Wednesday, August 6, 2014

More about water rates.

Further to my earlier discussions on fair water rates it is educational to have the evolution of water rates reviewed.

In 2003 the rates were set at $24.00 base fee (quarterly) and $0.56 per cu. m. with a 10% discount if paid by the end of the month. This basically reduced the fees to $21.60 base fee and $0.504 per cu. m. consumption fee.

As the attached table demonstrates base fees increased by a staggering 360% since 2003. This base fee increase is in direct contradiction of the “user pay” system. How did we get to this ridiculous situation? I’ll elaborate.

Finance officers like to use flat fees to cover cost of services. It is an easy way to ensure that budgets are balanced regardless of the pain it creates for low volume consumers. Greater Vernon Water staff suggested that we should actually increase the base fee. They would like to have 80% of the budget covered by flat fees or even worse, all of it.

Politicians, however, insist that we are employing the user pay system. Nothing is further from the truth. Low and middle water consumers carry the biggest burden of the total cost. Incidentally, if we were to usage total flat fees each account holder would be paying $712 per year ($178 per quarter). If every customer were charged that rate we would meet our budget requirements. As it is we are already paying over 56% of the fees as base fees.
Staff’s argument in recommending higher base fees is based on their argument that there are “fixed costs” and we must ensure that these fixed costs are covered. That argument is bogus. If we fail to recover any part of the budget presented we will have a deficit, as we have done for the last 3 years (total $3.1 million). The entire budget must be covered by the revenue stream. Since our stated method is the user pay system we must ensure that these revenues are collected through that system. It takes planning but that is what we pay staff for. It is up to the political representatives to ensure that policies and bylaws are enforced.

It is curious that staff did not recommend the same cost recovery system for the agricultural customers. Why not recover 56% of total agricultural fees through flat fees and the rest of it on a user pay system?

We invested millions in water meters so we could institute the user pay system yet we are working towards a universal flat fee system. At the same time we want to reduce water consumption but we punish those who reduce by raising their water rates. Where is the rationale?

Before you vote on the $70 million borrowing referendum make sure you investigate what you are paying for and how! And remember: there was no independent review of the current Master Water Plan!


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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.