It is a big discussion for Humboldt City Council.
During a special budget meeting of Humboldt council on January 21, water rates were once again the main topic of conversation.
Steve Brown, Director of Finance for the City, explained he is making a five-year plan for the City's utility budget, to help with year-to-year continuity.
"I went through the process, I went through with a fine-toothed comb," said Brown.
Since the 2012 reports are not finalized, Brown looked back at the 2011 information to help him portray the water use as accurately as possible.
"Prior years will be worse because the water loss ratio has been gradually getting better," said Brown.
He said 2011, the water loss ratio was better and was a good base for him to start from.
"Council asked me to look at the information and try to find out if there was any inequities or try to make sure everything is a uniform rate across the system and try to minimize the impact the utility increase will have as much as possible," said Brown.
From the 2011 financial information, the City saw about $2.4 million in revenue, $2.1 million in expenses and total water sales of 469,628 cubic metres.
According to the information, the city saw a water loss of about 20 per cent, explained Brown.
He pointed out that the average revenue the City sees per cubic metre sold is $4.80 and the expense is $4.54 and SaskWater charges $2.90 per cubic metre to the City.
"That is fairly significant," said Brown.
The council members questioned why the City would be seeing water loss.
"It could be from water breaks, faulty water metres and leaks that we may not know about," said Mayor Malcolm Eaton.
Brown tried to summarize the water utility information to make it easier to understand with a chart, showing different user groups, how much they have paid in the past, how much they will pay in 2013 and the revenue the City receives.
After he went through all the information, the rates for two user groups stuck out.
"I started with the users out of town," said Brown. "We do supply water to users outside of the city limits."
He started by looking at the South end sales.
"They pay $2.51 per cubic metre," said Brown of users south of city limits. "The actual cost that SaskWater charges is $2.90."
He explained the City is already at a loss when they sell water to the South users.
"We are losing 30 to 40 cents per metre," said Brown.
He explained he wanted Council to look at this information because the rate the South users pay does not factor in things like labour, system supplies and water maintenance."
"The water costs are a little greater than what we are charging them," said Brown. "This is one I have identified that the rate structure needs to be re-evaluated to bring it in line with what other users are paying."
"There is a line that goes out to the group," said Brown. "They are responsible for upgrades and capital and reimburse the City for meter reads."
Although the users are responsible for some expenses, the $900,000 for upgrades in the City system has not been included in their rate.
"If we have three water treatment operators, if a pump station shuts down, no one gets any water," said Brown, giving an example of how the City's system affects their water use.
"What you are suggesting going forward is they start contributing towards the larger infrastructure piece," said Eaton. "If our water treatment pump system goes down, they aren't getting water either, so anything we do like maintenance, upgrading and planning for the main water system impacts them, so they should be contributing just like (we) are."
Brown suggested a 24.6 per cent increase per year will bring these users back up to a rate that is more level with other city water users.
"We aren't trying to get them up to the top because we know there are costs that only in-city users will pay for," said Brown.
The other user group Brown pointed out was the North user group.
"This one is going to be very gross, I'm not going to lie," said Brown.
The current charge for the North users is $5.16 per cubic meter.
"You can see already they pay a very high amount for the water.," said Brown. "The problem is the line itself has a 50 per cent water loss. For every gallon we put in that line, 50 per cent of it goes into the ground."
He said because of the water loss ratio on the line, they can half the $5.16 because there is so much loss.
The City has looked at options for the water line, but because there is such a high water loss for the five-kilometre line and no valves they can use to check where the leak is, they don't have a lot of options, explained Joe Doxey, Director of Planning and Infrastructure.
"That line will cost $1.4 million to replace," said Brown.
The line is not considered part of the City's system because the water goes into it straight from SaskWater, but since it is licensed to the City, it is their responsibility.
It is also too close to the highway for proper maintenance to occur.
Since there are only four users on the pipeline, Brown does not see the point in replacing the line.
"We spent about $2 million on a super pipe last year, which affects hundreds of residents and users, whereas this will only affect four users," said Brown.
Council was looking at options to fix this problem, but a significant rate increase, for some of them 69.2 per cent, will be in the future for the North users.
"We could ask them to form an organization and own their own line or shut it down and ask them to find other water supplies," said Doxey. "The problem is no one has the desire to take on five kilometres of pipeline to service four people."
Eaton suggested the group maybe connect with the rural pipeline and attach to it instead.
As for the in-city users, the rate increase will be smaller.
"In-town users are looking at a seven per cent increase with about $40,000 out of the gas tax money," said Brown. "About 75 per cent of the system will be at a seven per cent increase."
There will then be about 75 per cent of the gas tax money from the provincial government left for roads.
"We will be using about one-quarter of the gas tax from the provincial government, leaving three-quarters for roads," said Brown.
The City also has to look at making the flat charges level across the board, so everyone will pay the same amount for something like a two-inch water connection, Brown explained.
"I think this is a process," said Brown. "We are going to have to look at it as we go along. We are looking at a complete re-examination of how we do the utility rate structure. Maybe it will be too high, maybe it will be too low. We will find out."
Brown brought the water utility budget back at the January 28 council meeting, with some clarifications.
Council approved the recommended average 8.9 per cent rate increase for the next five years in principle, as well as a $2.50 per year storm water levy increase for the first year, followed by a $1 a month raise each year until 2017.
Although the rates were approved in principle, the final approval will be made in a future budget meeting.
