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A combination of water conservation efforts by Niagara residents and the loss of a number of major industrial users plus unrealistic high sales volumes equal deficits. Over the last six years, this problem has resulted in a deficit of $22 million.
In order to recover that shortfall, the Region has had to dip into its capital reserves, which ultimately leads to a deferral of capital projects, Treasurer Gord Lockyer told regional councillors last Thursday. “We’re picking our own pockets here,” Public Works Commissioner Ken Brothers added. “We have to ensure that our business is sustainable.”
The region treats and pumps water to eleven of the 12 area municipalities (Wainfleet is the exception), charging them based primarily on consumption. The remaining 25 per cent of each municipality’s water charge is a fixed amount based on the average of their previous three–year water demand. But with water usage declining by an average of five per cent a year, this equation is leaving the region with the short end of the stick. “If we’re on the short end of the stick,” Brothers said, “we have to find some way to fix that.”
That fix – previously planned in 2006 after a study and a joint committee of regional and lower–area municipality representatives – recommended increasing the fixed portion to 50 per cent in 2011. It would continue to be billed in twelve equal payments to the area municipalities based on their previous three year’s average water supply volumes. Lockyer said regional staff still supports this recommendation, as it “would reduce our exposure to shortfalls.” The remaining 50 per cent would be billed monthly based on the previous month’s metered flows to each municipality.
Brothers said it comes down to a balancing act between encouraging conservation and ensuring the region’s costs are fully recovered. “If we get it right, it’s about shifting,” he added.
A joint rate setting/bill methodology review committee, which is being led by the region’s corporate services and public works departments with representation from the area municipalities’ treasurers and public works officials, is investigating the idea of developing a standardized method of setting water and wastewater rates for all municipalities. After the region treats and pumps the water to the municipalities, they’re then responsible for delivering it to the end user’s tap.
But when it comes to the method the municipalities use to bill residents, it ranges from some who cover some of the cost through their tax levy to others who use a similar fixed versus variable calculation rate. Brothers said in the last eight years, seven of the municipalities have increased their fixed costs, while one has reduced their fixed costs. The majority are only about 10 per cent off from the region’s proposed equation, which means the financial impact wouldn’t be too great for the person or business paying the water bill.
But St. Catharines Mayor Brian McMullan said in his municipality, it could mean a 20 per cent increase, which would penalize low–income households and seniors. “I believe you’ll see that in other municipalities as well,” he said. A partially completed comparison chart compiled by the region shows that Welland, Niagara Falls and St. Catharines would experience the biggest increases.
Lockyer said the joint committee is talking about having credits or some other method of assisting those who can least afford the increases. Staff is also considering phasing the new equation in. McMullan said until these mitigation measures are in place, it will be difficult to get support from some municipalities, including his own. “I think individual councils will have to consider equity and fairness to residents…and I don’t think we’re there yet.”
The dichotomy of residents’ conservation efforts leading to increased instead of decreased water rates is not lost on staff. The problem, Brothers said, is we have a lot of infrastructure for a relatively small population—there are 11 water and six wastewater treatment plants —“so it’s hard to find economies of scale.” That infrastructure needs to be operated and maintained and new provincial legislation requires upgrades to the system, regardless of how much water flows through them. As well, the region is still treating 30 per cent more wastewater from municipal storm systems and sewers than it is treating water flowing to the municipalities.
Regional staff plan to have full figures for councillors for their September 23 meeting. Working with the municipalities, they hope to have more accurate forecasts available, a phasing–in strategy and a communications plan that can be implemented. Brothers said public works officials from the area municipalities are slowly “coming to a convergence of opinion” on a common rate structure, but it will ultimately be up to each individual council to support this. The current approach, however, results in confusion and inconsistent messaging to customers, Brothers said.
One idea that hasn’t been broached in the joint committee meetings, though, is a single–tier water and wastewater service, Brothers said, in response to a question from this columnist. But the idea has been raised in the past—a joint committee of regional and area municipal councillors in the late 1990s considered it and an independent study commissioned by the province recommended it—and at least one regional councillor plans to push for it in the next term, if re–elected. Currently, Niagara is one of only two or three areas in the province with a two–tier system.
In a media release, St. Catharines Regional Councillor Bruce Timms said that a single–tier system would “get rid of two tier duplication and reduce cost.” In an interview with View, Timms said there are two methods of doing it: having the region manage and operate the system or moving to a utility model. The utility model would probably be more popular, he acknowledges, but wouldn’t allow the same amount of councillor oversight that a regional model would.
He sees a single–tier water and wastewater model in conjunction with another of his objectives—governance reform whereby regional councillors would do double duty by serving on their local council and regional council. Without this governance reform, he predicts it will be difficult to implement a single–tier water/wastewater model. A triple–majority would be required to implement the single–tier model. Timms said achieving a triple majority “isn’t likely considering the current climate.”
Maybe the support should be coming from the governed. After all, a single–tier model would result in a lot less confusion for ratepayers and a uniform rate across the region. As well, Brothers acknowledges that while implementing a single–tier would cost money, there would be savings in about five years time. Let’s make this an issue in the municipal elections this fall. V
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