Centre Wellington residents should not expect water and sewage costs to drop anytime in the near future.
In a Nov. 23 committee of the whole presentation to Centre Wellington councillors, consultant Gary Scandlan suggested locals can expect significant cost increases over the next decade – much of it directly linked to replacing aging infrastructure, some dating back to the 1930s.
Scandlan, a director and managing partner with Watson and Associates Economists Ltd., explained the township’s water and wastewater rates study looks at current and future water and sewage needs, as well as ways to recover capital costs.
In addition, the study examines operating costs for the next decade before providing a recommendation for future rates.
Scandlan explained that legislation affecting water and sewage systems has changed considerably since 2000, noting, “Almost everything is guided by the Safe Drinking Water Act.”
He also spoke on the Water Opportunities Act 2010, which addresses innovative water, wastewater, and stormwater technologies, services and practices; prepares water conservation plans; and prepares for sustainability for these services.
He said the municipality must look forward at least six years – and as long as 10 years.
In its urban areas, Centre Wellington has about 6,200 customers for water and just under 6,100 customers for wastewater service. He said capital needs were developed by township staff based on 2015 budgets and forecast infrastructure needs for the next decade.
This year’s budget included $1.5 million in capital water projects, but the forecast for the remaining decade includes another $23.6 million in infrastructure upgrades. Over half of the projected costs are related to replacing water infrastructure – with the rest related to community growth.
Sewage system capital costs are considerably higher, Scandlan said. While only $1 million in wastewater costs are part of the 2015 budget, Scandlan estimates another $52.6 million in infrastructure projects are needed over the next decade. That includes new growth and the eventual construction of a new sewage treatment plant.
Noting “there is no magic bullet to funding these,” Scandlan said costs can be recovered through reserves, debt, operating budget transfers, grants, development charges, and revenue from rates.
He recommended continued discussions with developers to accelerate funding for the growth related capital projects.
In short, Scandlan said many parts of the infrastructure are at the end of their lifecycle, with parts of both the water and wastewater systems dating to the 1930s.
He explained the township’s existing water infrastructure is valued at $114.39-million, while wastewater infrastructure is valued at $125.41-million.
Scandlan said base charges are anticipated to increase 4% annually for the next decade, while volume rates are anticipated to increase by the same amount. Even so, Scandlan admitted this still leaves a sizable amount of growth-related debt until the latter part of the forecast period – “which may require specialized agreements with the development community to mitigate the impacts on wastewater rates.”
At the same time, recommended water base and volume rates would also be increasing by roughly 2.5% annually.
However, Scandlan said this translates from a water bill from $480 to $499 in the first year and roughly $19 per year after that.
Scandlan said the combined water and sewage charge increase would be roughly $2.50 each month – based on average residential use.
“We’ve got this down to a comfortable 4.5% increase every year for the next 10 years,” said Scandlan.
He added any municipality dealing with its infrastructure is looking at a similar scenario.
Councillor Fred Morris expressed concern that earlier discussions led council to believe that future rate increases would be more modest.
“What has happened?” Morris asked.
Scandlan said some of the increase is related to aging infrastructure. He noted household consumption has actually dropped, which will lessen the impact of the rate increase.
“There are a number of factors leading us to a reduced level of consumption,” he said, but a lot of the costs are fixed even if use per resident may be going down.
Scandlan noted development charges only contribute to new growth projects – or changes required as a result of new growth.
As committee of the whole, councillors endorsed recommendations of the study, which included full water and wastewater costs, and the financial plan provided.
Councillor Morris suggested the communications officer prepare a pamphlet advising residents on how to reduce water consumption.
“Perhaps a communication piece would help our residents understand how to reduce their consumption,” he said.
CAO Andy Goldie noted there is information already available on the township website.
