Tapping the customer

 At the Civic Works Committee members will  be considering a staff report on modifying the water and sewer rates. For some background on this issue, read my previous blog London's advantage:fairness or subsidies.

Monday afternoon/evening will be busy for those of us who like to keep up on what is going on at city hall.

When I was on Board of Control, the standard practice was to alternate committee and council meetings on Monday evenings. It created some problems for media attempting to report on all the standing committees, trying to find enough bodies to cover the three simultaneous meetings, but frequently having the same reporter rush back and forth among all of them. It was a less than satisfactory arrangement, resulting in missed information for the public. It also meant that interested council members were confined to the activities of their single committee appointment; they had to settle for second-hand information on the details of what was going on in other committees although ultimately, they would have to vote on the recommendations of those committees.

The new schedule was to fix all that; it was to allow the media, the public, and other councillors the opportunity to sit in on all the committees by expanding the rotation from two to three weeks and using more time slots. Generally, that worked. Until today.

Now we have three meetings scheduled for Monday, two of them occurring simultaneously. Presumably, it is to allow everyone to be present at the very special meeting of the Public Safety Committee, the one dealing with what to do with out of control student parties on Fleming Drive.

It’s an important issue. The events of March 17-18 of this year have brought the kind of international notoriety that no city wants. In order to facilitate the attendance of all councillors at this meeting at 6 p.m. at the convention centre, other Monday meetings will be held simultaneously at 4 p.m.

That’s too bad, because important matters will be discussed at each.

One of these is the Civic Works Committee. It’s usually concluded quickly, dealing primarily with tenders that generate little discussion. Today, however, amid other business, the matter of water and wastewater rates will again be raised. That’s money out of our pockets, and residents are likely to be concerned.

It’s a longstanding issue. Infrastructure installation, maintenance, repairs and replacement are expensive but essential; you don’t have a functioning city without it.

In London, much of our infrastructure is old, some of it dating back more than 100 years. It doesn’t last forever, but replacing it means lots of digging as well as cost.

How to cover the latter is a problem. It’s like buying a new home. The roof is likely to be good for 20 years or so, but then you have to replace it. If you haven’t been saving up over those 20 years, the cost is likely to pack a wallop in your budget. It would have been a good idea to set aside a few bucks every month to cover that need. After all, it shouldn’t have come as any surprise. Stuff wears out.

But for a lot of years, council didn’t worry about those little details. It had other fish to fry, spending money on lots of good-looking stuff above the ground. Few worried about what was happening below.

Eventually, however, the message from staff got through: we were going to have to start replacing some of the pipes underground, and to do so would require some investment. An aggressive program on infrastructure renewal was undertaken, and Londoners felt the pinch in the form of higher water and sewer rates. It would take 15 – 20 years of increases above inflation rates to catch up.

But there was a ray of hope for the ratepayer. Although everyone would have to contribute to the cost of infrastructure maintenance and replacement, you could save a few bucks through conservation, since part of the cost was the actually amount of water you took from the tap or put down the sewer. Council encouraged conservation by increasing the rate for those who used “excessive” amounts. Start watering the lawn or filling the pool and your bills would escalate.

Londoners caught on quickly. They stopped watering the lawns and some even complained about having to water trees. They learned to use rain barrels. They installed low flow toilets. All in all, it was quite the success story.

Except for the engineering department. It still had to look after the infrastructure, but there wasn’t enough money coming into the reserves to cover the costs, especially when the summer held too many rainy days. Consumption and revenues continued to drop. More rate increases would be required.

That annoyed some residents. Here they were, practising conservation just as they had been encouraged to do, and all that happened was that their rates increased!

In 2011, ratepayers got a bit of a break when the council of the day honoured the mayor’s election campaign pledge not to increase the rates at all. But that only compounded the problem the following year, because the reserves were down but the need for infrastructure spending was still there. In fact, in 2011, the shortfall was nearly $1M, about $8.50 per customer.

Today, on the Civic Works Committee’s agenda will be three reports dealing with this issue.

The first addresses the dilemma of timing. Later this year, Dundas Street will be repaved from west of the Thames Bridge to Wellington Street in preparation for the Skating Championships next March. It should be a perfect time to replace century old pipes and replace them with bigger and better ones. But the city has neither the time nor the money for that. Therefore, it will have to tear up the streets again in five years or so, disrupting business and relocating transit.

The second and third reports address the chronic nature of the problem. Financial incentives to conserve don’t obviate the fact that providing clean, safe water to homes, industries and businesses, and removing and purifying the wastewater, costs money; you need the infrastructure and the current method of charging for that isn’t working. While the number of accounts keeps going up (growth), the total amount billed is going down. New homes are more efficient in their use of water and the lot sizes are smaller, both of which contribute to lower bills.

Much of the problem is due to the method of determining the rates. As the staff report points out, “the current rate structure was established more than 22 years ago for water and 15 years ago for sanitary rates. It has been identified as being one of the most complex rate structures in Ontario and contains inequities between customer classes and lacks consistency between the water and sewer customer classes and rate structures.”

All this is to say that council has played favourites when setting the rates. Homeowners pay a lot more than industry, business or institutional customers. When I was on council, this was constantly being described as “London’s Advantage”, but it worked mostly to the disadvantage of residents who ended up picking up the tab for the water guzzling industries and business while being urged to curb their own thirst. Although council had adopted a position in principle of moving to a fairer arrangement, every time the issue came up, companies like Labatt’s and Casco and institutions like Western University sent their high priced representatives to city hall to plead their case, while the average citizen was busy at work so that they could pay the bills. Needless to say, the citizen lost out.

So here we are again, chasing our tails trying to conserve and save.

Staff is proposing a new rate structure. In phase 1 a greater proportion of the bill you receive, if this approach is adopted, will consist of a fixed charge which would be identified on the water and sewer bill as an infrastructure renewal charge.  A smaller proportion of the bill will reflect actual consumption. Although the changes would be “revenue neutral” some customers may see changes in their bills. The report suggests that some may see reductions in their bills and those who experience increases have likely been getting a free ride. The proposed changes would bring the city more in line with how charges are assigned in other municipalities.

One group that would experience an increase in the amount billed would be the very low water user, especially those in single person households. Although such persons are likely to be found in commercial apartment buildings, many will also be widows trying to stay in their own homes. I wasn’t clear from the report how their concerns about affordability would be addressed.

A number of other possibilities are being floated to generate sufficient revenues to maintain the infrastructure: a separate rate for a fire protection charge which would affect those who choose to locate far from fire services and a charge for water used during construction. The former could help to inhibit sprawl and the latter would assign the charges to the construction industry which is currently subsidized by the residential ratepayer.

Before any of this can happen, however, the matter will have to be addressed at a public participation meeting. Let’s hope that if and when that happens that the residential water users are there to ask questions and state their concerns. There is no doubt that the commercial, institutional and industrial sectors will be there.