Can we afford our waterworks systems? Are the plans for rebuilding much of Picton’s water and sewage system more than can be carried by the approximately 3,800 households in Wellington, Picton, Carrying Place, Consecon, Ameliasburgh, Peat’s Point, Fenwood and Rossmore? Should Consecon residents pay the same rates as ratepayers in Picton and Ameliasburgh? And should non-serviced rural households pay something toward the soaring costs of operating and maintaining six water systems and two wastewater systems in Prince Edward County?

These are just some of the questions being asked by a special committee of citizens, council representatives and finance and waterworks staff over the past few weeks.

Pressing upon this committee is the weight of knowing that this municipality is planning to borrow as much as $33 million over the next 18 months to finance extensive upgrades to Picton’s waterworks including: the construction of a new sewage treatment plant; a new backwash management system; the relocation of the water intake; sewage and water replacement on Main, Centre and Queen Streets; as well as miscellaneous transformer stations and pumping stations.

Some argue that it is merely Picton’s turn—that other systems, in time, will need maintenance and repairs, and it will be better to share these costs across 3,800 user rather than the 2,100 serviced households in Picton or 19 in Peat’s Point. But others point to a lack of reserves and the historically low water rates in Picton for leaving that town without the financial resources to replace its aging infrastructure.

These are not easy deliberations. There are many moving parts to t

he County’s waterworks system: six water systems drawing off six different sources and two wastewater systems flushing the waste from 2,871 homes in Wellington and Picton into two bodies of water.

Then there are the cost drivers: operations (the cost to manage and oversee the systems); maintenance (the cost to fix and repair the system); capital expenditures (costs of the replacement and upgrade of major components); and de

bt servicing (the cost of paying interest and principal on borrowing used to fund capital expenditures and operating losses).

Once these have been defined and validated, the committee must then decide who shall pay, how much and when. It will allocate costs to existing users (through rates) or future system users (through connection charges). Since this municipality has already locked itself into $33 million of new expenditures, the County will need to borrow heavily to repay the loan (or loans) through rates and/or connection charges.

It can also use reserves to finance its costs; however, these funds have been depleted by some questionable choices in past years.

Rather than dip into reserves, the committee will likely be persuaded to recommend restoring these funds.

One of the thorniest issues the committee must grapple with is the notion that each County household receiving water and/or sewer service is equal, and therefore should pay the same rates and connection charges. But the cost of operating, maintaining and replacing these systems in Peat’s Point with 19 water service users is radically different than Wellington with 922 service connections.

For example, the replacement cost per customer ranges from $8,758 in Rossmore/Fenwood to $61,143 in Ameliasburgh.

Worse, the folks in Carrying Place and Consecon had a deal with Quinte West to supply water until the County came along and tore up the 20-year agreement—compelling water users on that system to pay the uniform County rate. Afamily of three in Consecon and Carrying Place now pays a water bill more than double the cost of their deal with Quinte West.

Perhaps the toughest deliberations will deal with who pays the extra burden. Every choice is a bad one. Put too much on the backs of ratepayers, and the committee could create a disincentive to live in settled urban areas—pushing development to rural and agricultural areas. Put too much of the burden on new connections, and the committee could further impair an already anemic local building sector—and in doing so discourage settlement in the County by those who might help share the burden of rate increases.

If, however, the committee simply increases debt, it will in effect push the cost of today’s infrastructure onto the backs of future generations. A spike in interest rates could cripple future administrations of financial flexibility.

But first the committee must grapple with capital expenditure forecasts and growth assumptions. Previous Public Works’ estimates pegged the capital expenditures required until 2018 at more than $54 million. Underlying these forecasts are estimates and assumptions that are gathering more uncertainty as increased scrutiny is cast upon them.

At the end of the day, the committee will need to satisfy itself that the assumptions are valid and the cost estimates sound.

Council has twice tasked economics consultant Andrew Grunda to process its numbers through his financial model—and twice been unhappy with the result.

In July, Grunda suggested that the municipality look at the problem the other way ’round—determine what it feels ratepayers can afford and what connection charges the municipality can impose without pushing development elsewhere. Pushing these results back through his model, he could determine how much the municipality could afford to build—rather than what waterworks staff say we need to spend. His suggestion has so far received short shrift.

There are, however, likely too many moving parts and too many assumptions for this committee, or council, to continue to ignore this suggestion.

Eventually this committee or council will have to answer the question: Can County ratepayers afford the future being planned for them?