BLOG #720: At a town hall meeting in early October city officials will be asking Londoners this question: What value do you place on our water? The answers will help design a new funding model to ensure our water and sewer utilities are able to achieve and maintain fully-funded operation.
Monday, Sept. 10, 2012 – London
What value do you place on London’s water?
That’s the question city officials will be asking in early October, in part to help sell you on the idea of a new funding model for the fresh, clean ‘essence of life’ delivered to the taps in your home 24 hours day.
London is currently trying to balance competing interests against the long-term requirement to put the municipal water and sewer utilities on a fully-funded basis – in other words, organizations that can pay all of their costs including expansion, repair and replacement.
The list of those competing interests, from a report prepared for this afternoon’s civic works committee meeting, will give you some idea of the complexity of the problem. They include “the single parent receiving social assistance and raising three kids in a rented apartment; the retired couple spending four months in sunny Florida; the homeowner with pool and a hot tub; the business community; health care organizations, universities and colleges; large industries such as those in the business of producing food and beverages; and future companies that will set up shop in London.
They all have two things in common: One, all are at the other end of the city’s network of 4,300 km. of pipes that pump water from Lake Huron or Lake Erie; and two, all want fresh water to be available whenever they turn on the taps.
There are big differences, of course. An industrial customer such as Labatt Brewery uses millions of litres but operates in a business where a penny plus on the rate can be the difference between jobs here or somewhere else. The Snowbirds use nothing for four months but insist the water be waiting whenever they return.
“Customers must be prepared to pay the appropriate price for the value and the delivery of (water) services,” says the report, prepared by Roland Welker, manager of water engineering. “A properly designed funding model will balance the objectives and principles across all customer groups and ensure that everyone pays their fair share.”
Ah, there’s the rub – pay a fair share.
Of late, water and sewer customers en masse have been disinclined to pay, period. As the city pushes water and rates every higher in order to reach the fully-funded basis ordered by the provincial government users at all levels have been reducing consumption, wrecking the financial models.
Water and sewer utilities are a big business, with total annual revenues of $130 million. The current rate structure for water was established 22 years ago, that for sewer 15 years ago.
The current rate structure is a single change based on the amount of water you use. Use less, pay less – proportionately anyway. Over the past 24 years consumption has fallen almost 50 per cent while the population has grown by 20 per cent.
So the answer, at least say city officials, is a rate structure with two separate components. Every residence would pay a fixed charge to cover hardware costs. The second component would be a variable rate based on per cubic metre consumption of water.
Within the model are some tweaks and alternatives – such as subsidies for the less fortunate or the large users – that will be the subject of a town hall meeting Oct. 2.
“Introducing and implementing a new funding model for water and sewer services will require a new understanding of the value of water,” the report says. “It is not about cost, it is not about price, it is about value – health and safety is maintained through constant monitoring and testing of the system, quality of life is enhanced by providing service on demand to residents and businesses, promoting economic development through a robust and reliable system, and fire protection that keeps insurance rates low for all customers.”
So, what’s that worth to you? As much, say, as your telephone or your cellphone or your cable system or your internet?
TOWN HALL MEETING