Mayor Al McDonald questions city staff during the Water and Sanitary Sewer Review Committee meeting on Monday night. PHOTO BY LIAM BERTI
On the eve of water meters going live in North Bay, the Water and Sanitary Sewer Review Committee members say they need more time to find a fair and equitable billing system come 2016.
With their original deadline for a recommendation to council rapidly approaching, the committee met for the fifth time on Monday night to review the sobering data that city staff presented to them over a fortnight ago.
When tasked with studying how billing customers based on water meter size would impact different users, the city’s chief financial officer, Margaret Karpenko, presented some eye-opening statistics that showed that ICI/multi-residential units with bigger fixtures could expect some big increases.
While the whole premise of that system would be to have bigger pipes and heavy users bear more burden for their demand on the system, the numbers seemed to accomplish that a little too well.
Under a 60 per cent fixed, 40 per cent variable cost recovery model, the city needs to recover $7.4 million in fixed rates to cover their costs from the 17,816 connections in the area.
But if every user were to be charged $0.99 per cubic metre of consumption, which the committee previously deemed fair for 2016, a typical residential home with a 5/8-inch or 3/4-inch fixture would still expect to pay $30.40 in fixed fees per month for the water portion of their bill. As the connection size increases though, so to would the fixed rates, drastically.
When using the same equivalent factors as Greater Sudbury, a one-inch connection, for example, would pay $79 each month in fixed fees, while a six-inch connection would be paying $1,575, with all other connections falling between that range.
In order to more accurately illustrate how local industrial and commercial users would be hit, the group held a closed in-camera meeting after the regular portion on Monday, during which staff confidentially revealed the identity of some of the larger users and their specific data.
“The committee needs to know names and specifics because we want to approach equity, but we don’t want to put people out of business either,” said committee chairman George Maroosis.
Maroosis said he feels content with meter size continuing to be considered in their recommendation, but that a declining-block rate system might have to be looked at, which would offer a volume discount for those who need the higher consumption.
“We may very well have to go into declining rates, if somebody is using a ton of water for good reason and not wasting it,” he said after the meeting. “Is that inequitable to give a volume discount? Theoretically I don’t think it is, but that’s why we need to take a close look at this thing.
“There’s no question that we want to approach equity but, at the same time, you’ve got to be careful; there are always consequences to everything,” he added.
As Coun. Mac Bain alluded to, many of the city’s services fall under ICI-type properties with large fixtures, therefore increasing their fixed water costs and, in turn, impacting the ratepayer.
Ultimately, the politicians are out to address the fact that the residential sector is paying 73 per cent of the revenue required for the city’s water and sanitary sewer cost recovery, but only accounting for 51 per cent of the water usage.
On the other hand, the ICI/multi-residential sectors use the other 49 per cent, but are only paying 27 per cent of the revenue.
Even if the simulated fixture size-based rates were adopted for 2016 and the city stuck to the 60 per cent fixed, 40 per cent variable cost recovery model, the residential sector would still be accounting for 64 per cent of the city’s revenue.
A projected four-year transition plan simulated by Karpenko showed that, even if the city shuffled the fixed-to-variable rates over the coming years, they still won’t reach equity among the classes.
Even with gradual tapering, Karpenko said the closest they could expect to get to true equality would be in 2019, when the residential sector would account for 57 per cent of the revenue under a 30 per cent fixed, 70 per cent variable cost recovery model, which would come with significant risk because of the city’s high fixed costs.
But apparently that disparity isn’t necessarily unique to North Bay.
City staff pooled sample data from consulting companies who have analyzed water billing in other Northern Ontario towns. Of the five anonymous municipalities that were included in Monday's presentation, four of them showed the residential sectors paying a significantly disproportionate amount of the cost-recovery revenue.
“In not too many instances is the actual consumption split even to the revenue-generating rates,” Karpenko explained. “So in terms of our revenue splits and our equity issues, there are several municipalities with the same challenge.”
“I think, if anything, the chart shows the challenge to the committee that we want to approach equity, but equity is something that is difficult to achieve,” Maroosis echoed. “It shows that we aren’t the only people in this situation; It doesn’t make our situation any better, but it just shows that it’s not the easiest thing in the world to get equity between the sectors.”
The rhetoric around the table has also transitioned back to the conservation efforts involved in water meter billing.
“Water meters are fair because you pay for what you use; I don’t think there’s any disputing that,” Maroosis said bluntly. “It really was an unfair system [before]. So this is about fairness, but the other thing this is about is conservation.
“Water is going to be the major issue in this century,” he added. “The notion that water is not a resource that we need to worry about wasting is an improper notion.”
All of Karpenko’s financial simulations take the assumption of customers using 20 per cent less water than they were under the fixture rate model.
But when looking at other communities who have made the transition to water meters, Karpenko said there tends to be a steady climb back to regular consumption within a five year window.
There was also talk of establishing some sort of subsidy program for more efficient fixtures and appliances on Monday.
City staff are looking into it Maroosis said, but such programs would only be developed later on as part of the water and sanitary sewer budget talks, which begin taking place sometime in October.
Maroosis said the proprietors of Carry All Builder Supplies Ltd. - Home Hardware have already said they are going to run their own unaffiliated campaign offering low flow toilets, shower heads and other fixtures at their cost to the general public.
Moving forward, the committee will meet again on Monday, September 14, at 5 p.m. where the team will “hopefully make some decisions.”
Having already reached their initial deadline for a recommendation, the committee has set their sights on some time in the middle of October to formulate a final recommendation for council to consider.
“We’ll get a plan pretty quickly now and we’ll be able to put it out and hold a public meeting and get some reaction,” said Maroosis.
With the water meters going live as of today (Tuesday), city staff are also hosting a series of open house meetings for the public throughout the first month of the new system.
The dates are tentatively set for September 3, 10, 16, 23 and 29 and more are expected to be announced as the first billing date in October approaches.
