New Water Rate Structure
Sidney Council recently approved changes to the way we bill for water services. This change will be implemented on the next utility bill, which will be sent out in mid to late April 2021.
Reason For The Change
The Town has been reviewing its water rate structure over the past several years. The question we’ve been working on is how to ensure we are collecting enough revenue to keep our water service sustainable in the face of fluctuating water consumption and the increasing cost of providing water. While this review was in progress, we held off on any significant changes in our water charges. In fact, the only increase over the past 10 years was a small adjustment in 2019. Over these 10 years, the cost of bulk water purchased from the CRD increased by 32%, while the Town’s user rate increased by less than 7%. We kept our rates low by using our accumulated surplus. This is no longer possible, and a rate increase is necessary.
New Water Rate Structure And Rates
Knowing that increases were necessary, we wanted to avoid simply raising the user rate. The old rate structure has not been working as an effective cost recovery measure, as it was far too dependent on the level of water consumption. We will, instead, be moving to a different rate structure that better aligns our recoveries with the costs of operating the utility.
We will continue to have a 3-tier revenue structure, but it will be slightly different, as shown below:
| Rate Component
|| New Rates
|| Current Rates
| Infrastructure Levy Per Folio
| Minimum Charge Per Account
| Fixed Charge Per Unit
| Consumption Charge Per 1,000 Gallons
|| $5.37/1,000 gallons
|| $6.50/1,000 gallons
The Infrastructure Levy is billed on the annual tax notice. It will not affect the quarterly utility bill. The changes to the utility bill will be a new Fixed Charge per unit, which replaces the Minimum Charge per account. This Fixed Charge does not include any “free” water consumption, whereas the Minimum Charge did. All water consumption will now be charged separately, although at a lower rate than we currently charge.
Impact Of The Change
Our analysis clearly indicates that the new rate structure will have a lower impact on customers than simply keeping the same structure and raising the user rate. The average user will pay an additional $27 per year. However, as with most policy changes, some users will pay more, while others will pay less. But our careful analysis indicates that the new rate structure will be more equitable than the old one, and will lead to a water service that is financially sustainable, by ensuring that all the fixed costs of running the water distribution system are recovered.
- Staff Report - Review of Water Utility Rate Structure
- Presentation at Jan. 18, 2021 Committee of the Whole
We thank you for your patience as we roll out this new billing structure in April of this year. As with all major changes, we expect some growing pains, but we will be ready to answer any questions you may have. If you have any questions or would like any additional information, please contact the Town's Finance Department by email at firstname.lastname@example.org or by phone at 250-656-1184.