THUNDER BAY – Freezing water rates in the short-term will lead to a flooding of increased costs in the future, city administration advised when one councillor contemplated whether reversing a proposed increase.
Water rates generated discussion as Thunder Bay city council met Wednesday night to continue combing through the preliminary municipal budget, which include a review of the rate-supported financial plans.
The proposed three per cent increases to water rates and the sewer surcharge would bring the annual estimated total cost for both services to $1,186 for the average household in Thunder Bay, a nearly $35 increase from 2018.
Coun. Brian Hamilton asked whether lowering water rates should be on the table.
“It’s hard. People are having a hard enough time paying their taxes, let alone these water bills that are going to go up three per cent every year,” Hamilton said.
“I don’t care if we’re in the middle of the spectrum. I don’t know if I’m even comfortable with that.”
The estimated annual cost for the average household, based on consumption of 200 cubic metres per year, amounts to 1.3 per cent of median household income, still well below the industry standard of four per cent. Combined, the two services are calculated to cost $3.25 per day using the same formula for the average household.
City environment division director Michelle Warywoda said that the city’s residential rate is in the middle of the pack for Ontario municipalities, while the industrial, commercial and institutional rate is among the lowest.
Warywoda made it clear that any attempt to save money now will cost more down the line.
“We need to provide it for public health protection, fire protection and support for the local economy,” Warywoda said, adding rates had increased by as much as 14 per cent in previous years before efforts were made to develop sustainable, long-term plans.
“If we do lower rates, there is an effect where we will be paying more later for capital renewal and higher interest costs because we are still having to borrow on the capital renewal program.”
The average age of the city’s water pipes is 46 years, while the average age of wastewater pipes is 55 years.
The increases follow the long-term Water Authority Financial Plan that had been approved by the previous council last year. That plan calls for water rates to go up four per cent in 2020, followed by a 3.5 per cent hike in 2021 before returning to the three per cent that has been consistent for the last few years.
“We have an abundance of water but it is expensive to treat. We have a state-of-the-art plant at the Bare Point water treatment facility,” Warywoda said.
“It does cost a lot to operate that plant and we do have a large piping network across the city. We have a spread out population and so there is a lot of cost there to renew that infrastructure and maintain and operate that infrastructure. We also have a declining consumption, so we have this fixed cost but we are seeing that people are conserving their water. We still need to pay to operate and maintain those assets.”
Coun. Albert Aiello asked whether council could generate revenue by selling water.
Charles Campbell, the city’s manager of central support, replied that the city does sell water to its residents.
“They get it for a substantially lower rate than the cost of bottled water that anybody might go to a store and buy,” Campbell said.
“I think from the point of view of people developing the system and maintaining it, that’s one of the frustrating parts we struggle with. We are in the business of selling what is many people consider to be the best water in the world and the challenge is that people don’t fill up their own bottles and take it somewhere from their taps.”
