Kitchener looks for ways to ease steep utility rate hikes

KITCHENER — City councillors will consider ways to soften the hit of decades of steep utility rate hikes at a special council meeting on Monday.

For the past three years, residents in Kitchener have had to swallow annual increases of close to 10 per cent to their water, sewer and storm water bills as the city has tried to replace a backlog of aging water and sewer pipes.

But during budget talks earlier this year, council made it clear it is not happy approving such steep increases, and asked staff to come back with more affordable options for ratepayers.

Instead of proposed increases of more than nine per cent a year for the next several years, the report suggests the city may be able to replace and maintain the city’s crumbling infrastructure with annual rate increases that are still above inflation, but much lower than originally forecast — anywhere from 4.5 to eight per cent a year over the next five years.

“It’s never going to be as great a reduction as we would have liked, but I do think it’s the responsible thing to do,” said Coun. Scott Davey, the city’s finance chair. “Clean water is probably the most important service the city provides. It even trumps fire protection.

“I think we have to make sure we fund it adequately.”

City engineers first sounded the alarm in 2015, saying steep increases in rates were needed until at least 2026 to replace aging water, storm water and sewer pipes.

If the original increases had gone ahead, the compounded effect would have meant the average Kitchener household would have been paying $1,767 for water and sewer services by 2022, compared to just $746 in 2014.

Instead, council will consider three options that would reduce the annual increases, so that the typical annual water and sewer tab would be anywhere from $1,464 to $1,615 by 2022.

Staff took a careful look at the actual age of the city’s full inventory of water, sewer and storm water infrastructure, and did a detailed analysis of what maintenance would be needed when, and how much it would cost, to see if there were ways to trim costs and still ensure the system is reliable, said Denise McGoldrick, Kitchener’s director of operations for environmental services.

Ensuring preventive maintenance gets done when it’s needed could reduce the urgency of replacing the aging pipes, she added.

Council will provide feedback on three options Monday for reducing the infrastructure increases:

improve maintenance in specific areas, but phase in the extra maintenance over five years, which would require annual increases of eight per cent for three years, and 6.5 per cent for two years. That would raise rates for the average household by $91 in 2018;

carry out the planned maintenance, but spread the replacement over a longer time, to 2037. That would mean annual increases of seven per cent for three years, and five per cent for two years after that. The average household would see rates jump $80 in 2018.

carry out the improved maintenance but spread the replacement of pipes to 2044, resulting in annual increases of 6.5 per cent for two years, followed by increases of 4.5 per cent for two years. Average rates would jump $74 in 2018.

Putting off replacement increases the risk of water main breaks and sewer failures, and of costly emergency repairs, McGoldrick warns, but “at a staff level we’re comfortable with all three options being manageable,” she said.

Monday’s report isn’t the full story on utility rate increases. Staff are also carrying out a study on whether to switch to a blended rate, with a basic amount everyone would pay regardless of how much water they used. That study won’t be done until early 2019.

And although Monday’s report looks only at rate increases to 2022, the above-inflation increases aren’t likely to stop then. City staff warned last year that ratepayers could face significant increases until 2032 — a full decade beyond the projections of Monday’s report.

But two things may reduce the need for big increases in the long term, Davey said. First, the federal or provincial governments might inject more into infrastructure funding. “We’re still hanging on to that hope ... but I think it’s irresponsible for us to bank on that until we know it’s going to happen,” Davey said.

Second, improvements in technology, such as inserting liners to repair pipes without having to dig up the whole street, could make repairs cheaper.

Council will vote on the actual rate increases when it passes the 2018 budget.