Another point of view on water rates.

Some thoughts on a balanced and reasonably fair water rate system.

"To me heavy consumers of water were subsidizing low water users in amounts that were too high even given the goal of promoting consumption. This particularly extends to high use commercial customers." (Manager of Greater Vernon Water Utility).

The above quotation is the opinion of the Manager of the water utility. This opinion is very difficult to rationalize.

Treated water delivered to customers via a pipe line system is a commodity the production cost of which determines its unit value. The construction cost of the system, the infrastructure cost, was and still is, the investment allowing the product to be produced and marketed.

Viewing the issue from this perspective it is quite obvious that the product cost should be distributed among the customers on a consumption basis. For instance, when one goes to the private water distribution centre to get their water in a 5 US gallon bottle they pay for the number of bottles they purchase. There is no question of who subsidizes the system to what extent. You pay for what you get. The same principle should be applied to water rates.

There is no question that there is a convenience in not having to go the market to buy water, thus, a reasonable access fee is warranted, like $25.00 per quarter. In addition, the cost of infrastructure financing (about $3 million) should also be included in the base fee until the question of taxation is settled.

Finance managers would love to have a secure income to cover expenses. They would love nothing better than having a flat fee to cover the cost of running and maintaining the water system, including the financing costs. However, we have another objective which is to encourage water conservation. The larger the flat fee component of the water rate the less ability we have to influence water conservation. We must have a reasonable balance between flat fee (or base fee) and user fee (or consumption fee). The latest fee proposal by the utility manager is not a reasonable balance.

The new accelerating block rate helps in controlling consumption, however, the large flat component largely eliminates this benefit to low consumers. The unit cost of their water is huge in comparison to high consumers (in the range of $5 per m3 for low users compared to $1.50 per m3 or less for heavy users). This is where improvements must be made.

Hopefully, the next meeting of GVAC will provide a more palatable water rate system.

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