ERIN – Town water customers in Erin village and Hillsburgh will likely get a rate reduction in 2020, followed by increases of three per cent per year until 2029.
Councillors have not made a final decision on the new rates, but were asked to state their preferences on Dec. 3 after receiving a preliminary water rate report by Gary Scandlan of Watson and Associates.
He laid out three water pricing options, as well as three population growth scenarios, so council could see the implications of their choices. A water rate study is required at least every five years.
From 2011 to 2014 the Erin water volume rate increased by 20% per year, to pay for upgrades to the system and build up reserves; in 2015 it rose 5%.
From 2016 to the present, the rate has been fixed at $3.99 per cubic metre. Most customers also pay a monthly base charge of $15.39.
Option 1 in Scandlan’s report calls for no change in 2020, followed by 3% increases to both the base charge and the volume charge, continuing every year until 2029. Mike Robins was the only councillor to favour this option, which would result in the highest build-up of reserve funds.
Option 2, favoured by Mayor Allan Alls and councillor Rob Smith, would see water bills reduced by 7% on average in 2020. The base charge would rise by 3%, but the volume rate would be cut by 10%. From 2021 to 2029, base and volume charges would still rise 3% every year.
Option 3, favoured by councillors John Brennan and Jamie Cheyne, would reduce water bills by 14% on average for 2020. The base charge would rise by 3%, but the volume rate would be cut by 19%. From 2021 to 2029, base and volume charges would still rise 3% every year.
Council voted 4-1, with Robins opposed, to have Scandlan come back with a more detailed report based on option 2. The mayor also asked for additional calculations blending options 2 and 3.
Even with option 3, the cost of water in Erin would still be substantially higher than in neighbouring municipalities, partly because the town runs two water systems with relatively few customers (1,481).
The average household uses 190m3 per year. Option 2 would cut the average annual household cost from $943 to $874 in 2020. Option 3 would cut the average annual cost from $943 to $808 in 2020.
That compares to about $670 in Minto (2,204 customers), $640 in Orangeville (9,849 customers), $590 in Guelph-Eramosa (1,635 customers), $590 in Centre Wellington (6,192 customers), $540 in Wellington North (3,247 customers) and $415 in Guelph (42,300 customers).
With Option 1 and a low growth scenario, the town would end up with a water lifecycle reserve balance of $4.1 million by 2029. With medium growth it would be $5 million and with high growth, $9.9 million.
With Option 2, low growth would produce a reserve balance of $2.9 million by 2029. With medium growth it would be $3.8 million and with high growth, $8.1 million.
With Option 3, low growth would produce a reserve balance of $1.7 million by 2029. With medium growth it would be $2.5 million and with high growth, $6.3 million.
Erin water reserves totaled $2.8 million at the end of 2018, including $2.5 million in the water lifecycle reserve. Major expenses are projected in coming years, with many water mains dating back to the 1950s. Replacement has been delayed so that water and wastewater lines can be done at the same time.
The town has contracted the Ontario Clean Water Agency to operate its system. Scandlan said the cost of water operations is rising at 2% per year, but the cost of supplies and utilities is rising at 5%.