Utility Rate Increases Are Coming

waterdropCity Council wishes to inform residents and businesses that the Morden Utility Rates will be increasing this year.  The following information should answer most of the questions you may have.

Why are Utility Rate Studies done?

The City of Morden decides when a Utility Rate Study is needed.  Once complete it is sent to the Public Utilities Board for them to make a decision on what the study suggests.  Municipalities are required to ensure that the funds received through water and sewer billing is enough to cover all the costs to supply these services. The Public Utilities Board recommends that capital costs for water and sewer not be paid through the property tax system but through utility rates.

Who did the 2013 study?

Genivar from Winnipeg was awarded the contract to do the 2013 Utility Rate Study. The study was ordered in October 2012 and supplied to Council in February 2013. The figures used for the study were the City of Morden audited financial reports up to the end of 2011.

Why was the study done?

The study was initiated because the 2011 Utility Fund showed a loss of $107,205 under the new accounting requirements. The last study was done in 2008 with the new rates being effective in 2009.

What did the 2013 study find?

The 2013 Utility Rate Study found that utility rates will need to increase because the City of Morden does not have enough reserves within the utility fund to support the upcoming major capital expenditures for the Water Storage Construction ($3 Million) and the upgrade to the Water Treatment Plant to deal with the Trihalomethane (THM) requirements (Millions). The study suggests that as well as covering the current costs of the Water Storage and THM projects, in the future there needs to be an annual levy of $350,000 to the reserve accounts to cover future capital projects like these, that will be required within the next few years.

Why do we need to build a new water storage tank at a cost of $3 Million?

The water storage is necessary to ensure that the City is able to supply water at all times, especially at high use times like supper time or when there is a fire.

When the new water plant was built a 400,000 gal reservoir was built underneath it.  We also have a water tower and elevated standpipe with a combined capacity of 750,000 gals for a total capacity of 1.15 million gallons.  As a result of having the towers inspected this year it was recommended to us that the elevated  tower needed extensive repairs to remain in operation.  The tower was deemed to have reached it’s service length and was removed from service.  This reduced our current water storage capacity by 250,000 gals. This has reduced our total storage capacity to 900,000 gals. At peak levels of water use that works out to approximately 1 day worth of storage.

How do we plan to meet Standards for Trihalomethanes?  (THM’s)

Trihalomethanes are formed when chlorine reacts with naturally occurring organic matter in the water. Because of the nature of Lime Soda-Ash softening plants and the amount of chemicals we need to add for softening the water.  Treating surface water to meet trihalomethane standards can be challenging .The standard for total THMS is.1 mg/l based on a running average of quarterly samples. The City of Morden is currently exceeding this standard based on the running average of our quarterly samples.

As a result of this, the City of Morden initiated a Water Treatment Study and has engaged the services of Associated Engineering to explore the possibilities of process enhancement or alternative treatment options to bring our THMs residuals into compliance with current ODW regulations. These changes to the process at the plant are expected to cost in the millions.

Why were the Reserve Funds so low?

The City has been playing catch up for the past 10 years by updating the worst utility infrastructure, which did not allow reserve funds to grow.

What does the Public Utilities Board Do?

The Public Utilities Board oversees the utility rates of all municipalities.  They will review the study and confirm if the rates suggested are justified.  They may decide that the rates need to change, either up or down. If there are objections from customers to the Public Utilities Board, it may decide to hold a public hearing.

What does this mean for residents and businesses?

If the Public Utilities Board approves the rates in the study, the minimum bill would go up from $48.80 to $64.40 (31.9%) This rate includes 3,000 gallons of water.  An average user (9,900 gallons per quarter) would see their bill increase from $120.56 to $176.86 (46.7%). Following the user-pay principles set out by the Public Utilities Board, the City would continue with the two-step rate structure.

Quarterly Service Charge

The service charge applied to all billings would actually go down from $17.60 to $15.50 (14% decrease).

Domestic Users

Water Rate Increase: The largest increase would be in the water rates increasing from $7.25 per 1,000 gallons to $13.15 per 1,000 gallons (81.3%) for domestic users (up to 100,000 gallons per quarter.)

Sewer Rates: The sewer rates for the domestic user would remain unchanged at $3.15 per 1,000 gallons.

Wholesale Users

Water Rate Increase: For wholesale users (those using over 100,000 gallons per quarter), their rates for consumption in excess of 100,000 gallons would increase from $3.45 per 1,000 gallons to $6.10 per 1,000 gallons (76.8%).

Sewer Rates: The sewer rate for wholesale users would increase from $0.95 per 1,000 gallons to $1.65 per 1,000 gallons (an increase of 73.6%).

Why such high increases?

There are a few main reasons why the rates need to increase at this level.

  • 15 year debenture to pay for the Water Storage project will cost $251,000 per year
  • Annual amount to go into Reserves $350,000
  • Amortization Costs of $225,000 + $223,000 = $448,000 per year. New accounting requirements.

When will the new rates take effect?

If the Public Utilities Board approves the study, the new rates will be effective on September 1st, 2013.

How do we compare to other communities?

Morden’s proposed rates are lower than Altona and Manitou, higher than Carman, but similar to Winkler.  These proposed rates are in the bottom third of other approved rates by the Public Utilities Board in the past year.