Recent public policy issues such as the decision to offer rate incentives
to J.M. Schnieder Inc. have prompted Winnipeg City Council to conduct a
review of the way it charges us for the costs of providing sewer services.
At the present time all customers, with the exception of a small group
of 28 high strength industrial users, pay exactly the same sewer rate.
As part of the review process, the City has established an Advisory Committee
representing the different types of sewer users. The PPMA was asked to
participate on the Advisory Committee.
Each day some 250 million litres of water flows through our taps. With the exception of those periods when excessive rainfall causes some sewers to overflow, almost all of this water eventually finds its way to one of the three wastewater treatment plants where it is treated before being discharged into the river system.
The process of sewage treatment is a very expensive one costing over $70 million each year, all of which is recovered through the sewer rates. No property tax revenue is directed towards the sewer utility, in fact the -reverse is true with the utility making an annual contribution to the city's general revenue fund.
In recent years Winnipegger's have seen a dramatic rise in their sewer rates. Much of this increase is due to the over $250 million in major upgrading and expansion undertaken during the past ten years. In large measure these improvements reflect our growing awareness for the environment.
The situation is not unique to Winnipeg as most waste water utilities across Canada are facing similar pressures. With increasing societal demands to reduce pollution combined with stricter legislated standards, increased costs are expected to continue well into the next century. It is therefore appropriate that the City review it's rate structure.
What's happened so far? As a result of the escalating costs of treating both sewer and water, the City is now considering adopting a "cost of service" principle for these utilities. For example if it costs twice as much to provide sewer service to an industrial user than a single family residence, then common sense suggests that the industrial user should pay twice as much. Unfortunately applying such a principle is not as simple as it sounds and attempting to determine the costs applicable to specific classes of users raises many complex questions.
To date City staff have completed a preliminary analysis and identified several customer classes, the costs of providing sewer service to these different classes and a rate structure which reflects the various differences between them. What has been suggested to date is that all multi-family properties, that is all buildings with two or more residential units, be grouped together into a single class. If this suggestion and the initial rate projections are eventually adopted, owners of multi-family properties would see a modest decrease in their sewer charges.
On the flip side, if the same principle is applied to water rates, most apartment owners would experience increased water bills.
A major issue, as yet unresolved by the Advisory Committee, is the issue of offering a reduced sewer rate to the J.M. Schnieder company. During the discussions the PPMA has advanced the position that utility rate pricing is not an appropriate tool to encourage economic development as it runs contrary to the cost of service principle. Such rate incentives also open a "Pandora's box" of other related problems, not the least of which is the equitable treatment of existing customers.
Where do we go from here? The review process is now about 75% complete and is expected to be concluded by the end of May. At that time both the City staff and the Advisory Committee will prepare reports and make their recommendations which will then be forwarded to City Council. The final decision whether or not to implement a new rate structure or to continue with the existing flat rates rests with City Council.
If City Council chooses to implement a new rate structure, it would take effect beginning in January 1998.