Council approves small increases to utility rates

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by Tristan Turner
With Files from Lucy Roy

Council has approved an increase in rates for water, sewer and waste, effective January 2018 at their Dec. 12 meeting. Water, sanitary and garbage would see an increase in utilities of just over 1.8 per cent for 2018.

The three bylaws passed second and third reading as part of a broad approval motion that included other items, including items for information and other legislation.

Waste Management Bylaw 18/2017

Presenter Shawna Jason, Director of Corporate and Financial Services, said that Administration is proposing an increase in waste management fees of 15 cents per month per household for an increase of $1.80 per year, just under the 2 percent increase residents saw last year.

Sewer Rates Bylaw 17/2017

Jason said the anticipated average residential household could see an increase in sanitary rates of $1.19 per month or $14.24 per year for an overall increase in utilities over last year by about 1.8 per cent.

Jason said the Town uses a full cost recovery model and a few changes were made to the sanitary rate model this year.

As with the water bylaw, they are achieving a slightly higher than the required surplus to achieve the rate they calculated.

They have also received a draft Alberta Capital Region Wastewater Commission rate update, and they have indicated they will have a price increase of just over 4.7 percent for 2018.
Jason said – at Council’s Nov. 28 meeting – they have also looked at their sanitation operating budget and completed an update on that into their model and have looked at their reserves balance.

“We are starting the reserve in 2016 at just over 3.2 million. We anticipate based on our draft model long-term capital plan expenditure just over 5 million with excess funds from Sanitary Sewer Utilities of over 14 million coming in for an anticipated reserve balance at the end of 2038 just over 12 million dollars.”

Water Rates Bylaw 16/2017

Jason said Administration is proposing water rates go up and the average residential customer would see an increase in their monthly utility bills of 82 cents per month or $9.79 per year.
In her quick background summary during First Reading, Jason said Morinville had adopted a full cost recovery rate model, and as part of adapting and upgrading a cost recovery model each year, some factors are reviewed and updated. This includes the current book value of water tangible capital assets. It is through the review of the cost recovery model that we receive some interesting discoveries.

“We are seeing a reduction in the average annual residential consumption of approximately 7 percent per year over that of last year despite we are seeing growth of over 2 percent. So it was an interesting observation,” Jason said. “It tells us that water consumption measures such as the rebate programs that we have been promoting seem to be working. So that was good information. And also, that any leaks within our system in Morinville use are quite minimal.”

Because of the cost recovery model update, the average rate of return for the water utilities calculated is 3.9 per cent and sanitary and utilities calculated at 4 percent. In order to meet those levels of return, the water utility requires a surplus of just over $1 Million and sanitary sewer utilities requires a surplus of about $675,000, so combined value of almost 1.7 million as a function.

Based on the cost recovery model update they are seeing a surplus of 1.8 million which is just over the amount required to reach that level of return.

Epcor Water Services have indicated the rates for water will be increased for January 2018 by 5 percent.

Jason said they have reviewed carefully the water utility budget operation point of view and also assigned those costs of both direct and indirect costs. As part of the update, they also spent some time on capital costs. The opening reserve balance at the end of 2016 was sitting with a balance of $175,000, and with their proposed draft long-range capital plan project identified in the water utility function, they have capital projects just over $13 million dollars between now and the year 2038.

Comparing that to the excess of funds they expect to bring in each year, they would end up in this reserve with a positive overall balance of just over 11 million. The model itself predicts that water rates will see steady increases over time in costs levied to the Town.

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