Greater Vernon water rate increase set at 2.9%

BARRY GERDINGFeb. 5, 2018 5:30 p.m. COMMUNITYNEWS Morning Star
https://rdno.civicweb.net/document/86925
Greater Vernon Advisory Committee signs off on increase
Water is going to become a more expensive commodity within the Regional District of North Okanagan this year. The Greater Vernon Advisory Committee has signed off on rates increases of 2.9 per cent for residential and commercial users, and 3.7 per cent for agricultural use rates.Stephen Banmen, general manager, finance for the regional district, said the 2.9 per cent figure is based on a 1.9 per cent inflation increase combined with the demands of increased operating costs and building up reserves for future capital projects. The agricultural rate increase was consistent with a 2017 decision to increase agricultural rates 3.7 per cent for three years to match better match revenue form agricultural properties to the most of supply. With approval from the committee, the rate structure is now forwarded to the Regional District of North Okanagan board for final approval.

GVAC director Bob Spiers, a Vernon city councillor, questioned at Monday’s committee budget meeting why the increase had to go beyond the rate of inflation, asking why the additional one per cent can’t be returned to water users as savings. GVAC chair Juliette Cunningham responded that the Greater Vernon water master plan, which was approved by Interior Health last week, made commitments to water quality and supply that require financial long-term planning.

Advisory committee director Jim Garlick, mayor of Coldstream, noted that building up reserves for future capital projects is necessary, but he would like to see a schedule of future capital projects earmarked for those funds. “It doesn’t make sense to me to build up huge reserves without any plan has to how that will be spent,” he cautioned.

The operating budget for the Greater Vernon Water Utility in 2018 will be 17.1 million, up from $15.8 million in 2017. Capital expenditures this year will total $19,936,317, up from $18,500,000 last year. The budget projected revenue for $22,163,324 is divided up between operations (56 per cent), capital plan (23 per cent), debt payments (13 per cent) and transfer to reserves (eight per cent). Close to 95 per cent of that revenue is generated from infrastructure base fees, meter consumption revenue, agricultural rates and meter replacement fees. Banmen said the policy directive is for a 50/50 split between fixed and variable water fees, which for 2018 is targeted at 52.5 per cent infrastructure base fee and 47.5 per cent metered consumption fee. He said the rate restructure of 2017 moved closer to that 50/50 split objective. “The split is highly dependent upon wet/dry years because the total revenue received from metered consumption is weather dependent,” he said. “The first and fourth quarters of a give year are pretty consistent for metered users. The variability shows up in the second and third quarters. If 2018 is a dry year, the splits will be closer to the policy directive than the proposed budget. If 2018 is a wet year the splits will fall further from the policy directive.”

Among the capital projects planned for this year include:

* Flood protection for Kalamalka Lake pump house, $50,000
* BX Intake decommissioning, $410,000
* Von Kyserlink Pump Station upgrades, $200,000
* Predesign/environment impact studies on raising Aberdeen Dam, $250,000
* Water pipe replacement on 28 Ave. from 30 to 32 St. in Vernon, $330,000
* Blackcomb Way to Rugg Road and PRV Main extension, $350,000
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Don Quixote Note:

• The actual rates approval will be set at a rates meeting and then forwarded to RDNO Board for approval. The budget was approved (6-1) NOT the actual rates. 
• I actually acknowledged that the 1% that was agreed to last year as part of an annual 1% increase for a 5 year period was correct. I did object to a 1.9% CPI increase that was well covered by the increase in our base rate customer revenue and the $600,000 that will be transferred into a rate stabilization reserve. (excess base fee and consumption revenue over 2017 budget)  I therefore voted against the budget and will argue for a smaller increase at the Rates meeting.
• Building up reserves for future capital projects that are life cycle type projects are correct but the reserve level should have a yearly cap. Using customer rates to built up a reserve for major projects such as Mission Hill Filtration in 2023 is not part of the reserve buildup I was assured at the meeting.

SPECIAL (GREATER VERNON WATER BUDGET) MEETING AGENDA

https://rdno.civicweb.net/Portal/MeetingInformation.aspx?Org=Cal&Id=1426
REGIONAL DISTRICT OF NORTH OKANAGAN
GREATER VERNON ADVISORY COMMITTEE MEETING
Monday, February 5, 2018
Coldstream Municipal Hall - Council Chambers
9901 Kalamalka Road, Coldstream
9:00 a.m.
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Page 1 https://rdno.civicweb.net/document/86919/180131_RPT_GVAC_GVW_Budget_FULL.pdf?handle=3D328E88E1F544FF981BE8B446DFE06F
The proposed budget includes a 2.9% water rate increase, consistent with the recently adopted 2017 Master Water Plan. Agricultural rates are proposed to increase 3.7%, consistent with the 2017 decision to increase agricultural rates by 3.7% per year for 3 years to more appropriately match total revenue from agricultural properties to the cost of supply. The rate increase provides additional funds for the capital program – both current and future. The proposed current revenue funding of the capital program is $5,042,000 (2017 – $5,585,000). The proposed transfer to the statutory reserve for future capital projects is $1,780,000 (2017 - $782,000).
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Duteau Creek Water Treatment Plant UV UpgradesTender

Awarded Bids (So Far)
Bid No. Description Closing Date Awarded to: Award Value
2017-E372.09.1 Ultraviolet Disinfection at Duteau Creek Water
Treatment Plant Project – Engineering Services
20-Jan-2017 Opus International Consultants (Canada) Ltd.
$399,870.00 (plus GST)

2017-E372.09.2 Ultraviolet Disinfection at
DCWTP Project - Equipment
23-Mar-2017 Xylem Canada Company
 1,243,340.00 (plus GST)

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Duteau Creek Water Treatment Plant UV UpgradesTender No. 2017-E372-09.4  Closing Date: Thursday, August 10, 2017 - 2:00 pm
The Regional District of North Okanagan, hereinafter referred to as “Owner”, invites tenders for Regional District of North Okanagan Tender No. 2017-E372-09.4, the Duteau Creek Water Treatment Plant UV Upgrades (DCWTP UV Upgrades).
The work includes the supply of all labour, materials and equipment to construct the Duteau Creek WTP UV Building and related facilities. The work includes, but is not limited to, the earthworks, concrete works, structural, installation of owner supplied UV equipment, mechanical and electrical systems necessary for the complete upgrade as detailed in the Contract Documents.

Water rates up, but down

By Kate Bouey - CASTANET Mar 9, 2017 / 10:47 am
Every drop of water Greater Vernon residents use this year will likely cost 3.7 per cent more. However residents are getting a small break on the base rate fee. The Greater Vernon Advisory Committee is recommending a complicated formula that will see commercial and industrial customers, including the hospital and brewery, pay more for water. Even cheap water for agriculture is going up 3.7 per cent. “We're realigning (rates) so everyone pays the same amount for water so that's a step in the right direction,” said director Bob Spiers following a meeting on Thursday. Spiers is pleased with a recommended change to the base rate from $95 to $90 per quarter – a $20 annual savings for small metered customers. “I'm happier this year than I was last year. We're moving in the right direction as far as covering our costs on the agriculture side and the idea that everyone should pay the same amount for each drop of water that they consume.” Spiers said he uses approximately 46 cu. metres of water per quarter and his bill should decrease by $13.48. If directors had chosen another option, his bill would have gone up by $14.00. GVAC chairperson Juliette Cunningham said the change could be an incentive for people to manage their consumption. “The impact could be quite minimal so it does help people to think about that, how they use their water,” Cunningham said. The changes must be approved by the North Okanagan Regional District board.
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Don Quixote Note: The approval for these rates will be at t5e RDNO next board meeting. They will be effective April 1, 2017 and will appear on your 2nd Quarter bill. (June 30).

When the water budget was approved a month ago there was to be a 3.7% rate increase across the board. This would have meant that the $95.00 Quarterly base fee would have increased to $98.52 (an increase of $14.08 annually).

It was decided that the base fee should reflect the water meter size and there are different base rates dependent on your meter size. There are now 3 meter sized base rates. The smallest meter size which is for most residential customers and most of the small businesses was reduced to $90 per quarter (resulting savings of $20 annually for most customers. )

 The other major change is that all ICI (Industrial, Commercial and Institutional Customers) now pay for their consumption at the same rates as Residential clients. The rates for each level of consumption was raised by 3.7% over the 2016 rates.
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 Link to a residential calculator where you can put in your quarterly consumption amount (in m3) and see how these new rates will effect you. (in my case my 46m3 quarterly consumption will result in an annual reduction of $13.48.)

Try the Beta calculator and estimate your saving or increase.

https://docs.google.com/spreadsheets/d/1nnItofUqHBkL8mKea_eEcAq-nK3LBa7EVSFqANPjmzw/edit#gid=0

Ultraviolet Disinfection at Duteau Creek Water Treatment Plant Project – Engineering Services

http://www.rdno.ca/tenders/2017_Bid_Awards.pdf

Directors take Greater Vernon water rates in a new direction

by Richard Rolke - Vernon Morning Star posted Feb 25, 2016 at 7:00 AM— updated Feb 25, 2016 at 8:21 AM
Greater Vernon’s water rates structure has been reversed and that has some politicians boiling. Instead of adopting a recommended rates structure from the Greater Vernon Advisory Committee, the Regional District of North Okanagan board voted to change the terms of the bylaw. “The spread between residential and commercial customers becomes larger,” said Akbal Mund, who, along with director Bob Spiers, opposed adoption. “There are more residential costumers than commercial so we are penalizing residential.” The rate changes adopted Wednesday include:

Domestic use from 40 to 80 cubic metres — $1.59 to $1.58
Domestic use of more than 80 cubic metres — $2.32 to $2.37
Non-domestic — $1.67 to $1.58

GVAC had recently gone against a staff report on rates and that was a mistake, says director Bob Fleming, who also sits at GVAC. “The staff proposal was well thought out and was created to keep the changes to an overall minimum, a two per cent increase to rates,” he said. However, Fleming says members of GVAC amended the staff proposal. “We didn’t have time to consider the implications. The main result is higher water users pay substantially more — nine to 10 per cent. It skewed things,” he said. As a result, Fleming introduced a motion Wednesday to amend the GVAC recommendation to reflect the original staff proposal. Only Greater Vernon directors voted on the motion Wednesday. Mund denies the GVAC recommendation was based on a lack of details. “The information is there,” he said. Spiers insists there shouldn’t be a difference between how residential, commercial and industrial water users are treated. “With a drop of potable water, you should pay the same,” adding that a residential customer using more than 80 cubic metres will see the cost climb eight per cent. “You want to talk about rate shock, that’s what you got.” A process will begin in May to review rates. “We need the context and the implications. Rates may go up and they may go down but there needs to be a discussion,” said director Mike Macnabb.
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Don Quixote Note:

• The change at GVAC was to maintain the spread between the non Domestic Rate of 1.53 (in 2015) and 2.19 Residential above 80m3 rate (2015 Rate) which is 66 cents lower for non Domestic Customers. (Business,Institutional and Industrial.) 
• The rate change as originally passed by GVAC maintained this difference at a  1.67 vs 2.32 = 65 cents. )
• The rate change as revised at RDNO increased this difference  at a  1.58 vs 2.37 = 79 cents

At the Special May Rates meetings GVAC will have to discuss the direction of this difference and how fast to equalize the NON Domestic and the Residential Rates. Agricultural rates will also be a source of discussion.

"Wait until May"

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Below are calculators updated with new RDNO approved rates that you can use to determine the effect on your water account.

Simply place your average quarterly number of m3 of water consumption in the yellow box to see how this 2% rates increase will affect you. If you wish you can put in your quarterly consumption for the last 4 quarters and total the amount. Because of the quarterly variances this amount will be slightly higher than the average result. In my case my average quarterly consumption is 35.25 m3 in 2015 and my total bill for 2016 (assuming same consumption) will be $25.43 lower. It is $23.51 lower when I use the different quarters rate method.

https://docs.google.com/spreadsheets/d/1Pr6mQbkFiySvj8rXw8XoewZ6dQ-wt9-1_YRrgFFH_G4/edit#gid=0  Residential Calculator: 

https://docs.google.com/spreadsheets/d/1maInmT6PxQz2IcSpNpQhPAf461HaIjQ2dN6xx0w57dk/edit#gid=0    ICI (business Calculator)  

Water work adds up to $19 million

by Richard Rolke - Vernon Morning Star posted Jan 31, 2016 at 1:00 AM
There’s a lot on tap for Greater Vernon’s water utility in 2016. The Greater Vernon Advisory Committee approved a $19 million budget for the water utility during a special meeting Thursday. “The projects presented are reasonable. We’re trying to replace old infrastructure,” said Juliette Cunningham. The budget includes $5 million for new projects and $4 million for work carried over from 2015. Among those moving ahead are replacing water meters, expanding dam capacity and extending the Kalamalka Lake intake. Overall water rates are climbing two per cent, and Cunningham says that’s necessary given the scope of work required. “It’s a big system and many parts of it are quite old,” she said. Opposition to the water budget came from directors Bob Spiers and Gyula Kiss. “I was reluctant to let it go without further study,” said Spiers. “We had no details until 8 a.m. (Thursday). We could have waited another week or two before making a decision.” However, Spiers says his opposition was more procedural than it was against the budget details. “I didn’t see anything that should be thrown out but when there are 30 pages of figures, it should have more review,” he said.
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Don Quixote Note: 
"Spiers says that money can help during or for upgrades, but doesn't need to be that high, especially when some of it comes from the rate hikes. "As (Coldstream councillor) Gyula Kiss said, when the reserves total one year's budget, they seem excessive to me."

In addition to wanting more time to check out the details of the budget I did object to the fact that from rates we are adding an additional  $655,000 to reserves in 2016.

http://www.rdno.ca/agendas/160128_AGN_GVAC_SPEC_amended_Full.pdf (p.44)

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The amount to come from Fees, Charges s/b last years budget plus 2% to get to the announced 2% rate increase that is held out for ratification at a future GVAC Meeting. The target for the total rates calculator s/b $19,459,839 x 1.02 =  $19,849,035. 

The difference between this amount and the $20,412,773 that is shown in above budget in the Fees, Charges line ($563,737) is that the difference is estimated to be coming from other revenue sources than the rates charges.

The prelim water calculator showed a 2016 target of $20,005,260 which is  $156,225 more that my calculated 2% rate increase  target.  

Using the existing prelim numbers from the calculator and from this report I have devised a prelim water calculator for Residential (Domestic) scrutiny. Simply place your average quarterly number of m3 of water consumption in the yellow box to see how this 2% rates increase will affect you.

https://docs.google.com/spreadsheets/d/1Pr6mQbkFiySvj8rXw8XoewZ6dQ-wt9-1_YRrgFFH_G4/edit#gid=0