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By Randall Denley, Ottawa Citizen February 20, 2011
The city’s water and sewer rate plan for this year is portrayed as a good news story, certainly one you don’t need to ask any questions about. Rates will go up 3.9 per cent, far less than the nine per cent we have seen for the last three years and were told to expect for 2011. Even better, rates will stay in that range for the entire term of council.
If you are curious as to how this miracle was achieved, don’t look for a lot of illumination in the water and sewer budget. It is a document as dark and subterranean as the sewer system itself. Even for a person used to examining city budgets, this document is nearly impenetrable.
For the last three years, water and sewer bills rose dramatically because, we were told, the city’s sewer pipes were in terrible shape and far more needed to be spent to maintain them. It was impossible for an ordinary citizen to know whether this was true, but it was certainly plausible. The city has a long history of not spending enough to maintain what it owns, an approach that is particularly tempting when those assets are mostly underground.
Now, the aging pipe problem is no longer Priority 1. This year’s capital budget is actually $10 million less than what the city spent last year. Has this huge problem been fixed in only three years? You will look in vain for an answer in the avalanche of facts and figures the city has generated. The city’s treasurer can’t even tell you how big the repair backlog was at the beginning of the big rate increases, or how big it is now.
How much should we be spending to maintain the $17 billion in pipes and related equipment that the city owns? Another question neither asked nor answered. We do know that planned pipe repairs under roads have been put off for years because the city doesn’t have the money for the road work. That would suggest that the city is doing less than it should.
The main reason why the city might not have to raise rates as much as in the past is an increase in water consumption. Water sales volume has been declining since 2007 due to environmental awareness, smaller properties in new subdivisions and water-saving plumbing devices.
Last year, the number went back up a bit. The city says this is due to greater water use by businesses and institutions. It’s difficult to know what’s behind that, with a flat economy, but the city’s plan to keep rates down assumes that the higher use will be permanent. If it’s not, say good bye to the relatively lower rates.
The city has the same problem as any utility company. The infrastructure required to move its product to your home is expensive. If the product isn’t being sold in sufficient quantity to cover those infrastructure costs, the rates need to go up to make up the difference. The higher the volume of water being sold, the lower the rate increase necessary to generate the dollars required to cover each year’s increasing costs.
As recently as 2009, the city was touting the decline in water consumption as good news and spending money on low-flow shower heads and low-flush toilets. Don’t expect to hear the city talking about water conservation any more. It might be seen as environmentally sound, but it’s bad for business.
While not small, the 3.9-per-cent increase is certainly a happier number than nine per cent. On that basis, councillors will be quick to bless it, but they should ask where the money is going. One notices, for example, that staff salary costs are up nearly $8 million over what was spent in 2010. That’s an increase of about 18 per cent. Someone might want to ask why. The city is budgeting to spend $19 million more on water and sewer services this year than it did last. That’s an increase of nearly eight per cent. Again, why?
Don’t count on councillors to ask any of these questions. City staff have promised them lower rates. That’s all they need to hear. If their light scrutiny of the rest of the budget is any indication, the rate budget will pass with ease.
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Contact Randall Denley at rdenley@ ottawacitizen.com or 613-596-3756.