Report sees need for steady water, sewer rate hikes

Annual increases up to 5.2% over next decade to fund upkeep, city council told

Water and sewer rates are projected to rise 5.5 per cent in 2018, with annual increases in that ballpark expected until at least 2027.

Rates are projected to go up between 4.4 per cent and 5.2 per cent annually over the next 10 years under a proposed financial strategy to pay for the upkeep of infrastructure.

“Required rate increases were forecasted by service and will be minimized as much as possible and will be smoothed over the 10-year forecast period in order to provide predictability for ratepayers,” a city report says.

If council endorses the updated long-range financial plan pitched by the finance department, properties hooked into the municipal water and sewer systems would be paying more each year for drinking water and wastewater treatment, plus stormwater collection.

According to the report, the stormwater rate is projected to increase 13 per cent in 2018 and will continue to rise between 10 and 13 per cent each year for 10 years.

The city has switched the billing system so stormwater services are a separate line item on water and sewer bills for ratepayers and on tax bills for properties not connected to the municipal water and sewer system.

In the report, the city notes that the last forecast, in 2012, called for an average annual increase of 5.7 per cent to rates over 10 years, but the new forecast calls for average annual increases of 4.8 per cent over the next 10 years.

The city needs to spend $2.6 billion between 2018 and 2027, or about $240 million to $280 million annually, to keep the water and sewers in top shape. Nearly all of the money is for keeping the pipes and facilities in a good state of repair, while the rest of the money is for growth and regulatory requirements.

According to the city’s forecasts, $601 million of the funding would be borrowed money, with the rest coming from revenues, such as water and sewer bills.

While the city spends $42 million annually to pay debt and interest on water and sewer projects, that figure is expected to gradually climb to $77 million by 2027 — still within debt restrictions set by city council.

Revenues projected in the 2012 long-range financial plan were lower than expected because customers didn’t use as much water as expected, finance staff told council.

The city hopes a new billing structure, which will include a fixed price on bills in addition to the consumption price, will improve its budgeting forecasts.

The water and sewer system includes 8,500 kilometres of water and sewer pipes, two water purification plants, a sewage treatment plant, 92 pump stations and more than 5,800 culverts. The city says the total replacement value for the infrastructure is about $21 billion.

An asset review determined the water and sewer system is in fairto-good condition.

Council’s environment committee will review the long-range financial plan during a meeting on Tuesday.