How is the Water Increase of 30% over 5 years explained ???
IMPACT OF VOTE ON RATES
7How will borrowing $70 Million for the Master Water PLan (MWP) priority projects impact water rates?
A “Yes Vote” would mean that the total GVW budget would increase by 30%
for debt servicing (principle + interest payments). This increase would
be phased in over 5 years. This is based conservatively on a 4%
interest rate and a 20 year borrowing term through the Municipal Finance
Authority. The following provides an estimate of the impact to rates
based on an average domestic GVW customer:
- Average GVW Domestic Customer Water Bill in 2014: $585/year (based on 175 cubic meters of water used in one year)
- Percentage Increase: 30% phased in over five years averaging 6% per year
- Annual Increase to Water Bill: $36.00
- Increase to Water Bill by 2019: $180 (total annual bill in 2019 = $765)
It should be noted that this increase is only to fund the MWP priority
projects and does not include additional increases due to the Consumer
Price Index (CPI), increases in operations and maintenance, costs
associated with any legislative changes, or other capital works projects
required outside of the MWP (e.g. emergency repairs or infrastructure
renewal). This projected increase for the MWP priority projects is for
project construction costs in 2012 dollars using the 2014 rate structure
for domestic customers (Greater Vernon Water Rates (Bylaw No. 2622, 2014).
A “No Vote” would mean that the projects outlined in the MWP will not
proceed as presented. The impact on rates is unknown and would only be
determined following a review of the MWP with elected officials and
Interior Health.
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Don Quixote Note:
If we borrowed $70,000,000 for the Master Water Plan Capital
Requirements this is the repayment schedule we would have for a 20 year
borrowing at the RDNO predicted conservative lending rate of 4.00%.
http://mfa.bc.ca/long-term-lending-rates (This chart is for
comparative purposes only as rate are only guaranteed for the first 10
years.)The Annual Financing Costs would be $5,150,722.
For 2014 the revenue required from rates was $18,600,840.
Of this $16,968,524 was to come from Domestic (Residential) ($14,224,499) and Commercial & Institutional. ($2,744,025) Balance from Agriculture was ($1,025,616) with other fees and charges bringing in ($606,700.)
Consequently the revenue required after this borrowing (if approved) would increase to $23,751,562 or a further 27.69% rates increase. (assuming rate increase spread equally over Agricultural, Residential , Commercial and fees)
However it appears that the rate increases will be applied only to the $16,968,524 For Residential,Commercial & Institutional and thus the %age increase will be (16,968,524 +5,150,722)/ 16,968,524 = 30.35% (click here for more)
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The cost implications are bad enough but the worst news is the fact that we continue to treat the worst quality and most expensive to treat water forever.
The combined cost of the two treatment plants at Duteau will be over $55 million ($3.9 million annual cost for 20 years). The annual treatment costs will amount to about $2.5-3 million. And to boot 80-90% of the treated water will be used for agricultural irrigation.
Domestic use (includes household, industrial, commercial and institutional) from the Duteau treatment plant only accounted for less than 1,500,000 cubic meters in 2012. Cost of treatment in the same year was over $2.2 million. Estimated cost of 1cubic meter of domestic water from Duteau is $1.44. At the same time the Mission Hill treatment plant produced about 4,300,000 cubic meters of domestic use water at a cost of $524,275 for a unit cost of $0.12. Somewhat of a difference. The filtration will add more costs. So now you have more of the facts to help make up your mind.
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