There might be no shutoff valve to stem the rising tide of potential water and sewage rate increases here and Palmerston resident Ron Ellis believes the municipality should be held accountable.
In 2004, the town commissioned a study to look at water and sewer rates for the municipality in response to increased costs as a result of the Walkerton tragedy.
It noted the Sustainable Water and Sewage Systems Act required full cost recovery through water and sewer rates. What ended up being passed by the town was a phase-in of increases.
Citing a June 2005 letter from the the town, Ellis pointed to a projected 2014 monthly water rate of $35 and sewage rate of $37.50.
However, by January 2008, his water rates already exceeded that amount and the sewage rates were coming close.
“To me, that study was a joke,” said Ellis. He added he could see modest increases to rates, but he contended the current rates have increased without explanation.
He believes the municipality should have done more to both explain and justify the current rates, since they have gone up so much from the 2005 estimates.
“No one gets the equivalent of wages doubling in five years. The town should be held accountable and provide residents with an explanation,” he said.
Ellis added “even if the rates had to double, we should have received a letter of explanation.” He also questioned the validity of the original study.
“Why was the case study so out to lunch on the estimates?” Ellis suspected a substantial amount of money was spent on the consultant.
Public meeting was held
However, the increased rates are not just something out of the blue.
In 2008, Minto held a public meeting to look at revamping those rates. At that time, then mayor David Anderson said there have been a lot of changes in the past five years in the area of water and wastewater costs.
Minto undertook a full cost water and wastewater rate study, which resulted in a 10-year rate forecast to recover anticipated capital and operating costs of water and wastewater services.
Increased costs
However, the town experienced lower than expected revenues, resulting from increased capital needs and the transition from a non-metered system to meters.
As a result, council again brought in Watson & Associates to review the water and wastewater rate forecast. Andrew Grunda, of Watson & Associates, said capital needs forecasts had increased dramatically over what was identified in the 2005 study for water and wastewater.
In water costs, the study projected a $4.5-million increase (62%), while wastewater capital costs had jumped $7.7-million (114%).
In addition, costs predicated by the Safe Water and Clean Drinking Water Acts had a further impact in the areas of monitoring of water and sewage works in the town. Also, water costs were projected to increase from $1.1-million to $1.2-million by 2014.
At that time, it was stated that if the full extent of the new proposed rates were implemented flat water rates could jump from $33 per month to $54.38 in 2014, and sewage rates rise from $27.50 to $78.33 over the same period.
“In short, at the end of the year the municipality needs to ensure that it can collect enough money to sustain the current assets and provide for future needs,” Grunda said.
He explained the study considered those needs and to cover those needs, “a substantial amount of revenue is required.”
He projected sewage rates increasing at roughly 20% per year between now and 2014, with water rates also increasing, but at a slightly lower rate.
Not all municipalities implement full cost recovery for water and sewer rates – but Grunda said all municipalities are required to file financial plans outlining the full costs and how it plans to address those costs.
Grunda said Minto is taking a proactive approach by looking at this earlier. Typically the rates are reviewed every five years.
Minto applied for Canada Ontario Municipal Rural Infrastructure Funding grants three times for assistance with water and sewage-related issues, only to be turned down every time. He added sometimes the shear size and density of a municipality can affect costs.
Grunda said larger urban centres with integrated water and sewage systems can sometimes integrate larger projects at lower costs, unlike municipalities such as Minto, which has a number of small systems over a wide geographic area.
Grunda pointed out that at the end of the day, the municipality still needs to collect the same amount of funds to sustain its water and sewage treatment system.
Current situation
Minto treasurer Gord Duff told the Advertiser water rates are going up 14% per year, on average, while wastewater rates are going up 19% per year. In 2011, the monthly rates are $42.50 for water and $46.50 for sewer.
Duff said cost recovery for water and sewer projects is something mandated through provincial legislation. But, he said, the rates are not just about covering today’s costs, but being prepared for the future.
Duff pointed to the fact the town had to cover the costs of three water towers, without infrastructure funding assistance.
“Water and sewer projects are extremely capital intensive,” he said.
He added the costs are not necessarily related to the volume of water or waste, but being able to bring the service to the customer. And with three separate water and sewage systems paid for by only 6,500 urban residents, the costs can add up quickly (only urban ratepayers incur water and sewer rates).
Duff said increased capital costs is something most municipalities are facing, in addition to the provincial mandate for cost recovery via water and sewer rates. Even now, the municipality continues its water quality monitoring and internal audits.
Another potential capital cost on the horizon could come from lead tests.
Duff said while the town fared well under the initial set of tests, another round of tests is anticipated shortly.
