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.