Utility Rate Review

The City has completed a review of its rates for the water, electrical and sanitary sewer utilities. The review recommends a 0% increase to electrical rates, a 0.6% increase to treated water rates, a 4% increase to agricultural water rates and a 9.4% increase to sewer rates each year for the next three years beginning in 2020. The recommended rates ensure the utilities receive the funding needed while balancing concerns of affordability for customers.

“We have taken steps in recent years to properly fund our electrical and water utilities which allows us to hold the rates for the foreseeable future,” says General Manager Infrastructure Mitch Moroziuk. “The sewer utility is currently underfunded and the recommended changes to those rates will help ensure this service receives the investment it needs.”

In addition to assessing the funding needs of the utilities, the review also compared the City’s utility bills with seven other communities in the area and consulted customers on the options before determining the final recommendations. One of the biggest areas of concern for residential customers was an early proposal to increase sewer rates by 16.5% for the next two years to make up the funding requirements needed for projects such as replacing the compost facility at the landfill. Based on feedback from residents and the input of a citizen task force, this initial proposal was adjusted to a 9.4% increase for each of three years to lessen the impact to residents.

“Penticton has been very upfront about the costs of maintaining civic infrastructure and proactive in addressing the funding requirements,” says Mayor John Vassilaki. “Reviews like this help us determine if we are on track with the responsibility of keeping up these services while not forgetting about the needs of residents. I want to thank the citizens who participated in this important process and especially the five-member task force who represented the interests of customers.”

The recommendations were shared with Council at their July 16 meeting and will be included in the annual update to the Fees and Charges Bylaw that takes place each fall. If approved by Council, residents can expect a $10 per month total increase in their combined utility bills over a three-year period with the average household increasing from $202 per month in 2019 to $212 per month in 2022. Residents are encouraged to read the Council Report at www.penticton.ca for the complete findings from the review including the impacts for commercial, industrial and agricultural customers.

The City has completed its tri-annual review of utility rates and is ready to share the findings with residents. The conclusions will be reviewed with Council at their meeting on April 16 and then discussed with residents at two open houses on April 17 and 18. The information gathered through the review will assist the City in setting utility rates for the next three years.

“The goal of the review is to determine what the rates need to be in order to properly fund the maintenance and operations of our electric, water and sewer utilities as well as the need to replace or build new infrastructure,” says Infrastructure General Manager, Mitch Moroziuk. “It also compares Penticton’s rates to other municipalities and considers the impact on customers and affordability.”

The City reviews its utility rates every three years. This review was kicked off in late 2017 and was postponed to allow staff to respond to flooding. The study has since been completed and will be published on the City’s website on April 12. In preparation for the Council meeting and upcoming engagement activities, the City is sharing some of the key findings from the study including:

· The reserve balances for the electric utility are forecast to be higher than required. As a result, the review is recommending the rates set in 2017 continue through to 2022. This will mean that the 0% increase in electrical rates will continue for the next three years.

· The reserve balances for the water utility are slightly higher than required. As a result, the review is recommending a small annual rate increase of 0.6% per year 2020 to 2022 or from $47 per month in 2018 to $50 per month in 2022 for the average household. Agricultural rates are also recommended to continue to increase 4% per year for the next three years to recover operations and maintenance costs.

· The sanitary sewer system continues to be underfunded and the review is recommending rate increases of 16.5% per year for 2020 and 2021 followed by a modest increase of 3.7% for 2022 or from $27.00 per month in 2018 to $45 per month in 2022 for the average household.

Following the Council meeting, staff will review the findings with customers including meetings with groups representing the industrial and agricultural communities and open houses to meet with residents. As part of these activities, staff will be looking for feedback on the proposed increases to the sanitary sewer rates as well as gauging interest in introducing water rates that incentivize conservation.

“The input received through the engagement process will be shared with the Utility Rate Review Task Force and options to address the concerns received will be generated and provided to Council as part of the final Utility Rate Review presentation,” says Moroziuk.

Attend an Open House

Residents who want to discuss and provide input into the findings of the review and the proposed rates are invited to review the materials online at www.shapeyourcitypenticton.ca beginning April 12 or participate in one of the following events:

The City is kicking off a review of its utility rates and wants to hear from its customers. A survey has been launched on shapeyourcitypenticton.ca to gather customer feedback so that it can be considered in the review.

“The City regularly reviews its utility rates to ensure they provide the funding needed to keep the utilities going,” says JoAnne Kleb, community engagement strategist. “This year, staff are taking the added step of involving the community to ensure customer interests are more fully represented in the review.”

The goal of the review is to determine what the utility rates need to be in order to properly fund the operation of the utilities, sustain existing infrastructure and construct new projects, and to develop a plan that balances the impact to customers. The review will look at the rates for the water, electrical, sanitary sewer and agricultural water utilities and it will compare them with other communities with similar assets. The City aims to complete the review this year and consider the findings and recommendations as part of the 2019 budget process.

In addition to the survey, the City has also established a task force to represent the interests of customers in the review. A group of citizens representing residential, agriculture, commercial and industrial property owners have stepped up to participate.

Customer feedback will be collected until April 3. To encourage participation, the City is offering customers a chance to win their May residential utility bill. Customers who register on shapeyourcitypenticton.ca and complete the survey will be entered in a draw to have the City pay up to $200 towards the May 2018 utility bill on an active residential account. Paper copies of the survey are also eligible and are available at City Hall.

Residents can learn more about the review by watching a one-minute video available at shapeyourcitypenticton.ca.

Published Jan. 25, 2018

Preparation for the City’s Utility Rate Review Project has concluded following the appointment of interested community members to a guiding committee and the awarding of a contract to carry out the forthcoming work.

From the eligible committee applicants who expressed interest in participating, the following individuals were selected:

• Frank Conci, representing Industrial Customers
• Chris Struthers, representing Commercial Customers
• Rod King, representing Agricultural Customers
• Frank Regehr, representing Residential Customers
• William Stollery, representing Residential Customers

In addition, the following City staff will also sit on the Committee:

• Mitch Moroziuk, General Manager of Infrastructure
• Jim Bauer, CFO (Participation when required)
• Amber Coates, Revenue Supervisor (Participation when required)
• Wesley Renaud, Budget Analyst
• Shawn Filice, Electric Utility
• Ian Chapman, Engineering Department

To assist the committee in meeting its objectives, Intergroup Consultants were chosen as the successful proponent from a list of eligible submissions received through a Request for Proposal process.

“With the goal of developing a sustainable rate structure, the Utility Rate Review Project will examine current and future charges for electricity, sanitary sewer and both treated and agricultural irrigation water”, said General Manager of Infrastructure, Mitch Moroziuk. “The project is scheduled to span from the end of January through to July and will include both committee and public engagement meetings”.

The key focus areas of the project are:

• The administration / overhead fee charged to each utility
• The electrical utility dividend
• Adjustments to the Sanitary Sewer Rate Structure
• Decoupling power purchase cost from City costs
• Rates account for:
• electricity purchase costs
• operating and maintenance costs
• capital costs for new capital additions
• average annual lifestyle investment for asset management purposes
• administrative / overhead costs
• debt servicing costs
• transfers to reserves
• the electrical utility dividend

Members of the community wishing to contribute feedback towards the findings of the utility rate review are encouraged to watch for advertisements promoting the upcoming public engagement meetings.

Published Dec. 12, 2017

2018 marks the beginning of the City of Penticton’s Utility Rate Review. With the goal of developing a sustainable rate structure, the review will examine current and future charges for electricity, sanitary sewer and both treated and agricultural irrigation water.

To ensure a variety of perspectives and points of view are gathered over the course of the review process, the City is seeking the participation of four community members who are interested and available to join staff on a Utility Rate Review Committee. Of particular interest to the City are individuals representing the interests of residential, commercial, industrial and agricultural utility users. Individuals with backgrounds and experience in accounting and finance are also sought.

The project is scheduled to span from January 23, 2018 to July 17, 2018 and will involve about four meetings, plus participation at public engagement sessions. Key focus areas of the committee will include:

1. The administration / overhead fee charged to each utility.
2. The Electrical Utility Dividend.
3. Adjustments to the Sanitary Sewer Rate Structure.
4. Decoupling of the FortisBC power purchase increases from City controlled price increases.
5. Revenue requirements to meet:
   1. Electricity purchase costs;
   2. Operating and maintenance costs;
   3. Capital costs for new capital additions;
   4. Average Annual Lifecycle Investment for asset management purposes;
   5. Administration / Overhead costs;
   6. Debt servicing costs;
   7. Transfers to reserves; and
   8. The Electrical Utility dividend.
6. A Cost of Service analysis to ensure that each customer class in each of the four utilities is paying the correct amount.
7. Development of rate structure options.
8. Utility expense comparisons.
9. Public engagement.
10. Finalizing a rate structure.

Local community members interested in being considered for this committee are asked to download and submit the following form by January 15, 2018.