Water rates to continue rising for next three years

Already facing a 14.3 per cent increase to pay for water and wastewater, city taxpayers could also be looking at hefty increases in 2012 and 2013.

The money is needed to balance out a $10.5 million funding gap the city has been mandated by the province to eliminate, making the water system a rate-supported, rather than tax-supported system.

“We need to close that gap in order to fund the full cost of operating and maintaining the water system over time. With the changes to the water rate structure we’re able to achieve increases to operating revenue to reduce that gap to approximately $7.5 million,” said Keri Marshall, the city’s environment manager.

“We plan, with an increase of rates this year of 14.3 per cent, which translates to a household increase of $8.07 per year, to further increase that gap to $4.6 million on an annual basis.”

The remaining difference will be closed over the next four years, she added.

What that means are projected water and sewer rate increases of 6.1 per cent next year and 7.1 per cent in 2013. Following that, barring unforeseen circumstances, inflation will dictate any future increases.

If the rates are approved during the upcoming budget process, a homeowner using 200 cubic metres of water this year would pay $774.10. That same owner would have paid $677.25 for the same amount in 2010. At 1.48 per cent of the median household income in Thunder Bay, that still puts consumers well within the four per cent zone that is considered affordable.

At $880 a year for 250 cubic metres of water, it places the city at the upper end of other Ontario cities, but considerably below municipalities like Sudbury, Sarnia, Windsor and Muskoka, whose residents paid $1,127 for that amount of water last year.

Coun. Ken Boshcoff said it's not really a lot to pay when one considers the alternative.

"When people have concerns about the cost of water, most of the planet does not get the amount of water we do," said Boschoff, after being told residents could fill about 1,000 250-millilitre bottles for about 40 cents.

But while Westfort Coun. Joe Virdiramo understands the requirement to balance the budget, and as reluctant as he is to see water rates jump, he’s equally concerned that at present not enough money is being put aside to fund future capital projects.

He sought confirmation that the city is thinking with the long-term in mind.

“I think we have to be cognizant of the fact that we’re not putting enough money away to rebuild in the event that we need to do,” Virdiramo said after a three-and-a-half hour meeting Tuesday night that included an hour-long presentation on the water and wastewater rate supported budget.

“If we don’t, we’ll be back in the same situation that we are right now. Our water rates will continuously go up. I think we have to be diligent that we do that, that we put money aside so that our infrastructure can be replaced when it’s needed.”

Northwood Coun. Mark Bentz was not happy to learn that capital expenditures, notably about 4.6 kilometres of water-main renewal and rehabilitation, were put on hold.

“If we’re deferring it, we’re ignoring it. We’re pretending it’s not there,” said Bentz, who earlier spoke out against a $15 million infrastructure deficit the city has been incurring each year.

Marshall said the financial plan, over a period of a number of years, will put aside funds that can be used to partially fund major capital projects.

“The plan that we’re proposing is that we not need to incur additional debt to complete our annual capital renewal programs,” she said.

While wastewater expenses were kept in check last year, coming in $275,000 under projections, revenue fell way short of the $14.9 million budgeted, at $13.3 million. That’s still about $2 million more than 2009 figures.

Water consumption targets were also off.

The city projected about 12.8 million cubic metres of water would be used, but in actual fact residents used 13.1 million cubic metres, a 2.4 per cent difference.

Operating expenses on the water side were $344,100 less than planned for and there was a positive variance of $290,000 over the $20.9 million target.