Wednesday, April 1, 2009

Public Utility for Regional Water & Waste Water?

During some Regional meetings last week, I was reminded of the quote, “Water, water, everywhere, nor any drop to drink” from Samuel Taylor Coleridge’s “Rime of the Ancient Mariner.” There we were, after several deferrals and much debate, discussing the Regional water and waste water rates for 2009.

You see, since the fall the Region has been working on a new way to charge for water and waste water services.

The Regional side of your water and sewer rates pays for both the water and sewer treatment costs and any delivery costs to the 11 Towns, Townships, and Cities that have retail water services. In fact, last year 75 million cubic meters of water was treated at the Region’s six treatment plants. In addition, 91 million cubic meters of wastewater was treated at nine sewage treatment plants.

But, essentially, the Region is the wholesaler of water to the municipalities. Up to this year, the price was based on a three-year rolling average of a Town’s or City’s usage. However, under that system, the Region accumulated an $18 million deficit over the last five years for water charges! (That’s on a base of an annual water budget of approximately $41 million.)

How could that happen?

Well, in some respects, it’s really some good news. You see, water consumption has significantly decreased over the last number of years. We were told that the drop in consumption was due both to increased conservation by users (great work everyone!), and to wet summers in 2008 and 2006. As the numbers show, the trend is quite clearly for decreased water usage. (And, I argued that the Region clearly wasn’t budgeting properly for the decrease!)

So, the Region proposed instituting a 50% fixed water charge because the service has “between 60% and 90% fixed costs.”

Various municipalities – the retailers of the water to you and your neighbours – disagreed. They argued that such a high fixed-price component would jeopardize efforts to conserve water.

Finally, after many meetings over many months, a compromise was reached.

First, the fixed component was set at 25% for the next two years.

Second, staff will present options for linking the “wholesale” and “retail” components together. We suggested researching a common regional water rate structure, or even a separate, public utility model for regional water delivery! While this may take some time, I wanted you to know about the direction we are investigating at the Region.