HomeMy WebLinkAboutINS-16-096 - User Fees - Gas FeesStaff Rport
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REPORT TO:
Committee of the Whole
DATE OF MEETING:
November 21, 2016
SUBMITTED BY:
Cynthia Fletcher, Executive Director INS, 519-741-4424
PREPARED BY:
Jim Edmondson, Interim Director, Utilities 519-741-2600
ext. 4754
WARD(S) INVOLVED:
All
DATE OF REPORT:
November 10, 2016
REPORT NO.:
INS -16-096
SUBJECT:
User Fees — Gas Fees
RECOMMENDATION: That Council approve the 4 Utilities gas user fees (fees 1594-1597)
as outlined in the 2017 User Fee review report FCS -16-166.
BACKGROUND:
At the Finance & Corporate Services Committee meeting on November 7th, Council considered
2017 user fees. (Report: FCS -16-166). The Committee deferred the decision on the 4 gas user
fees and staff was directed to provide additional information related to the purpose of the fees.
This report is intended to explain each fee and outline the rationale for recovering costs.
The intent of recovering the costs associated with installing new or converting to natural gas
services as outlined in the report below is to avoid having existing rate payers subsidize the cost
of work for new customers.
REPORT:
For 2017, Kitchener Utilities has proposed 3 new user fees (#1594, #1595, #1596) and the
inclusion of the existing application for Multi -meter Manifolds (#1597) as a user fee for
consistency.
Each of these fees is being proposed to recover costs from customers asking for a specific new
service or damages to existing infrastructure. In the past, these costs have been absorbed by
the Kitchener Utilities operating budget. However, due to increasing costs, staff are
recommending individual customers absorb the specific service costs avoiding impacts to
existing rate paying customers. More information about each of the new fees is provided below.
#1594: Broken, Buried Valve Box Repair: NEW
• This fee is intended to recover the cost for repairing valve boxes that will be damaged or
buried by developers/ contractors during subdivision construction projects.
• The annual number of damaged valve boxes is approximately 5-10.
• The cost of a repair is $2,000. This cost will be charged to the developer/ contractor
who caused the damage.
• This is an avoidable cost if work is completed properly.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
#1595: Frost Charges: NEW
• This fee will apply to the installation of gas services in the winter, for new builds and
existing homes switching to gas. This fee is intended to cover the cost for excavation of
frozen ground. The flat fee of $750 per service assumes full depth frost.
• Builders will sign frost agreements and will only be charged for actual frost costs based
on depth of frost measured in the field upon installation.
• Customers switching from another fuel source to natural gas would pay the full $750 per
service and if the cost is less than $750, the customer would be reimbursed in the
spring. Costs are evaluated on an annual basis and will be adjusted, if necessary.
• There are approximately 50-60 gas service installations during the winter.
#1596: Excavation Charges: NEW
• This fee applies to the installation of gas service, for new builds and existing homes
switching to gas throughout the calendar year.
• Gas service installation costs have increased over time to the point where the cost is no
longer offset by natural gas sales over a 30 -year payback period. This fee is proposed in
order to recover some of these costs and to avoid other customers paying for new gas
service installations in the gas rates.
• This fee of $200 is intended to cover some of the cost for excavation. The cost to install
a new gas services varies based on specific site conditions, however a standard fee of
$200 fee is proposed to be consistent for all customers.
• Approximately 1,000 new gas services are installed each year.
• This cost will impact all customers who require a new gas service.
#1597: Multi -meter Manifold: Existing Fee
• The demand for multi -meter manifolds is increasing significantly from both commercial
and residential customers to sub -meter gas in order to pass the cost on to the tenants.
• Kitchener Utilities does not charge for multi -meter manifolds on new builds, only retrofit
properties. The rationale behind this is that Kitchener Utilities has already installed gas
meters at these properties and if the owner is then choosing to sub -meter, additional
labour and work is required to install. Also, additional ongoing maintenance is required
when supplementary gas meters and the manifold are added.
• The $250 fee is the average cost per gas meter for Kitchener Utilities to build the
manifold. The costs will be evaluated on an annual basis.
• Approximately 45 meter manifold changes were requested in 2015 for retrofit properties.
• The cost impacts both commercial and residential customers who would like to sub-
meter gas
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The recommendation of this report supports the achievement of the city's strategic vision
through the delivery of core service.
FINANCIAL IMPLICATIONS:
The proposed 2017 Gas Delivery budget includes revenue assumptions based on the
implementation of these four fees. If the fees are not approved, the revenue budget for Gas
Delivery will need to be lowered as outlined below:
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting.
Also, Kitchener Utilities will include the user fee information in printed material and on the
website.
ACKNOWLEDGED BY: Cynthia Fletcher, Executive Director, Infrastructure Services
Department