water and wastewater rates in the city of ...water rate increase – 2001 to 2005 inflationary and...

WATER AND WASTEWATER RATES IN THE CITY OF GREATER SUDBURY

Overview of Price Trends and Cost Factors

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Key Questions

Why have water rates increased since 2001?Why have water rates increased since 2001?How does the City compare to other municipalities?How does the City compare to other municipalities?

Billing structuresBilling structuresWater and wastewater costsWater and wastewater costsRate increasesRate increases

How are water rates projected to change in the future?How are water rates projected to change in the future?

Pricing Trends

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Water and Wastewater Costs

0

5

10

15

20

25

30

2001 2002 2003 2004 2005

Capital Operating

Water Costs (millions)Water Costs (millions)Water Costs (millions)

30% increase

$18.1

$22.7

$23.6

$19.1$20.7

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Water and Wastewater Costs

0

5

10

15

20

25

30

2001 2002 2003 2004 2005

Capital Operating

Wastewater Costs (millions)Wastewater Costs (millions)Wastewater Costs (millions)

32% increase

$17.3

$21.1$22.9

$18.2 $19.7

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Water Rates

0.300

0.400

0.500

0.600

0.700

0.800

0.900

1.000

Jan 1999 Jan 2002 Jan 2003 Jan 2004 Jan 2005Jan 2000 Jan 2001 Jul 2001

$0.770

$0.610

$0.670$0.734

$0.791$0.770 $0.770

$0.590

34% increase$0.201 per m3

Variable Rate (per m3)Variable Rate (per mVariable Rate (per m33))

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Water Rates

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Jan 1999 Jan 2002 Jan 2003 Jan 2004 Jan 2005Jan 2000 Jan 2001 Jul 2001

$8.77 $9.07$9.96

$10.92 $11.76

$8.77 $8.77 $8.77

34% increase$2.99 per month

Service Charge (per month)Service Charge (per month)Service Charge (per month)

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Impact on Residential Customer

20012001 20052005

Average residential consumptionAverage residential consumption 20 m20 m33 20 m20 m33

Variable consumption chargeVariable consumption charge $0.590$0.590 $0.791$0.791

Monthly consumption chargeMonthly consumption charge $11.80$11.80 $15.82$15.82

Monthly service chargeMonthly service charge $8.77$8.77 $11.76$11.76

Total monthly water billingTotal monthly water billing $20.57$20.57 $27.58$27.58

Monthly wastewater billingMonthly wastewater billing $23.66$23.66 $31.99$31.99

Total monthly water and wastewater billingTotal monthly water and wastewater billing $44.23$44.23 $59.57$59.57

Monthly increaseMonthly increase $15.34$15.34

Annual increaseAnnual increase $184.08$184.08

Average Monthly CostAverage Monthly CostAverage Monthly Cost

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Residential Customer Billing

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Residential Customer Billing

Cost Drivers

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Water Rate Increase – 2001 to 2005

Total increaseTotal increase20.1¢ per cubic 20.1¢ per cubic metremetre or 34%or 34%

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Inflationary and regulatory cost increasesInflationary and regulatory cost increases8.4¢ per cubic 8.4¢ per cubic metremetre or 14.3%or 14.3%


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Inflationary and Regulatory Cost Increases

Provincial requirements stemming from WalkertonProvincial requirements stemming from WalkertonEnergy costsEnergy costsChemical costsChemical costsExpiration of OMERS holidayExpiration of OMERS holidayWage increases pursuant to collective agreementWage increases pursuant to collective agreement

Comparative cost indicesComparative cost indices 2001 to2001 to20052005

Consumer price indexConsumer price index 9.2%9.2%Electric power selling price indexElectric power selling price index 31.4%31.4%Industrial price index Industrial price index –– chlorinechlorine 20.5%20.5%

Impact – 8.4¢ or 14.3%Impact Impact –– 8.4¢ or 14.3%8.4¢ or 14.3%

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Inflationary and Regulatory Cost Increases

Since 2002, the Ministry of the Since 2002, the Ministry of the Environment has charged and/or Environment has charged and/or fined more than 50 municipalities fined more than 50 municipalities for regulatory violationsfor regulatory violationsOne municipality is currently One municipality is currently facing 12 charges carrying facing 12 charges carrying maximum fines of $26 millionmaximum fines of $26 million

The Cost of Non-ComplianceThe Cost of NonThe Cost of Non--ComplianceCompliance

Number of municipalities fined/chargedNumber of municipalities fined/charged

0

5

10

15

20

25

2002 2003 2004

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Sustainable capital asset management policy Sustainable capital asset management policy 6.3¢ per cubic 6.3¢ per cubic metremetre or 10.6%or 10.6%


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Sustainable Capital Asset Management

The City’s current investment in water infrastructure is estimatThe City’s current investment in water infrastructure is estimated to be ed to be just over $700 millionjust over $700 million

NumberNumber ReplacementReplacementValue (millions)Value (millions)

Production infrastructureProduction infrastructureWater treatment plantsWater treatment plants 22 $90$90Well systemsWell systems 2121 $5$5

$95$95

Distribution infrastructureDistribution infrastructureWater distribution pipes (metres)Water distribution pipes (metres) 870,000870,000 $435$435ValvesValves 7,5007,500 $30$30Tanks and reservoirsTanks and reservoirs 88 $15$15Booster and pumping stationsBooster and pumping stations 1212 $6$6

$486$486

Service infrastructureService infrastructureWater services connectionsWater services connections 42,00042,000 $105$105Fire hydrantsFire hydrants 4,6504,650 $23$23

$128$128

Total infrastructure costTotal infrastructure cost $709$709


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Sustainable Capital Asset Management

In order to maintain the current state of this infrastructure, tIn order to maintain the current state of this infrastructure, the City is he City is required to spend approximately 2% of the replacement value on arequired to spend approximately 2% of the replacement value on an n annual basisannual basis

Capital financing in 2001 amounted to less than 1%Capital financing in 2001 amounted to less than 1%The establishment of a sustainable capital asset management progThe establishment of a sustainable capital asset management program in ram in 2002 increased the capital financing component of the water and 2002 increased the capital financing component of the water and wastewater rates (phased in over 10 years) wastewater rates (phased in over 10 years)

Increases will continue until 2012Increases will continue until 2012

(millions)(millions) 20022002 20032003 20042004 20052005

Additional annual capital financing Additional annual capital financing $0.4$0.4 $0.8$0.8 $1.2$1.2 $1.6$1.6

Cumulative increase in water costsCumulative increase in water costs 2.6%2.6% 5.3%5.3% 7.9%7.9% 10.6%10.6%

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Allocation of program support costsAllocation of program support costs2.4¢ per cubic 2.4¢ per cubic metremetre or 4.0%or 4.0%


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Allocation of Program Support Costs

Water costs for 2005 reflect an allocation of program support coWater costs for 2005 reflect an allocation of program support costs not sts not previously financed through water ratespreviously financed through water rates

FinanceFinanceInformation technologyInformation technologyHuman resourcesHuman resourcesLegalLegal

This allocation reflects the transition towards full cost accounThis allocation reflects the transition towards full cost accounting for water ting for water and wastewater services mandated/to be required by Provincial and wastewater services mandated/to be required by Provincial legislationlegislationTotal allocation for 2005 is anticipated to be $600,000Total allocation for 2005 is anticipated to be $600,000

Would be financed through municipal levy if not recovered througWould be financed through municipal levy if not recovered through h water rateswater rates


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Consumption decreasesConsumption decreases1.8¢ per cubic 1.8¢ per cubic metremetre or 3.1%or 3.1%


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Consumption Decreases

10.00

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

2001 2002 20031999 2000

17.6 million 18.1 million

16.4 million

17.4 million

18.2 million

Consumption levels (m3)Consumption levels (mConsumption levels (m33))

16.5 million

2004

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Consumption Decreases

(millions)(millions) 20022002 20032003 20042004 20052005

Costs to be financed by consumption charge Costs to be financed by consumption charge $10.8$10.8 $11.8$11.8 $12.7$12.7 $13.6$13.6

2001 consumption level (millions of m2001 consumption level (millions of m33)) 17.617.6 17.617.6 17.617.6 17.617.6

Water rate per mWater rate per m33 (assuming no change)(assuming no change) 61.0¢61.0¢ 67.0¢ 67.0¢ 72.2¢ 72.2¢ 77.3¢77.3¢

Actual water rate per mActual water rate per m33 61.0¢61.0¢ 67.0¢67.0¢ 73.4¢73.4¢ 79.1¢79.1¢

Effect of decrease in consumptionEffect of decrease in consumption –– –– 1.2¢ 1.2¢ 1.8¢1.8¢


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Loss of INCO and Falconbridge donationsLoss of INCO and Falconbridge donations1.2¢ per cubic 1.2¢ per cubic metremetre or 2.0%or 2.0%





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Loss of INCO and Falconbridge Donations

During 2001, INCO and Falconbridge committed to a total donationDuring 2001, INCO and Falconbridge committed to a total donation of of $1.3 million to offset the shift of costs to non$1.3 million to offset the shift of costs to non--mining customers resulting mining customers resulting from the implementation of a full recovery wastewater ratefrom the implementation of a full recovery wastewater rate

WaterWater WastewaterWastewater TotalTotal

20012001 $300,000$300,000 $300,000$300,000 $600,000$600,00020022002 $200,000$200,000 $200,000$200,000 $400,000$400,00020032003 $165,000$165,000 $165,000$165,000 $330,000$330,00020042004 –– –– ––20052005 –– –– ––

As the amount of the annual donations have decreased, water rateAs the amount of the annual donations have decreased, water rates have s have risen by a corresponding amountrisen by a corresponding amount


Municipal Comparisons

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How Does Sudbury Compare?

The current rate structure utilized by Greater Sudbury reflects The current rate structure utilized by Greater Sudbury reflects common common practice for similar sized municipalitiespractice for similar sized municipalities

Variable RateVariable Rate MonthlyMonthlyUniformUniform OtherOther NoneNone Service ChargeService Charge

Greater SudburyGreater SudburySault Ste. MarieSault Ste. MarieNorth BayNorth BayTimminsTimminsThunder BayThunder BayBarrieBarrieBrantfordBrantfordKawartha LakesKawartha LakesKingstonKingston

PeterboroughPeterboroughSarniaSarnia

Water Billing StructureWater Billing StructureWater Billing Structure

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The current rate structure utilized by Greater Sudbury reflects The current rate structure utilized by Greater Sudbury reflects common common practice for similar sized municipalitiespractice for similar sized municipalities

Sewer RateSewer Rate Applied toApplied toPercentagePercentage OtherOther ServiceService

of Waterof Water ChargeCharge

Greater SudburyGreater SudburySault Ste. MarieSault Ste. MarieNorth BayNorth BayTimminsTimminsThunder BayThunder BayBarrieBarrieBrantfordBrantfordKawartha LakesKawartha LakesKingstonKingstonPeterboroughPeterboroughSarniaSarnia

Wastewater Billing StructureWastewater Billing StructureWastewater Billing Structure

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Monthly CostsMonthly CostsMonthly Costs

0 10 20 30 40 50 60 70 80

Brantford

Sarnia

Barrie

Kingston

Kawartha Lakes

Timmins

Thunder Bay

North Bay

Sault Ste. Marie

Sudbury

Water Wastewater

Assumed consumption Assumed consumption –– 20 m20 m33 per monthper month

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Assumed consumption Assumed consumption –– 20 m20 m33 per monthper month WaterWater WastewaterWastewater TotalTotal

Greater SudburyGreater Sudbury $27.58$27.58 $31.99$31.99 $59.57$59.57

Sault Ste. MarieSault Ste. Marie $16.07$16.07 $16.07$16.07 $32.14$32.14North BayNorth Bay $15.78$15.78 $14.15$14.15 $29.93$29.93TimminsTimmins $18.24$18.24 $10.94$10.94 $29.18$29.18Thunder BayThunder Bay $17.95$17.95 $11.67$11.67 $29.62$29.62BarrieBarrie $24.56$24.56 $15.00$15.00 $39.56$39.56BrantfordBrantford $21.95$21.95 $12.00$12.00 $33.95$33.95Kawartha LakesKawartha Lakes $37.54$37.54 $38.67$38.67 $76.21$76.21KingstonKingston $18.68$18.68 $33.88$33.88 $52.56$52.56SarniaSarnia $21.80$21.80 $12.46$12.46 $34.26$34.26

Monthly CostsMonthly CostsMonthly Costs

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Why So High?

Large geographic area combined with a number of separate Large geographic area combined with a number of separate population clusterspopulation clustersTopographyTopographyGround characteristicsGround characteristics

SudburySudbury Sault Ste. Sault Ste. PeterboroughPeterborough OttawaOttawaMarieMarie

Water treatment plantsWater treatment plants 22 11 11 22Well systemsWell systems 2121 66 –– 44Booster and pumping stationsBooster and pumping stations 1212 22 44 2020Tanks and reservoirsTanks and reservoirs 88 33 –– 1414

Sewage treatment plantsSewage treatment plants 1010 22 11 22LagoonsLagoons 44 –– –– ––Lift stationsLift stations 7777 1818 1313 1414

GeographyGeographyGeography

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Why So High?

Currently, Greater Sudbury appears to be the only major municipaCurrently, Greater Sudbury appears to be the only major municipality in lity in Northern Ontario that has adopted true full cost recovery for waNorthern Ontario that has adopted true full cost recovery for water and ter and wastewater serviceswastewater services

(in millions)(in millions) WaterWaterUser FeesUser Fees ExpensesExpenses ShortfallShortfall

Sault Ste. MarieSault Ste. Marie $6.2$6.2 $8.5$8.5 ($2.3)($2.3)North BayNorth Bay $5.2$5.2 $6.1$6.1 ($0.9)($0.9)TimminsTimmins $4.4$4.4 $6.2$6.2 ($1.8)($1.8)Thunder BayThunder Bay $12.7$12.7 $17.7$17.7 ($5.0)($5.0)

(in millions)(in millions) WastewaterWastewaterUser FeesUser Fees ExpensesExpenses ShortfallShortfall

Sault Ste. MarieSault Ste. Marie $6.1$6.1 $8.8$8.8 ($2.7)($2.7)North BayNorth Bay $5.2$5.2 $3.8$3.8 $1.4$1.4TimminsTimmins –– $2.6$2.6 ($2.6)($2.6)Thunder BayThunder Bay $7.4$7.4 $15.1$15.1 ($7.7)($7.7)

Full Cost RecoveryFull Cost RecoveryFull Cost Recovery

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Why So High?

If Greater Sudbury financed water and wastewater costs through tIf Greater Sudbury financed water and wastewater costs through the he municipal levy to the same extent as Thunder Bay, the average momunicipal levy to the same extent as Thunder Bay, the average monthly nthly cost would be reduced by $15 per monthcost would be reduced by $15 per month

The municipal levy would experience a corresponding increase of The municipal levy would experience a corresponding increase of $10.2 million or 6.9%$10.2 million or 6.9%

(in millions)(in millions) WaterWater WastewaterWastewater

Budgeted costs Budgeted costs –– 20052005 $23.6$23.6 $22.9$22.9Less:Less:

Other revenue sourcesOther revenue sources ($0.9)($0.9) ($0.4)($0.4)Municipal levy financingMunicipal levy financing ($5.0)($5.0) ($7.7)($7.7)

Required user fee revenueRequired user fee revenue $17.7$17.7 $14.8$14.8Actual projected user fee revenueActual projected user fee revenue $20.3$20.3 $22.5$22.5

Potential reduction in user feesPotential reduction in user fees 12.8%12.8% 34.2%34.2%

Full Cost RecoveryFull Cost RecoveryFull Cost Recovery

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Why So High?

Where sustainable capital asset management programs have been Where sustainable capital asset management programs have been introduced in Southern Ontario, water customers have seen markedintroduced in Southern Ontario, water customers have seen markedincreases in water ratesincreases in water rates

20002000 20012001 20022002 20032003 20042004

Greater SudburyGreater Sudbury –– (20.8%)(20.8%) 3.8%3.8% 9.8%9.8% 9.6%9.6%YorkYork 2.8%2.8% 2.5%2.5% 0.3%0.3% 5.0%5.0% 5.0%5.0%DurhamDurham 0.4%0.4% 3.5%3.5% 4.6%4.6% 5.5%5.5% 6.5%6.5%PeelPeel –– –– 3.0%3.0% 3.0%3.0% 5.0%5.0%HaltonHalton 2.3%2.3% 7.1%7.1% 7.5%7.5% 6.5%6.5% 9.1%9.1%HamiltonHamilton 39.5%39.5% 14.9%14.9% 12.0%12.0% 8.6%8.6% 9.5%9.5%TorontoToronto 2.0%2.0% 2.1%2.1% 9.0%9.0% 9.0%9.0% 6.0%6.0%

Capital Asset ManagementCapital Asset ManagementCapital Asset Management

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Why So High?

20012001 20052005 IncreaseIncrease

Water and wastewater Water and wastewater –– Greater SudburyGreater Sudbury $44.23$44.23 $59.57$59.57 34%34%

Residential telephone (local service only)Residential telephone (local service only) $22.14$22.14 $22.14$22.14 ––ElectricityElectricity $94.15$94.15 $94.92$94.92 1%1%Natural gasNatural gas $42.52$42.52 $51.51$51.51 21%21%Basic cable televisionBasic cable television $19.81$19.81 $25.08$25.08 27%27%

One litre of municipal waterOne litre of municipal water $0.003$0.003One litre of bottled waterOne litre of bottled water $2.200$2.200

Monthly Utility CostsMonthly Utility CostsMonthly Utility Costs

Bottled vs. Tap WaterBottled vs. Tap WaterBottled vs. Tap Water

Anticipated Future Rates

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Anticipated Future Rates

Future water and wastewater costs will continue to increase due Future water and wastewater costs will continue to increase due to:to:Inflationary and regulatory cost increasesInflationary and regulatory cost increasesContinued phaseContinued phase--in of the sustainable capital asset management in of the sustainable capital asset management programprogram

0

10

20

30

40

50

60

70

80

90

2005 2006 2007 2008 2009 2010 2011 2012

Forecasted Monthly CostsForecasted Monthly CostsForecasted Monthly Costs

WATER AND WASTEWATER RATES IN THE CITY OF GREATER SUDBURY

Overview of Price Trends and Cost Factors

water and wastewater rates in the city of ...water rate increase – 2001 to 2005 inflationary and...

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