Water Rates

Sticker shock is the best way to describe my first reaction to the suggested water rate increase. The reason for the sticker shock? The debt servicing charge on the Water Tower and EK Water line, which benefited from a low interest program set up by the provincial government, is about $1,152,355.35 including interest per year and rates have not been adjusted since 2011.

Paying for the water tower and water line is not cheap. Equally divided between every water meter means each water meter needs to contribute $155 4 times (3 month billing cycle) a year or $620 per year to pay the $783,000 in principal plus $369,355.35 for a total of $1,152,355.35 to service the debt on the water infrastructure. Or, should there be a separate rate for residents and business such as $135 for residents and $185 for businesses? On top of this is the consumption charge.

Another factor to consider is the reserve level for utilities. Because rates have not been raised since 2011, and costs have increased, the reserves have been depleted much faster than is prudent. Approximately $1 million needs to be paid back into reserves. The question Council had for Administration is how quickly does the reserve have to be paid back? What is the risk if we pay it over 3 years rather than 2 years?

Administration has been developing some options for Council since the last meeting during which a 1st Reading was given to the new rates. As a result some of the new options, in broad terms, include:

1. the original presentation by Administration during the last meeting based on tiered rates;
2. slightly lower consumption rates, tiered, so that the reserves are replenished at a less aggressive or slower rate.
3. a 50% debt repayment fee for every water meter plus a lower tiered consumption rate; and
4. a 100% debt repayment fee for every water meter plus a lower tiered consumption rate.

These are some of the options being worked on. I have not seen the numbers they are using except the debt repayment fee.

Here is how the tiered rates work.

Residential

• two tiers
• 0 -25,000 gallons per 3 month cycle is one rate,
• more than 25,000 gallons per 3 month cycle means an extra charge only for the water used above 25,000.

As an example if you use 26,000 gallons in your 3 month water bill cycle you will the base rate on 25,000 gallons and the higher rate on 1,000 gallons.

Commercial

• five tiers

1. 0 - 50,000 gallons per 3 month cycle
2. 50,001 - 200,00 gallons per 3 month cycle
3. 200,001 - 500,000 gallons per 3 month cycle
4. 500,001 - 1,000,000 gallons per 3 month cycle
5. more than 1,000,000 gallons per 3 month cycle

• each level is to be at a different rate and the rate is only charged for water used at a particular level.

Consider, if a business uses 300,000 gallons during their 3 month water cycle then they pay the base rate on 50,000 gallons, the second rate on 149,999 gallons and the third rate on 99,999.

Considerations

• What is a fair method to charge?
• Should low users pay the same as high users given that the more water used does not make it cheaper to produce? (do low users subsidize high users?)
• What share should residents pay?
• What rate reflects a charge level that encourages business growth and water conservation?

These are some of the things we are considering with the new water rates.

There is a public meeting during Council Monday evening. Please attend if you would like to learn more, have questions, or want to express a concern.

I will be out of town with my family and unable to attend. Normally I would ask you to email me you thoughts but I will not be checking emails or messages while I am gone; my wife has laid down the law.