The city wants to change the way they charge residents for water, which could see households that use the least amount of water paying more.
The billing change is a response to what the city says is a flawed rate structure. The city says the problem has been highlighted in recent years as the city’s consumption continues to decline as a result of conservation measures.
Currently, residents pay their water bill based on how much water they consume. That means a resident who uses $50 worth of water also pays $50 for sewage and storm sewers, plus a small base fee for fire services.
Sally McIntyre, manager for environmental programs, says this model doesn’t actually reflect the costs of delivering water services.
“Even though there are more people using water, revenues have actually been decreasing because the cost structure is based on consumption.”
City statistics indicate that Ottawa is consuming less water than it has in decades. This year the city used 6.5 per cent less water than the year before resulting in a $7 million revenue shortfall.
McIntyre says the city wants to change the way residents pay for water by introducing a base charge that would reflect fixed costs such as administration, storm sewers and meter reading.
The city would prefer to keep 75 per cent of the water bill based on consumption and create a new 25 per cent base fee that reflects the city’s fixed expenses. MacIntyre says the plan would be revenue neutral because the rate per cubic metre would actually decrease slightly. What McIntyre says the new rate structure will de-couple some of the city’s revenues from consumption in order to avoid continued falling revenues.
Based on the 2009 budget, households and businesses that use an average amount of water will only see a two-cent increase.
Households that consume the least amount of water will notice the change the most with an increase of $5 a month. This is because they don’t use enough water, which will cost less per cubic meter, to offset the new rate.
While city staff say they prefer this option council will consider two other options.
The first is to shift storm sewer costs to property taxes. Another option would see residents hooked up to the water and sewer system paying a base charge on their water bill and rural residents contributing to storm sewer costs through a levee on their property taxes.
McIntyre says the conflict is between tying water bills to consumption to encourage conservation and ensuring some financial stability for the system for overhead expenses that won’t vary with how much water is used.
“There is no perfect solution so this is a good compromise in that it allows us to garner a certain amount of our fixed costs while still providing consumers with ample opportunity to influence their bill by consuming less,” says McIntyre.
The Ottawa Taxpayers Advocacy Group disagrees with the city’s logic. One of the group’s members, Ade Olumide, says that as consumption decreases the city should reduce its operating costs accordingly. Olumide points to the new smart meters and the green bin program saying they reflect a department-wide trend to increase revenue rather than decrease costs.
“The city has a spending problem, but city staff and council believe they have a revenue problem. Time spent by council and staff to devise new ways to forcibly take more money from us, should be spent reducing costs,” says the group.
In terms of declining revenues the group says that in 2002 the revenue from water works was $59 million and in 2009 these revenues rose 65 per cent to $97 million.
The group says this far outstrips any increase by inflation or increased client base.
Environment and Planning committee member, councillor Peter Hume was unavailable for comment.
If council approves the rate structure change, residents will begin receiving the new bills in 2011.