City defends proposed water rate increases

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This article was published 20/07/2022 (1271 days ago), so information in it may no longer be current.

A proposal to almost double water and wastewater utility rates is mostly driven by a need to make up for past years’ deficits, re-establish reserve funds and purchase wastewater infrastructure improvements in the southwest, city staff told Brandon City Council at Monday’s meeting.

The city is looking to borrow $30 million for the wastewater project, and the rate increases are to pay those funds back, but the increases also account for ongoing upgrades to the water treatment plant and deficits incurred in previous years.

In a presentation on water and wastewater rates, general manager of corporate services Dean Hammond said the city’s wastewater treatment plant cleans the equivalent of two Sportsplex pools — 25 megalitres — worth of water every day.

Currently, the city charges $1.66 per cubic metre for water services and $1.63 per cubic metre for wastewater services.

If the proposed rate increases are approved, those would climb to $3.062 per cubic metre for water services and $3.05 per cubic metre services in four increases between now and Jan. 1, 2026.

Additionally, quarterly service charges would rise from the current $18 to $21.51 as of Jan. 1, 2026.

Those rate increases include a $0.172 per cubic metre charge to help pay for a new chemical building at the water treatment facility, a deficit rate rider of $0.16 per cubic metre for water services and a deficit rate rider of $0.21 per cubic metre for wastewater services.

For a family of four with a quarterly consumption of 46 cubic metres of water, the annual total paid for water and wastewater services would rise from $675 a year in 2022 to $1,211 per year as of 2026, Hammond’s presentation stated.

In a comparison between Brandon’s rates and other municipalities, Brandon is on the lower end. The current $169 quarterly bill for water services in the Wheat City is a lot higher than the $118 charged in Lethbridge, Alta., but comparable to the $176 in Dauphin, and far below Regina at $340.

Even after the increases scheduled between now and 2026, Brandon’s quarterly charge wouldn’t surpass Regina’s.

In a breakdown of what’s driving the growing costs, 34 per cent of the increases are due to budgetary and accounting requirements, 27 per cent represents transfers to reserves, 18 per cent account for ongoing improvements to the water treatment plant, eight per cent is due to rising water operating expenses and six per cent is due to wastewater operating expense increases, according to Hammond, and Dayle Lyle of Way To Go Consulting.

The increase in service costs, a city document says, take into account inflation, actual and budgeted revenues since 2017, a contingency allowance and population growth rates derived from the 2016 and 2021 censuses.

“We actually started this project in 2019,” Hammond said. “Unfortunately, COVID got in the way. We had to shift resources and divert this project for a while. The other piece is that during a pandemic, we didn’t want to impose additional rates on the public and there was so much other turmoil.

“Now we’re in unprecedented times with inflationary pressures and interest rates. Once this rate study’s in place, the goal is to get on a more regular track.”

Because the city is in a working capital deficit position for its water utility, the Public Utilities Board (PUB) requires the deficit rate rider put in place to recover from that position. These riders are usually active for three to five years.

Additionally, since the city is in a working capital deficit position, it can ask for the PUB to approve the increases on an interim basis. With the city expecting to recover from the deficit next year, a document explaining the increases states that this would mean Brandon could submit the increases through the normal process then.

The PUB also requires that municipalities keep a minimum working capital position of 20 per cent compared to utility expenditures. This is determined by taking the utility’s capital asset balance and removing it from the utility’s surplus, then adding its reserve balance and debt balance.

Through this calculation, the city has been in a working capital deficit since 2013.

After the first reading of the bylaw approving the rate increases was passed on Monday, the city must now submit the utility rate study to the PUB, which may elect to hold a public hearing or approve the increase.

A public hearing was held the last time the city raised water utility rates in 2016.

If the new rate increases are approved, they will start on July 1, 2023.

Hammond said a second utility rate study will be performed in time for the end of the scheduled increases to determine the next increases.

Coun. Shaun Cameron (University) asked Hammond what the impact might be from the rate increases on businesses. Hammond said it depends on their water usage, and he encouraged the city’s largest water users to provide feedback if and when the PUB holds a public hearing.

» cslark@brandonsun.com

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