A12
ADMINISTRATIVE REPORT
Date: November 21, 1996
TO: Vancouver City Council
FROM: Director of Finance and General Manager of Engineering
Services
SUBJECT: Annual Review of Water Rates for 1997
RECOMMENDATION
A. THAT flat water rates for single dwelling units be
increased from $195 to $218 and that other flat water
service charges (Schedule "B" and Schedule "C"),
charges for metered water service (Schedule "D"), and
charges for temporary water service during construction
(Schedule "F") be increased by 11.9%, and that the
rates as detailed in this report be approved effective
January 1, 1997.
B. THAT flat rate connection and removal fees (Schedule
"A" and Schedule "A.1"), meter service charges
(Schedule "E") and flat rate fees for installation of
water meters (Schedule "G") be increased by 1.0% to
reflect inflation, and the rates as detailed in this
report be approved effective January 1, 1997.
C. THAT the meter testing charge described in section 38
of the Water Works By-law be updated from $75 to $110,
to reflect inflation since the fee was last updated and
appropriate cost-sharing for this work.
D. THAT the Director of Legal Services be instructed to
bring forward the necessary amendments to the Water
Works By-law for approval.
MANAGERS COMMENTS
The Managers of Corporate Services and Engineering Services
RECOMMEND approval of A through D.
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COUNCIL POLICY
Water rates for both metered and non-metered customers are
specified in the Schedules of Rates and Charges included in the
Water Works By-Law. These schedules are updated annually by
Council to establish the following year's water rates.
PURPOSE
The purpose of this report is to recommend a general increase in
water charges for 1997 to fund GVWD and City water system costs,
and to update the fee for meter tests requested by customers.
BACKGROUND
The waterworks distribution system of the City of Vancouver is
intended to operate on a utility basis, with the City purchasing
water from the Greater Vancouver Water District (GVWD) supply
system and distributing it to water consumers within the City on
a cost-recovery basis, including debt charges.
1. REVIEW OF 1996 OPERATIONS
The following table shows the anticipated results of waterworks
operations for 1996. These projections indicate that expenditures
will be $31,300 (0.1%) over budget while revenues will be
$313,800 (0.8%) over budget. These variances reflect a larger
than forecast increase in metered water usage.
1996 OPERATIONS
1996 1996 Increase/
Projected Budget (Decrease) %
Expenditures
Debt Charges $19,121,200 $19,121,200 $0 0.0%
Water Purchases (GVWD) $15,550,500 $15,519,200 $31,300 0.2%
Water Rates Billing $762,500 $762,500 $0 0.0%
Operating & Maintenance $5,779,100 $5,779,100 $0 0.0%
Total Expenditures $41,213,300 $41,182,000 $31,300 0.1%
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$16,605,000 $16,579,400 $25,600 0.2%
Meter Service Charge $1,876,800 $1,876,800 $0 0.0%
Metered Rate $22,911,200 $22,623,000 $288,200 1.3%
$41,393,000 $41,079,200 $313,800 0.8%
Transfer from (to)
Stabilization Reserve ($179,700) $102,800 ($282,500)
Total Revenues $41,213,300 $41,182,000 $31,300 0.1%
2. 1997 ESTIMATED BUDGET
The 1997 budget projects an increase in expenditures of 13.0%.
The components of this increase are explained below:
The first factor driving this increase is a projected 10.5%
increase in the cost of water purchased from the GVWD. This
compares with an 9.8% increase in the water charge for 1996 and
is a result of the large capital expenditure program at the
regional level which is currently underway.
The second factor expected to have a significant effect on costs
is debt charges associated with the City's capital expenditures.
The 1997 water works budget includes an increase in debt charges
of 16.8% over 1996 as a result of the 1996 debenture issue. These
debt charges reflect the completion of borrowing for the
1994-1996 Waterworks Capital Plan.
The operating and maintenance costs are expected to increase by
4.5% in 1997. This increase includes a 1% inflation increase as
well as an additional $200,000 for flushing water mains in
accordance with the GVRD Water Quality Improvement Program. A
report is forthcoming for Council approval on this expenditure in
advance of the Operating Budget.
The following table summarizes expected expenditures and revenues
for 1997:
1997 1996
Estimated Projected Increase %
Expenditures
Debt Charges $22,328,200 $19,121,200 $3,207,00 16.8%
Water Purchases (GVWD) $17,434,700 $15,550,500 $1,884,20 12.1%
Water Rates Billing $770,100 $762,500 $7,600 1.0%
Operating & Maintenance $6,038,900 $5,779,100 4.5%
Total Expenditures $46,571,900 $41,213,300 $5,358,60 13.0% - 4 -
Revenue
Flat Rate $18,600,700 $16,605,000 $1,995,70 12.0%
Meter Service Charge $1,914,300 $1,876,800 $37,500 2.0%
Metered Rate $26,066,200 $22,911,200 $3,155,00 13.8%
$46,581,200 $41,393,000 $5,188,20 12.5%
Transfer from/(to)
Stabilization Reserve ($9,300) ($179,700)
Total Revenues $46,571,900 $41,213,300 $5,358,60 13.0%
It is recommended that the increase in expenditures be funded by
an increase in metered water rates to 105.5õ per unit from the
current 94.3õ per unit, a flat water charge increase to $218 per
year from the current $195, and a transfer to the Stabilization
Reserve of $9,300. These rates are based on an average 11.9%
increase and are detailed in Appendix 1 of this report.
3. INFLATION INCREASE
Some services provided are not affected by the cost of water but
are mainly dependent on general increases in the cost of goods
and services. It is proposed that these services which include
Schedules A, A.1, E, and G be increased by 1.0% to cover
inflation of material and labour costs.
4. WATER RATES STABILIZATION RESERVE
The Water Rates Stabilization Reserve is comprised of the
accumulated surpluses of the waterworks operations over the years
and is used to stabilize year over year changes in the water
rates. With the transfer of approximately $179,700 in 1996, the
balance in the reserve will be increased to $2,261,500. The
$9,300 transfer from the reserve in 1997, will balance the
Waterworks budget and will result in a balance of approximately
$2,270,800 in the reserve at the end of 1997.
5. TESTING OF METERS
Section 38 of the Water Works By-law specifies that the City will
test a water meter, on written request by a customer and upon
deposit of a fee of $75. If the meter is found to over-register
by more than 2%, then the fee is refunded; otherwise the fee is
retained to offset the cost of the test.
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The $75 meter testing fee has not been updated since 1984, and
the actual cost to test a water meter now ranges from $200 to
$250, depending on the type of meter. Because the City also gains
some benefit from these tests, however, it is recommended that
the meter testing fee be updated to $110, as of January 1, 1997.
This would recover approximately 50% of the test cost, and the
increase would be consistent with inflation for the period 1984
to 1997 (48%).
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