HomeMy WebLinkAboutFIN-2022-488 - 2023 Water Utilities Rates
Financial Services Department www.kitchener.ca
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: December 12, 2022
SUBMITTED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 ext. 7353
PREPARED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 ext. 7353
WARD(S) INVOLVED: All
DATE OF REPORT: November 21, 2022
REPORT NO.: FIN-2022-488
SUBJECT: 2023 Water Utilities Rates
RECOMMENDATION:
THAT the proposed rates contained in the 2022 Water Utilities Rates schedule attached
to Financial Services Department Report FIN-2022-488 be approved.
REPORT HIGHLIGHTS:
st
The combined Water Utilities rate increase is 4.5% and comes into effect January 1
Water supply and sewage processing costs from the Region of Waterloo make up nearly
An increase in stormwater is required to leverage nearly $50M of grant funding through the
Disaster Mitigation and Adaptation Fund (DMAF)
This report supports the delivery of core services.
BACKGROUND:
Council. A comprehensive, multi-year rate forecast was prepared in 2017 as part of the Water
Infrastructure Program (WIP). The WIP report provided information about the infrastructure in
each of the utilities and provided Council with investment options for both capital replacement
the WIP discussion provided staff with
direction for future investments and rate increases which have been reflected in previous
budgets and is being used to inform the proposed 2023 rate increase. Staff will be updating the
WIP analysis in 2023 to inform future budget years.
REPORT:
Water u
water, sanitary and stormwater utilities deliver critical services to Kitchener residents and
ensure the safe and reliable provision of drinking water, wastewater collection, and water
quality and quantity control of stormwater runoff to prevent property damage and protect the
natural environment. These services are highly regulated to ensure the proper management
and decision making that supports this critical service delivery. Federal and provincial
legislation include the Canadian Environmental Protection Act, Safe Drinking Water Act, Clean
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Water Act, Environmental Assessment Act, Canadian Fisheries Act, Ontario Water Resources
Act, as well as requirements specified within other regulations, such as developingand
updating asset management plans.
The proposed combined rate increases for the Water Utilities is 4.5% and will come into effect
st
on January 1. The table below summarizes the rate increase by utility with a more detailed
schedule attached to the report.
Summary of Water Utilities Rate Changes
Utility Rate Change
Water 3.2%
Sanitary 2.0%
Stormwater 8.0%
Combined 4.5%
Rate changes in these utilities are a function of four factors:
1) Regional rate changes (Water & Sanitary only)
Roughly half of the water & sanitary utilities are paying the Region for
supplying clean water and processes sewage.
2) Capital impacts
Funding needed for capital projects that create/replace assets that will serve the community
for long periods of time. This includes replacing the underground infrastructure during a full
road reconstruction project (e.g. watermains and sewers for sanitary and stormwater) as well
as replacing water meters, sewage pumping stations, and naturalizing creeks. The
replacement of infrastructure is critical to ensure that disruption of service is minimized to the
maximum extent possible and the City meets the goals of safe, reliable water, sanitary and
stormwater services.
3) Operating impacts
Funding needed for day-to-day costs to operate and maintain the capital investments made
by the utilities and to meet regulatory requirements to operate these systems. This includes
drinking water testing, maintaining shutoff valves so water can be turned off during a main
break, maintaining pumping stations so sewage can get to the treatment plant, and removing
pollutants from stormwater catch basins prior to entering the natural water system.
4) Other impacts
Other impacts include items like changes in amount of water sold, changes in transfers from
reserves, or one-time items.
The proposed combined rate increase of 4.5% is in line with the forecast rate increase from the
original WIP discussion as shown in the table below. The original WIP forecast only went out to
2022, but has been extended by one year as an update was delayed by the COVID pandemic.
This one-year extension was indicated to Council through the 2022 budget process.
History of Combined Water Utilities Rate Increases
2018 2019 2020 2021 2022 2023
Rate Increase Projection from WIP 6.5% 6.5% 4.5% 4.5% 4.5% 4.5%
Revised/Proposed Rate Increase 6.5% 6.5% 4.4% 0.9% 2.2% 4.5%
In 2021 & 2022, recognizing the pandemic related hardships to ratepayers, the City was able to
achieve lower than forecasted rate increases by only passing on the Regional water and sanitary
rate increases and not advancing important capital and maintenance investments on City
infrastructure. This is not possible for 2023 as the impacts of inflation are significant on operating
and capital expenses for each of the utilities and reserves (funds saved up in prior years to offset
higher costs in future years) are projected to be completely used up within the 5-year forecast
window.
Regarding stormwater, an 8% rate increase is required to continue to 10-year
commitment which is significantly funded (approximately $50M) by other levels of government
through the Disaster Mitigation and Adaptation Fund (DMAF). Failure to keep up with the
commitment would mean the City would forfeit a large amount of grant funding and not address
underlying issues of potential flooding within the city. A significant portion (75%) of urban areas
in the city lack adequate stormwater management. The DMAF funding will implement important
stormwater management initiatives that will help mitigate the impacts of climate change by
reducing the severity of local flooding that can impact drinking water quality, downstream
environments and public and private properties. It is estimated that for every dollar spent by
Kitchener ratepayers, they receive a projected return of $18 in prevented damage costs.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
The total annual impact of the proposed rate changes is $42 (or 4.5%) as noted in the table
below.
Impact on Homeowner
2022 2023 $ Change % Change
Water $422 $446 $14 3.2%
Sanitary $545 $556 $11 2.0%
Stormwater $197 $225 $17 8.0%
TOTAL $1,174 $1,227 $42 4.5%
Assumptions:
3
Water & Sanitary: water consumption of 170m annually
Stormwater: Residential Single Detached Medium
COMMUNITY ENGAGEMENT:
INFORM website with the agenda in advance of the
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter.
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services
ATTACHMENTS:
Attachment A 2023 Water Utilities Rates
Attachment A - 2023 Water Utilities Rates
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