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City looking at water and sewer rate increases

At a budget meeting Monday, City Council heard that revenue from water and sewer rates needs to at least double in order to cover costs. In order to go to a full cost recovery model, the city must generate over $3 million to cover water costs and over $2 million for sewer.

It's projected that over the next 20 years, costs for replacing aging infrastructure will be over $80 million. City Manager Dianne Hunter explains, "In a community that's experiencing growth, you are adding infrastructure on all the time, therefore you're adding new infrastructure deficit all the time."

However, Director of Infrastructure and Capital Works Victor Shopland pointed out that although Fort St. John's population is moving up, the water volume used is down, something he calls a "very good trend". The city is using about the same amount of water as 10 years ago.

While some of the replacement projects can be deferred, it is a risk that grows every year. In the past, water projects have been funded from reserves, and long term borrowing, something that isn't considered sustainable.

Currently residents pay a minimum of $45 quarterly, with a charge of 75 cents per cubic meter over the minimum volume and 85 per cent of that cost for sewer. In rural areas water costs $2.50 per cubic meter.

In order to move to a full-cost recovery model, city staff believes the following changes need to happen:

– Following rates of other utility commissions, water and sewer rates would increase approximately 15 cents, starting with a rate of $1.81 for water and $1.86 for sewer in 2012, plus frontage taxes and other fees. These increases are proposed to take place over 10 years. Each 1 cent increase produces approximately $20,000, so in order to generate $3 million more, the rate would have to increase by $1.50.

– Billing monthy, instead of quarterly, to improve cash flow and address billing issues sooner.

– Implementing a proposed non-domestic surcharge of $2 at rural water stations.

– Adding a monthly service fee of $1 a month, generating approximately $80,000 a year for either water or sewer. In comparison, a $10 per month service fee split between water and sewer would create $400,000 more per year each.

– Removing the minimum amount, meaning if no water is used, the only cost will be the proposed service fee. This would mean that approximately $150,000 a year would not be collected.

If all of these changes were implemented, it would mean the average monthly bill for a residence would be $39.49, up from $22.74, or $473.93 for the year, an increase of $201.11.

Council deferred a decision on the matter until Saturday, asking staff to prepare a document showing what the plan would look like over the next 10 to 15 years, as the one presented Monday was only for 2012.

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