Minto compelled to adjust water rates as conservation results in revenue shortfall

The price of success appears to be higher rates for some users of this municipality’s water and wastewater systems.

The Town of Minto was compelled to adjust rates introduced just eight months ago in order to compensate for lower revenues as residents react to metered water charges by cutting usage.

Conservation was among the stated goals when residents in Harriston, Palmerston, Clifford and the Minto Pines subdivision were placed on metered systems beginning last summer.

However, on March 1 town council approved new water rates, effective April 1, that will show up on the June bill. A press release from the municipality states the new rates will result in an average residential water bill of $199.87 every other month.

“This bill is less than the estimated average for residential users of $214.45 bi-monthly provided at the July 2015 public meeting. It is also less than the flat rate bill of $212.50 paid by all users before meters were installed,” the release states.

A table of estimated rates indicates the actual bill for an average home for the past three billing cycles was only about $166.

“The new rates will be higher than what many water users paid the last three billing cycles. The problem is our estimates on water use after installing meters were too high,” the town states in the release.

“New rates are re-set so revenue from water and sewer users equals the cost of taking care of the systems as required by provincial law.”

At the March 1 meeting, treasurer Gordon Duff explained the province requires water and wastewater systems to be self-sustaining.

“We’re obligated to do it at cost recovery … although the expenses haven’t changed the revenue certainly hasn’t lived up to the projections that we have,” said Duff. “Basically we’re going under by $40,000 a month. It’s not good.”

Councillor Mary Lou Colwell said, “The good thing is that our consumption is down to cause that, but it’s not affecting our costs to run the system to the (same) degree.”

Mayor George Bridge  said, “What’s happened now is Gord’s had to take money out of capital, which we all know we’re on the hook for. If anything goes wrong that we don’t fix we’re going to be personally and criminally responsible, which people don’t realize.

“But the fact is that we have to show them that this money that we put away on delivery (charges) is for the capital … we have a plan that says we have to do it, so by taking it out of capital – we can’t do that.”

Over the last five years, the town has spent $8.5 million to maintain water and wastewater capital assets. This was paid for by around 2,100 residential and commercial users.

The town’s press release indicates 58% of the average bill goes to short- and long-term capital costs needed to keep systems safe and compliant with the law.

Around 38% of the average bill is fixed and about 62% of the bill is based on meter readings.

Reducing subsidization of non-residential consumers by residential users was among the goals when the town approved a rate structure devised by Watson and Associates Economists following a public meeting in June 2015. Duff suggested most residential users, who make up about 1,800 of the water and waster water system customers, should still come out ahead.

“Hopefully their bill will still be a little lower than what they were paying under the flat structure, but not quite as low as what they’ve been paying in the past few months,” he said.

CAO Bill White said, “What we did when we set the rate was try and set the average residential rate as close as possible to what they’d been paying previously. That was based on all sorts of research and conclusions about usage that the consultant brought forward.

“So in theory what the public was expecting was a bill around $212. 50 approximately … many people have enjoyed a lower bill than originally estimated so what we wanted to do was bring it back to what we originally estimated in the summer.”

“This was one thing that we were not sure about; there was no secrets, we all talked about it,” said councillor Dave Turton of the effort to set rates at cost recovery.

“We just can’t let it go on, we need to do something. Sometimes we do have choices on some of the decisions that we do make, but I don’t think we have any choice on this.”

Colwell said, “Our size is definitely a big part of our water rate – we have to do the same work and have the same equipment, and in fact three times in some cases, that the city of Kitchener would have to do. We have to maintain the same system that a large city would maintain in order to keep our water safe.”

Council agreed to the rate structure recommended in Duff’s report, and also agreed no public meeting is necessary.

“I don’t think we need another public meeting because we’ve talked about all this before,” said Bridge.

He told the Advertiser that although the town didn’t get the rates right on the first try, the switch to water meters was still the right move.

“It’s not a mistake, because basically if we’d kept going on flat we would have had to keep increasing because we would have been using 25 to 30 per cent more water, which we’re treating and doing everything else to,” he said. “So this is going to help us in the long run.”

 

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