ADMINISTRATIVE REPORT
Date: November 21, 1995
TO: Vancouver City Council
FROM: Director of Finance and General Manager of Engineering
Services
SUBJECT: Annual Review of Water Rates for 1996
RECOMMENDATION
A. THAT flat water rates for single dwelling units be increased
from $177 to $195 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
9.9%, and that the rates as detailed in this report be
approved effective January 1, 1996.
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 2.5% to reflect inflation, and the rates as
detailed in this report be approved effective January 1, 1996.
C. THAT the annual "Backflow Device Administration Levy",
approved by Council on April 19, 1994, be specified in
"Section 14: Prevention of Contamination" and "Schedule H:
Miscellaneous Charges" of the Water Works By-law.
D. THAT residual water pressure estimate fees ($35.00 for the
original calculation and $10.00 for each additional copy for
the same location) and charges for miscellaneous water
information requests ($40.00 per hour) be added to "Schedule
H: Miscellaneous Charges" of the Water Works By-law.
E. THAT charges for service pipes shut off for more than ninety
days as specified in section 37(c) of the Water Works By-law
be set at $2.00 per month and be added to "Schedule H:
Miscellaneous Charges" of the Water Works By-law.
F. THAT the Director of Legal Services be instructed to bring
forward the necessary amendments to the Water Works By-law for
approval.
- 2 -
MANAGERS COMMENTS
The Managers of Corporate Services and Engineering Services
RECOMMENDS approval of A through F.
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 1996 to fund GVWD and City water system costs, as well as
update some specific service charges.
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 1995 OPERATIONS
The following table shows the anticipated results of waterworks
operations for 1995. These projections indicate that expenditures will
be $490,800 over budget and revenues will be $266,800 under budget.
These variances reflect a larger than forecast overall increase in water
usage while metered usage increased at a rate which was slightly lower
than forecast. As the 1995 budget had originally anticipated a surplus
of $759,700, these variances can be accommodated within the existing
funding.
1995 OPERATIONS
1995 1995 Increase
Projected Budget $ %
Expenditures
Debt Charges 17,140,300 17,140,300 0 0.0
Water Purchases (GVWD) 14,135,300 13,754,500 380,800 2.8
Water Rates Billing 782,300 722,300 60,000 8.3
Operating & Maintenance 5,185,000 5,135,000 50,000 1.0
Total Expenditures 37,242,900 36,752,100 490,800 1.3
- 3 -
Revenues
Flat Rate 15,019,000 15,027,300 (8,300) (0.1)
Metered Service Charge 1,840,000 1,874,200 (34,200) (1.8)
Metered Rate 20,386,000 20,610,300 (224,300) (1.1)
Total Revenue 37,245,000 37,511,800 (266,800) (0.7)
Transfer from/(to)
Stabilization Reserve (2,100) (759,700) 757,600
Total Revenues 37,242,900 36,752,100 490,800 1.3
2. 1996 ESTIMATED BUDGET
The 1996 budget projects an increase in expenditures of 11.5%. There are
two major components to this increase.
The first factor driving this increase is a projected 8.7% increase in
the cost of water purchases from the GVWD. This compares with an 18.6%
increase in the water charge for 1995 and is a result of the large
capital expenditure program at the regional level which is currently
underway.
The second factor expected to affect costs is debt charges associated
with the City's capital expenditures. The 1996 water works budget
includes an increase in debt charges of 16.3% over 1995, reflecting
principal and interest charges flowing from the 1995 serial debenture
issue and the partial year's costs for the projected 1996 debenture
issue, less maturities of prior years debt. This borrowing reflects the
expansion in the water capital budget which Council has approved in
recent years.
The following table summarizes expected expenditures and revenues for
1996:
1996 ESTIMATED BUDGET
1996 1995 Increase
Estimated Projected $ %
Expenditures
Debt Charges 19,941,200 17,140,300 2,800,900 16.3
Water Purchases (GVWD) 15,519,200 14,135,300 1,383,900 9.8
Water Rates Billing 796,400 782,300 14,100 1.8
Operating & Maintenance 5,278,300 5,185,000 93,300 1.8
Total Expenditures 41,535,100 37,242,900 4,292,200 11.5
Revenue
Flat Rate 16,579,400 15,019,000 1,560,400 10.4
Meter Service Charge 1,876,800 1,840,000 36,800 2.0
Metered Rate 22,623,000 20,386,000 2,237,000 11.0
Transfer from/(to)
Stabilization Reserve 455,900 (2,100) 458,000
Total Revenues 41,535,100 37,242,900 4,292,200 11.5
- 4 -
It is recommended that the increase in expenditures be funded by an
increase in metered water rates of 9.9%, a flat water charge increase to
$195 per year from the current $177 (10.2%), and a transfer from the
Stabilization Reserve of $455,900. These rates are detailed in Appendix
1 of this report.
3. METERED WATER RATE STRUCTURE
The "uniform" rate structure which was adopted by Council on December
12, 1991, to replace the "declining block" rate structure, was fully
implemented in 1995, and will remain in place for 1996 and thereafter.
The change was undertaken to promote water conservation, and was phased
in over a four year period to reduce the impact on the largest
consumers. It is proposed that the 1995 rate of 85.8õ per unit of water
be increased by 9.9% to 94.3õ per unit for 1996.
4. 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 2.5% to cover inflation of material and labour
costs.
5. 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 $2,100 in 1995, the balance in the Reserve will be
increased to $1,933,500. As this level is in excess of normal needs, it
is proposed to reduce this surplus by $455,900 in 1996. This will leave
a balance of approximately $1,477,600 in the reserve at the end of 1996.
6. CROSS-CONNECTION CONTROL ADMINISTRATION FEES
In 1995, the City implemented an annual "Backflow Device Administration
Levy" for all metered water customers who own backflow prevention
assemblies. This levy was approved on April 19, 1994 as part of
Council s budget management program, to recover the City s cost to
administer and enforce the cross-connection control program. Authority
for this program is provided under section 14 of the Water Works By-law,
"Prevention of Contamination".
The fees for the levy were set at $20.00 for the first assembly, and
$10.00 for each additional assembly in a premise. For clarity and ease
of enforcement, it is recommended that these fees be described in
section 14 of the Water Works By-law, and the rates be added to
"Schedule H: Miscellaneous Charges". The rates will remain unchanged in
1996.
- 5 -
7. COST RECOVERY FOR INFORMATION REQUESTS
The Engineering Department receives a significant number of requests for
information from the development industry and residents. For example, at
our Water and Sewer Counter, we provide information about service
locations, installation standards, servicing costs, sewer depths,
backflow prevention and water pressure estimates for fire sprinkler
designs. Some of this information, such as sewer depths and water
pressure estimates, requires time-consuming calculations. In addition,
the information for one property is often requested by several parties
other than the owner, because they are bidding on a mechanical job or
considering purchasing the property. These multiple requests require
considerable staff time which significantly increases the cost to the
City. To reduce the impact of these costs on the water and sewer
systems, it is proposed that fees be established to recover the costs
from the users of the information. With respect to the water system, the
fees would be:
Residual water pressure estimate:
original calculation $35.00
additional copies for same location $10.00 each
Miscellaneous water information requests $40.00 per hour
The fee for miscellaneous requests is intended to apply to staff time
spent in developing information in response to requests. File research ,
calculations etc. would be subject to the fee. It would not apply to
simple across the counter inquiries.
Subject to Council approval, these fees will be added to "Schedule H:
Miscellaneous Charges" of the Water Works By-law, to support staff s
implementation of the fees, and become effective January 1, 1996.
8. CHARGES FOR SERVICE PIPES SHUT OFF FOR MORE THAN NINETY DAYS
Section 37 of the Water Works By-law specifies the charges to be
recovered for maintaining service hookups when a service pipe has been
shut off for more that ninety days. The rates for metered services and
unmetered fire lines increase as the meter charge and fire line charge
(Schedule E and Schedule C) increases. For unmetered services however,
the rate has not been changed for many years because it is contained
within the text of the by-law. It is proposed that we change this fee
from $.50 to $2.00 per month and include the fee in "Schedule H:
Miscellaneous Charges" of the Water Works By-law.
* * * * *