Erin water rate plan relies on strong population growth

ERIN – Town council approved a water rate bylaw on Dec. 17 that will decrease the average annual residential bill by 7% in 2020, but increase rates by 3% annually for several years after that.

Gary Scandlan of Watson and Associates presented the report, but warned councillors the fee strategy would only produce sufficient revenue to cover needed upgrades if the town experiences a relatively high rate of population growth.

“If there’s no growth, you may have to increase the rates,” said Scandlan, who on Dec. 3 laid out three options for council. The first had no rate decrease in 2020, the second had a 7% cut and the third a 14% cut, but all had 3% increases starting in 2021.

After the previous rate study, the town froze the monthly base charge at $15.39 and the volume rate at $3.99 per cubic metre for the years 2016 through 2020.

The studies are normally completed every five years, but this one was done after four years to coordinate with a range of initiatives related to growth, said communications officer Jessica Spina.

Councillor Mike Robins was the only member to vote against the new fee structure, saying he is concerned about risks related to insufficient revenue.

“We may not be investing enough to ensure delivery of clean water,” he said, noting that if growth is low, reserves could be depleted.

“This could constrain us from spending and create a safety risk.”

The town currently has about $2.4 million in its water lifecycle reserve. For existing infrastructure only, the required investment would be $3.6 million by 2029.

With low growth, the lifecycle reserve would contribute $2.9 million; with medium growth $3.7 million and high growth $8.1 million.

Scandlan assured Robins the 7% rate reduction is “doable” and councillor John Brennan said if growth does not come when expected, council is free to change the water rates again.

“We have to watch how the growth breaks out and react,” said Brennan.

The new fee structure comes into effect Jan. 1, achieving the 7% cut by combining a 10% decrease to volume rates with a 3% annual increase to the base charge. The average customer will receive an average annual savings of $68.56.

Erin operates two water systems with relatively few customers. Even with the reduction of the average annual bill from $942.78 to $874.22, Erin water users will still be paying more compared to other area municipalities, where the annual averages are in the $540 to $670 range.

Scandlan said the others will likely have increases in the 5 to 10% range in the coming years.

“The town’s water rates are conservatively set in comparison to our neighbouring municipalities and will continue to build up the town’s water reserves, while providing residents with cost savings,” said Mayor Allan Alls.

The total replacement value of the town’s water infrastructure is $38 million.

In a low-growth scenario, the overall required investment in the system including growth would be $7.5 million, with $1.4 million from development charges.

In the high-growth scenario, expenditures of $32.5 million would be needed, with $24.4 million from development charges.