White Rock closes deal on water utility
City pays $13.4 million to gain control over its system after two years of acrimonious talks
It took four years of difficult, secretive and sometimes acrimonious negotiations, but the City of White Rock has finally agreed to pay $13.4 million for its water utility.
That’s $1.6 million less than the price estimate outlined in a confidential corporate report from 2013 that will be released today.
“It was pretty frustrating,” Mayor Wayne Baldwin said of the negotiation process. “In the end, I know we’ve done the right thing so I’m happy about that, and I’m happy our numbers turned out to be correct and we were actually able to bargain a good price and a fair price for the residents.”
White Rock is one of the few municipalities in Metro Vancouver that don’t receive their water from the regional district. The city’s water comes from seven wells that dip into the Sunnyside Uplands Aquifer.
In 2010, E. coli was detected in one of White Rock’s wells and a boil-water advisory was issued. EPCOR White Rock Water Inc., the water utility owner at the time, added chlorine to the well to rectify the problem, however Fraser Health ordered that the utility begin treating all of the city’s water.
Three years later, in early 2013, the city began exploring where it should be getting its water and whether it would be worthwhile to buy the water utility.
“We just felt something like water should have been in the hands of the public as opposed to a private enterprise,” said Baldwin. “They were oriented toward the business as opposed to us being oriented to the public health.”
City staff prepared a business case that outlined the expenses associated with the status quo, buying the utility and using the existing water source or buying the utility and moving to Metro Vancouver water.
If EPCOR kept running the utility, residents were expected to see a spike in their water bills thanks to upgrades, chlorination and arsenic filtration, which were budgeted to cost $21 million.
It was estimated that it would cost, at minimum, $15 million to buy the utility, plus $500,000 in legal and other one-time startup costs. If the aquifer was used, chlorination, arsenic filtration and upgrades would still have to be done and debt expenses would be $500,000, making the total cost $37 million. The goal was to pay that off at $2.3 million per year for 30 years.
Council decided that it would move ahead with buying the utility from EPCOR and would stick with its aquifer because the cost of moving to Metro water was prohibitive.
Negotiations began in early 2013, and did not go well. Baldwin described the process as “rancorous.” He said that, after a year, the city threatened to expropriate the utility but was urged by EPCOR’s CEO to continue negotiating.
The city took over the utility on Oct. 30, 2015 and made an advance payment of $14 million, though the final purchase price took two more years to finalize. Arbitration was set for this fall, but a deal was worked out within the last couple of weeks.
The city has already received the $600,000 refund from its advance payment, and that money will go back into the utility’s capital expenses.
Baldwin said the city couldn’t release information about the negotiations, including the purchase price, until everything was finished or else it would have compromised the process. The city also signed a confidentiality agreement.
“There was a concerted effort out there to make statements that we were doing the wrong thing and hiding the numbers on purpose,” he said. “We couldn’t really say anything about it because of the gag order.”
The utility takeover was not a smooth process either. Since early last year, a group of White Rock residents has actively protested the city’s decision to use chloramine for secondary water treatment.
The residents have advocated for the use of chlorine. According to the city, chlorine reacted with the arsenic and manganese that naturally occur in the water and caused discoloration that ranged from slightly yellow to the same hue as coffee or strong tea.
This spring, the city backtracked and decided to go with chloramine.