining volume and the need to make a new water purchase under the same mechanism.

The purpose of the advance payment option is for users of the public aqueduct and sanitary sewer services to have access to the service, according to their ability to pay over time and under the same conditions of service quality and continuity. In this context, for the current price-setting, it is of interest that, as with the normal aqueduct modality, users who acquire the service with this payment methodology cover the costs derived from water resource protection.

The conditions for providing the service under this modality are established in accordance with the provisions of resolution RE-0028-IA-2024 and its amendments for aqueduct and sewer services.

It must also be highlighted that advance payment for the service, by its nature, applies only to services that have a metering system with automatic activation and disconnection and remote control by the service provider. Existing or future subscribers may opt for the prepaid modality, provided that technical conditions allow it and they comply with current regulations.

g. Residential Time-of-Use Modality Despite the sector not having hourly demand monitoring, resolution RE-0028-IA-2024 and its amendments propose this modality in the provision of the aqueduct service in an enabling manner so that operators can have a tool that generates signals and incentives to create a change in subscriber consumption patterns; and in turn, promote technological incorporation in service provision both in the general system and in the different stages of the value chain.

Considering this proposal and in line with what was stated for the prepaid modality, since all aqueduct service must be linked to adequate protection of water sources to ensure its sustainability; the tariff for water resource protection to be charged to subscribers under time-of-use conditions is also proposed, in an enabling manner.

In line with this proposal, the aim is to standardize the service supply hours with those available in the electricity sector for residential users, given that both services are complementary in consumption and production. Likewise, both are closely exposed to climate changes and face the same operational vulnerabilities due to their structural characteristics (they depend on surface water sources and seasonality).

Thus, the application of this modality is defined for the water resource protection service of the residential category for the supply of water to single-family homes and apartments serving exclusively as permanent lodging, requiring a metering system with a multi-tariff meter. Likewise, the time bands are defined as follows:

- Definition of Hours:

- Peak 1: between 10:01 and 13:00 hours - Peak 2: between 18:01 and 21:00 hours - Off-Peak 1: between 05:31 and 10:00 hours - Off-Peak 2: between 13:01 and 18:00 hours - Off-Peak 3: between 21:01 and 23:00 hours - Nighttime: between 23:01 and 05:30 hours - Residential Time-of-Use Tariff (Tarifa Residencial Horario, T-Re-H): The tariff whereby subscribers may manage their water consumption according to the established schedule, and will also allow residential users of the regulated aqueduct service provided in the country to contribute the amount required for water resource protection. This excludes supply to common areas of residential condominiums that have individual metering.

- Application: For the supply of water to single-family homes and apartments, serving exclusively as permanent lodging. It does not include supply to common areas of mixed-use condominiums (residential-commercial-industrial), recreational areas, motels, hotels, cabins or vacation homes, hospitals, hospices, combined services (combined activities: residential, commercial, and industrial), apartment buildings served by a single meter, or establishments related to for-profit activities.

- Metering System: A single system whose meter is multi-tariff.

V. PARAMETERS USED

The following table presents the percentages of devaluation of the colón against the dollar and the average inflation, both data for the last real years (2022-2023) and the projections for the period covering 2024 to 2029. The source for these real data parameters is found in the footnote, and the projected data were obtained by the Intendancy.

Table No. 2 Administrative Associations of Communal Aqueducts (Asadas).

Economic parameters for the estimation of Required Revenues according to the methodology. Period 2021-2029 (real and estimated data*) *Data for 2025, 2026, 2027, 2028, and 2029 are estimates. Variations are calculated at year-end (December) or as the variation of the annual averages of the respective indices.

Source: Prepared by the Water Intendancy, Aresep with data from the Central Bank of Costa Rica, the U.S. Bureau of Labor Statistics, and the U.S. Federal Reserve, which were compiled from their websites on March 12, 2025, from the following links:

http://www.bccr.fi.cr/publicaciones/politica_monetaria_inflacion/PM_2017-2018.pdf http://www.bccr.fi.cr/publicaciones/politica_monetaria_inflacion/PM2018-2019.pdf https://activos.bccr.fi.cr/sitios/bccr/publicaciones/DocPolticaMonetariaInflacin/Programa_Macro economico_2019-2020.pdf https://activos.bccr.fi.cr/sitios/bccr/publicaciones/DocPolticaMonetariaInflacin/Programa_Macro economico_2020-2021.pdf https://activos.bccr.fi.cr/sitios/bccr/publicaciones/DocPolticaMonetariaInflacin/Revsion- Programa_Macroeconomico-2020-2021_informe.pdf https://www.bccr.fi.cr/publicaciones/DocPolticaMonetariaInflacin/IPM_octubre_2021.pdf https://www.bccr.fi.cr/publicaciones/DocPolticaMonetariaInflacin/IPM_enero_2022.pdf https://www.federalreserve.gov/monetarypolicy/2021-02-mpr-summary.htm https://www.federalreserve.gov/monetarypolicy/2021-07-mpr-summary.htm https://gee.bccr.fi.cr/indicadoreseconomicos/Cuadros/frmVerCatCuadro.aspx?idioma=1&CodCuadro=%2040 https://gee.bccr.fi.cr/indicadoreseconomicos/Cuadros/frmVerCatCuadro.aspx?idioma=1&CodCuadro=%2073

VI. DETERMINATION OF INFORMATION

Below is the section corresponding to the collection of information, as well as the criteria used to determine the sample that serves as the basis for the proposed tariff adjustment for the water resource protection service provided by the Asadas; which, in turn, is based on the analysis carried out for setting the aqueduct service provided by these operators, as the units sold, costs, and shared investments must be used consistently and prorated among the different services and activities carried out by the Asada, as detailed below:

1. Collection of Information:

For the collection of information used in the tariff study, both for the market section with subscriber and consumption histories and for the financial information provided by the corresponding financial statements, probability sampling was not used due to the lack of information from the regulated entities that are part of this sector. This situation is because many of these operators lack personnel or the necessary means to collect it.

Conducting probability sampling could lead to the selection of Asadas that do not have the necessary information, which would force their constant replacement. This situation would not only affect the quality of the results but would also considerably increase the costs and time of the study, which contradicts the main objective of applying sampling and therefore would make updating the sector's tariffs impossible.

Furthermore, the market composition of Asadas reveals that approximately 20% of these have more than 500 subscribers, representing 66% of the total subscribers served by this type of operator. This market also has many ASADAS with few subscribers, and as mentioned in previous paragraphs, they are not economically viable because the tariffs would have to be very high to cover the requirements of these operators.

Therefore, a total enumeration of the Asadas in cluster A was carried out, and convenience sampling was used for the rest of the clusters. The collection of information took place from July 7, 2023, to July 31, 2024. The tools for collecting the information were: templates and documents establishing the formats and requirements for the required information.

As has already been indicated, the information collection process was the most significant challenge faced in this tariff update; it had to be carried out in several stages because the response from the operators was very poor. This is detailed below:

• a)Initially, in response to official communication OF-0260-IA-2023, the Water Intendancy received market information from the country's Asadas; with the objective of forming a consolidated database that allows understanding the demand upon which these providing entities deliver the aqueduct service. On the other hand, for the financial information, it was collected by telephone during the same time period, seeking to have the greatest amount of information to carry out the corresponding tariff study.

Through the aforementioned official communication and telephone contact for requesting financial information, data were received from around 185 delegated providers throughout the territory, including Asadas with a range of subscribers from less than 100 to those with more than 1000 users. However, from this sample, only a total of 69 operators with valid information were identified, both market and financial, which had to coincide in time, as it is not possible to associate costs from one period with revenues from another to make estimations; doing so would be a serious error in the estimates. Therefore, information was defined as valid when it was complete for the years submitted and available for manipulation, since in some cases data were sent via barely legible photographs or in formats other than those requested, causing the information to be unusable.

• b)Subsequently, given the difficulty in obtaining complete information from the Asadas in response to the formal request made, and considering the population of Asadas described in the previous subsection that showed some interest in providing data but whose submission was incomplete, the Intendancy implemented a work plan to make direct contact with each of these operators distributed throughout the country, both by telephone and in person. In this second effort to achieve the objective, Asadas that had attached information in previous processes (either market or financial, as both inputs are required) and all neighboring Asadas that field technicians managed to identify and visit in person were incorporated. This was done to get them to submit the consolidated and complete requirements for inclusion in the tariff analysis, in addition to strengthening the available sample.

In this way, during the months of March and April of this year, an effort was made to contact 93 Asadas, including both new contacts and Asadas that had previously provided information but required corrections. However, of these 93, attempts were made to communicate by telephone with around 16 Asadas because it was necessary to complement or clarify information; of those 16, no response was obtained because the reported means of communication were outdated, the information was not complete, or they did not have it.

• c)Finally, with the entry into force of resolutions RE-0010-IA-2024 and RE-0011-IA-2024 on the information requirements that Asadas must meet and the guidelines for opting for the regulatory quality seal for the country's aqueduct and sewer services, information was received from 102 Asadas, which was included in the database. It should be noted that upon reviewing this information, it was identified that some of these Asadas corresponded to operators that had already submitted information previously. However, thanks to the new data submission, it was possible to update either market information, financial information, or in some cases both, in order to have the most recent information cutoff possible.

Considering the outlined line of work, as well as the different means and tools used for collecting information, at the end of this work, a total sample of 317 Asadas is obtained.

It should be highlighted that the data collected from the different sources used form the preliminary information base for conducting the tariff analysis. From this, an in-depth review of the data is generated to subsequently form the final sample, which will be detailed in the following subsection.

2. Criteria Used for Determining the Final Sample:

Now, to determine the final sample of Asadas, the aim is to have a database that is consistent in its information, meaning it does not present data with atypical behaviors or that do not follow a stable trend. For this, an evaluation was conducted on the information provided by the 317 Asadas, considering its evolution over time, to ensure that the quality of the information is suitable to ensure a tariff setting that is close to real behavior. For example, in some Asadas that sent information disaggregated by subscriber, those subscribers who presented negative consumptions in any month were not taken into account for the projections, as is the case of Ojo de Agua de Sictaya, Turrialba.

In this next stage of data analysis, the consistency of the temporality between the market and financial information was verified; however, in some cases this was not the case, so the following procedure was followed:

- Regarding the financial statements, operators sent information with different temporalities, so in some cases the information had to be indexed to adjust the financial variables to December 31, 2023. In these cases, the market data from the original year was maintained, as imputing subscriber and market data would alter the information supporting the financial expenditure for the original year of the information. As previously noted, a relationship must be maintained between costs and expenses that coincide with the sales of the actual supplied market (subscribers and consumption), because these costs and expenses are associated with providing this required flow for the sale of water with its respective operation and maintenance costs, among which is the potabilization of the water resource; otherwise, the data could not be used in the estimates.

- The second situation that arose was the existence of 32 cases in which the Asadas submitted financial information as of December 31, 2023, but with subscriber and consumption data corresponding to other years. To avoid excluding these Asadas from the sample, the subscriber and consumption data were estimated using trend regression, in order to achieve a market that had a relationship with the costs and expenses provided by the operators, thus managing to rescue these cases for making the estimates.

It is emphasized that, despite the efforts made by the Intendancy to collect and rescue robust information to form a consolidated database, due to the difficulties in obtaining it and the problems encountered in both format and content of the information, as a result of this first filter identifying those Asadas that correctly provided the market data and financial-accounting information together, a refined sample of 176 Asadas with information as of 2023 was obtained.

Taking the analysis of the information provided by these 176 Asadas to a deeper level, and due to the exigencies, seriousness, and implications involved in an industry tariff estimation that has national impact, the data feeding the model to be used must not only be coherent but also uniform and consistent. Therefore, the statistic of 1.5 times the interquartile range was applied to each of the cost and expense accounts analyzed, for subgroups of Asadas depending on the subscriber range they fall into, since given the great heterogeneity in the sample, this analysis was carried out taking this variable into consideration. This statistic involves identifying values that deviate significantly from the majority, specifically those below the first quartile or above the third quartile; this provides robustness to the information to be used, as the measure is not sensitive to extreme data like the standard deviation is, for example. It is important to emphasize that this study focuses on determining a tariff in relation to the desired market, capable of responding to the investments proposed with the objective of improving service provision and guaranteeing the quality of the product delivered to subscribers.

Once the data identified as atypical using the statistical method described in the previous paragraph were cleaned, and ensuring their stable and consistent behavior, a final sample of 88 Asadas was obtained in accordance with the following detail:

Table No. 3 Administrative Associations of Communal Aqueducts (Asadas).

Number of Asadas in the final sample by subscriber range.

As seen in the previous table, an effort was made to at least rescue one asada from each subscriber range in order to have some representation of that group; however, the largest number of Asadas in the sample that managed to remain until the end of the analysis correspond to the groups with the highest number of subscribers. The estimates made and the application of the statistical methods can be found in the Annexes of this report titled "UNION DE ARCHIVOS DE RECOLECCIÓN" and "Estudio de Asadas TPRH".

In relation to this section, the annex "CONTROL DE INFORMACIÓN DE ASADAS" provides the list of Asadas that submitted information complying with resolutions RE-010-IA-2024 and RE-011-IA-2024, and those that submitted information to form the sample. If an Asada's information presented inconsistencies in only one of the files (either market or financial statements), its entirety was discarded from the database, to avoid creating distortions between the financial and market information, as was extensively explained in this section.

VII. MARKET ANALYSIS

In this section, the projection of subscriber levels and consumption of the Asadas for the water resource protection service they provide is carried out.

In this section, the projection of subscriber levels and consumption of the Asadas for the water resource protection service they provide is carried out.

These forecasts are used to determine the demand level for the tariff revenues required to provide the service and to generate price signals according to the categories, blocks, and descriptions of the tariff structure during the study period. The information used to make these forecasts was determined according to the procedure explained in the previous section on the final sample of 88 Asadas, for which data is available for the years 2020 to 2023.

Due to the heterogeneity present in the database, derived from the different levels of subscribers and consumption that the Asadas have, and in general from the presence of different factors influencing the service provision of these operators, it is determined that using the growth rate method for estimating the market in the corresponding five-year period is the one that best adapts to the available information.

The starting point for estimating subscribers and consumption is the arithmetic mean of the sample for each variable. The mean was used because it is a measure of central tendency that adequately represents the dataset, besides being easy to calculate and interpret. Although the mean can be affected by extreme values, this was avoided by eliminating atypical cases, as mentioned in point VI: Determination of Information.

Regarding the possibility of using other measures of central tendency such as the mode or the median, the former was discarded because this statistic only represents the most frequent value, ignoring the variability of the data. Furthermore, the modal value can change, making it less stable and, therefore, a less consistent option for this case. On the other hand, the median is not suitable for asymmetric distributions, as is the case here, where some larger Asadas have considerably high consumption. If the median is used, the asymmetry is not adequately captured. This could lead to underestimations in both the number of subscribers and consumption, affecting the generation of necessary revenues. These revenues allow for ensuring an adequate cash flow to cover the planned investments, the purpose of which is to improve and strengthen operational management and ensure the quality of the potable water supply provided by the Asadas.

From a statistical point of view, there are several models to estimate the growth of variables. For the case of subscribers and consumption, the geometric model was selected due to its ability to maintain a constant year-over-year rate, which ensures a stable variation throughout the projection period. The basic formula of this model is presented below:

Formula No. 1 V_t=V_0 x r^t Where:

V_t is the value of the variable at time t.

V_0 is the initial value or the value at time t=0.

r is the geometric ratio, which represents 1+g, where g is the growth rate per period.

t is the number of time periods elapsed.

Now, regarding the growth rate used in the previous formula, its calculation is described below:

Formula No. 2 % Growth=(Value year t)/(Value year t-1)*100 To summarize these values into a single one for each variable (subscribers and consumption), the geometric mean was used, because it is useful for estimating the average change in percentages and other relative indices; this according to Lind, D. A., Marchal, W. G., and Wathen, S. A. (2015). The geometric mean is calculated using the following formula:

Formula No. 3 GM= √(n&(x_1 )*(x_n )*...*(x_n)) Where n is the number of observations.

Finally, obtaining the growth rate is the difference between the value of the geometric mean and one. From this, a growth of 8.03% in subscribers and 7.13% in consumption in cubic meters was obtained. These growth rates give an indication of the level of growth that the Asadas are presenting, as these are significant levels, identifying that an increasingly larger part of the population is served by these providers, derived from the organic growth of the communities.

Finally, upon applying the model described, the subscriber and consumption results are obtained for the five-year period from 2025 to 2029. It should be noted that for the base year 2024, a level of monthly subscribers corresponding to the sample average of 818 and an annual aggregate consumption level of 207,080 cubic meters from the sample are taken into account; these data correspond to the final sample average, and using them as the base market means that the growth projections will be estimated from these data. The following graph visualizes the forecast results for both subscribers and consumption.

Graph No. 5 Administrative Associations of Communal Aqueducts (Asadas).

Projection of subscribers (monthly) and consumption (annual).

Period 2024-2029 It is important to mention that time series were not used because the goal is not to forecast each of the Asadas in the sample, but rather to have a representative Asada for the group of Asadas.

Likewise, it is necessary to delineate the method used for breaking down the forecasts by consumption block, as these data are essential for calculating the final tariffs. The calculation is performed as follows:

For large residential consumers:

Formula No. 4 P_(s,GC,b)=P_s * W_s * W_c * W_(c,b) Where:

P_(s,GC,b): Forecast of series "s" (subscribers or consumption) for the Large Residential Consumers category for block "b" P_s: Forecast of series "s" (subscribers or consumption) W_s: Relationship between large consumers and the total service; for subscribers, the relationship is 0.122%, and for consumption, 4.44%; these data are estimated in the annex titled "TARIFAS ASADAS PRH GENERAL 05.12.24".

W_c: Proportion of category "c" with respect to the total W_(c,b): proportion of block "b" in relation to category "c".

For the other tariff categories:

Formula No. 5 P_(s,c,b)=?(P?_s-P_(s,GC))*W_(c*) W_(c,b) Where:

P_(s,c,b): Forecast of series "s" (subscribers or consumption) for category "c" for block "b" P_(s,GC): Forecast of series "s" (subscribers or consumption) for the total of large residential consumers.

P_s: Forecast of series "s" (subscribers or consumption) W_c: Proportion of category "c" with respect to the total W_(c,b): proportion of block "b" in relation to category "c".

The proportions for each block are calculated specifically for the year 2023 (January to December), using market information from AyA and ESPH because data for the Asadas with this level of breakdown are not available.

In the case of AyA, it has national representativeness, as it is the operator with the largest coverage in the country, and together, AyA and ESPH provide service to the majority of the national population according to the INEC data previously indicated.

The following table presents the proportions:

Table No. 4 Administrative Associations of Communal Aqueducts (Asociaciones Administradoras de Acueductos Comunales, Asadas).

Proportions for subscribers and consumption of AyA and ESPH 2023 by category and block (Excluding the category of large residential consumers and others)

Source: Intendencia de Agua, report RE-0028-IA-2024.

For the case of large residential consumers, the following distribution table is used for both subscribers and consumption:

Table No. 5 Administrative Associations of Communal Aqueducts (Asociaciones Administradoras de Acueductos Comunales, Asadas).

Proportions for subscribers and consumption of AyA and ESPH 2023 large residential consumers in monthly averages according to block.

Source: Intendencia de Agua It is worth mentioning that the targeted subsidy system to finance users classified as being in poverty and extreme poverty must be explicitly shown on the billing, and the residential tariff will be charged; while users classified as social welfare will be charged the large residential consumer tariff.

VIII. ANALYSIS OF INVESTMENTS AND NEW COSTS AND EXPENSES

The following is an analysis of the proposed investment plan and new costs and expenses that will improve water resource management, both with technological elements and through investment in the future via the education of new generations; this is intended to generate significant improvements in the provision of the water resource protection service during the 2025-2029 five-year period.

The investment proposal aims to recognize, in this tariff study, resources to address the deficiencies detected in report IN-0109-IA-2021 entitled "Cluster Analysis of Asadas" available on folio 27 of file ET-084-2024, which are detailed below.

In this tariff study (ET-104-2024), an allocation of 3.45% of the administrative costs shared among services is recognized for the water resource protection service, leaving the other 96.55% for the aqueduct service, which has already been incorporated in the processing of file ET-084-2024, thus ensuring that this group of operators has 100% of the resources to achieve the proposed objectives for better service provision for their subscribers.

1. Total operating, administrative, and commercial costs and expenses (CTet):

These are the operating, administrative, and commercial costs and expenses for executing projects for the protection of the water resource of provider "e" for period "t". The calculation includes the following components detailed in the following equation:

Formula No. 6 CTet = GREMet + CSERet + DEPet + CMSet + OGet Where:

. CTet = Total operating, administrative, and commercial costs and expenses incurred by provider "e" for period "t" to execute projects for the protection of the water resource.

. GREMet = Remuneration expenses incurred by provider "e" for period "t" to execute projects for the protection of the water resource.

. CSERet = Service costs incurred by provider "e" for period "t" to execute projects for the protection of the water resource, as well as the corresponding administrative and commercial costs.

. DEPet = Cost for depreciation of assets incurred by provider "e" for period "t" to execute projects for the protection of the water resource.

. CMSet = Cost for materials and supplies incurred by provider "e" for period "t" to execute projects for the protection of the water resource, as well as the corresponding administrative and commercial costs.

. OGet = Other costs or expenses incurred by provider "e" for period "t" to execute projects for the protection of the water resource, as well as the corresponding administrative and commercial costs.

The detail for each of the components can be found in the TPRH Methodology (RE-0098-JD-2023).

The operating, administrative, and commercial costs and expenses considered for the water resource protection service are the same as those used for the aqueduct service tariff setting (ET-084-2024), since, as indicated previously, it is necessary to generate 100% of the resources needed for the provision of the different services offered by the Asadas.

These are divided into two parts: the costs and expenses present in most of the financial statements of the Asadas sample used, and some new items considered necessary to improve service provision as well as efficiency in administrative management.

. CTet present in most Asadas in the sample:

These are detailed below:

The criteria used by the Intendencia de Agua (IA) for estimating the costs and expenses are:

• a)Financial Statements: From the information provided by the Asadas, the Financial Statements present different timeframes, balances, and accumulated results for the periods 2021, 2022, and 2023, which were indexed in accordance with the economic indicators detailed in Section V, in order to have standardized operation, maintenance, and administrative costs and expenses at 2023 prices.
• b)Determination of cost and expense recurrence: The line items for operation, maintenance, and administrative costs and expenses, and the depreciation expense, are defined as recurrent, meaning they have a constant behavior over time. Most of these were projected with inflation, except for depreciation expense, which was estimated based on the assets incorporated and the remaining useful life.
• c)Total operating, administrative, and commercial costs and expenses: These expense accounts were obtained in accordance with the sample of Asadas information detailed in previous sections. As already indicated, an analysis was conducted of the accounting accounts that comprise them, including salary line items, fuels and lubricants, materials and supplies, contracted services, and other costs and expenses associated with the operation and maintenance of the aqueduct, and other costs and expenses associated with the administrative items for water resource protection projects.

These comprise the weighted average of the operation and maintenance costs from the sample of 88 Asadas, which included the accounts recorded in this grouping, such as salary accounts, social charges, and legal benefits. They also consider outflows related to both preventive and corrective maintenance, purchase of materials and supplies, contracted services, and other costs and expenses related to water resource protection activities. Consequently, on average, an amount of ? 3,288,704.30 was incorporated for each of the years.

• d)Depreciation expense: In the case of assets, it is necessary to align with the criterion used to estimate consumption and the 824 subscribers of the base year, since to supply these, it is necessary to have the required infrastructure. From that Asadas sample available, the one that most closely matched that market was selected in order to obtain the asset auxiliary ledger and incorporate the depreciation expense that best approximated it. In this case, the asset auxiliary ledger of Asada Tarbaca as of December 31, 2023, was used. It is an Asada that has a potable water treatment plant, so its asset base is robust and seeks to satisfy sufficient expense provision so that the calculation allows their replacement at the end of their useful life if managed adequately for this specific purpose. The annual depreciation expense for each projected year corresponds on average for the five-year period to ?110,892.41.

Additionally, the depreciation expense for 5 bulk meters (macromedidores), and 1 computer equipment is included, in accordance with the investment goals determined by the Intendencia de Agua. In the case of the vehicle, since the resources are only obtained by the year 2029, this tariff exercise is insufficient to begin making provisions for its replacement. For these items, the average depreciation expense for the five-year period is ?512,449.68.

. New proposed CTet for all Asadas:

• a)Full-time administrator: To ensure adequate administrative-financial management and customer service, this proposal considered that the Asadas have a full-time administrator at the University Bachelor category. For this, Decreto Ejecutivo N°44293-MTSS was considered, which establishes the following monthly remuneration of ¢638,299.51:

Table No. 6 Minimum wages for remuneration of generic occupations per month established by Ministerio de Hacienda Effective from December 14, 2023 (figures in colones)

Source: Decreto Ejecutivo N°44293 MTSS.

Additionally, 37.34% for social charges was considered in accordance with the provisions of the Caja Costarricense de Seguro Social, and 8.33% corresponding to the year-end bonus (aguinaldo), for a total annual social charges of 45.67%, according to the following detail:

Based on the foregoing, an annual expense was estimated at ¢392,488.57 for 2025, ¢404,663.23 for 2026, ¢416,803.13 for 2027, ¢429,307.22 for 2028, and ¢442,186.44 for 2029.

• b)Office rental: As part of the commitment to improve service quality and user service for the public water service activities related to water resource protection, the need to establish a physical space dedicated exclusively to customer service was identified. This space will allow for more efficient, accessible, and personalized service to public service users.

The rental of an office dedicated to customer service represents a strategic investment to improve service quality and strengthen the relationship with our users. By providing a space dedicated to personalized and efficient service, not only is internal operation optimized, but the commitment to offering a public service that effectively responds to the needs and expectations of users is also fulfilled.

To determine the cost to be recognized, an average of the reference rental prices of different sizes nationwide was calculated according to market availabilities. Furthermore, as in the previous case, this expense is shared among the different services provided by the Asadas, so the same proration criterion used for existing administrative expenses is applied. The result of this procedure is that for 2025 an amount of ¢230,674.81 is recognized, for 2026 an amount of ¢237,830.14, for 2027 an amount of ¢244,965.05, for 2028 an amount of ¢252,314.00, and for 2029 an amount of ¢259,883.42.

• c)Computer equipment: The tariff adjustment proposal includes the acquisition of computer equipment to manage billing and collection, which allows the aqueduct to maintain better control of its revenues to operate the systems under the conditions established in Ley 7593 and the regulations issued by Aresep. It is also the instrument with which all administrative tasks of the aqueduct are carried out, which is of vital importance for the monitoring and automation of factors associated with billing and water loss control.

For this, the acquisition of a laptop computer and a 27-inch monitor was considered; the unit cost of the computer equipment and the monitor corresponds to an amount of ¢31,553.21. The detail is found in the spreadsheet called "Estudio de Asadas TPRH", specifically in the tab called "Respaldo de costo".

• d)Compliance with financial-accounting requirements: To guarantee the integrity and compliance with the National Accounting Standards (Normativa Contable Nacional), established by the National Accounting Office of the Ministerio de Hacienda, in addition to guaranteeing the delivery of the information required in Resolutions RE-0010-IA-2024 on periodic information requirements for Asadas, as well as RE-0011-IA-2024 on the Regulatory Quality Seal (Sello Regulatorio de Calidad), this item is included within the tariff estimate, in accordance with the professional fees established by the Colegio de Contadores de Costa Rica.
• e)Acquisition of a vehicle: The tariff adjustment proposal incorporates the acquisition of a double-traction vehicle, as it is fundamental for optimizing the operation and operational efficiency of the potable water conveyance and distribution system. This type of vehicle offers an ideal combination of robustness and versatility, enabling the transport of heavy equipment and tools necessary for the maintenance and repair of hydraulic infrastructures, as well as the transport of personnel to difficult and limited-access terrain. The vehicle's capacity facilitates the transport of pipes, pumps, and other essential materials, reducing the need for multiple trips and improving the speed of emergency response. Additionally, its four-wheel drive and rugged design are perfect for facing adverse conditions and rough terrain typical in rural and mountainous areas, thus ensuring continuous and efficient service in aqueduct management.

The adjustment proposal considers a vehicle for an amount of ¢1,143,536.77, which is projected to be collected over 4 years, in order not to cause a very strong impact in a specific year. For the year 2026, an amount of ¢273,336.22 is included in the calculations; for 2027, ¢281,536.30; for the year 2028, an amount of ¢289,982.39; and for the year 2029, an amount of ¢298,681.86.

The reference cost is attached in the cost tab "Estudio de Asadas TPRH", specifically in the tab called "Dep inversiones". The amount included in this item may also be used for another type of vehicle needed to attend to the operation and maintenance of the aqueduct according to its topographical needs or the particular characteristics of the network.

2. Resources for project financing (RFet):

The resources for project financing are calculated by the sum of the funds allocated to finance projects from the tariff and/or through debt to finance projects, thereby also recognizing in the tariff the cost of servicing the debt obligations. This component is assigned with the objective of providing the provider with resources to ensure the adequate development of the activity.

The resources for financing the development of projects are calculated as follows:

Formula No. 7 RFet = CINVet + SDet Where:

- RFet = Resources to finance the execution of projects for the protection of the water resource of provider "e" for period "t". These resources are composed of the sum of the estimated investments with own resources and the debt service.

- CINVet = Estimated disbursement of investments with own resources to execute projects for the protection of the water resource of provider "e" for period "t". The cost of the projects must be explicit and justified by the service provider, based on reasonable technical and financial criteria in accordance with the universal rules of science or technique.

- SDet = Debt service cost to execute projects for the protection of the water resource of provider "e" for period "t". The procedure to obtain this cost is detailed in section 2.1.

This item included the investment projects that have already been mentioned previously throughout the report, which are proposed under the following detail:

1. Hydrological and/or Hydrogeological Study:

This investment project aims to incorporate the necessary resources for the Asadas to conduct a hydrological and/or hydrogeological study according to the needs of the Asada, which allows for the delimitation of the protection areas that each operator must procure.

This is to keep their water sources (nacientes) safe in aspects such as maintenance and adequate recharge, as well as protection from exogenous agents that may directly and indirectly affect water sources. Likewise, said study aims to identify the specific characteristics of water sources, such as their sustainable extraction capacity, resource quality, and vulnerabilities to potential contaminants or land-use change (cambio de uso del suelo).

This detailed analysis will allow the development of specific action plans for integrated water resource management, aligned with environmental regulations and sustainability principles. Moreover, these studies will contribute to improving the strategic planning and operational capacity of the Asadas, strengthening their role as operators responsible for guaranteeing access to safe and quality water in their communities. According to the following criteria:

The quotations available in this tariff file are attached, corresponding to the Asadas la Argentina, Pocora, el Tanque, San Carlos, Rosales, Desamparados de Alajuela and la Fortuna, San Carlos respectively, as can be seen in the quotations available in the spreadsheet called "Estudio de Asadas TPRH", specifically in the tab called "Estudio Hidrogeológico".

Table No. 8 Calculation of the Average per Hydrogeological and/or Hydrological Study The amount to recognize for the execution of this investment corresponds to the average of the quotations obtained, updated to the prices of the year in which they are expected to be carried out, which would correspond to ¢2,065,467, distributed as ¢1,016,960.87 for the year 2025 and ¢1,048,506.13 for the year 2026. For those Asadas that already have hydrological and/or hydrogeological studies, they may use these resources for other types of studies that the operator requires that generate technical support, such as socioeconomic studies. This takes into account the investment prioritization that the Asada may have within the framework of water resource protection.

2. Bulk Metering (Macromedición):

In this section, the proposal for the acquisition of five bulk meters (macromedidores) intended for monitoring the springs (nacientes) used by the Asadas is analyzed. This type of investment is considered essential for improving water resource management, since it allows for accurate information on water extraction and, consequently, more efficient use of the available resource, considering factors such as scarcity and seasonality.

The implementation of bulk meters (macromedidores) establishes a baseline for the continuous monitoring of sources, facilitating informed decision-making regarding the management of the Asadas' main input: water. This monitoring seeks to provide comprehensive and precise knowledge of the sources' behavior, overcoming the limitations of traditional methods such as gauging (aforos), which are subject to the influence of multiple variables that can affect the accuracy of the data obtained. Although gauging (aforos) is commonly used to determine the production level of sources, they provide specific results that can be inaccurate or inconsistent, underscoring the need for more robust solutions such as bulk meters (macromedidores).

The estimation of the number of bulk meters (macromedidores) needed for this project was based on information collected in the SAGA System of AyA, where 38 Asadas out of the total sample of 88 were identified as having details about their infrastructure, such as sketches, networks, tanks, and springs (nacientes). The data chosen for the number of sources was estimated by calculating the 80th percentile, which represents a statistically significant value for at least 80% of the sample, resulting in five sources.

The estimated values and cost references used come from the tariff file ET-055-2023 for the aqueduct service tariff study of Asada Labrador. Detailed information is available in the Excel file entitled "Estudio de Asadas TPRH", specifically in the sheet called "Dep inversiones".

Based on this information, the unit cost of ¢1,840,000 per bulk meter (macromedidor) was incorporated, distributing the total investment of ¢9,446,033.60 per year, with the following projected disbursements: ¢3,056,078.68 for the year 2027, ¢3,147,761.04 for the year 2028, and ¢3,242,193.87 for the year 2029.

If an Asada already has bulk meters (macromedidores) installed in all its sources, it is proposed that the resources be invested in the implementation of a control center. This would allow for automated and efficient monitoring of the production and the level of flow entering the system, improving the operational management and the quality of the potable water supply that these organizations provide to their communities.

3. Quality Program (Quality Analysis):

The recognition of the costs that the Asada must incur in order to have a Water Quality Control Program is included, to perform water quality analyses at the sources requested by the Ministerio de Salud through the guidelines established in Decreto 38924-S "Reglamento para la Calidad del Agua Potable" and its amendments.

Specifically, the items to be recognized in the tariff adjustment are for the application of quality analyses at the First (N1), Second (N2), and Third (N3) levels, specifically for the aqueduct system component known as sources, in attention to what is indicated in Article 13 of Decreto 38924-S, which states:

"Article 13. Water Quality Control Program. Every operating entity must have and keep implemented, updated, and available a Water Quality Control Program, which must contain the following:

• a)AREA OF INFLUENCE OF THE WATER SUPPLY SYSTEM.
• i)Have a sketch or plan of the aqueduct.
• ii)Identification and description of the area where the supply sources are located.
• iii)Control of the area of influence of the supply sources.
• iv)Identification of the risk and vulnerability associated with the water sources and storage tanks, through the periodic inspections they carry out, according to Annex 5 of this regulation.
• b)SAMPLING.
• i)Frequency of sample collection and Sample collection points.

The frequency of sample collection by the operating entity (Operational Control) and the designated laboratory must be subject to the provisions in tables B1, B2, and B3 of Annex 2 of this regulation, for which they must have the corresponding semi-annual schedule according to table B.4 of Annex 2 of this decree.

• ii)Sample collection points.
• 1)The sampling points for the different analyses by the operating entity (Operational Control) and the designated laboratory must be uniformly selected so that they are representative of the supply zones; starting with the source, storage, disinfection site, and ending in the distribution network.
• 2)They must be located at the outlet of the treatment plant, the outlet of storage tanks, the outlet of underground sources (wells, springs, infiltration galleries), and in the distribution network.
• 3)The tap selected for sampling must be located as close as possible to the household connection controlled by the operator, before the elevated tank or any other type of intra-household water storage." On the other hand, the costs included in the tariff adjustment proposal also respond to the objective that the Asadas have the necessary resources to apply the water quality analyses required for the Regulatory Quality Seal Program (Programa de Sello Regulatorio de Calidad), which encompasses what is indicated in Resolutions RE-0010-IA-2024 and RE-0011-IA-2024.

Both for compliance with the water quality analyses requested by the Ministerio de Salud and for those of the Regulatory Quality Seal Program, the resources to be assigned through the tariff adjustment must be used through laboratories that have the tests of interest to be contracted by the Asadas, duly accredited by the Ente Costarricense de Acreditación, and that also have the respective sanitary operating permit, as indicated in Article 10 of Decreto 38924-S:

"Article 10. Laboratories and Methods of Analysis a) Every laboratory that performs physical, chemical, and microbiological analysis must have a sanitary operating permit granted by the Ministerio de Salud, according to Decreto Ejecutivo N° 34728-S "Reglamento General para el Otorgamiento de Permisos de Funcionamiento del Ministerio de Salud" of May 28, 2008, and its amendments.

• b)The reference methods for analysis are those indicated in the latest edition of the Standard Methods for the Examination of Water and Wastewater.
• c)The collection of samples for physicochemical and microbiological analyses must be carried out by personnel from the contracted laboratory.
• d)Public operating entities must present analysis reports issued by laboratories whose test methods are accredited, as established in Article 34 of Ley N° 8279 of May 2, 2002, "Sistema Nacional para la Calidad," published in La Gaceta N° 96 of May 21, 2002." To estimate the costs corresponding to the quality analyses, we started from the information of the final refined sample corresponding to 88 Asadas, as well as the sketch files related to the aqueduct systems they use, available in the AyA's SAGA system, and the demographic information from the 2023 National Household Survey (ENAHO) published by INEC.

Taking these information sources as a base point, the first step was to identify the Asadas that have sketches within AyA's SAGA database. The sketches provide information about how the aqueduct systems in the Asadas are configured, for example, they include elements such as the number and type of sources, whether they are springs (nacientes), wells, or surface intakes like rivers, storage tanks, the number of communities supplied, whether they have a treatment plant, among other aspects.

It should be noted that the sketches used were made by the AyA in the year 2021, so this is the base year for that information, taking into account that the configuration of the systems may not vary greatly over the years and the limitation in data availability from the Asadas, this information source is used for the respective calculation. Now, from the previously delimited final sample, a total of 38 Asadas with sketches were identified, which were the ones used to estimate the costs of the quality analyses, also aligned with point 3. Interconnection and control of this same section.

Once the Asadas were identified, the information recorded in the sketches was tabulated, considering the variables of number of sources. Now, once the data corresponding to each variable for the selected sample is available, to identify the costs corresponding to the quality analyses, it is necessary to note that the current decree 38924-S "Reglamento para la calidad del Agua Potable" establishes a minimum number of analyses for water quality control, as well as mandatory analysis parameters.

In this regard, said regulation establishes four levels of drinking water quality control: N1, N2, N3, and N4, each of which measures different specific parameters at different points in the system. Likewise, the frequency with which the tests must be carried out is defined according to the population supplied by the system. As a summary, the table below shows the different aspects defined by the Reglamento de Calidad to establish the number of tests that must be performed in the systems.

Table No. 9 Administrative Associations of Communal Aqueducts (Asadas).

Levels for quality tests according to population, sampling point, and frequency._ *For the case of N4 analyses, given that the tests are carried out only in specific cases where the presence of substances or organisms that may contaminate the water is detected, for the purposes of this study, these analyses are incorporated for the sources.

This level is requested by the Ministry of Health only in emergency cases.

Source: prepared by the Water Superintendency, Aresep, based on the Reglamento para la Calidad del Agua Potable.

Subsequently, after determining the number of samplings required annually according to the level type in accordance with the current regulation, it is necessary to estimate the population that each Asada in the sample supplies service to, in order to define the frequency with which each analysis must be carried out.

For this, household and population information from the ENAHO 2023 was used, from which the number of people per household was estimated according to region; this information was cross-referenced with the location of each Asada, so that the population could be obtained from data with a disaggregation closer to the reality of each Asada and not solely with respect to national information.

With this, the product was calculated between the number of residential subscribers of each Asada and the number of people per household according to the region corresponding to the location of that Asada; in this way, the population data required to calculate the frequency with which the analyses must be carried out for each level established in the quality regulation for each Asada was approximated individually.

It is necessary to highlight that, in the case of N4 type analyses established only in emergency cases where organisms or substances that may eventually contaminate or affect water quality are identified, the analyses required for the detection of agrochemicals and hydrocarbons once per year were contemplated within the cost estimation. Likewise, in the context of compliance with resolution RE-0011-IA-2024 of the Sello Regulatorio de Calidad del Agua, the Superintendency establishes, as an admissibility requirement, the performance of said analyses due to the non-conformities found in the country's aqueduct systems regarding these parameters.

Once the number of quality analyses required per each Asada was determined according to the estimated population and the respective number of sources, tanks, and networks, the cost of these was calculated. For this, the costs per level (N1, N2, N3, and N4) were determined based on the amounts established within the market study that the Water Superintendency conducted for its water quality program, attached in the Annex called "Fiscalización Calidad-Tarifario Asadas.docx" of this report, which are presented in the table below:

Table No. 10 Administrative Associations of Communal Aqueducts (Asadas).

Average amounts for quality analysis by level for 2024.

(figures in colones)

Source: Water Superintendency, Aresep.

Based on this, for the tariff estimation, the amount used corresponds to the one that incorporates the 80th percentile of the costs associated with the sample of Asadas, previously indicated. This statistic is used because it is robust in terms of data concentration and is not influenced by extreme values as the average is. Likewise, the 80th percentile statistic shows the value below which 80% of the data are found, indicating that the greatest amount of data from the sample is considered, only excluding those in the highest 20%.

In this way, an average annual amount of ?1,562,620.85 is recognized within the tariff costs for the concept of quality analysis and compliance with the quality program, which contains an inflation adjustment for all years of the study in order to maintain the value of money over time. All the estimates made for this section can be found in the spreadsheet called "Hoja Datos Estudio de Asadas TPRH.xlsx," specifically in the tab called "Análisis de Calidad." 4. Water Culture Program:

The Water Culture Program aims to promote the valuation, responsible use, and conservation of water resources through awareness-raising, education, and community participation strategies. This program is based on the recognition that sustainable water management requires not only adequate infrastructure but also a cultural change oriented toward respect and care for this essential resource.

Although each Asada organizes and executes these programs differently according to its needs and capacities, the main objectives must align with the following thematic approaches:

- Awareness: Create a deep understanding of the importance of water as a limited and vital resource, highlighting its role in environmental sustainability and social well-being.

- Education: Develop educational programs aimed at various audiences, such as educational centers, communities, and service users, to promote responsible practices in the use of water resources.

- Community Participation: Promote community participation in activities related to the protection of water sources, reforestation, community monitoring, and rainwater harvesting projects.

The implementation of these programs is expected to generate positive impacts, such as:

* Increase public awareness about the relevance of water as an indispensable resource.

* Reduce waste and promote efficient practices in water consumption in homes, businesses, and institutions.

* Strengthen community commitment to the sustainable management of water resources.

To estimate the costs associated with these workshops and activities, the available data in the file called "Estudio de Asadas TPRH.xlsx" were compiled and processed, specifically in the tab titled "Cultura del agua." These estimates consider the specific needs of the Asadas and the resources required to ensure the success of the proposed activities, with an average of ?2,891,527.62 being incorporated for the period corresponding to this rate setting for said concept. This amount includes a cost per person of ?6,717.85, meaning that on average, the Asadas will have the possibility of training around 437 people per year on issues of water resource protection. Specifically, the following data were used for this estimation:

Table No. 11 Administrative Associations of Communal Aqueducts (Asadas).

Average amounts for quality analysis by level for 2024.

(figures in colones)

IX. FINANCIAL ANALYSIS

Below is the summary of the historical costs that are part of the tariff adjustment proposal; the first three rows coincide with the estimates of the aqueduct service processed in ET-084-2024, subsequently in the orange-colored row, the percentage of 3.45% corresponding to the expenditure to be incorporated in the study for the water resource activity is applied, as shown below:

Table No. 12 Administrative Associations of Communal Aqueducts (Asadas).

Summary of historical and projected costs Period 2023-2029 Taking into account the detail of new expenditures and investment projects explained previously, this item is established at an average annual amount of ?7,825,230.77 for the period 2025-2029, as detailed below:

Administrative Associations of Communal Aqueducts (Asadas).

New costs and resources for project financing Period 2025-2029

Source: Water Superintendency, Aresep.

Below is the summary of the needs for costs and expenses, depreciation, and investments to determine the level of income required for the water resource protection activity in Asadas:

Table No. 14 Administrative Associations of Communal Aqueducts (Asadas).

Proposed income statement Period 2025-2029

Source: Water Superintendency

X. TARIFF STRUCTURE

1. Proposed tariff structure This section defines the different components that form part of the tariff structure, which, in turn, constitutes the instrument through which prices are defined according to type of consumer, geographic area, demand periods, or other distinctions when applicable, with this set of prices being the one that allows obtaining the service's revenues. It is through this structure that the way in which the monetary inputs required by the operator will be collected is defined so that it can provide a quality service, in line with the costs and investments necessary to meet this objective.

Said tool is made up of different sections such as tariff categories, which discriminate consumers according to their characteristics and the uses given to the service, and likewise the consumption blocks that divide the volume demanded by subscribers according to the intensity with which they have used the service. In this sense, there are different charging modalities that can also be used for this purpose; therefore, this section describes the different groupings that make up the tariff structure, as well as the modalities that providers can adopt to apply the tariffs to their subscribers in accordance with the provisions of resolution RE-0028-IA-2024 and its amendments set forth above.

Although the aforementioned resolution, originating from report IN- 0117-IA-2024, establishes the applicable tariff structure for aqueduct and sewer services, it is necessary to remember that the current tariff methodology for the water resource protection service of resolution RE-0098-JD-2023 indicates in its scope that it "applies to the current tariff structure of the aqueduct service," in the context of applying the water resource protection tariff.

a. Type of tariff This section defines the type of tariff with which the transfer of costs and expenses associated with the provision of the water resource protection service is carried out. This tariff scheme allows recovering the necessary income for the Asadas through a progressive and equitable approach, being that it is composed solely of a variable part described below.

* Variable charge:

The variable charge is the amount that the user must pay for each unit of water consumed or use of the service, and it responds to the need derived from the operator's operation and maintenance costs for optimal and efficient service provision.

In this way, the variable charge is estimated according to the distribution of the different categories and consumption blocks, establishing progressivity in the charge according to the intensity and use given to the service provided by the operator. It is the responsibility of this structure to define the tariff considering aspects such as excessive consumption and the requirement of the service as a productive input to ensure good water resource management.

b. Tariff categories In accordance with what was previously described, complementing the variable charge, and in line with the analysis developed in resolution RE-0028-IA-2024 and its amendments, the tariff categories allow classifying subscribers according to their properties in the use of the service and the conditions under which they are when demanding it. Thus, the following tariff categories are defined:

-Residential Tariff (T-Re): includes dwelling houses and apartments intended for the exclusive use of permanent or long-stay accommodation (sleeping, basic needs and personal hygiene, preparing and consuming food).

-Large Consumer Tariff (T-GC): applies to all large consumers of the aqueduct service (vertical and horizontal condominiums, apartments, housing clusters for both residential and mixed use) whose consumption is measured through a master meter (macromedidor) by the service provider, in accordance with the current Technical Regulation by Aresep.

-Large Residential Social Welfare Consumer Tariff (TGCR-BS): This incorporates only those Large Residential Consumers of social welfare duly established as such by the Banco Hipotecario de la Vivienda (Banhvi) or by the State institution that holds that competence.

- Commerce and Services Tariff (T-CS): Incorporates businesses classified in the commerce or services sector, according to the classification of economic activities (ISIC code), in these establishments the aqueduct service is used for the purpose of selling finished products or providing services. This category also applies to all government establishments, including the central Government and community centers (halls), except hospitals, clinics, and Ebais, public companies and Decentralized Institutions.

Furthermore, it must be applied to the supply of potable water in motels, hotels, or short-stay lodging (vacation accommodations), private hospitals and clinics, and other establishments related to for-profit activities that require a municipal license to operate.

Potable water consumption for common areas that have their own meter.

Industry Tariff (T-In): Applies to companies classified in the industrial sector according to the classification of economic activities (ISIC code) used by the Central Bank of Costa Rica (BCCR). The service is used for the purpose of manufacturing products from raw materials or assembling them for sale.

. Preferential Tariff (T-Pre): includes activities of a social nature, which are registered with legal status. This category comprises the following activities:

. Education: only for educational centers, belonging to the state public education sector (preschool education centers, primary education schools, special education schools, secondary education high schools, secondary education technical high schools, university colleges, universities, and public libraries, including facilities dedicated exclusively to public educational activity). Restaurants, cafeterias, student residences, photocopy centers, and others are excluded from these categories, even if they are in the name of educational entities; they will not enjoy this tariff and must be placed within the corresponding one.

. Religion: applies to temples of legally constituted churches and whose service is in the name of the legal entity that carries out the religious activity; any other activity not directly related to religious worship will be excluded from the tariff.

. Protection of children and the elderly: covers homes and asylums for the elderly and/or disabled people, state-promoted daycare centers, and public homes for children, which must be of a charitable and non-profit nature, legally constituted, and whose service is in the name of the legal entity that carries out the activity.

. Care of the indigent: includes establishments for the care of people in street situations or drug addiction, which operate non-profit and are legally constituted, and whose service is in the name of the legal entity that carries out the activity. Assistance and relief institutions: includes those whose purpose is social assistance for groups with scarce economic resources or protection of people in the event of disasters or crisis situations. All of a charitable and non-profit nature. In these cases, the tariff will apply exclusively to the buildings and other properties expressly used for the cited purposes.

. Hospitals and clinics: only applies to the hospitals, clinics, and Ebais of the Caja Costarricense de Seguro Social.

c. Consumption blocks Likewise, for the definition of the consumption blocks corresponding to each tariff category, as indicated in resolution RE-0028-IA-2024 and its amendments, aspects such as consumption distribution, income concentration, and number of subscribers are considered, which was complemented with analyses carried out by the IDB and ECLAC and information from INEC, with which the following consumption blocks are defined as representative according to the consumption behavior of each proposed category, as illustrated in the following figure:

Figure No. 3 Administrative Associations of Communal Aqueducts (Asadas).

Proposed tariff structure In this way, these are the consumption blocks through which the costs related to the variable part of the tariff will be recovered, seeking to ensure a progressive tariff signal and at the same time generate an incentive for the efficient management of water resources.

d. Fixed services As previously provided in the diagnostic analysis, regarding fixed services that do not have service measurement, it will be applied in accordance with the period established in resolution RE-0034-IA-20024 for the Aqueduct service for Asadas; said period corresponds to the entry into force of the respective resolution and until July 31, 2025.

e. Bulk water sale To determine the tariff to be charged for this service, resolution RE-0028-IA-2024 and its amendments establish the stages of the value chain that will be considered for what concerns the bulk water sale; these are those previously defined as conveyance, treatment, and distribution.

Once the stages are identified, given that the required information to identify the consumption levels associated with this service by the Asadas is not available, nor the separation of costs by value chain, to estimate the tariff associated with the protection of the water resource that each stage must contribute, the cost proportions of the AyA were used, these are shown in the table below:

Table No. 15 Administrative Associations of Communal Aqueducts (Asadas).

Proportion of costs by stage in the value chain.

AyA, approved costs 2023-2024. RE-0014-IA-2023.

* The conveyance stage incorporates catchment costs.

Source: prepared by Water Superintendency, Aresep, from resolution RE-0014-IA-2023.

Now, to estimate the corresponding tariffs for this item, we start from the estimated average prices annually for the five-year period 2025-2029 and distribute them according to the cost weightings indicated in the previous table.

It is important to note that the billing modality for this tariff is cumulative, meaning that the charge must be made according to the stage of the value chain from which the water is extracted.

For example, if the Asada buys and sells treated water from the distribution network, then it must be billed the amount corresponding to the stages in the value chain through which that water had to pass before reaching the stage from which it is extracted, that is, the tariff for conveyance, treatment, and finally the tariff for treatment. As a demonstration, the following tables show two examples of billing for this item.

Table No. 16 Administrative Associations of Communal Aqueducts (Asadas).

Example 1 of billing for bulk water purchase-sale for 500 m3 of water extracted from the distribution network.

Table No. 17 Administrative Associations of Communal Aqueducts (Asadas).

Example 2 of billing for bulk water purchase-sale for 1000 m3 of water raw extracted from the conveyance stage.

Source: Water Superintendency.

Furthermore, it is important to define the tariff categories for the large-volume purchase-sale of water according to the type of user, and keeping a record of the transactions according to the stages of the value chain in effect; these categories are defined as follows:

* Water service provider: Buyer or seller of raw water (without treatment) as well as potable water. In the case of water sales between providers, the conditions agreed upon by the parties must be respected, as well as the tariffs and conditions in the provision of the service set by Aresep.

* Private company: Legal entity not attached to its supply network that requires it, such as water transporters or anyone requesting it for temporary use, in accordance with the procedures and requirements established by the provider.

* Ports and airports: Vessels at national ports and airports for their provisioning.

f. Prepaid modality Regarding the prepayment or advance payment modality, in accordance with resolution RE-0028-IA-2024 and its amendments, and the context set out in previous sections of the report, its application is defined as follows:

- Prepayment Tariff (Tarifa Pre-pago, T-PP): The application of prepaid water tariffs is established in accordance with the provisions for the water supply service, which are a way of ensuring that users of the different tariff categories pay in advance for their water consumption and the protection of the water resource associated with it. This proposal can help reduce water waste and ensure that water is available for all who need it, as well as raise awareness among subscribers of their water consumption.

h. Residential Time-of-Use Modality The application of this modality is defined for the water resource protection service of the residential category for the supply of water to single-family homes and apartments that serve exclusively as permanent accommodation. This requires a metering system with a multi-tariff meter. Likewise, the time bands are defined in accordance with what was previously defined:

Definition of time bands:

· Peak 1: between 10:01 and 13:00 hours · Peak 2: between 18:01 and 21:00 hours · Off-Peak 1: between 05:31 and 10:00 hours · Off-Peak 2: between 13:01 and 18:00 hours · Off-Peak 3: between 21:01 and 23:00 hours · Night: between 23:01 and 05:30 hours In order to achieve the objective of modifying the consumption pattern of subscribers, a tariff incentive must be offered according to the distribution of service use in relation to the previously indicated time bands. Therefore, it is established that for the "Peak" periods, the tariff to be applied is that of the highest block of the residential category; in the case of the time band designated as "Off-Peak," the tariff corresponds to the average price; and, finally, in the "Night" time band, the tariff of the lowest block in the residential category is applied.

2. Tariff Estimation Taking into account the proposed tariff structure for the water resource protection service provided by the country's Asadas, an income estimation must be carried out in accordance with the distribution of categories and blocks proposed. In this manner, it must be ensured that the approved costs and investments are covered, in line with the arguments set out in the previous sections.

The required revenues, consumption, and average price are identified in the following table:

Table No. 18 Asociaciones Administradoras de Acueductos Comunales (Asadas).

Initial variables for tariff estimation.

Source: Intendencia de Agua, Aresep.

1. Tariff Schedules The tariff schedules resulting from the analysis carried out in the previous sections are detailed below. These indicate the tariffs to be applied by the country's Asadas for the water resource protection service, applicable to those that do not have an individual study for this service, as well as in the other water sale modalities.

Likewise, this section incorporates the tariff schedules corresponding to the individual tariff fixations of Asadas for which the application of this tariff implies a change in the structure of the fixed schedules; in this regard, the reweighting to the new tariff structure of the current water supply schedule for Asadas that do not have a regulatory quality seal, established through resolution RIA-006-2017, is also incorporated.

It should be noted that these schedules correspond to a reweighting only of the amounts already established, that is, they are not a tariff study per se, but rather an adaptation to the new tariff structure proposed by the Intendencia with the same level of revenues.

a. Range of 1 to 100 subscribers:

Table No. 19 Tariff Schedule Asociaciones Administradoras de Acueductos Comunales (Asadas) Tariff for Water Resource Protection (Tarifa para la Protección del Recurso Hídrico, TPRH) Range of 1 to 100 subscribers

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 20 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service for fixed services Range of 1 to 100 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Water Resource Protection Service Prepayment Modality Range of 1 to 100 subscribers Tariff Schedule

Water Resource Protection Service Residential Time-of-Use Modality Range of 1 to 100 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

b. Range of 101 to 300 subscribers:

Table No. 23 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Range of 101 to 300 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

c. Range of 301 to 1000 subscribers:

Table No. 27 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Range of 301 to 1000 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 28 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service for fixed services Range of 301 to 1000 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 29 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Prepayment Modality Range of 301 to 1000 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 30 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Residential Time-of-Use Modality Range of 301 to 1000 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

d. Range of More than 1000 subscribers:

Table No. 31 Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Range of More than 1000 subscribers Tariff Schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Water Superintendency, ARESEP.

Source: Own elaboration by the Water Superintendency, ARESEP.

e. Bulk water:

Table No. 35 Community Aqueduct Administrative Associations (Asadas).

Tariff schedule bulk water

Source: Own elaboration by the Water Superintendency, ARESEP.

f. Other schedules:

Table No. 36 Community Aqueduct Administrative Associations (Asadas) Aqueduct service tariff schedule goal schedule RIA-006-2017

Source: Own elaboration by the Water Superintendency, ARESEP.

Aqueduct service tariff schedule goal schedule RIA-006-2017 Fixed services

Source: Own elaboration by the Water Superintendency, ARESEP.

Aqueduct service resolution RIA-006-2017 Bulk water Asadas

Source: Own elaboration by the Water Superintendency, ARESEP.

San Pedro de Barva.

Tariff schedule Bulk Water Sale Service

Source: Own elaboration by the Water Superintendency, ARESEP.

Table No. 41 Community Aqueduct Administrative Association (Asada) San Pedro de Barva.

Tariff schedule Aqueduct service

Table No. 42 Community Aqueduct Administrative Association (Asada) San Pedro de Barva.

Tariff schedule Bulk Water Sale Service

Source: Own elaboration by the Water Superintendency, ARESEP.

Labrador, San Mateo.

Tariff schedule Aqueduct service

Source: Own elaboration by the Water Superintendency, ARESEP.

San Pedro de Barva.

Tariff schedule Bulk Water Sale Service

Table No. 45 Community Aqueduct Administrative Association (Asada) Labrador, San Mateo.

Tariff schedule Aqueduct service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 46 Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Rate schedule for the Bulk Water Sale Service

Table No. 47 Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo. Rate schedule for the Aqueduct Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 48 Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Rate schedule Bulk Water Sale

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 51 Asociación Administradora de Acueducto Comunal (Asada) Lomas de Zurquí Rate schedule for the Sewerage Service

Asociación Administradora de Acueducto Comunal (Asada) Lomas de Zurquí Rate schedule for the Sewerage Service

Sucre, San Carlos Rate schedule for the Water Resource Protection Service

Asada Sucre, San Carlos Rate schedule for the Water Resource Protection Bulk Water Sale Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Sucre, San Carlos Rate schedule for the Water Resource Protection Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asada Sucre, San Carlos Rate schedule for the Water Resource Protection Bulk Water Sale Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Sucre, San Carlos Rate schedule for the Water Resource Protection Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asada Sucre, San Carlos Rate schedule for the Water Resource Protection Bulk Water Sale Service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Table No. 59 Asociación Administradora de Acueducto Comunal (Asada) Sucre, San Carlos Rate schedule for the Water Resource Protection Service

Source: Own elaboration by the Water Superintendence, ARESEP.

Table No. 60 Asociación Administradora de Acueducto Comunal (Asada) Asada Sucre, San Carlos Tariff schedule for the Water Resource Protection Service Bulk water sale

Source: Own elaboration by the Water Superintendence, ARESEP.

XI. PUBLIC HEARING

Regarding the public hearing related to the present case, held on March 17, 2025, the Dirección General de Atención al Usuario (DGAU) issued minute AC-051-DGAU-2025 and report IN-0128-DGAU-2025, from which it follows that in accordance with Law 7593, article 36 and Decree 29732-MP, articles 50 and 56, the following positions were received:

I. ADMITTED POSITIONS

POSITIONS RECEIVED IN VIRTUAL PUBLIC HEARING:

1.Opposition: Carlos Andrés Jiménez Herrera, identity card 2-0611-0134. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In his argument he states:

In his argument he states:

He expresses his concern and discontent with the tariff increases in the water service applied by ARESEP. In the previous hearing, an increase of 39% had been discussed, but in his community it translated into increases of up to 400%, severely affecting users. Although ARESEP subsequently adjusted the tariff, the impact remains high, with increases ranging from 85% to over 100%.

He points out that these increases do not consider the economic reality of the population and especially affect low-income families and small entrepreneurs.

Additionally, he mentions the lack of consensus between ARESEP and AyA, which generates confusion and causes the community to unfairly perceive that the ASADA supports the increases. He feels frustrated and powerless seeing how the continuous rises further impoverish the population, without adequate studies to justify these increases. In conclusion, he rejects these tariffs, as he considers they unfairly hit citizens without offering sustainable solutions.

Response:

The Water Resource Protection Tariff is based on information presented by the Asadas, on market data with historical subscriber records, and on financial information from the financial statements. The resources obtained from this tariff are intended to carry out technical studies (hydrological and hydrogeological), implement macro-metering at the different concessioned sources, and promote a new water culture focused on the sustainability, protection, and quality of the water resource used in the provision of the aqueduct service, contributing to adaptation to climate change, for the benefit of all users.

Regarding the concern for the low-income population, it is indicated and clarified that the adjustment proposal corresponding to the TPRH, for example, for a consumption of 24 m3 per month would be approximately ¢1,100 per month, so the appellant is informed that the adjustment is not excessive and maintains a relationship with the progressive consumption that aims to give the corresponding signals for the conservation and efficient use of the water resource.

Furthermore, categories and blocks were created based on average consumption that seek to smooth the bill amount for those subscribers who make efficient use of the water resource. Thus, for example, all categories in the first consumption block show accessible and reasonable prices, so a subscriber located in them should not have a problem paying their bill.

Finally, the proposal is supported by the provisions of resolution RE-0098-JD- 2023, which establishes the corresponding information requirements that support the adjustment proposal, which is duly based on the powers given by law to the Autoridad Reguladora de los Servicios Públicos.

For the foregoing, the argument is rejected.

2.Opposition: Carlos Garro Aguilar, identity card 3-0492-0853. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In his argument he states:

There is a contradiction between two perspectives on the water tariff increase. From the aqueduct's business point of view, the adjustment helps finance the acquisition of land to protect springs and improve infrastructure, something that was not possible before. However, he also expresses concern about the impact of the increase on users, especially those in conditions of poverty and extreme poverty.

Although he considers that the adjustment may seem radical, he believes it is part of a cultural shift in the valuation of water in Costa Rica. While he is in favor of the increase from an administrative perspective, he admits that the transition will be difficult for the population. He highlights that the funds will allow for the prevention of environmental and sanitary problems in the future, like those faced in his community between 2022 and 2024. In conclusion, he supports the measure, but recognizes the need to manage its effects on the population.

Response:

Regarding the opposition proposed by Mr. Carlos Garro Aguilar, it is worth citing that Executive Decrees No. 39757 and No. 40711 establish that a system of targeted subsidies must be implemented for users classified as living in basic poverty and extreme poverty; however, this will only apply to billings for drinking water and sanitation consumption, and not regarding the amount associated with the water resource protection tariff, as indicated in Article No. 4 of Executive Decree No. 39757-MINAE of April 25, 2016:

"Article 4º—The methodologies for setting tariffs for operators of drinking water and sanitation systems must be based on criteria of distributive social justice, which take into account the social strata and the zone to which the users belong, so that those with greater payment capacity subsidize those with lesser capacity, with the purpose of obtaining income that responds to the financial policy that the corresponding legal norms indicate for operators of drinking water and sanitation systems. The State and its social assistance institutions may subsidize, totally or partially, areas or groups of users who, due to their economic conditions, are unable to pay the established tariffs." It is important to mention that the resources generated by the Water Resource Protection Tariff must be allocated to cover the costs and expenses associated with the projects cited in this report, which will allow for the protection of water sources, contributes to the sustainability of the water resource and to adaptation to climate change, for the benefit of all Asadas users.

This being the case, it is clarified that the TPRH is not included in the targeted social welfare plan of Executive Decrees No. 39757 and No. 40711, and Mr. Garro's participation in expressing his support for the proposed tariff for the benefit of present and future generations is appreciated.

3. Opposition: Diana Barbosa Quintero, residence card number 117001347412. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In her argument she states:

She expresses concern about how the water tariff increase affects condominiums, since they are being treated as large consumers without considering the individual consumption of each family. She explains that the use of macro-meters prevents differentiating the consumption levels of residents, which generates a disproportionate impact on their costs.

Furthermore, she criticizes that current regulations do not allow handing over networks to operators public, which forces condominiums to assume additional expenses without viable alternatives. She points out that this affects the economy of residents, forcing them to choose between paying for water or other basic needs, and that it could trigger delinquency and put access to the service at risk.

She also warns that the lack of a clear response from the authorities and the lack of options to mitigate these costs represent a form of discrimination against those who live in residential units. She mentions examples of drastic increases in bills and fears that, with the projected increases through 2029, the situation will become unsustainable for many families.

Response:

It is important to indicate to Mrs. Barboza that the arguments pointed out by the user do not correspond to issues related to the proposed water resource protection tariff nor to the projects that were raised in file ET-104-2024, so they are not related to the tariff request analyzed.

With respect to the condominium issue, through resolution RE-0028-IA-2024, the tariff categories of Large Residential Consumers (GCR) were created, whose definition is detailed below:

"Large Residential Consumers (GCR): applies to all residential subscribers of the aqueduct service (vertical condominiums, horizontal condominiums, apartments, hamlets, etc.) whose consumption is measured through a macro-meter by the service provider, in accordance with the Technical Regulation: 'Provision of the supply of aqueduct, sewerage, and hydrant services' that is in force.

The consumption blocks or consumption ranges for this category are:

. 0 to 519 m3 . 520 to 1315 m3 . More than 1316 m3 Subsequently, resolution RE-0008-IA-2025 was issued, dated March 5, 2025, 'THE WATER SUPERINTENDENT TAKES COGNIZANCE OF THE PARTIAL MODIFICATION OF RESOLUTION RE-0028-IA-2024, OF NOVEMBER 15, 2024, CALLED "TARIFF STRUCTURE OF THE REGULATED AQUEDUCT SERVICE IN COSTA RICA" AND PARTIAL MODIFICATION OF RESOLUTIONS RE-0031-IA-2024 OF NOVEMBER 15, 2024, RE-0033-IA-2024 OF DECEMBER 3, 2024, RE-0034- IA-2024 OF DECEMBER 6, 2024, AND RE-004-IA-2025 OF FEBRUARY 5, 2025.' And the following consumption blocks were established:

. 0 to 2500 m3 . 2501 to 6000 m3 . More than 6001 m3 In this resolution, the aim was to expand the consumption blocks, allowing more consumptions to fall within the first blocks, which have similar tariffs to the sum of the first two residential blocks.

On the other hand, the Technical Regulation: 'Provision of the supply of Aqueduct, Sanitary Sewerage, and Hydrant Services (AR-RT-SUMAAH-2023)', in its article 20 establishes:

"Article 20. Infrastructure for the provision of public services built by developers. All the infrastructure necessary for aqueduct, sanitary sewerage, and hydrant services, built by developers of urban projects, must be donated free of charge to the provider for its operation, maintenance, and future replacement and must be carried out in accordance with the procedures established by the service provider and following the design standards in force in the country.

In the case of condominiums, in accordance with the legislation regulating the matter, they may donate free of charge the infrastructure for the supply of aqueduct, sanitary sewerage, and hydrant services, along with the lands and easements free of liens and encumbrances on which the works rest, for the proper operation, maintenance, and administration by the provider. Likewise, this infrastructure must comply with the design standards in force in the country and the service provider's approval prior to being handed over." Given the foregoing, the possibility does exist, as provided in the previous article, to hand over the infrastructure to the service providers, as long as the infrastructure complies with the design standards in force and the provider's approval.

For the foregoing, the arguments are rejected.

4.Opposition: Xinia Gamboa Santamaria, identity card 2-0515-0556. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In her argument she states:

She has strong opposition to the tariff increases imposed by ARESEP, denouncing that they disproportionately affect communities and condominiums without considering their economic reality. She criticizes the lack of a clear response from the Regulatory Entity, pointing out that public hearings seem to be merely formalities, without real impact on decisions.

She also argues that the ASADAS have lost autonomy and that the increases impose unjustified burdens, benefiting certain urban areas while punishing rural communities. She complains about the excessive bureaucracy to present oppositions and emphasizes that many citizens, especially older adults and low-income people, do not have the means to make their voice heard in the process.

The speaker warns about the social and economic consequences of these increases, pointing out that they could lead to a water access crisis, poverty, and conflicts within communities. She suggests that the government might be seeking to centralize control of water in the country and warns about the risk of the resource becoming a source of conflict at the national and international levels.

Response:

With respect to the tariff increase, this proposal stems from an initiative by the Autoridad Reguladora de los Servicios Públicos that promotes the conservation and protection of the water resource, which seeks to finance via tariffs the hydrogeological and hydrological studies, macro-metering at the sources, and promote a new water culture, this with the aim of incentivizing the protection and conservation of sources at the national level in order to guarantee access to drinking water for present and future generations.

Furthermore, RE-0098-JD-2023 enables the possibility of opting for these initiatives, which are linked to the improvement in the availability, quantity, quality, continuity, and conservation of the service. Therefore, in the exhaustive analysis that the IA carries out in reviewing the proposals and their respective costs, they are incorporated into this tariff proposal and distributed over the five years for which the tariff is set.

The adjustment is not excessive, it maintains a relationship with the progressive consumption that aims to give the corresponding signals for the conservation and efficient use of the water resource, for example, for a consumption of 24 m3 per month it would be approximately ¢1,100 per month.

Regarding the issue of public hearings, she is informed that the calls corresponding to the holding of the public hearing circulated in national circulation media, such as nationally in national circulation media like La Extra and La Teja on February 12, 2025. In addition, it was published in the official gazette La Gaceta No. 26 of February 10, 2025, being published in the corresponding media to promote citizen participation, and this report responds to each of the oppositions raised.

Regarding the autonomy of the Asadas, it is important to clarify that Article 6 of Law No. 7593 "Obligations of the Regulatory Authority" establishes that part of Aresep's obligations is "d) Set the tariffs and prices in accordance with the technical studies" and as part of the obligations of the service providers is: "a) Comply with the provisions issued by the Regulatory Authority regarding the provision of the service, in accordance with the provisions of the respective laws and regulations." According to article 14 of this same law, therefore, the setting of this tariff seeks to protect the water sources, complying with the legal framework that governs it.

For the foregoing, the argument is rejected.

5. Opposition: Anthony Phillips Arguedas, identity card 1-1156-0997. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In his argument he states:

Many families choose to live in rural areas due to the lower cost of water, which helps balance the additional expenses that life away from cities implies, such as transportation and the higher prices of consumer goods. However, with the new tariff increases, this advantage disappears, negatively affecting those who opted for this lifestyle.

The central problem pointed out is the classification of residential condominiums as large consumers, which subjects them to commercial tariffs that are unaffordable for many families. It is argued that this measure is unfair, as residential condominiums do not generate profit with water, unlike businesses such as bottling plants or golf courses.

Furthermore, a legal and administrative obstacle is mentioned: for condominiums to be treated under residential tariffs, they are required to transfer their internal aqueduct network, which is complicated and unnecessary. The key proposal is that a clear and fair criterion be established to guarantee that residential condominiums are treated as residential consumers, instead of automatically applying commercial tariffs to them.

Response:

Regarding the opposition of Mr. Anthony Phillips Arguedas, he is informed that the arguments pointed out by the user do not correspond to issues related to the proposed water resource protection tariff or to the projects that were raised in file ET-104-2024, so it is not related to the tariff request analyzed.

In light of the foregoing, the opposition presented is hereby rejected.

Without prejudice, he is informed that with respect to the condominium issue, through resolution RE-0028-IA-2024, the tariff categories of Large Residential Consumers (GCR) were created, whose definition is detailed below:

"Large Residential Consumers (GCR): applies to all residential subscribers of the aqueduct service (vertical condominiums, horizontal condominiums, apartments, hamlets, etc.) whose consumption is measured through a macro-meter by the service provider, in accordance with the Technical Regulation: 'Provision of the supply of aqueduct, sewerage, and hydrant services' that is in force.

The consumption blocks or consumption ranges for this category are:

. 0 to 519 m3 . 520 to 1315 m3 . More than 1316 m3 Subsequently, resolution RE-0008-IA-2025 was issued, dated March 5, 2025, 'THE WATER SUPERINTENDENT TAKES COGNIZANCE OF THE PARTIAL MODIFICATION OF RESOLUTION RE-0028-IA-2024, OF NOVEMBER 15, 2024, CALLED "TARIFF STRUCTURE OF THE REGULATED AQUEDUCT SERVICE IN COSTA RICA" AND PARTIAL MODIFICATION OF RESOLUTIONS RE-0031-IA-2024 OF NOVEMBER 15, 2024, RE-0033-IA-2024 OF DECEMBER 3, 2024, RE-0034- IA-2024 OF DECEMBER 06 OF 2024, AND RE-004-IA-2025 OF FEBRUARY 5, 2025.' In which the following consumption blocks were established:

. 0 to 2500 m3 . 2501 to 6000 m3 . More than 6001 m3 In this resolution, the aim was to expand the consumption blocks, allowing more consumptions to fall within the first blocks, which have similar tariffs to the sum of the first two residential blocks.

6. Opposition: Johanna Luna Alfaro, identity card 2-0581-0746. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In her argument she states:

There is deep concern about the increases in water tariffs and a strong demand for transparency and justice for the subscribers of the ASADA de Chilamate and other affected communities. A series of key questions addressed to ARESEP are presented, among them:

. What did ARESEP base its decision on to authorize such high increases in the tariffs of each ASADA?

. Were audits conducted to determine if each ASADA really needed or was entitled to a tariff increase?

. How is it justified that people in extreme poverty or with sick family members cannot access benefits for not being in the SINIRUBE?

. How is it explained that, without prior studies, some subscribers received significant reductions in their bills after complaining?

The speech also denounces the absence of the administrator of the ASADA de Chilamate at the hearing, which reinforces the perception of a lack of transparency. It is argued that this ASADA in particular has sufficient resources, which casts doubt on the need for an increase.

The central proposal is the conduct of independent audits to demonstrate that certain ASADAS do not require increases and that the increases have been applied without rigorous analysis. It denounces: '...I am going to mention it publicly, because they have had assets, assets that have disappeared.' It is underlined that the most affected is the people, and ARESEP and AyA are urged to listen and act in favor of the citizens.

Response:

With respect to her arguments, the following is indicated:

What did ARESEP base its decision on to authorize such high increases in the tariffs of each ASADA?:

She is informed that the IA based its decision on the provisions established in resolution RE-0098-JD-2023, which indicates the corresponding information requirements that support the adjustment proposal, which is duly founded on the powers given by law to the Autoridad Reguladora de los Servicios Públicos, which are based on technical and legal aspects for the development of the proposed tariff.

The accounting financial and market information, as indicated in this report, was provided by the operators in response to what was requested in Resolutions RE-0010-IA-2024 and RE-0011-IA-2024.

Were audits conducted to determine if each ASADA really needed or was entitled to a tariff increase?

In addition to the information provided by the operators, it is clarified that the IA carried out, throughout the 2023-2024 period, visits to different Asadas nationwide where the corresponding information for the tariff study was collected; therefore, the particular aspects of the sample were considered, in addition to the sector diagnosis included in this report, which reveals the needs of the sector.

It must also be remembered that the tariff setting is for all Asadas with a quality seal and not for a particular Asada. As substantiated in this report, a series of expenses and investments are included that the Asadas must carry out for the improvement of rural aqueducts and therefore for the benefit of their communities, seeking quality water for present and future generations.

How is it justified that people in extreme poverty or with sick family members cannot access benefits for not being in the SINIRUBE?

With respect to the poverty and extreme poverty benefit, Executive Decrees No. 39757 and No. 40711 establish that a targeted subsidy system must be implemented for users classified as living in basic poverty and extreme poverty; however, this will only apply to billings for drinking water and sanitation consumption, and not regarding the amount associated with the water resource protection tariff, as indicated in Article No. 4 of Executive Decree No. 39757-MINAE of April 25, 2016. Therefore, it is not possible to make a distinction in this case for that group of subscribers.

How is it explained that, without prior studies, some subscribers received significant reductions in their bills after complaining?

Corrections in billing may occur because the service operator made a measurement error, a situation which is unrelated to the tariff adjustment proposal, and no arguments are provided to support the assertion made by the appellant. Therefore, regarding this claim and the accusations made, no further investigation can be conducted, as no evidence of the assertions is attached.

In addition to mentioning that billing claims must be processed in the first instance before the service provider, who must address and resolve them. If it is not resolved, they could be presented at the Aresep single window; this is not the appropriate channel for that procedure.

For the foregoing, the arguments are rejected.

7. Opposition: Johnny Méndez Pérez, identity card 1-0659-0448. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email: [email protected] In his argument he states:

The gentleman emphasizes the total rejection of the disproportionate increases in water tariffs and criticizes the lack of a detailed analysis by ARESEP before implementing them. Several key points are highlighted:

1. Excessive and Unjustified Increase. An increase of 100% to 400% is denounced, considered unprecedented and disproportionate.

· It is pointed out that such an abrupt increase can seriously affect low-income families, forcing them to cut basic needs.

2. Lack of Individualized Analysis · The methodology used to justify the increase and the lack of consideration for the economic capacity of subscribers are questioned.

· The application of a general formula for all ASADAS is criticized, without considering the particularities of each one.

· It is mentioned that the ASADA de Chilamate is well-equipped and financially stable, so it would not require such a high increase.

3. Key Questions for ARESEP · Will the ASADAS be required to apply time-of-use bands in the service as part of the quality certification?

· Why is it established that ASADAS with fewer subscribers pay less, when it should be the opposite due to economies of scale?

· What is the technical and economic justification behind the difference in tariffs according to the number of subscribers?

4. Demand for Greater Transparency and Justice · ARESEP is demanded to conduct detailed and specific studies for each ASADA before imposing increases.

The need for a fair distribution of costs is emphasized to avoid negative impacts on the most vulnerable families.

The central message is clear: increases must not be generalized or disproportionate, and ARESEP must be accountable for its rate calculation process (.)".

Response:

Regarding argument 1: as is evident, the first year of the implementation of this TPRH proposal for the Asadas nationwide, as indicated in the report submitted to the Public Hearing, when applied for the first time, involves the registration, billing, and payment thereof by the users of the various Asadas nationwide. By way of example, it is clarified that the billing for an average residential consumption of 24 m3 would be approximately ¢1,100 per month, which is clearly not excessive and maintains a relationship with progressive consumption, efficient use of the resource, and its conservation.

Regarding argument 2: the appellant is informed that, in accordance with the provisions of the current tariff methodology for determining the Water Resource Protection Tariff, approved under resolution RE-0098-JD-2023, it considers the technical, financial, market, and legal information requirements to determine the corresponding public service rates for this tariff setting. Additionally, in accordance with the provisions of Law 7593 of the Regulatory Authority for Public Services, operators may request an ordinary tariff study at least once a year; furthermore, the IA has developed support mechanisms to guide operators on requests for individualized ordinary adjustments, should the service provider deem it appropriate.

The tariff methodology used at the time was subjected to the public hearing process as established by Law 7593, and therefore it is an endorsed instrument for carrying out tariff settings.

Regarding the goals for new costs and investment, if the Asada, at the time the setting was made, already has some of these, it must allocate the resources to execute the remaining objectives established in the setting. Given the above, if in a period of less than the 5 years established in this setting the Asada has completed everything stipulated, it may request a review of its rate.

Regarding argument 3: enabling a time-of-use tariff implies investment in smart meters, which were included in the tariff setting for the aqueduct service for the Asadas that met the regulatory quality seal, approved under resolution RE-0034-IA-2024, since with this type of meter, users may opt for this benefit to optimize consumption and shift activities that allow them to make rational use of the resource and flatten the demand curve, placing less water stress on the system; this is voluntary and at the users' request.

In this same argument, it is clarified that indeed, upon observing the different tariff schedules, there are economies of scale applied to the corresponding rates for each range of subscribers. This responds to the distribution of costs according to demand for each user range, meaning that in Asadas with fewer services, the average cost per cubic meter will be higher according to the system's characteristics.

It is important to consider that, for the application of what is called the "Tariff Structure," factors such as the recovery of income by tariff category are taken into account, which influences the level of rates defined for each category and consumption block, ensuring the principle of service at cost. Below, the table illustrates what is described for the case of residential rates:

| --- | --- | Likewise, due to the heterogeneity present in both the cost and demand characteristics of the Asadas, it is not optimal to set a single rate that meets the particular needs of each one; because of this, groupings by number of services are used, taking into account those sample groups identified with similar characteristics in both cost and demand structures.

Ensuring, in this way, the adequate recovery of proposed income in accordance with the principle of service at cost; likewise, the number of users allows for groupings that incorporate aspects such as infrastructure capacity, efficiency in service distribution, and incentives to reduce excessive consumption, considering that the first consumption blocks were built based on the average consumption of the categories and have the most accessible prices, since the aim, as has been indicated, is the efficient use of water resources and conservation for present and future generations.

Regarding argument 4: as indicated to the appellant in argument number 2, the tariff methodology used for the definition of this proposal is approved under resolution RE-0098-JD-2023, which contains the technical and legal foundation that supports the results obtained. Additionally, it is clarified that this report contains the regulatory criteria used for the estimation of each of the variables it considers, as well as the corresponding spreadsheets supporting the information sources used.

Finally, as already indicated, both the tariff methodology and this procedure have followed the processes defined in the Law, giving way to transparency of processes, and all interested operators and users have been provided with spaces for training and advisory services as requested.

Given the analysis conducted on the preceding points, the arguments of this opposition are rejected.

8. Opposition: Jose Pablo Gonzalez Araya, identity card 2-0589-0653. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email address: [email protected] In his argument, he states:

1. Opposition to the Disproportionate Increase · The increase of up to 100% in billing is criticized, when only 26% was originally mentioned.

· It is considered an economic blow for families and small producers, who now face unsustainable costs.

· It is compared to other sectors such as fuel, where increases can generate changes in consumption, but in the case of water, there is no alternative.

2. Consequences for the Local Economy · Small producers and families who depend on activities such as dairy farming and poultry farming are considering drilling their own wells instead of paying the new rates.

· This endangers the financial stability of the ASADAS, which have invested in infrastructure and improvements under the assumption of stable demand.

· There are fears that in a few years, the ASADAS will have fewer users, which could affect their operability and sustainability.

3. Lack of Personalization in Rates · It is noted that the increase was generalized for the entire country, without considering the differences in operating costs between regions.

· It is mentioned that in places with abundant water, such as San Carlos, Sarapiquí, and Heredia, supply costs are lower compared to drier areas.

· It is proposed that rates be adjusted according to the reality of each community, rather than applying a single model for all.

4. Proposed Action · A direct dialogue with ARESEP is suggested to discuss a possible differentiated rate by region or a staggered increase.

· The need for greater technical analysis and consultation with the communities before imposing increases is raised.

· A warning is given about the possibility that, if the rate is not adjusted, many ASADAS could enter a financial crisis due to the loss of users.

Response:

Regarding argument 1: the appellant is told that they must clarify and specify which Asadas without this tariff will have a 100% increase. As is evident, the first year of the implementation of this TPRH proposal for the Asadas nationwide, as indicated in the report submitted to the Public Hearing, when applied for the first time, involves the registration, billing, and payment thereof by the users of the various Asadas nationwide. By way of example, it is clarified that the billing for an average residential consumption of 24 m3 would be approximately ¢1,100 per month, which is clearly not excessive and maintains a relationship with progressive consumption, efficient use of the resource, and its conservation.

Additionally, in the definition of consumption categories, the limit of the first block is always established based on average consumption, so that subscribers who consume the average for their category should not experience disproportionate increases in their billing; those with disproportionate bills must first analyze their consumption and verify if it is excessive, as the rates aim to promote efficient use and protection of the resource to guarantee access, quantity, and quality for present and future generations.

Regarding argument 2: As indicated in the response to argument 1, this tariff setting seeks to generate a price signal that allows the Asadas to have sufficient resources to ensure the quality, quantity, and continuity of the water resource, through a progressive price signal, efficient use of the resource, and its conservation.

The actions taken by service users involving well drilling and other activities removed from efficient resource management are outside the competencies established by law for the Regulatory Authority for Public Services. The rates established in this proposal seek to guarantee not only the economic and financial sustainability of these service providers but also the quality of the water resource.

Now, as water is a limited natural resource and a fundamental public good for life and health, it is necessary to manage it sustainably and equitably. Its adequate supply must be ensured, and the service must be accessible to all persons, without risking the ecological balance.

To this end, it is important to prevent the usurpation of traditional sources and their contamination, as well as illegal supply; the providers and involved entities must supervise and control that this does not happen.

In this regard and on this topic, it is established that according to the Water Law No. 276 of August 26, 1942, the Ministry of Environment and Energy (Minae) is the entity responsible for disposing and resolving on the domain, use, utilization, governance, and surveillance of water.

At the same time, according to Law No. 2726, the Costa Rican Institute of Aqueducts and Sewers (AyA) is the autonomous institution responsible for administering and operating the aqueduct and sewer systems throughout the country. This entity was assigned the public purpose of supplying potable water throughout the national territory and guaranteeing the population water in sufficient quality and quantity to satisfy and develop their needs.

For its part, the Ministry of Health (MINSA), in accordance with General Health Law No. 5395, has as its essential function the definition of the national health policy, the formation, planning, and coordination of all public and private health-related activities, as well as the execution of those activities that pertain to it according to the Law.

Consequently, it is evident that both Minae, AyA, and MINSA play an important role in water resource management and the protection of the human right to water. In this sense, Article 271 of Law No. 5395 states:

"(...) ARTICLE 271.- In the regions of the country where there are no public supplies of potable water, and while these are being established, the inhabitants shall use the water supply systems for consumption and domestic use that the Ministry indicates, and local authorities shall collaborate in disseminating information on methods for obtaining or purifying water intended for drinking (.)". (Emphasis not in the original).

This article is clear in indicating that only in those cases where a public potable water supply network does not exist, should the systems established by MINSA be used; which therefore means that, conversely, if an aqueduct system exists or when it is established, it is a duty to connect to it in order to receive the public potable water service.

An adequate supply of water resources is necessary to avoid reducing the risk of water-related diseases and to meet the consumption needs of the entire population through equal distribution; therefore, public potable water service providers are the only ones designated by Law, concession, or permit to supply the service, which they do through their networks, and it is their obligation to provide it within optimal service parameters regarding quality, quantity, continuity, reliability, equality, universal access, efficiency, timeliness, sustainability, and with a human rights approach.

This adequate organization of receiving the public potable water service through the aqueduct systems offered by the provider also aims to achieve the sustainability of the water service while simultaneously ensuring its economic accessibility, where rates for the supply service must be based on the principle of equity, in order to ensure that these services are within the reach of all (Article 12, Law of the Regulatory Authority for Public Services No. 7593), it being established by Law and constitutional jurisprudence that access to public services is not free. These cannot be taken for free nor can payment be avoided, because this would result in an impact on the financial stability of the companies providing the service in the country.

In accordance with the foregoing, based on Article 25, subsection 2) of the Water Law No. 276 and Article 5 of the Regulation for the Permit for Drilling and Water Concession for Self-Supply in Condominiums No. 35271-S-MINAE, the water use concession is extinguished at the moment public providers are able to directly supply potable water to the concession holder and the actual connection to the service is made.

For this, the Costa Rican Institute of Aqueducts and Sewers (AyA) or the competent operator must notify MINAE when infrastructure expansions are made, so that MINAE may notify users of the need to initiate the connection procedure.

The cited articles state:

Water Law No. 276:

"(...) Article 25.- Concessions shall be extinguished:

I. Upon expiration of the term for which they were granted;

II. Upon cessation of the object for which the use was intended; and

III.By expiry, which shall be declared administratively by the Ministry of Environment and Energy, after hearing the interested parties (.)". (Emphasis not in the original).

Regulation No. 35271-S-MINAE

"(...) Article 5: Extinction of the concession. In accordance with Article 25, subsection 2 of the Water Law, the water use concession shall be extinguished at the moment public operators are able to directly supply potable water to the concession holder and the actual connection to the service is made, in addition to the existing grounds that extinguish the concession. For this, the Costa Rican Institute of Aqueducts and Sewers or the competent operator must notify the Ministry of Environment, Energy, and Telecommunications when infrastructure expansions are made, so that the Ministry of Environment, Energy, and Telecommunications may notify users of the need to initiate the connection procedure (...)".

From the transcribed regulations, the obligation to connect to the aqueduct system of the public service provider when it is technically feasible to do so is again apparent. In the case of water use concessions granted to private individuals (for example, the case of wells), these shall be extinguished once public operators are able to directly supply potable water to the concession holder; for this, the corresponding provider must communicate the situation to MINAE so that the connection to the network and the extinction of the granted concession may be initiated.

Regarding argument 3 and 4: the appellant is informed that, in accordance with the provisions of the current tariff methodology for determining the Water Resource Protection Tariff, approved under resolution RE-0098-JD-2023, it considers the technical, financial, market, and legal information requirements to determine the corresponding public service rates for this tariff setting. Additionally, in accordance with the provisions of Law 7593 of the Regulatory Authority for Public Services, operators may request an ordinary tariff study at least once a year; furthermore, the IA has developed support mechanisms to guide operators on requests for individualized ordinary adjustments, should the service provider deem it appropriate.

It is also indicated that this report has conducted an analysis of the reality of the Asadas nationwide, and the proposal is focused on addressing the needs that were previously identified and documented.

In light of the foregoing, the opposition presented is rejected.

9. Opposition: Karen Campos Carmona, identity card 2-0718-0064. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email address: [email protected] In her argument, she states:

Problem with the Water Resource Protection Tariff (TPRH) · It should be clarified and specified that the ASADAS without this tariff will have a 100% increase, as variations in percentages may confuse users.

· The possible duplication of costs in the TPRH is questioned, since items such as administration, rent, office equipment, and intake analysis, which are already included in the aqueduct tariff, are included.

· Transparency is requested on how these costs have been calculated to avoid unjustified surcharges. Doubts about the Cost of Water Quality Analyses · It is considered that the amounts allocated to quality analyses in the TPRH are excessive.

· Experience with the Blue Flag Program is mentioned, where water analyses have cost 600,000 CRC, including microbiological and macroinvertebrate analyses.

· It is questioned whether these costs are already included in the aqueduct tariff and whether expenses are being duplicated unnecessarily.

Confusion in the Billing Methodology for Large Consumers · It is reported that the Intendancy's training on the billing methodology for large consumers was contradictory.

· There is fear that the applied charges are incorrect, which could generate sanctions or legal problems for the ASADAS.

· Priority is requested in clarifying this methodology.

Excessive Impact on Large Consumers · A case is mentioned where a condominium went from paying 4,000,000 CRC to 7,000,000 CRC and then to 24,000,000 CRC with the new rate.

· With the TPRH, this amount would increase by an additional 600,000 CRC.

· An urgent review of these rates is requested before their application on July 13 (.)".

Response:

The appellant's first argument generates confusion, where they state that it should be clarified and specified that the Asadas without this tariff will have a 100% increase. As is evident, the first year of the implementation of this TPRH proposal for the Asadas nationwide, as indicated in the report submitted to the Public Hearing, when applied for the first time, involves the registration, billing, and payment thereof by the users of the various Asadas nationwide. By way of example, it is clarified that the billing for an average residential consumption of 24 m3 would be approximately ¢1,100 per month, which is clearly not excessive and maintains a relationship with progressive consumption, efficient use of the resource, and its conservation.

Regarding the statement about the possible duplication of costs corresponding to the operation, maintenance, and administration of the Asadas, it is important to emphasize to the appellant that in the section of this report called IX Financial Analysis, it is clearly explained, with due technical foundation, that there is no duplication of these costs. The percentage allocated to TPRH corresponds to 3.45% of the total estimated costs for aqueduct, this to guarantee the recovery of 100% of these costs in the Asadas that provide this service and will implement the application of this TPRH proposal.

Regarding the doubts about the cost of potable water quality analyses to be carried out under the Water Resource Protection Tariff (TPRH), these respond to the objective of recognizing the costs for applying the parameters of the first (N1), second (N2), and third (N3) levels indicated in Decree 38924-S "Reglamento para la Calidad del Agua Potable," for each of the supply sources that the aqueduct has.

Hence, the costs associated with the TPRH ensure the resources so that the regulated entities can fully comply with each of the aspects required and requested by the regulator of public service providers.

For the definition of such costs, the market study conducted by the Water Intendancy for the Quality Verification Program was used. On this occasion, cost information for analyses from four laboratories that provide said service was available; the associated average cost is that indicated in this report in the section called 4. Quality Program.

Regarding the method of billing large consumers, as has been repeatedly indicated to the appellant through various official means, the regulatory and application context of resolution RE-0078-IA-2024 on the partial suspension of the current technical regulation must be considered. In light of this, the following is noted:

. From 07/17/2024 to 07/17/2025: the current methodology established by resolution RE-0078-JD-2024 applies.

. Starting 07/18/2025: the current regulation established in resolution RE-0013-JD-2024 applies.

The validity of this application may vary if the Board of Directors issues a binding guideline before the period established in resolution RE-0078-JD-2024 is completed.

And related to the last argument, the appellant does not detail sufficient elements to determine the disproportionality indicated; they only indicate random amounts without any technical foundation that can be addressed.

Therefore, the appellant's arguments are rejected.

10. Opposition: Leonel Arburola Flores, identity card 6-0280-0080. Observations: Speaks at the public hearing. Does not submit a written statement. Notifications: To the email address: [email protected] In his argument, he states:

Concern for the Rights of Indigenous Communities Inaccessibility to the public hearing: It is questioned whether the indigenous communities that are under the impact of these decisions, particularly those that have ASADAS or AyA aqueducts, have been duly consulted.

ILO Convention 169 is mentioned, which requires the free, prior, and informed consent of indigenous populations when decisions affecting them are made.

The speaker demands a clear demonstration of how the government has fulfilled this obligation, given that many indigenous peoples did not have access to the hearings or were not properly informed about the changes.

Concern over Arbitrary State Action It is reported that institutions, such as ARESEP, are acting arbitrarily and without fulfilling their responsibilities. The intervention expresses a lack of confidence in the decision-making process, accusing the government of not having fulfilled its responsibilities towards indigenous communities, which are one of the most vulnerable sectors.

Lack of Internal Audit and Consideration of Local Particularities It is questioned whether ARESEP has conducted an internal audit of all ASADAS and whether it has taken into account the sociodemographic particularities of the various areas of the country.

It is argued that the conditions of the different regions are not the same, and that the tariff model proposed by ARESEP does not reflect these differences, which could be unfair for some communities.

The speaker highlights the incongruence between what is preached from ARESEP and what actually occurs in the communities, especially in terms of costs and the efficient management of resources.

Criticism of the Tariff-Setting Methodology The inconsistency between the rate amounts and the management of water resources in the communities is mentioned, especially for those involved in the ASADAS.

The lack of consideration of local costs and the internal autonomy that many ASADAS have achieved in their water management is questioned, which contrasts with the imposition of rates that do not adjust to the reality of each community (...)".

Response:

Regarding what was stated about the rights of indigenous communities:

In relation to what was expressed by Leonel Arburola Flores, concerning his concern for the Rights of indigenous communities and inaccessibility to the public hearing, it is appropriate to inform him that the Regulatory Authority for Public Services (Aresep) has provided space for citizen participation in regulatory processes.

Among these are public hearings, where the interested population can present their position orally or in writing, in favor or against the topic under study.

With this aim, and in order to give participation to all inhabitants of Costa Rica, including indigenous communities, on March 17, 2025, at 5:15 p.m., the public hearing corresponding to the ex officio tariff study being conducted in file ET-104-2024, related to the Water Resource Protection Tariff (TPRH) provided by the Asadas nationwide, was held virtually (see in this regard the annex visible at folio 3481 of the file, concerning the publications made in the media La Teja, La Extra, and in the Official Gazette La Gaceta, where the virtual celebration of the public hearing was communicated).

The Constitutional Chamber has been developing the objective pursued with the public hearing as a mechanism for citizen participation, in such a way that the hearing is not a mere formality within the tariff procedure, but rather, in attention to the rights enshrined in Article 9 of the Constitution, it must allow effective citizen participation.

Precisely in Votes 2006-1796 of February 15, 2006, and 2006-01980 of February 17, 2006, the Constitutional Chamber analyzes the reform of Article 9 of the Political Constitution. In the latter vote, it indicated:

III. SPECIFIC CASE

In judgment No. 2005-14654 of 14:24 hours on October 21, 2005, the Chamber indicated that the public hearing established in Article 36 of the Law Creating the Regulatory Authority for Public Services involved a problem of fundamental rights protectable through the amparo process, specifically, the right to participate in public activity and decisions.

In this regard, it provided the following:

".the reform of Article 9 of the Constitution, by virtue of Law No. 8364 of July 1, 2003, has incorporated the principle of participation in the government of the Republic, thereby effecting a substantial modification in the form of power. The incorporation of this principle in Article 9 implies much more than a formal, purely adjectival matter of adding a new qualifier to the Government, understood as the set of public powers (see judgment No. 919-99); it is a substantial change in the design of democracy and radically expands the content of the democratic principle recognized in Article 1 and deployed throughout the Political Constitution, by adding the element of citizen participation to the principle and mechanisms of representation on which our democracy has traditionally relied. The Constitution, previously reformed, has created specific mechanisms for citizen participation, such as the referendum and popular initiative, still pending legislative development; on the other hand, various laws prior to the new constitutional text also contemplate other mechanisms through which individuals or groups intervene in public decision-making, for example, Article 361 of the General Law of Public Administration incorporates the hearing of entities representative of general or corporate interests in procedures for drafting general regulations; Article 13 of the Municipal Code contemplates plebiscites, referendums, and open town hall meetings.

Thus, the existence of these instruments at the infra-constitutional level are signs of the existence of participatory democracy. In particular, Article 36 of the Law of the Regulatory Authority for Public Services No. 7593 of August 9, 1996, provides that the Regulatory Authority shall convene a hearing, in which persons with a legitimate interest may participate to express their views, for which purpose it shall order publication in La Gaceta and in two nationally circulated newspapers, among other things, of requests for the ordinary setting of rates and prices for public services. After publication, a hearing shall be convened, within a period of thirty calendar days for the presentation of oppositions based on technical studies.

(...)

As of the aforementioned reform of Article 9 of the Constitution, the participation of citizens in public decision-making provided for in the Constitution and in the laws acquires the rank and force of a fundamental constitutional right, whose violation is subject to amparo (.)".

Likewise, regarding the objective sought by the public hearing, the Constitutional Chamber, through vote 015635-2006 of 10:52 hours on October 27, 2006, stated:

"(...) The public hearing that the Regulatory Authority for Public Services must hold in those cases where it processes a study for a rate increase for public services has the purpose of allowing the exercise of the community's right to participate in a matter that directly affects it, prior to the administrative decision being made, and, in this way, it constitutes a manifestation of the democratic principle (on this matter, see judgment No. 2004-09434 of 11:26 hrs. on August 27, 2004). It is not a simple formal requirement, such that it can be set in a way that renders the exercise of the right it seeks to protect nugatory, by being granted under conditions that impede or hinder the fulfillment of the objectives it is called upon to achieve, in protection of the right to information and citizen participation. Likewise, it must not become an obstacle to the issuance of a timely resolution of the proceeding

(...)".

On the other hand, in its Vote No. 2006-017403 of 19:01 hours on November 29, 2006, it indicated:

"(.) For this Chamber, the functioning of public services must be available to the inhabitants, and these services must adapt to the conditions of those inhabitants and not the contrary.

Now then, having reached this point, it cannot be denied either that today the majority of institutions suffer from obstacles in the face of user demands, which can end up distorting their very reason for being. In this case, the setting of public transport rates is a matter that concerns, although not exclusively, but directly, the Indigenous community of Talamanca, and not only because of their right to citizen participation, but by express provision of Article 6 of ILO Convention 169, that is, that conventional regulation that requires consulting indigenous peoples on administrative measures that may affect them. Even logic indicates that such a situation would be negative for the interests of that community, if the mechanisms, such as the public hearing, to achieve or persuade a rate increase in public transport, are held in a place far removed from that locality, as is this case where it was held in San José. By doing so, the respondent has violated the rights of citizen participation (...)".

By virtue of the foregoing and since the Constitutional Chamber has been emphatic in affirming that the public hearing cannot be granted under conditions that impede or hinder the protection of the right to information and citizen participation, as well as that it is negative for the interests of the linked community for the public hearing to be held in a place far from the community, this Regulatory Authority considered it appropriate to hold the public hearing at hand here, virtually in accordance with the instruction "AU-IN-04: Instructivo para realizar audiencias púbicas de forma virtual", issued by the Regulatory Authority for that purpose.

On the other hand, it is not considered that there has been any obstacle to the effective enjoyment and exercise of users' rights. Article 36 of Law No. 7593 grants the administered party the opportunity to present their oppositions from the moment the call for a public hearing is communicated until the very day of its celebration.

These are given equal treatment to those presented on the day of the hearing; that is, with the best attention to the arguments contained therein and with the greatest impartiality and justice.

Based on the foregoing, it is concluded that this Regulatory Authority duly consulted the indigenous peoples on the ex officio study corresponding to the Tariff for the Protection of Water Resources (Tarifa para la Protección del Recurso Hídrico) for the country's ASADAs, and consequently, the opposition is rejected.

Regarding the points called concern over arbitrary state action, lack of internal audit, and consideration of local particularities: it is indicated that with respect to the statements made by him regarding arbitrariness, lack of audit, and particular considerations, it is indicated that the proposal is supported by what is established in resolution RE-0098-JD-2023, which establishes the corresponding information requirements that support the adjustment proposal, which is duly grounded in the powers given by law to the Regulatory Authority for Public Services, which are based on technical and legal aspects for the development of the proposed tariff. Additionally, it is clarified that the IA conducted visits to different ASADAs nationwide throughout the year 2024, where the information corresponding to the tariff study was compiled, such that the particular aspects of the sample were considered.

Regarding the argument called criticism of the tariff methodology: it is indicated that this methodology clearly defines the conditions under which aqueduct service providers can generate the income that allows them to cover the necessary costs not only to cover water resource protection projects but also to cover the operating and maintenance costs corresponding to this activity.

The tariff methodology, approved under resolution RE-0098-JD-2023, was submitted to the corresponding citizen participation process, where all interested parties were called to present their arguments either for or against this instrument at the public hearing held on March 16, 2023. Therefore, this is not the appropriate procedural moment to make observations without technical foundation on the tariff methodology approved in resolution RE-0098-JD-2023 by the Board of Directors of the Regulatory Authority for Public Services.

For the reasons stated above, the arguments are rejected.

11. Opposition: Jose Ángel Cascante Matamoros, identity card 1-0783-0462. Observations: Takes the floor at the public hearing. Does not submit a written brief. Notifications: To the email address: [email protected] In his argument, he indicates:

Lack of Information and Adequate Summons by ARESEP Absence of official summons: The ASADA of San Pedro did not receive any formal summons to participate in the hearing on the rate increase, which reflects a lack of effective communication on the part of ARESEP.

Through a group of friends from other ASADAs and regions, the ASADA learned of the link for the hearing, and from there, they took charge of communicating it to the subscribers. This highlights the lack of transparency in the dissemination of information.

ARESEP has not adequately informed the citizenry about the decisions being made, which has generated confusion and unrest, since the communities perceive the ASADAs as responsible for the increases, when in reality these are the ones in charge of transmitting ARESEP's decisions.

Concern about the Impact of the Rate Increase on Vulnerable Communities.

The rate increase has been perceived as disproportionate, especially by people of scarce resources, who are the most affected by these rate hikes.

In places like San Pedro, a community with high poverty rates, the lower class is seeing how the rate increase affects their economic stability. This could have serious social consequences, as there is growing unrest and manifestations of aggression towards the members of the ASADA, who are wrongly seen as responsible for these increases. This type of situation generates widespread misinformation that fuels distrust in the ASADA and in those responsible for water management in the community.

Distrust in the Management of the Rate Increase The people of the community have begun to see the members of the ASADA's board of directors as enemies responsible for the increases, despite the fact that they have fulfilled their role of informing ARESEP about the mandatory changes in water management.

A call is made for ARESEP to reflect on the situation and consider the socioeconomic conditions of each community to apply a fairer and more proportional increase, especially for rural communities that depend on work in the countryside and whose ability to pay is more limited.

Proposal for a Proportional Increase According to Community Conditions The ASADA of San Pedro is willing to dialogue and make proposals for ARESEP to review the rate increases, suggesting that ASADAs be classified according to their investment plan, growth, and income. This would allow increases to adjust to the economic reality of each community.

The community is seeking a fairer solution, with a proportional increase that does not disproportionately affect people of low resources. Classifying ASADAs according to their characteristics could be a way to apply more equitable rates.

Defenses of the ASADA Members - Concern is expressed for the difficult situation that the members of the ASADA's board of directors are experiencing, many of whom are elderly people who have dedicated their lives to water management in the community. These members are being accused of being responsible for the increases, which is generating tensions and affecting the ASADA's image.

- Despite this, a call is made for reflection by all involved parties, recognizing that ARESEP must consider local realities and users' difficulties so that the tariff process is fairer and more equitable (...)".

Response:

Regarding his arguments, the following is indicated:

Lack of Information and Adequate Summons by ARESEP: in this regard, it is indicated that in compliance with the due process set forth in Law 7593, the summons corresponding to the holding of the public hearing circulated in nationally circulated media, such as nationwide in nationally circulated media like La Extra and La Teja on February 12, 2025. It was also published in the official gazette La Gaceta No. 26 on February 10, 2025. Therefore, the argument of absence of summons lacks merit, as it was published in the corresponding media to promote citizen participation.

Concern about the Impact of the Rate Increase on Vulnerable Communities and Distrust in the Management of the Rate Increase: for this argument, it is indicated and clarified that the adjustment proposal corresponding to the TPRH, for example, for a consumption of 24 m3 per month, would amount to approximately ¢1,100 per month. Therefore, it is indicated to the appellant that the adjustment is not excessive and maintains a relationship with the progressive consumption intended to give the corresponding signals for the conservation and efficient use of water resources. Regarding the distrust regarding the management of the rate increase, it is indicated that the proposal is supported by the provisions of resolution RE-0098-JD-2023, which establishes the corresponding information requirements that support the adjustment proposal, which is duly grounded in the powers given by law to the Regulatory Authority for Public Services.

Proposal for a Proportional Increase According to Community Conditions: as indicated in the previous argument, the tariff adjustment proposal is not considered excessive, compared to what corresponds to the public services tariff, where, as clarified in the previous point, consumption of 24 m3 would be close to ¢1,100 per month.

Regarding the last argument related to the defense of the ASADA members, it is indicated and clarified at the same time that this adjustment proposal corresponds to an initiative of the IA supported by its powers to carry out ex officio tariff studies based on tariff methodologies and competencies, where the citizen participation process and the corresponding technical foundation have been guaranteed.

For the reasons stated above, the arguments are rejected.

12. Opposition: Andres Bonilla Cedeño, identity card 1-1660-0126. Observations: Takes the floor at the public hearing. Does not submit a written brief. Notifications: To the email address: [email protected] In his argument, he indicates:

Problems with the Management of Large Consumers (Condominiums) - The regime for large consumers does not allow ASADAs to individualize water consumption within condominiums, which makes the adequate distribution of consumption among residents difficult.

- This especially affects condominium owners, who are impacted by collective consumption, without being able to regulate or distribute their consumption as people outside a condominium do.

- Condominium administrators, like the speaker, face this difficulty and feel that, by not being able to manage consumption individually, the rate increase affects condominium owners more abruptly.

Disproportionate Rate Increase for the Working Class - The rate increase is perceived as excessive, especially for those people with low levels of education or who earn a minimum wage, like many members of the working class.

- The speaker highlights that such an abrupt and disproportionate increase can generate great economic difficulty for many families, as water is a fundamental service for daily life.

- In a context of water rationing, the rate increase is even more complicated, since families already face difficulties due to scarcity and service cuts.

Call for a More Detailed and Fair Study - A call is made to ARESEP to conduct a more detailed and rational study of the rates, which allows for establishing more proportional and equitable rates.

- The objective is that the increase not be so abrupt, but rather better adjusted to the socioeconomic realities of the Costa Rican people, especially for those who depend on minimum wages and face difficulties in covering their basic needs (.)".

Response:

Regarding the arguments presented, it is indicated:

Management of large consumers in condominiums: in this regard, the IA has issued resolutions RE-0028-IA-2024 and RE-0008-IA-2025. Additionally, through RE-0078-JD-2024, the manner of billing condominiums for the potable water supply service was defined, which is by charging each housing unit in the manner established in the Por Tanto III of resolution RE-0078-IA-2024, in the sense that each consumption unit contributes the corresponding proportion to the total bill; this is determined by dividing the total consumption recorded on the meter by the number of residential units, in order to place the determined consumption within the current tariff structure and charge according to the respective block determined in resolution RE-0008-IA-2025 for the "Large Consumers Tariff (Tarifa Grandes Consumidores - T-GC)" or for the "Large Residential Consumers of Social Welfare Tariff (Tarifa Grandes Consumidores Residenciales de Bien Social - T-GCR-bs)".

Disproportionate Rate Increase for the Working Class: regarding this statement, it is clarified that the adjustment proposal corresponding to the TPRH, for example, for a consumption of 24 m3 per month, would amount to approximately ¢1,100 per month. Therefore, it is indicated to the appellant that the adjustment is not excessive and maintains a relationship with the progressive consumption intended to give the corresponding signals for the conservation and efficient use of water resources.

Request for a fairer tariff study: in accordance with the provisions of the current tariff methodology for determining the Tariff for the Protection of Water Resources, approved under resolution RE-0098-JD-2023, it considers the technical, financial, market, and legal information requirements to determine the corresponding public service tariffs for this tariff setting. Additionally, in accordance with the provisions of Law 7593 of the Regulatory Authority for Public Services, it establishes that operators may request an ordinary tariff study at least once a year. Furthermore, the IA has developed support programs to guide operators in requesting individualized ordinary adjustments, should the service provider deem it appropriate.

For the reasons stated above, the arguments are rejected.

POSITIONS SUBMITTED TO THE CASE FILE:

13. Supporting Position: Consejero del Usuario, represented by Mr. Jorge Sanarrucia Aragón, bearer of identity card 5-0302-0917. Observations: Does not take the floor at the public hearing. Presents a written brief (visible on folio 3494). Notifications: To the email address: [email protected], [email protected] In his argument, he indicates the following:

Tariff for the Protection of Water Resources (TPRH) The TPRH is a tool designed to guarantee the sustainability of water resources, ensuring their availability for future generations. It is based on principles of intergenerational responsibility, ethics, and legality. Its implementation seeks to generate the necessary funds to preserve and protect water sources through investments in infrastructure and monitoring.

Allocation of TPRH Funds The funds collected through the TPRH must be used exclusively for water conservation and efficient management projects. The need for transparent and regulated administration of these resources is emphasized, ensuring they are allocated solely to water sustainability programs.

Priority Investment Projects The TPRH proposal for the 2025-2029 period prioritizes three types of projects:

- Hydrogeological or hydrological studies to assess the situation of supply sources.

- Purchase of bulk meters (macromedidores) to monitor water use and reduce waste.

- Water Culture Programs, aimed at raising awareness and education on responsible consumption of the resource.

Impact on ASADAs and the Water Sector The implementation of the TPRH will benefit the ASADAs (Asociaciones Administradoras de Acueductos Comunales), which represent 25% of the water supply market. It will allow for improved operational efficiency and promote the regeneration of watersheds and aquifers. However, its application will require significant effort in inspection, advisory services, and follow-up by the Regulatory Authority for Public Services (ARESEP).

Standardization of the Tariff Structure It is proposed to unify the tariff structure of the ASADAs, aligning those without a Regulatory Quality Seal (Sello Regulatorio de Calidad) with those that have one. This will facilitate the administration and billing of aqueduct service costs and the TPRH, avoiding the coexistence of different tariff systems that could cause confusion.

Considerations for Implementation It is warned that the correct application of the TPRH will require an effort in training and technical support for the ASADAs. It will also be necessary to ensure that the collection is managed in accounts separate from the aqueduct service and that it is allocated exclusively to the stipulated projects (.)".

Response:

In this tariff adjustment proposal, the TPRH is an initiative of the Regulatory Authority for Public Services that promotes the conservation and protection of water resources, which seeks to finance these projects via tariffs. Currently, the IA promoted, through case file ET-104-2024, the proposal for a Tariff for the Protection of Water Resources to all ASADAs nationwide, with the aim that these operators have sufficient resources to have hydrogeological and hydrological studies, bulk metering (macromedición) at sources, and promote a new water culture. This is to incentivize the protection and conservation of sources nationwide. The idea is to have a national map of where we take water for human consumption, what condition it is in, and what risk of contamination it is exposed to, in order to have a baseline for defining subsequent lines of action.

Regarding the use of resources and the projects to be financed under this tariff, projects associated with water resource conservation are promoted. The tariff methodology for determining the Tariff for the Protection of Water Resources, approved under RE-0098-JD-2023, enables the possibility of opting for these initiatives, which are linked to improvements in the availability, quantity, quality, continuity, and conservation of the service. Therefore, in the exhaustive analysis carried out by the IA in reviewing the proposals and their respective costs, these are incorporated within this tariff proposal and distributed over the five years for which the tariff is set.

Additionally, related to the impact on the total billing of users with a consumption indicated by the Consejero del Usuario, as indicated in his submission, it is not disproportionate with respect to the total billing for the service. Furthermore, the proposal entails decreases for the periods between 2026 and 2029, guaranteeing the provision of the service at cost in the tariff proposal.

Regarding standardization (homologación), it is indeed sought to unify the tariff structure of the water sector in Costa Rica, generating signals in terms of price and consumption for the conservation of water resources. Additionally, it is indicated to the Consejero del Usuario that the Intendencia de Agua is promoting opportunities for consultations and training for the correct administration and application of both the tariff structure and the signals in the corresponding prices and billing.

POSITIONS NOT ADMITTED Position: Jeffry Muñoz Valverde, identity card 2-0512-0539. Observations: Does not take the floor at the public hearing. Presents a written position in the body of the email and does not attach a signed written brief (visible on folio 3487). He is warned by means of prevention order No. AP-0037-DGAU-2025 (visible on folio 3504), notified on March 24, 2024 (visible on folio 3503-3507), which he did not comply with. Position rejected. Rejection resolution No. RE-0061-DGAU-2025. Notifications: To the email address: [email protected] , [email protected] Position: Fabiola Quirós Nájera, identity card 2-0636-0483. Observations: Does not take the floor at the public hearing. Submits an unsigned writing (visible on folio 3501). She is warned by means of prevention order AP-039-2025, notified on March 26 (visible on folio 3508-3512), which she did not comply with. Position rejected. Rejection resolution No. RE-0062-DGAU-2025. Notifications: To the email address: [email protected]

XII. CONCLUSIONS

1. The availability of information was the main limitation in developing the proposal, so the data was based on information collected for the national aqueduct setting. In which, the IA collected the information corresponding to the market and financial-accounting information, associated with the operation of the ASADAs, through official letters, telephone calls, and visits by IA officials to build the database that supports the tariff proposal.

2. The IA, through the issuance of resolutions RE-0010-IA-2024 and RE-0011-IA-2024, established the information requirements on economic regulation, quality regulation, and implementation of the regulatory quality seal, which are fundamental for the information corresponding to this tariff adjustment proposal.

3. Once the information collection was completed, there is a complete database of 176 ASADAs, of which, upon performing a review of uniformity and consistency in the data, only 88 ASADAs are distinguished with data that meet the requirements for both market and financial-accounting information.

4. Additionally, this information was supplemented with data provided through the individual tariff settings that the Intendencia has processed for the Tariff for the Protection of Water Resources in ASADAs. Based on these 8 settings, an average cost allocation percentage of 3.45% was determined; likewise, quotations were used to determine the cost of investment projects.

5. In this sense, for the proposed operating, maintenance, and administrative costs, the weighted average of the selected sample of ASADAs was considered, multiplied by the allocation percentage identified in the previous point; with which, an average amount of ¢3,288,704.30 is determined for the five-year period.

6. Regarding the variable called depreciation expense, the depreciation expense of existing assets and the depreciation of new investments were considered, this in order for the resources to be used for the replacement of assets that reached the end of their useful life. On average for the 2025-2029 five-year period, this corresponds to an amount of ¢110,892.41.

7. In observing the different necessities for the water resource protection service identified in the Asadas, the execution of new costs and investment projects is proposed for this tariff study. These incorporate the contracting of a hydrogeological or hydrological study according to the need at the sources of the respective Asada, resources are incorporated for the purchase of 5 bulk meters and quality analyses for the sources that the Asada has, and, finally, the resources to carry out the "Water Culture" program for approximately 437 people per year.

8. Accordingly, the amounts proposed by the IA for the execution of new costs and additional investments for the five-year period from 2025 to 2029 are ₡6,037,503.06, ₡6,447,001.33, ₡8,619,382.53, ₡8,877,964.01, and ₡9,144,302.93 respectively.

9. On average, the total income requirements for the five-year period from 2025 to 2029 under this tariff adjustment proposal amount to ₡11,529,524.28.

10. The Asadas present water loss levels much higher than the average for operators in the region, which generates distortions in the service cost structure. Water losses can be divided into physical losses (from leaks and infrastructure damage) and commercial losses (such as illegal connections or measurement errors). These inefficiencies not only raise operating costs but also impact resource availability and service sustainability.

11. Excessive water losses force the extraction of larger quantities of the resource to meet demand, leading to overexploitation of aquifers and potentially causing problems such as water stress, contamination, and salinization.

It is crucial to reduce these losses to prevent unsustainable exploitation and guarantee access to water in the future.

12. Only a portion of the Asadas have conducted water capacity studies, reflecting a lack of adequate planning at the national level. Conducting hydrogeological studies and improving resource management is essential to guarantee water availability and long-term service sustainability.

13. The proposed average price obtained for the five-year period amounts to ₡45 per cubic meter.

14. The tariff categories and consumption blocks are established in accordance with the descriptions proposed in resolution RE-0028-IA-2024 and its amendments, thus including the following categories and blocks:

15. The tariff categories mentioned above are defined as follows:

- Residential: includes dwelling houses and apartments intended exclusively for permanent or long-stay accommodation (sleeping, basic needs and personal hygiene, preparing and consuming food).

- Large Consumers: Applies to all large consumers of the aqueduct service (vertical and horizontal condominiums, apartments, small housing clusters for both residential and mixed use) whose consumption is measured using a bulk meter by the service provider, in accordance with the current Technical Regulation: "Provision of the supply of aqueduct, sewerage, and hydrant services".

- Large Residential Consumers of Social Interest: This applies only to those Large Residential Consumers of social interest duly established as such by the Banco Hipotecario de la Vivienda (Banhvi) or by the State institution that holds such competence.

- Commerce and Services: Incorporates companies classified in the commerce or services sector, according to the classification of economic activities (ISIC code), where the aqueduct service is used in these establishments for the purpose of selling finished products or providing services. This category also applies to all government establishments, including the Central Government and community centers (halls), except for Caja Costarricense de Seguro Social hospitals, clinics, and Ebais, public companies, and decentralized institutions.

Furthermore, it must apply to the supply of potable water in motels, hotels, or short-stay lodgings (vacation accommodations), private hospitals and clinics, and other establishments related to for-profit activities that require a municipal license to operate.

Potable water consumption for common areas that have their own measurement.

- Industry: Applies to companies classified in the industrial sector according to the classification of economic activities (ISIC code) used by the Banco Central de Costa Rica (BCCR). The service is used for the purpose of manufacturing products from raw materials or assembling them for sale.

- Preferential: includes activities of a social nature, which are registered with legal status. This category comprises the following activities:

. Education: only for educational centers, belonging to the state public education sector (preschool education centers, primary education schools, special education schools, secondary education high schools, technical secondary education high schools, university colleges, universities, and public libraries, including facilities dedicated exclusively to public educational activity). Excluded from this category are restaurants, small eateries, student residences, photocopy centers, and others; even if they are registered under the name of educational entities, they shall not enjoy this tariff and must be placed in the corresponding category.

. Religion: applies to temples of legally constituted churches and whose service is registered under the corporate name that carries out the religious activity; any other activity not directly related to religious worship shall be excluded from the tariff.

. Child and Elderly Protection: covers homes and asylums for the elderly and/or persons with disabilities, daycares promoted by the State, and public children’s homes, which must be charitable and non-profit, legally constituted, and whose service is registered under the corporate name that carries out the activity.

. Care for the Indigent: includes establishments for the care of persons experiencing homelessness or drug addiction, which operate on a non-profit basis, are legally constituted, and whose service is registered under the corporate name that carries out the activity. Assistance and Relief Institutions: includes those whose purpose is social assistance for groups with scarce economic resources or the protection of people in case of disasters or crisis situations. All must be charitable and non-profit. In these cases, the tariff shall apply exclusively to buildings and other properties used expressly for the cited purposes.

. Hospitals and clinics: only applies to hospitals, clinics, and Ebais of the Caja Costarricense de Seguro Social.

- Fixed Services: Fixed services are those where subscribers do not have a hydrometer, and are therefore assigned a specific amount or linear fixed tariff depending on the type of tariff category to which they belong. This tariff will be provisional or temporary, for a maximum period until July 31, 2025, in order to allow providers to install hydrometers or suspend the service in accordance with resolution RE-0034-IA-2024.

- Bulk Water: purchase and sale of raw or potable water in large volumes, according to the following detail:

. Tariff-Conduction (T-C): interconnection for carrying out water purchase and sale transactions that take place in the pipeline section intended to conduct water from the source to the distribution tank or treatment plant.

. Tariff-Treatment (T-T): interconnection for carrying out water purchase and sale transactions that takes place downstream of the purification process, involving all the physical, mechanical, and chemical elements and processes (grit chamber, primary sedimentation tank, dosers, coagulation, flocculation, sedimentation, filtration, disinfection, among others) that will make the water acquire the necessary characteristics to be suitable for consumption.

. Tariff-Distribution (T-D): interconnection for carrying out water purchase and sale transactions that takes place in the pipeline system responsible for delivering water from storage tanks to users' consumption points.

16. For the bulk water tariff, users are identified in three broad categories, for which a detailed record of transactions must be maintained according to the stages of the value chain. These users, according to resolution RE-0028-IA-2024 and its amendments, are as follows:

. Water service provider: Buyer or seller of raw water (without purification) and potable water. In the case of water sales between providers, the conditions agreed upon by the parties must be respected, as well as the tariffs and service provision conditions set by Aresep.

. Private company: A legal entity not connected to its supply network that requires it, such as water transporters or anyone requesting it for temporary use, in accordance with the procedures and requirements established by the provider.

. Ports and airports: Vessels in national ports and airports for their provisioning.

17. In accordance with resolution RE-0028-IA-2024 and its amendments, the modality of water sales with discrimination by consumption time bands is incorporated through the hourly residential tariff, for which the corresponding charge for Water Resource Protection must be applied. For this, the following is defined:

- Hourly Residential Tariff (T-Re-H): A tariff under which subscribers can manage their water consumption according to the established schedule, and which also allows residential users of the regulated aqueduct service provided in the country to contribute the amount required for water resource protection. This excludes supply to common areas of residential condominiums that have individual metering.

. Definition of schedules:

Peak 1: between 10:01 and 13:00 hours Peak 2: between 18:01 and 21:00 hours Off-peak 1: between 05:31 and 10:00 hours Off-peak 2: between 13:01 and 18:00 hours Off-peak 3: between 21:01 and 23:00 hours Night: between 23:01 and 05:30 hours . Application: For the supply of water to single-family dwellings and apartments used exclusively as permanent accommodation, including the supply to common areas of residential condominiums.

It does not include the supply to common areas of mixed-use condominiums (commercial-industrial residence), recreational areas, motels, hotels, cabins or vacation houses, hospitals, hospices, combined services (combined activities: residential, commercial, and industrial), apartment buildings served by a single meter, nor establishments related to for-profit activities.

18. Regarding the Hourly Residential Tariff, this seeks to generate an incentive by changing consumption behavior among service users. For this, a tariff differentiation is incorporated according to the established time bands, such that for peak periods, the tariff of the highest block of the residential category is set; for schedules designated as off-peak, the tariff equals the average price; and, finally, for the night schedule, the price corresponds to that designated for the lowest block of the residential category.

19. The prepaid water sales modality is incorporated in accordance with the provisions of resolution RE-0028-IA-2024 and its amendments. For this, the following is defined:

-Prepaid Tariff (T-PP): The application of prepaid water tariffs is established, which are a way to ensure that users of the different tariff categories pay for their water consumption in advance. This can help reduce water waste and ensure that water is available for all who need it, as well as raise awareness among subscribers of their water consumption.

20. Regarding the tariff for the water resource protection service provided by the Asadas, this is distinguished by having only one component related to consumption volume, called the variable charge.

21. The estimation of market variables, namely subscribers and consumption, was carried out using the growth rate method. For this, an average growth rate of 7.13% in consumption in cubic meters and 8.03% in subscribers was identified within the sample, in accordance with the provisions of resolution RE-0034-IA-2024.

22. With respect to fixed services, according to resolution RE-0034-IA-2024, such tariff is established with a validity until July 31, 2025, a period in which operators must resolve the metering for said subscribers, as this practice violates the efficient use of the water resource.

23. For those Asadas that do not have a quality seal and maintain tariffs established in the "Por Tanto I" of resolution RIA-006-2017 corresponding to the "Meta" tariff schedule, the respective schedules are presented with the re-weighting of such tariffs for the aqueduct service under the new tariff structure. It is worth noting that this adjustment does not correspond to a new tariff setting, but rather to incorporating the proposed categories and blocks.

24. Likewise, for the individual tariff settings of the Asadas Lomas de Zurquí (Sewerage), Sucre (Water Resource Protection), Labrador (Aqueduct), San Pedro de Barva (Aqueduct), the re-weighted schedules with the new tariff structure are established, which respect the required revenues established in the corresponding settings (.)".

II.

In accordance with the foregoing resultandos and considerandos, and consistent with the merit of the case file, it is appropriate to set the Tariffs for Water Resource Protection (TPRH) for the Asociaciones Administradoras de Acueductos Comunales del País (Asadas); as hereby ordered.

Based on the powers conferred in Law No. 7593 and its amendments, in the General Public Administration Law No. 6227, in Executive Decree 29732-MP, which is the Regulation to Law No. 7593, in the Internal Regulation of Organization and Functions of the Regulatory Authority of Public Services and its Deconcentrated Bodies (RIOF) THE WATER INTENDANT RESOLVES

I.To set the Tariff for Water Resource Protection (TPRH) for the Asociaciones Administradoras de Acueductos Comunales (Asadas) that do not have individual settings for this service, in accordance with the following detail:

a. Range of 1 to 100 subscribers:

Asociaciones Administradoras de Acueductos Comunales (Asadas) Tariff for Water Resource Protection (TPRH) Range of 1 to 100 subscribers Tariff schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

b. Range of 101 to 300 subscribers:

Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Range of 101 to 300 subscribers Tariff schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Hourly Residential Modality Range of 101 to 300 subscribers Tariff schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

c. Range of 301 to 1000 subscribers:

Asociaciones Administradoras de Acueductos Comunales (Asadas) Water Resource Protection Service Range of 301 to 1000 subscribers Tariff schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

d. Range of More than 1000 subscribers:

Community Water Management Associations (Asadas) Water Resource Protection Service Range of More than 1000 subscribers Rate schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Community Water Management Associations (Asadas) Water Resource Protection Service Hourly Residential Modality Range of More than 1000 subscribers Rate schedule

Source: Own elaboration by the Intendencia de Agua, ARESEP.

e. Wholesale Water:

Community Water Management Associations (Asadas).

Wholesale water rate schedule Effective from April 1, 2025, until December 31, 2025

Source: Own elaboration by the Intendencia de Agua, ARESEP.

II.Define the rate descriptions for the implementation of the rate structure of the Tariff for Water Resource Protection (Tarifa para la Protección del Recurso Hídrico, TPRH) of the Community Water and Sanitation System Management Associations (Asadas) with the following detail:

- Residential: includes dwelling houses and apartments intended for the exclusive use of permanent or long-stay accommodation (sleeping, basic needs and personal hygiene, preparing and consuming food).

- Large Consumers: Applies to all large consumers of the aqueduct service (vertical condominiums, horizontal condominiums, apartments, hamlets for both residential and mixed use) whose consumption is measured by the service provider using a master meter, in accordance with the current Technical Regulation: "Provision of aqueduct, sanitary sewer, and hydrant services." - Residential Large Consumers for Social Good: This applies only to those Residential Large Consumers for social good duly established as such by the Banco Hipotecario de la Vivienda (Banhvi) or by the State institution with that competence.

- Commerce and Services: Incorporates companies classified in the commerce or services sector, according to the economic activities classification (ISIC code), where the aqueduct service is used for the purpose of selling finished products or providing services. This category also applies to all government establishments, including the Central Government and community centers (halls), except for CCSS hospitals, clinics, and Ebais, public enterprises, and decentralized institutions.

Furthermore, it must apply to the drinking water supply in motels, hotels, or short-stay lodging (holiday accommodation), private hospitals and clinics, and other establishments related to for-profit activities requiring a municipal license to operate.

Drinking water consumption for common areas that have their own metering.

- Industry: Applies to companies classified in the industrial sector according to the economic activities classification (ISIC code) used by the Banco Central de Costa Rica (BCCR). The service is used to manufacture products from raw materials or assemble them for sale.

- Preferential: includes activities of a social nature, which are registered with legal personality. This category comprises the following activities:

-Education: only for educational centers belonging to the state public education sector (preschools, elementary schools, special education schools, secondary education schools, technical secondary education schools, university colleges, universities, and public libraries, including facilities dedicated exclusively to public educational activity). Excluded from these categories are restaurants, small eateries (sodas), student residences, photocopy centers, and others; even if registered under the name of educational entities, they shall not benefit from this rate and must be placed within the corresponding category.

-Religion: applies to church temples that are legally constituted and whose service is in the name of the legal entity that performs the religious activity; any other activity not directly related to religious worship will be excluded from the rate.

-Protection of children and the elderly: covers homes and asylums for the elderly and/or disabled persons, state-promoted nurseries, and public homes for children, which must be charitable and non-profit, legally constituted, and whose service is in the name of the legal entity that performs the activity.

-Care for the destitute: includes establishments for the care of homeless individuals or those struggling with drug addiction, operating on a non-profit basis, legally constituted, and whose service is in the name of the legal entity that performs the activity. Assistance and relief institutions: includes those whose purpose is social assistance for low-income groups or protecting people in the event of disasters or crisis situations. All charitable and non-profit in nature, applied exclusively in buildings and other properties used expressly for the stated purposes.

-Hospitals and clinics: only applies to the hospitals, clinics, and Ebais of the Caja Costarricense de Seguro Social.

-Flat Services: Flat services are those where subscribers do not have a water meter, therefore a specific amount or linear flat rate is established for them according to the type of rate category to which they belong. This shall be of a provisional or temporary nature, for a maximum period of 6 months, allowing providers to install water meters or suspend service.

- Wholesale Water: purchase and sale of raw or potable water in large volumes, according to the following detail:

-Rate-Conveyance (T-C): interconnection for conducting water purchase and sale transactions carried out in the pipeline segment intended to convey water from the source to the distribution tank or treatment plant.

-Rate-Treatment (T-T): interconnection for conducting water purchase and sale transactions carried out downstream of the treatment process, involving all physical, mechanical, and chemical elements and processes (desander, primary sedimentation tank, dosing equipment, coagulation, flocculation, sedimentation, filtration, disinfection, among others) that will give the water the necessary characteristics to be suitable for consumption.

-Rate-Distribution (T-D): interconnection for conducting water purchase and sale transactions carried out in the pipeline system responsible for delivering water from storage tanks to users' consumption points.

III.Standardize the rate structure for the ASADAs that do not have the Regulatory Quality Seal from the Intendencia de Agua and that apply rates in accordance with the provisions of the target rate schedule of resolution RIA-006-2017; thereby adjusting their rates as follows:

Community Water Management Associations (Asadas) Aqueduct service rate schedule target schedule RIA-006-2017

Source: Own elaboration by the Intendencia de Agua, ARESEP Community Water Management Associations (Asadas).

Aqueduct service rate schedule target schedule RIA-006-2017 Flat Services

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Community Water Management Associations (Asadas).

Aqueduct service resolution RIA-006-2017 Wholesale Water

IV.To approve the tariff structure for the individual tariff settings of the Asadas Lomas de Zurquí (Sewer), Sucre (Water Resource Protection), Labrador (Aqueduct), San Pedro de Barva (Aqueduct); so that the tariff schedules with the new tariff structure are adjusted according to the following detail:

Asociación Administradora de Acueducto Comunal (Asada) San Pedro de Barva.

Tariff schedule for Aqueduct service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) San Pedro de Barva.

Tariff schedule for Bulk Water Sale service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Aqueduct service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Bulk water sale

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Aqueduct service

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Bulk water sale

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Aqueduct service

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Bulk water sale

Source: Own elaboration by the Intendencia de Agua, ARESEP.

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Aqueduct service

Asociación Administradora de Acueducto Comunal (Asada) Labrador, San Mateo.

Tariff schedule for Bulk water sale

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Lomas de Zurquí Tariff schedule for Sanitation Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Lomas de Zurquí Tariff schedule for Sanitation Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Sucre, San Carlos Tariff schedule for Water Resource Protection Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Asada Sucre, San Carlos Tariff schedule for Water Resource Protection Service Wholesale water sale

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Sucre, San Carlos Tariff schedule for Water Resource Protection Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Asada Sucre, San Carlos Tariff schedule for Water Resource Protection Service Wholesale water sale

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Sucre, San Carlos Tariff schedule for Water Resource Protection Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Asada Sucre, San Carlos Tariff schedule for Water Resource Protection Service Wholesale water sale

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Sucre, San Carlos Tariff schedule for Water Resource Protection Service

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

Community Water System Administrative Association (Asada) Asada Sucre, San Carlos Tariff schedule for Water Resource Protection Service Wholesale water sale

Source: Own elaboration by the Water Superintendency (Intendencia de Agua), ARESEP.

In compliance with the provisions of Article 245 in relation to Article 345 of the General Public Administration Law (Ley General de la Administración Pública), it is hereby informed that the ordinary remedies of revocation (revocatoria) and appeal (apelación), and the extraordinary remedy of review (revisión), may be filed against this resolution. The remedy of revocation (revocatoria) may be filed before the Water Superintendent (Intendente de Agua), who is responsible for resolving it; the appeal (apelación) and review (revisión) remedies may be filed before the Board of Directors (Junta Directiva), which is responsible for resolving them.

In accordance with Article 346 of the General Public Administration Law (Ley General de Administración Pública), the remedies of revocation (revocatoria) and appeal (apelación) must be filed within three days from the business day following notification, and the extraordinary remedy of review (revisión) must be filed within the timeframes established in Article 354 of the aforementioned Law.

NOTIFY AND PUBLISH