If you thought a utility rate review by the municipality wasn’t something worth paying attention to, you might change your mind once changes to come out of the process are implemented.
General manager of public works Andreas Comeau presented the municipality’s two utility rate services to the budget committee this month, and recommended some big changes for both.
Canmore provides municipal solid waste, i.e. garbage removal and recycling, as a utility and a review found the two should be separated when it comes to the budget process.
“We separated the two budgets because truly the one was subsidizing the other,” Comeau said. “Recycling was subsidizing solid waste.”
The new budget separates the two areas completely, with an increased revenue of $240,000 budgeted for 2016. That is comprised of $160,000 in rates (two per cent increase in waste rates and 10 per cent for recycling for residential ratepayers and 10 per cent recycling rate increase for commercial ratepayers) and increased commercial transfer fees from the waste transfer station of $75,000.
The total solid waste services budget for 2016 is proposed at $2.7 million, with an additional 0.5 full time equivalent position (FTE) added to the current 12 FTEs.
The other utility the municipality manages is water and wastewater services, and Comeau said the review of the service found the Town should also separate utilities and rates charged to better reflect a cost for use.
In other words, Comeau said residential water rates have been historically subsidizing larger commercial users and he recommended to council that change over time.
The water utility, added Comeau, is a lot simpler to manager than wastewater for the municipality, especially from a capital budget perspective.
“Most of our money, time and resources are on the wastewater side,” he said. “We live close to a clean water source, so our cost to provide clean water is minor compared to the wastewater side.”
Wastewater budgets for new infrastructure are related to growth and on unplanned replacements. However, any infrastructure related to new growth is also tied into the Town’s off-site levy bylaw, which sets out how new growth will pay for itself. Depending on where new residential development is proposed, off-site levies generate money over time to pay for capital costs and the municipality pays for it up front.
It is a model with many assumptions built into it, ones that Comeau said he would like to work with the development industry on updating.
“We want to go back and take a look at the different scenarios depending on the way things go with developments,” Comeau said.
But updating the off-site levies will depend on what comes out of a utility master plan scheduled for 2016 at a cost of $280,000. Council balked at the price tag, but Comeau said the specialized areas of expertise and engineers needed to complete the update to the plan “are expensive.”
In the past, water rates were determined by applying the same percentage increase to all categories of water usage (from 15 mm sized water metre to 10 mm). The new model, said Comeau, determines how much money the utility needs to operate, applies a more equitable distribution in rates and “it spits out what the rates should be.”
Other factors taken into consideration to determine the next year’s rates are how much should be transferred into reserve ($2.6 million in 2016), and increased revenues needed ($420,000 recommended by administration).
Within the water utility, 32 per cent is potable water use and 68 per cent wastewater. Each has a fixed and variable rate, and the variable is determined by the model.
Within the water utility, 95 per cent of users have a 15mm water metre, or are residential. The remaining five per cent is spread between various sizes of water metres up to 100mm. Those are the largest commercial users and Mayor John Borrowman noted those will be the accounts that see the greatest change in rate.
Comeau recommended gradually changing the rates over time, especially for the larger users, to phase in the increased cost.
“We know this is likely unattractive for us to pursue, but if the budget committee and council recognize our key recommendations, we can stage that over a couple of years,” he said.
General manager of municipal infrastructure Michael Fark said the old model resulted in residential water users and ratepayers subsidizing the larger ones.
“The residential will continue to subsidize the commercial until we get to a rate that is no longer doing that,” Fark said.
Without phasing the increase over time, the largest commercial users (22 accounts at 100mm water metre size) would see a 49.8 per cent increase, while residential metres would see a 1.8 per cent decrease. The first year of a multi-year correction, however, would see a 1.9 per cent increase for residential users (15mm), 34.6 per cent increase for 20mm, 19.6 per cent for 25mm, 1.9 per cent for 38mm, 23.8 per cent for 50mm, 20.1 per cent for 75mm and 17.2 per cent for 100mm.
