I seriously hope council does not approve the 19% increase being proposed. Is this the benefit we get from trying to conserve water – pay higher rates?? Are there no reserves to offset such a significant increase? MD
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Thank you for your email. Council did approve a 15.5% increase to the water and waste water rates. I will try to briefly explain below the main reasons for this significant increase.
Municipal property taxes do not pay for the water and wastewater budgets. Instead, these budgets are funded solely from the sale of water. Customers fund the operations and maintenance of Guelph’s municipal water and wastewater utilities through thier water and wastewater bills.
Furthermore, the majority of the cost of providing water and wastewater treatment services does not decrease when customers use less water. In other words, if you did not use water for the next month (and created no wastewater), the City would still need to pay a significant number of costs to keep both systems operating, namely:
the cost of maintaining the underground infrastructure that connects customer properties to the water supply and wastewater collection systems;
the costs of keeping the water and wastewater treatment plants operational and in a state of readiness for fire fighting and varying customer use;
the administrative costs of customer service, billing, and collecting revenue; and
the significant, ongoing cost of complying with provincial regulations.
In fact, electricity and chemical costs are the main costs that will decrease when customers use less water, but these savings are a small portion of the overall costs described above (although these decreases have been included in the approved 15.5% increase).We are currently experiencing almost a 5% annual decrease in the amount of water customers are using due to City initiated water conservation programs (Outside Water Use Program, Toilet rebates etc.), customers deciding to use less water on their own, business closures, and less business water use in general due to the changing economy.
In order to pay the stable fixed costs described above and maintain the same level of customer service, our only option when volume sales decrease is to raise the unit cost, or rates accordingly, as the City is not allowed to run a deficit and we are mandated to recover all costs solely from the user rates.
The new approved rates mean an average residential customer using 250 cubic metres of water in 2009 will pay $86 or 15.5% more than in 2008. Residential customers using less than 250 cubic metres will pay less; those using more than 250 cubic metres will pay. Customers have the ability to lower their billing increase in the short term through reduced water use.
Another related question often asked by customers is why should they have to pay more for water and wastewater services if they have been doing a good job of conserving water? There are short term and long term components of the answer to this question:
First, as stated above, most of the costs of operating water and wastewater systems don’t decrease with decreased use. The fixed costs of operating the utilities are rising mainly due to new regulatory requirements and infrastructure upgrades . The financial benefit of conserving water in the short term is lower bills.
Second, the long term benefit of conservation is that it delays, for both current and future customers, the costs of more expensive future capital upgrades to the system that are needed to both improve the reliability for existing customers, and accommodates the need for growth which has been mandated by the Province. If customers were not reducing the amount of water they used, we would have to quickly build more expensive infrastructure to both maintain the system and supply growth. These costs would result in customer bills increasing a lot more than the approved 15.5% in 2009. So by reducing water use, as a customer, you are minimizing the impact of future rate increases on your bill in the long term.
Maybe a better way of explaining th e long term benefit would be to provide you with a mock set of water bills for the next ten years where the municipality has decided to build more infrastructure instead of reducing water use. Then we would give you another set of mock bills based on the Council approved conservation targets that we are currently meeting. The total cost of the conservation bill set would be significantly lower than the infrastructure bill set over the 10 year period (infrastructure can cost over 3 times as much as conservation).
In summary, if regulatory and infrastructure impacts were not forcing the total costs up, conservation in and of itself would drive the rate up, but not the average bill – i.e. BY DEFINITION, as you conserve, you are using less water, and therefore paying for less water volume. If you pay a higher rate for a smaller volume, by definition the average bill or cost would be the same unless something else is driving up the total cost of the system/service. Basic conservation (i.e. turning off the tap – outdoor water use, rebate driven upgrades etc) does not increase the total cost of the system at all. What is driving up the total cost of the systems are regulation and and plant expansions, infrastructure upgrades etc – these are not conservation.
Even with the 15.5% rate increase, Guelph rates sit at the average for comparable Ontario municipalities.
I realize now that the response above is not brief in nature. I do hope the information above helps explain the reasons why Council approved the 2009 rate increase. Staff