Respect for the Customer

In 2005, SABESP’s Ombudsman - always with the purpose of ensuring a highly satisfactory an reliable service to the customer-citizen - acted in an innovative manner in the relationship with the other areas of the Company, invested in quality management and in the search for excellence and improved its information and control instruments. In customer relationship, the Ombudsman acts at a second instance and, therefore, its results reflect the primary service provided by the Company and are measured more by the gains of “contents” than those of “quantity”. If the Ombudsman figures are small in relation to the universe of customers, it means that the Company has been acting satisfactorily in both levels. The information below shall be seen under such point of view.


General Service Data

Until the end of 2005, the Ombudsman accepted and filed 9,356 manifestations received by telephone, email, letter and personally. From those, 9,034 (97.07%) were settled and ended until December 31, 2005. In Consumer Protection Agency – Procon, 1,566 manifestations related to SABESP have been filed, out of which 1,542 (98.46%) were settled until December 31, 2005. In the Distinguished Service Project - “Expressinho”, a partnership with the Small Claims Courts with the purpose of searching for “friendly” solutions for complaints of customers before the filing of the lawsuit, 93 cases related to SABESP have been filed, out of which 90 were concluded until December 31, 2005, with 59% of agreements.


Tariff Rates Adjustment

Since August 2003, SABESP has been readjusting the water supply and/or sewage collection tariffs according to the Tariff Rate Adjustment calculation. The result from the application of the formula for the period from August 2004 to July 2005 would imply in an adjustment of 11.12% in the water supply and/or sewage collection service tariff rates, out of which 3.94 percentage points are related to the increase of the Social Security Contribution Tax (COFINS) rate. In case such rate would not have increased, the readjustment index would be of 7.18%, very close to the accumulated Expanded Consumer Price Index (IPCA/IBGE) variation, which was of 6.57%.

In order to reduce the effects over consumers’ budget, SABESP Management decided to charge the increase of COFINS/PASEP (Public Service Employee Savings Program) over bills in two installments, one in 2005 and the remaining in 2006. Therefore, the readjustment in water supply and/or sewage collection service tariffs was of 9.00%, beginning on August 31, 2005.


Tariff Rates Restructuring

The assignment started on April 2004 for the restructuring of SABESP’s tariff rates ended in 2005 and was submitted to Company Management in the beginning of 2006 for evaluation.


Market and Concessions

The concession agreements for provision of basic sanitation services SABESP maintains with the municipalities of the State of São Paulo, which ended the 30-year term in 2005 and which will end in the first months of 2006, were amended to the middle of 2006, in the same agreement conditions. Such measure is required in view of the institutional changes affecting the sector.

Concurrently with the negotiations with the respective Municipalities and City Halls for amendment of the agreement terms, SABESP has been strengthening the relationship with Municipal authorities, on order to obtain subsides that will allow to set up future agreements.

In addition to Law No. 11,107, enacted on April 06, 2005, which provides about general rules for contracting of public consortia and establishes new relationship manners among the federation entities (Federal, State and Local Governments) and between the service grantor and concessionaire, and also must cause impacts on the sanitation sector, the “Proposed Law” No. 155/2005, currently in progress in the Brazilian Senate, and the “Proposed Law” No. 5,296/2005, written by the Ministry of the Cities, filed with the House of Representatives. It must be added that Bill No. 5296, proposed by the Federal Government, shall be in progress in the House of Representatives together with “Proposed Laws” 4,092/2004, 2,627/2003, 1,772/2003, 1,144/2003 and 5,578/2005, all of them providing about the same theme.


Lawsuits with Municipalities

From the lawsuits now in progress, related to the debts of municipalities for the wholesale supply of potable water, we highlight the success achieved in some filed lawsuits, such as: (a) against Guarulhos and Mauá, related to the payment obligation of orders of cash release in the amount of R$ 318 million; (b) against Mauá for the application of monetary adjustment for payment of a minimum tariff of R$ 0.65 per cubic meter (c) against Diadema, which obliged the seizure of 15% of Companhia de Saneamento de Diadema’s (Saned) revenues.


Corporate Management – Implementation of the Balanced Scorecard

Continuing the implementation of the management tool based on Balanced Scorecard principles, SABESP implemented in 2005 the Project Management Office - PMO, an organization comprised of people, processes and systems, supporting the teams in the management of the action plans of the Balanced Scorecard planned initiative portfolio. Fifty-four Projects/Programs were given priority and have been detailed, being made available on line in the Project Web Server for performance follow-up of the foreseen actions. Such portfolio of initiatives intended to transform the strategies into defined actions, together with the aggregated and coordinated pluri-annual proposals of cost budget, commercialization (sales/collection) and investment have been consolidated into the Business Plan for SABESP.

The implementation of the Decision Process also began in 2005, with the effective operationalization of the Balanced Scorecard Control Panel as a Corporate Management Instrument and the use of the Problemsolving Form. In August, the Corporate Balanced Scorecard breakdown process started for the Metropolitan Division and for the Regional Systems Division.


Quality Actions

In line with SABESP’s Future View to be recognized as a Company with “Worldwide standard of excellence in the provision of environmental sanitation services”, the Quality Management Excellence Program is being developed and implemented, with the purpose integrating the operations of quality, strengthening the impacts on the Company’s overall results.

This Program is compliant with the Strategic Guidelines and Objectives defined in the 2004-2005 Strategic Planning and with the Sarbanes-Oxley Act accomplishment parameters. It is based on the adoption and convergence of the excellence fundaments of the National Quality Foundation, and on the ISO/OHSAS certifications.

At the present time, SABESP holds twenty-three ISO 9001 Certifications, one ISO 14001 Certification (Environmental Management System, in the Sewage Treatment Plant, for the sewage treatment system of the Tietê River fountain, in Salesópolis) and three ISO 17025 Licensing.

In the Regional Systems Division service territory, one of its priorities was the implementation of the Quality Management System, as required by Standard ISO 9001:2002 for the Certification of the Division as a whole (Multi Site), focused on the “water” product processes, from its capture to the final disposal of sewage. In 2005, the 330 municipalities operated by the Company have been certified, granting to the Regional Systems Division a quality standard recognized worldwide.


Supply System Optimization

Several initiatives have been implemented for optimization of the Supply System, among which the following should be emphasized:

• Online Sabesp Auction - its use provided more agility and transparence to the bidding process, in addition to savings of R$ 41.5 million in 2005.
  
  
• Purchase of Electric Energy in the Free Market - the entry of SABESP in the free market of energy provided savings of R$ 25.6 million in 2005.
  
  
  

Electric Energy Cost Rationalization and Reduction

During 2005, the Energy Efficiency Program continued through agreements with the electric energy concessionaries Elektro and Bandeirante, in the accumulated value of R$ 11 million until 2005, invested by the concessionaires, the remuneration of the investment being made by SABESP with the value obtained in the electric energy bill reduction. Such program provided savings of R$ 3.8 million in the electric energy bills in 2005.

The optimization of the energy supply agreements with the concessionaires allowed savings of R$ 1.2 million in electric energy expenses in 2005, only in the São Paulo Metropolitan Region. In the municipalities that compose the Regional Systems Division, the “Program of optimization of the water production and reduction of energy consumption of the water supply systems supplied by deep tubular wells” has been implemented, being ranked third in the Award “Electric Energy and Water Efficient Management”, held by ABES/PROCEL/SANEAR.


Information Technology

In 2005, as regards to Information Technology, three major lines had priority in the operating area: (i) development of applications focused specially on the business support and SABESP management, such as the beginning of re-modeling of the Commercial System and of the Operational Service System, the start of development of the new São Paulo Metropolitan Region supply supervision and control system and the implementation of the Control and Results Followup System, based on the Business Intelligence technology; (ii) strengthening of the information security features, with bidding for contracting of room-safe box for the central data center; and (iii) actions focused on Information Technology Governance, with development of the adjustments required for compliance with the Sarbanes-Oxley Act requirements.


Asset Management

In 2005, the asset optimization process started, with the approval by SABESP’s Executive Committee and Board of Directors for the sale of properties in the amount of R$ 28.2 million, (R$ 2.3 million already sold in 2005). It has also been implemented the Property Information System, integrated to the State Government Property Management System, in which all SABESP’s properties become part of the system and of the management of water, sewage, electric energy, telephone and Property Tax (IPTU) expenses, among others.

Implemented in 2005, the Fuel Supply Integrated Management System currently comprehends 57% of SABESP’s vehicle fleet, forecasting the enlargement of the system for all vehicles in 2006. Such system promotes real time integrated management of the supply of each of the Company’s vehicles and optimizes consumption, resulting in savings of 12% or R$ 2.5 million per year. The fleet renewal and optimization program also started, with the sale of the old fleet and lease of 60 vehicles to São Bernardo do Campo.