KOROR, Palau — The Palau Public Utilities Corporation (PPUC) will implement new water and wastewater rates as outlined in its latest tariff but will not disconnect service for non-payment under a court-issued Temporary Restraining Order (TRO).
The TRO, granted on Feb. 14, prevents PPUC from cutting off water and wastewater services if customers fail to pay due to the increased rates. However, the order does not block PPUC from enforcing the new rates, which took effect on Feb. 1.
In response, the Senate passed Senate Joint Resolution 12-2, citing its authority to void newly established rules or regulations within 120 days. The resolution seeks to overturn the Palau Energy & Water Administration’s decision to raise water and wastewater tariffs, arguing that the increases are excessive and should be phased in gradually to ease the financial burden on residents.
The new rates were initially set to take effect on Feb. 1, 2025. The Senate attempted to prevent their implementation by filing for the TRO after PPUC began charging the higher rates.
PPUC’s financial records from 2016 to 2023 show that its Water Operations division has accumulated $34.9 million in operational losses, including $15.2 million in unpaid electricity bills. A Consolidated Water Policy, adopted in October 2024, described the utility’s water operations as financially insolvent, stating that current rates are too low to cover operating costs. The policy also noted that the division’s liabilities significantly exceed its assets.
PPUC’s water operations remain dependent on energy sector subsidies and financial aid from development partners. Without higher tariffs, the company warns that sustaining water and wastewater services will be challenging.
“Even with the new tariff, the rates do not fully cover service costs,” PPUC CEO Frank Kyotasaid in an interview.
The court will determine in an upcoming hearing whether PPUC must continue operating under the Senate’s resolution or if it can implement the higher rates without government subsidies. The ruling must clarify how the utility can balance its legal mandate to recover full-service costs with legislative oversight.