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HomeMy WebLinkAboutPublic Works - 1999-06-14PWTC\1999-06-14 PUBLIC WORKS & TRANSPORTATION COMMITTEE MINUTES JUNE 14, 1999 CITY OF KITCHENER The Public Works and Transportation Committee met this date, chaired by Councillor John Smola, commencing at 8:40 a.m., with the following members present: Mayor C. Zehr and Councillors J. Haalboom,, K. Taylor-Harrison, C. Weylie and J. Ziegler. Councillors G. Lorentz and B. Vrbanovic were in attendance for part of the meeting. Others Present: Ms. P. Houston, Ms. F. Schlosser and Ms. J. Billett, and Messrs. J. Gazzola, E. Kovacs, D. Snow, J. McBride, and D. Quinn. 1. DOPWR 99-19 - TRAFFIC CONTROL - TURNING RESTRICTION - KING STREET WEST AT WATER STREET The Committee was in receipt of a report dated June 8, 1999, from Mr. J. McBride, Manager of Traffic and Parking, requesting that eastbound left turns from King Street West onto Water Street be prohibited anytime. The purpose of this prohibition is to minimize delays experienced by motorists and, particularly, by transit operators in meeting schedule demands. On motion by Councillor J. Ziegler- it was resolved: "That eastbound left turns from King Street West onto Water Street be prohibited anytime; and further, That the Uniform Traffic By-law be amended accordingly." DOPWR 99-20 - TRAFFIC CONTROL - RIGHT-TURN-ON-RED PROHIBITIONS - LORRAINE AVENUE/KRUG STREET AT RIVER ROAD The Committee was in receipt of a report dated June 9, 1999, from Mr. J. McBride, Manager of Traffic and Parking, requesting that right turns be prohibited, during the red phase, for southbound Lorraine Avenue at River Road and for northbound Krug Street at River Road. These prohibitions are requested to alleviate delays in accessing River Road from adjacent side streets such as Manchester Road, Halliwell Drive, and Hickson Drive, as a result of the closure of Ottawa Street at the Expressway overpass. Mayor C. Zehr suggested that a time frame for removal of these prohibitions should be included in the recommendation to coincide with the re-opening of Ottawa Street. Mr. D. Snow responded that the By-law, as written, does not include a time limit; however, he suggested that staff could revisit the continuation or removal of the turning prohibitions when Ottawa Street is re-opened. On motion by Councillor K. Taylor-Harrison - it was resolved: "That right turns during the red phase be prohibited for southbound Lorraine Avenue at River Road; and, That right turns during the red phase be prohibited for northbound Krug Street at River Road; and, That the right turn prohibitions, as outlined above, be in effect during the closure of Ottawa Street and be reconsidered upon the re-opening of Ottawa Street; and further, That the Uniform Traffic By-law be amended accordingly." Mr. D. Snow advised the Committee that on Tuesday, June 15, 1999, the Transit Division will be presenting a preview of its TV Monitoring Program at City Hall, commencing at 10:30 a.m. Mr. PUBLIC WORKS & TRANSPORTATION COMMITTEE MINUTES JUNE 14, 1999 -48 - CITY OF KITCHENER 3. PROMOTIONAL EVENT - TRANSIT TV MONITORS (CONT'D) Snow stated that, at this time, five buses have been fitted with the TV monitors and encouraged all members of Council to attend this event. 4. GAS ENTERPRISE RATE CHANGES The Committee was in receipt of two reports dated June 6, 1999, from Mr. D. Quinn, Director of Utilities, outlining proposed rate changes for the Gas Enterprise with respect to delivery, supply and transportation of natural gas, and for the Rental Water Heater and Appliance Service Programs. Mr. E. Kovacs stated that the rate changes, as proposed, relate to both the delivery/transportation components of the Gas Enterprise and ancillary services. He pointed out that, as a result of deregulation and the impact on Union Gas, the City's enterprise has been financially impacted. He noted that staff are recommending paralleling past practices in maintaining rates equivalent to Union Gas at this time, with further monitoring to take place over the next several years. a) Delivery, Supply and Transportation of Natural Gas Mr. D. Quinn stated that, as a result of reorganization within Union Gas, the Ontario Energy Board significantly reduced Union Gas rates. He advised that the City's past practice has been to mirror Union Gas rates and staff are recommending continuing this practice as the City does not have its own rate making policy. Over the next year, as the effect of deregulation and unbundling are monitored, he advised that staff may reconsider using Union Gas rates. Mr. Kovacs further clarified that Union Gas has transferred its ancillary services to its subsidiary company, Union Energy, and that this reduction in service resulted in the Ontario Energy Board reducing its rates accordingly. He stated that continuing to follow Union Gas rates will translate to a reduction in revenue, which should be the focus of consideration by this Committee. Councillor G. Lorentz entered the meeting at this time. Mayor C. Zehr inquired how the lost revenue ultimately translates through from a levy/infrastructure standpoint. Ms. P. Houston advised that, when the 5 Year Capital Budget review was undertaken, it was felt that a sufficient buffer existed with respect to reserve funding; however, a reduction in revenue will mean a reduction in surplus funds. Mayor Zehr questioned if the reduction in revenue had already been anticipated and Ms. Houston responded that $3 million per year had been anticipated with $2.3 million already having been accounted for. In this regard, Mayor Zehr questioned if this creates any significant problems and Ms. Houston responded that it did not; however, there would not be a surplus to add to the Tax Stabilization Reserve. Mayor Zehr stated that he would support staff's proposal as, in his view, no other viable alternative was available. Councillor J. Haalboom inquired if the competitiveness of the rate changes proposed in relation to other suppliers was shown in chart form. Mr. Quinn responded that a chart had not been prepared as it would be difficult to keep updated and that other competitors are not publicizing their rates. He advised that as a comparator, the City's rate is $0.1155/m3 while Sunoco is charging $0.129/m3. Councillor Haalboom questioned if this would mean rates would have to be tracked similar to stocks in the stock market. Mr. Quinn stated that the process of monitoring rates would be similar as it is a volatile commodity; however, he advised that it is intended to reduce the risk by buying ahead. He pointed out that the proposed rate change is intended to cover this winter only; but it is possible that further changes may occur as staff have no control over pricing. Councillor J. Haalboom questioned that, if the rates are based on a one year period and the market shifted to a lower price during that period, how this would impact on the City's rates. Mr. Quinn responded that the risk of a rate change during the one year period is 4. GAS ENTERPRISE RATE CHANGES (CONT'D) JUNE 14, 1999 PUBLIC WORKS & TRANSPORTATION COMMITTEE MINUTES - 49 - CITY OF KITCHENER a) Delivery, Supply and Transportation of Natural Gas (Cont'd) minimal as the market is very tight at this time and would only be at risk if another warm winter, as experienced last year, were to occur. On motion by Mayor C. Zehr - it was resolved: "That, effective June 1, 1999, the proposed rates for natural gas delivery outlined in Appendix "A" attached to the June 6, 1999 report from D. Quinn, Director of Utilities, be adopted; and, That, effective June 1, 1999, the proposed rate of $0.1155 per cubic metre for natural gas supply be adopted; and further, That, effective June 1, 1999, the proposed rate of $0.035268 for natural gas transportation be adopted." b) Rental Water Heater and Appliance Service Proqram Mr. E. Kovacs provided the Committee with a revised Appendix "A" to the report and noted that additional appliances not included in the original Appendix had now been added. Mr. D. Quinn advised that several years ago Union Gas had raised its rates for ancillary services by 20 to 30%; however, the City had chosen not to follow suit. He stated that staff have since undertaken an analysis of the City's rates and have determined that a 10% rate increase is now required to meet cost recovery and provide a reasonable rate of return. He noted that, even with this increase, the City's rate will still be below that of Union Gas. In addition, he pointed out that staff are proposing a decrease to the 20% discount enjoyed by seniors to 10%. He stated that maintaining the 20% discount is no longer viable in terms of cost recovery and that at a 10% discount seniors will still be provided good quality service. Mayor C. Zehr indicated that the recommendation provides an effective date of April 26, 1999 and questioned if it was intended to impose the rate increase retroactively. Mr. Quinn advised that it was not really retroactive as staff have not yet billed customers for April and May because of the impending installation of a new billing system and the desire to synchronize the new rates with its implementation. Mayor Zehr inquired if billing occurred on a monthly basis and Mr. Quinn responded that billing was originally on an annual basis but has now been changed to every six months. Mayor C. Zehr stated that he was not in favour of a retroactive increase and questioned if this was the standard throughout the industry. Mr. Quinn responded that staff have stayed away from retroactive increases and this was part of the reason for not following Union Gas practices as they do raise rates retroactively. He stated that, in this instance, customers are not paying retroactively as they have not yet been billed. Mayor Zehr questioned if it was possible to split the billing with partial payment for those months the billing was delayed to be at the old rate and the remaining term of the billing to be at the new rate. Mr. Quinn responded that he would have to determine if the billing system could accommodate a split in rates. Councillor B. Vrbanovic entered the meeting at this time. Mayor C. Zehr questioned that, if approval was granted this date, when the bills would be sent out. Mr. Quinn indicated that the bills would be forwarded within a weeks time, approximately 7 weeks behind schedule. Mayor Zehr stated that not all customers are on the same timeline and inquired how many customers were affected by the delayed billing. Mr. Quinn advised that approximately 6,000 to 7,000 customers would be affected but GAS ENTERPRISE RATE CHANGES (CONT'D) b) Rental Water Heater and Appliance Service Proqram (Cont'd) PUBLIC WORKS & TRANSPORTATION COMMITTEE MINUTES JUNE 14, 1999 - 50 - CITY OF KITCHENER cautioned that if approval was not granted at this time there would be a financial impact of approximately $250,000. Mr. Kovacs stated that the reason approval is being requested now is to have the increase in place in advance of the next major billing and to provide staff an opportunity to take advantage of competitive rates. Ms. P. Houston clarified, that while on the surface it may appear to $250,000 lost revenue, the rates are being increased by 10%. Over a two month deferral period, she advised that the loss of revenue would in reality only be approximately $12,000.00. Mr. Gazzola further added that, in the interest of good customer relations, the minimal financial impact should be absorbed rather than imposing a retroactive increase. Councillor B. Vrbanovic questioned if customers who have already paid for one year are being dealt with retroactively and Mr. Quinn responded that existing invoices would be honoured at the old rate. Councillor Vrbanovic stated that those affected by the delay in billing were expecting to be billed at the old rate and, in the interest of fairness, suggested that they should be billed accordingly. Councillor C. Weylie expressed concern that seniors would be experiencing a 20% increase, as rates were to increase by 10% and their discount of 20% would be reduced to 10%. Mr. Quinn responded that the reduction to seniors only applies to the customer service rate rather than the rental of water heaters, for which there is no discount. Councillor C. Weylie inquired as to the actual cost of a water heater in relation to rental costs and Mr. Quinn responded that, in most cases, customers will have underpaid under the rental program. He advised that water heaters cost between $250 to $1,000, plus installation costs. At minimum, he stated that the total cost would be approximately $400. He further advised that the City pays an installation bonus to the contractor and maintenance is provided free of charge to customers. In this regard, he stated that all of these costs were factored in when assessing the rate increase. Councillor Weylie stated that customers do pay over and above the City's bonus to contractors for installation and questioned what controls were placed on additional contractor fees. Mr. Quinn responded that contractors must maintain their original quotes and, if found to be gouging customers, would risk losing their contract with the City. Mr. E. Kovacs stated that if the customer believes that rental fees are excessive they do have the option of buying the heater units at a depreciated rate at any time and that the driving force behind flexible rates is the total program costs. Councillor J. Haalboom expressed concern with impending criticism in raising rates by 10% and 20% for the rental of water heaters and inquired if a lesser increase could be imposed. Mr. Quinn responded that it was possible to defer some of the increase; however, he pointed out that the increases should have taken place 2 to 3 years ago and that the City was now in a position to catch up with its competitors. He advised that it was his experience that customers prefer a one-time increase rather than incrementally and that a pamphlet explaining the proposed rate increases would be included with the next billing. Councillor J. Ziegler stated that the increase should not be retroactive and, in this regard, proposed an effective date of July 1, 1999. He stated that this would be fair to all and would provide sufficient notice of the increase to the City's customers. Mayor C. Zehr stated that he wished the Committee to understand the rates were only increasing by 10%, not 20%. He further noted that the rate allows for full recovery of costs but at the same time does not gouge the public. GAS ENTERPRISE RATE CHANGES (CONT'D) b) Rental Water Heater and Appliance Service Proqram (Cont'd) PUBLIC WORKS & TRANSPORTATION COMMITTEE MINUTES JUNE 14, 1999 -51 - CITY OF KITCHENER Councillor B. Vrbanovic stated that he supports the rate increase of rental of water heaters in the context that it is a business and by nature must provide service at a reasonable rate of return; however, he again expressed concern that those who should have been billed in April and May were not being fairly treated. He suggested that approval be subject to these customers being billed at the old rate for April and/or May. Councillor J. Ziegler stated that imposing an effective date of July 1st implies that this will be the case and no further amendment to the recommendation would be required. Councillor J. Haalboom asked for clarification of the percentage of the proposed rate increase as she understood the report to indicate a 10% increase for conventional water heaters and a 19% increase for power vent water heaters. Mr. Quinn responded that those percentages were correct and that the reason for the 19% increase for power vent water heaters was due to the number of breakdowns experienced in the use of this equipment. He pointed out, however, that this rate is still 10% lower than that of Union Energy. Councillor C. Weylie questioned if the increase could be offset by the profits made on the sale of natural gas and Mr. Kovacs responded that the sale of natural gas cannot, by regulation, be cross-subsidized with ancillary services. Councillor J. Ziegler indicated that he was prepared to move approval of the proposed rate changes for rental water heaters and appliance services, as amended to include an effective date of July 1, 1999, and in this regard, Councillor B. Vrbanovic requested that the recommendations be dealt with separately. On motion by Councillor J. Ziegler - it was resolved: "That, effective July 1, 1999, the proposed rates for rental water heaters as outlined in revised Appendix "A" to the June 6, 1999 report from D. Quinn, Director of Utilities, presented to the Public Works and Transportation Committee on June 14, 1999, be adopted." On motion by Councillor J. Ziegler - it was resolved: "That, effective July 1, 1999, the proposed rates for appliance service as outlined in Appendix "B" attached to the June 6, 1999, report from D. Quinn, Director of Utilities, be adopted." Councillor John Smola advised members of the Committee that the recommendations with respect to rate changes to the Gas Enterprise would be considered at the special Council meeting to be held later this date. 5. ADJOURNMENT On motion, the meeting adjourned at 9:40 a.m. Janet Billett, AMCT Committee Administrator