Is your water bill high? Here is why.

Letter to the Editor

 

 

The above letter was published in the Morning Star on March 9, 2012. The author points out the unintended consequences of our increased water costs. 

 

My report below is intended to explain the reasons for the high costs and suggests a way to improve the situation. Unfortunately, some of the mistakes cannot be corrected but we must ensure that future funds are directed to the right solution. In order to reduce future cost increases we need to have a total plan developed, funds borrowed and repaid on a 20 year plan instead of on a cash basis.

 

Duteau Creek Blues.

It used to be that we supplied irrigation water to domestic customers. It was cheap but lacked quality. So we changed the system. Now we feed treated water to crops and domestic customers alike. It is expensive. Sadly, it is just the beginning of the costs - unless we change our approach.

In 2008 GVW’s budget was just under $6.5 million. This year it is just slightly under $20 million. Next year it is projected to be over $21.5 million. How high will it go? Depends on our resolve to change direction.

In 2000 my water bill for the year was $219.34 for 388 cubic meters of water. In 2012 the same volume of water in the same quarterly distribution would cost $729.44. That’s an increase of $510 or 320% in 12 years. This incredible rate increase is not sustainable.

The consultants who prepared the Master Water Plan of 2002 identified the major problem with our water system as being the result of mixed irrigation and domestic water. They recommended total separation of the two systems. In their opinion continuation of the mixed system would be significantly more expensive than total separation. It appears they were right. To date we spent about $50 million and we are nowhere near the end See Table below).

Despite that advice in 2004 a decision was made to continue with the mixed distribution system, except we made it a lot more expensive.

Here is my personal synopsis that may explain the reasons for the meteoric rise in water costs:

1.    Chose the more expensive plan

In 2004 a decision was made to ignore the recommendations of the consultants and adopted a plan that was rejected by those consultants as significantly more expensive. The interesting reason for selecting this plan was that they feared that the cost of the 2002 plan would have been rejected by the taxpayers.

The 2002 MWP costs for the first phase were estimated to be $71.3 million. Annual financing costs of such sum would be between $5-5.2 million. Annual operation and maintenance of a system proposed by the consultants would likely not have exceeded $5 million. Had we opted for the proposal of 2002 we would have saved a lot of taxpayers dollars. When I bring this up with staff and other politicians the response generally is: “it’s hindsight” and “that door is no longer open”. I strongly believe that “that door” can still be opened with some ingenuity. I’ll explain those options later.

The current plan was heralded to be less expensive than the 2002 plan. Taxpayers were asked to approve $35 million for the project. Yet we have already spent $50 million and we don’t know how much more is needed. It appears to be a bottomless pit.

2.    Chose the wrong financing

When the current plan was selected taxpayers were asked to approve a borrowing referendum of $35 million. Theoretically, that would have cost taxpayers about $2.4 million annually. However, it appears that additional funds to the tune of $2-3 million annually  were also collected on a “cash basis”. These extra funds were to supplement the costs of the infrastructure projects that were not advertised in advance of the referendum. These funds basically equalled the funds collected to pay off the borrowed funds. Ironically, the combined sum would also have covered the cost of $71 million had we borrowed it.

Now we have two treatment plants instead of the one proposed in 2002. The Duteau plant is also more expensive to operate than the Vernon treatment plant yet it only supplies 20-25 % of the total domestic needs of the utility. Further more, the treatment plant at Duteau Creek does not meat neither the quantity nor the quality requirements of the water utility. It is hard to understand how a $29 million treatment plant that did not meet quantity and quality requirements could have been approved.

If we wish to meet the quality and quantity requirements changes must be made. My recommendation is to return to the total separation as proposed in 2002 with some innovative changes. More about that later. However, current proposals indicate a different direction.

3.    Attempting to return to the failed plan

The conventional wisdom is to do a partial separation of the raw water before we divert part of it to the treatment plant. The diverted raw water would be used strictly for crop irrigation. Physical details are not yet available. The plan is supposed to retain the Duteau Treatment plant and ad a filtration plant to meet health requirements.

Detailed financial plans are also unavailable but estimated to be between $50 and $60 million. The problem is that significant amounts of treated water would still be used for irrigation purposes. We would still have difficulty assigning true costs to irrigation water.

The other problem is that the cost of treatment would be very significant, probably between $4-$5 million annually. Remember, the total domestic water provided by the Duteau plant is only about 20-25% of the total domestic needs! Should we spend that much money on partial separation? Should we continue funding the treatment of that small amount of domestic water at those horrendously high costs while continuing to use large amounts of expensive water on crops? Is there an alternative?

I believe there is a viable alternative. It requires some imagination and outside the box thinking. The basic principle is to supply all domestic customers with Kalamalka Lake water. The existing treatment plant on Reservoir Road is producing treated water that has dual disinfection: ultra violet irradiation followed by chlorination. This water is pumped to the Mission Hill reservoir and distributed to domestic customers. About 75% of Greater Vernon customers receive this water. With small expenditures all customers on Middleton Mountain could be converted to Kal water. Customers currently supplied from the Cunliffe reservoir could also be converted with little cost. That would further reduce the need for domestic water from Duteau Creek.

The main issue to tackle, in order to implement this recommendation, is the transfer of various water licenses from upper sources to Kalamalka Lake. We own licenses on Coldstream Creek, King Edward Lake and we could even get a fraction from Duteau Creek. It is mostly an administrative issue and politicians of all levels should lobby for these administrative changes. There is no reason why we could not utilize our license capacity at Kal Lake. The further down the course we remove the water the more use it provides for fish habitat and other uses.

Politicians of all levels should join to lobby to bring about the change in allowable license transfer. It serves the greater good of the community. The total separation of the agricultural and domestic water system would guarantee greater accounting of costs and availability of our valuable commodity.

After settling on an acceptable plan total costs must be calculated, required funds borrowed and repaid on a 20 year schedule. The current method of removing cash ($2 million this year, proposed to be $4 million next year and annually thereafter) must be discontinued. Amortization of new infrastructure should be discontinued until all borrowed funds are repaid.

The foregoing report is strictly my interpretation of the available date using all available reports.

 

 

Table of expenses to date: GVWU.

 

 

As always, your comments are solicited and welcome. Next Monday I will be making a Power Poin presentation at the COW meeting in Counci Chambers. Everyone welcome.

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