Sunday, December 7, 2014

Water woes - and a response - letter to the Morning Star

 Dec 5, 2014 at 1:00 AM

I recently received my third quarter utility bill and the water cost portion of this bill is enormous.
Last year when I received the same third quarter bill (which I also thought was enormous), I decided to do something about it and adjusted my water consumption, bringing my water usage down by almost 20 per cent. Guess what?

My bill this year was almost the same as last year.

A review of what has happened here has brought me some interesting results. On March 19, the Regional District of North Okanagan board approved a new tiered fee structure, including the infrastructure base fee, increasing the cost to domestic (residential users) by almost 20 per cent. Yes, almost 20 per cent.

This in the face of inflationary guidelines of two per cent. I guess the cost of water is not included in the calculations for inflation.

Don Graham

The above letter points out the unusual way Greater Vernon Water Utility charges for water. It charges a consumption fee on a tiered basis and adds to it a fixed tax (called "base fee") of $99.80 per quarter. Up to a consumption of 66 cubic meters per quarter this tax is greater than the consumption cost. At 40 cubic meter consumption the tax is more than twice as much as the consumption fee. This is what we call a "user pay system". It shows that at lower consumption levels there is no incentive to conserve water because the consumption cost is negligible as compared to the fixed fee.

The reason given for this huge base fee is that it must cover "fixed costs". However, I was never given the actual value of fixed costs. In an annual budget there are two ledgers: an expenditure ledger and a revenue ledger. The expenditures must be equal the revenues or else we have a deficit or a surplus. Thus, I believe that the fixed costs are the costs identified in the expenditure side of the budget. If we wanted to cover all the fixed costs by base fees then the base fees should cover the entire budget. In our budget of $17 million the annual base fees would then amount to about $710 per year or $178 per quarter. All customers should then pay the same regardless of consumption (it used to be that way until quite recently - extremely unfair but there were no meters). 

There are major problems with this system aside from being unfair to low consumers: the utility would lose control of consumption. As indicated above the current system is already showing less incentives to conserve water at lower consumption rates, a universal flat rate would be unmanageable. Unfortunately, the current trend of ever increasing base fees is heading in the wrong direction.

In my opinion a conventional user pay system based on unit cost of treatment and delivery of domestic water with a small base fee (that would also be based on unit cost of water) would be the most effective and fairest way of charging for domestic water.

Just for the record, the "base fee" of $399.20 currently charged by GVWU would be the annual General Tax for a property worth $177,000 in Coldstream.


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About Me

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I have been a resident of Coldstream since 1976. I have had 15 years of experience on Council, 3 years as Mayor. As a current Councillor I am working to achieve fair water and sewer rates and to ensure that taxpayers get fair treatment. The current direction regarding water supply is unsustainable and I am doing all I can to get the most cost effective water supply possible.