Time for a real review of water rates

With each passing year, I hear comments from residents who are increasingly concerned about the high cost of water in the County. I agree.

New residents likely never considered asking their real estate agent about the cost of water as a decision point on their move. Property taxes, perhaps, but not water. The water bills they were used to were modest and not something that would necessarily hurt their household budget. But the County is different. My neighbours tell me their bills are substantially higher and pose a real burden to their living expenses. My water bill rivals that of my gas or hydro bill, but I am on a septic system and not subject to wastewater charges.

So why are water bills so expensive, and what are the plans to tackle this problem?

I have listened to several Water Rate Committee meetings at Shire Hall and have been impressed by the community members who sit on this investigatory panel. They have solid backgrounds and the necessary knowledge to resolve our rate issues. However, it seems the committee has been charged with establishing the next inevitable water rates increase (2026 to 2030) rather than digging into why rates are so high now. Or devising potential ideas for reversing the trend of forever increases. Or at a minimum, stabilizing rates.

So why are water rates so expensive in the County?

Rates are driven by two inputs: the operating costs of the current systems, plus the capital required to maintain and improve the systems.

Operating costs, while being a better-known commodity, can always be trimmed. The same can be said for any budget that is in the millions of dollars. You just need an open mind and discussion.

Questions such as: Are we proactive in the maintenance of systems? Are we managing our systems based on best practices as established by our counterparts in the province? These questions can be a start in a line item review, perhaps on an annual basis.

Capital requirements are the more contentious subject based on our infrastructure projects of the last several years. Without a clear project and financing planning principles based on a credible housing growth forecast, the accuracy of the capital planning will always be in doubt. With the false start of a proposed oversized waterworks project, we would have seen large amounts of capital and finance charges assigned to the existing ratepayers on the system, which brought little value to them.

Based on the current water rate structure (2022 to 2026), some would argue that some of this misadventure is already baked into water bills.

Shire Hall has committed more than $40 million to infrastructure expansion in Wellington. The benefit to existing ratepayers is 15 per cent, or $6 million. But Shire Hall says we have a reserve of approximately $11 million. The surplus reveals another reason, perhaps, explaining why water rates have risen.

But what can we do about water rates in the County?

To make any changes, we need to do a deep dive into the data and truly understand the problem.

Here are some steps I suggest:

1. Freeze water rates where they are until we have a consensus on what investments are needed for infrastructure, what the benefits (if any) are to the existing ratepayers and what the true value is to those benefits.
2. Do a deep dive review on both the operating costs and the capital costs as they exist today.
3. Project operating costs (line by line) over the next four-year timeframe. In general, costs should not exceed inflation unless there is a verifiable and transparent reason.
4. Prepare a project plan and financing plan for revised infrastructure needs. Determine any impact on water rates.
5. Hold public consultations on all findings and ask for input before moving to solutions. If existing ratepayers have truly overpaid for the infrastructure already built, then ask them for options on how to utilize the excess funds. It is their money.
6. Give the Water Rates Committee authority to lead all aspects of this review. When augmented with relevant staff, they have the expertise to perform this work.

While there is no guarantee this review will lead to a drop in current water rates, if done right it would address the elephant in the room that persists today: Why are water rates in the County among the highest in the country, on an island surrounded by fresh, clean water?

Tim Good has 30+ years in finance, project management, process management and communication for large multinationals in areas such as cement manufacturing, food processing and information technology.