Thursday, December 15, 2016

Greater Vernon water rates climb

by Richard Rolke - Vernon Morning Star Vernon posted Dec 15, 2016 at 10:00 AM
The Greater Vernon Advisory Committee agreed Thursday to hike water rates 3.7 per cent annually over three years. “This helps to spread out the pain. It seems reasonable to me,” said Juliette Cunningham, chairperson. Of the 3.7 per cent, 1.7 per cent is tied to the consumer price index, while two per cent is linked to operating, maintenance and capital improvements. Opposition came from director Bob Spiers, who says CPI hasn’t hit 1.7 per cent recently. “It’s an arbitrary figure,” he said. Spiers also blasted the two per cent for capital works. “We’re charging the people of today for projects tomorrow,” he said. However, Cunningham disagreed. “I don’t understand that argument, How do we quantify what people borrowed 20 years ago (for facilities) that we are using today?” she said. Directors have also received an update on the master water plan. It includes a filtration pilot study at the Mission Hill plant and possibly putting off filtration at the Duteau plant until after 2030. Director Mike Macnabb is concerned interest rates could climb as the master plan proceeds. “If we pay as we go, we could pay a lot more,” he said of borrowing. David Sewell, Regional District of North Okanagan chief administrative officer, admits there’s a balance between deferring projects to manage costs and accessing favourable financing rates.
Don Quixote Note:
My vote against a 3.7% rate increase each year for the next 3 years is based on my belief that rates for water consumption should be based on the budget that is required each year to meet the operating costs of the Utility. A 3.7% increase across the board for rates would not acknowledge the new customers each year that are added to the system that would bring added revenue to the water function that should be used to lower rates. The base fee for each new customer is $95 per quarter ($380 annually) plus revenue from their consumption. The 3 year rate increase should be based on the budgeted operating costs over the next 3 years only not an across the board hike.

The method  adopted will simply built up the new rate stabilization reserve and the operating reserve that will be ultimately used in some instances for  Capital Projects like Filtration of Mission Hill in 2020-21 so the amount of Borrowing will be reduced and the public will be persuaded to pass the borrowing referendum. All major Capital Projects should be financed only through grants and or borrowing so the people who benefit over the next 20 years are the ones who will still be using the water system. The money built up in reserves through over charging water customers should not be the source of financing for our Master Water Plan Large Capital projects.

My money is being built up in the reserves and if it is used for large Capital Works Projects then I hope to get a thank you if I move or pass on in the next 20 years.

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