CBRM Council held a relatively brief meeting on Tuesday morning that included a presentation from the municipal Water Utility on a proposed water rate hike.
CBRM’s Water Utility, according to this handy description provided by the Utility and Review Board (UARB) back in 2017, is:
…comprised of seven distinct areas, each with its own water supply and distribution system. The seven areas are: Sydney, Glace Bay, Northside, New Waterford, Louisbourg, Floral Heights, and Gardiner Mines. The water supply for each of these areas, respectively, is: Middle Lake Wellfield, MacAskill’s Brook Reservoir, Pottle Lake, Waterford and Kilkenny Lakes, Kelly Lake, and two non-GUDI drilled wells. Each area has its own water treatment process.
Greg Campbell and Gerry Isenor present to CBRM Council, 25 October 2022
Tuesday’s presentation was made by Gerry Isenor of G.A. Isenor Consulting Limited with an assist from Greg Campbell, the CBRM’s Manager of Technical Support Services (and new father, as he mentioned at the outset). Isenor and Blaine Rooney of Blaine S. Rooney Consulting Limited, were hired to draft the proposal which will go to the UARB for approval and, if approved, take effect in 2023. (The last rate increase was in 2019.)
I remembered reporting on Isenor and Rooney’s last presentation to council, back in 2017, when they were looking for rate hikes to help address the Water Utility’s growing deficit. At that point, rates hadn’t changed since 2013, which puzzled the UARB, judging by its 2017 decision:
The Board asked the Utility during the hearing why it had not applied for a rate increase sooner, given the length of time the deficit has been present. The Utility responded that it had not received the political direction to pursue a rate increase. The Utility had instead been asked to find cost savings.
The Water Utility, which had cited water loss as a significant issue in its previous rate application, provided an update in 2017:
The Utility noted that a high level of success was achieved after a leak detection program was undertaken in 2011, but that the Utility was unable to maintain that success after the consultant had completed its work. More recently, the Utility has engaged a new consultant and partnered with EfficiencyOne to undertake a water loss reduction project aimed at developing the management systems required in order to sustain long-term results. During the hearing, the Utility pointed out that the water-loss reduction should help the Utility to reduce its deficit.
The water-loss reduction project was a success, as Campbell explained in a 2018 Efficiency Nova Scotia video:
Efficiency Nova Scotia helped us to engage a consultant, so we did what is called a water audit and we determined a volume of losses. We had set targets for ourselves, so we had said that, early on, we would try and reduce the volume loss in two systems by 50%. We thought that we could do that in two years and we actually achieved that within six months. And then we set five-year goals, and our five-year goals, we’ve achieved in two years.
(A cynic might suggest the goals were set too low or wonder why this work was postponed so long, but I’m not feeling particularly cynical today. In point of fact, my experience during Fiona has made me very grateful for my municipal water.)
I think you should realize your Water Utility is doing quite well. In 2017 it had a significant deficit, that’s now been eliminated, you actually have a decent-sized surplus that’s starting to grow into an actual, working-capital surplus…
Elsewhere he commended the CBRM for “doing the right things” especially “fixing leaks.”
Lucky (Until Now) 13
But, as is my wont, I’ve buried the lede: the Water Utility is seeking to raise rates for residential customers by 3.6% the first year, 1.9% the second year and 0.7% the third year, beginning in 2023. Isenor said this will result in an increase, for residential customers, of about $3 per quarter, with average quarterly bills in the $125-$130 range, putting us “dead on average” for the province.
What I found particularly interesting was the plan to phase out the municipality’s “two-block rate structure” for water, under which it is sold to “high-volume” customers at a discount that, as Isenor explained, is paid for by low-volume customers.
Isenor said such two-tier rate structures are being phased out across North America and CBRM will actually be one of the last municipalities in this province to kiss theirs goodbye. (He didn’t say “kiss theirs goodbye. That’s me, paraphrasing.) Locally, it will mean 13 customers will pay significantly more for their water while the remaining 28,660-some customers will see their rates “pretty much sitting still, including residential customers.”
The current structure, according to Isenor’s presentation:
…is based on 20,000 cubic meters at the Block 1 rate with all water after that sold at the Block 2 rate. The Utility is requesting that the Block 1 size be changed to 35,000 cubic meters in the first test year, 120,000 cubic meters in the second test year, and that the second Block rate be eliminated in the final test year.
Isenor says there is only one, real large-volume consumer of water in the CBRM and it’s Nova Scotia Power Inc (NSPI) which takes “a huge portion” of our water.
Other “high-volume” customers in CBRM include the Cape Breton Regional Hospital, the marine facilities, the Cambridge Suites and the Holiday Inn. Isenor said none of these uses anything like the volume of water consumed by NSPI and, in fact, customers the size of the hotels never get the second-block rate from other utilities (go figure).
Expansion dreams
Steve Gillespie
There was a lot more to Isenor’s presentation, including an item-by-item review of changes to the Water Utility’s rules and regulations (which the consultants borrowed wholesale from Halifax Regional Municipality), a detailed look at the Utility’s finances and a discussion of the provision of water for fire services, but I am not going to get that deep into the weeds.
That said, I do want to mention a point raised by District 4 Councilor Steve Gillespie.
Gillespie asked about the possibility of extending the municipal water system to include people now on wells, noting that he understood that under the Public Utilities Act, a municipality can’t spend capital to expand a system if it will negatively affect existing customers.
Engineering and Public Works Director Wayne MacDonald fielded the question, explaining there were a couple of ways the Water Utility could expand. One would be to “find someone else to build the system” then give it to the Utility to operate. This is called a “donated asset,” he said, and means the Utility only has to pay depreciation which it would “probably get enough customers to do.”
CBRM also has in place a procedure under which, he said, an area wanting to hook onto the municipal water supply can hold a plebiscite, then (assuming it passes) secure provincial and/or federal funding to build the infrastructure, at which point, the Utility can expand. The “good news,” said MacDonald, is that the CBRM has plenty of available water to sell.
Next steps
The actual resolution before Council yesterday was:
That Cape Breton Regional Municipality Council approve the rate study as presented and authorize the submission of a Water Rate Applications [sic] to the Nova Scotia Utility and Review Board.
This passed, I think unanimously, although I can’t say for sure because, due to ongoing technical difficulties, the vote wasn’t displayed on the livestream. District 3 Councilor Cyril MacDonald, who sent his regrets, was the only councilor not present at Tuesday’s meeting.
Isenor said they’ll file their documents with the UARB which then “takes full control of the process,” setting a hearing date during which formal intervenors may participate (NSPI, maybe?) and members of the public may request to speak or send letters of comment. (Municipal staff will notify the CBRM’s 13 “high-volume” water customers of the proposed changes, which is “just good manners,” according to Isenor.)
The UARB will send “at least 100 to 150 questions,” he said, and CBRM will answer in writing to save time at the hearing, which will likely be held, as was the 2017 hearing, in Council Chambers.
Six to eight weeks following the hearing, CBRM should get a decision, although Isenor warned the board is “backed up” due to COVID.
