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Why does the Region set its water/wastewater cost recovery structure this way?
The water rate structure ensures that the Region has the required funds, available on a timely basis, to cover the costs required to prudently operate as well as maintain and develop its infrastructure. The rate structure also provides an incentive to local municipalities to continue to support conservation as 75 per cent of the cost will be based on the actual volumes consumed during the current year.
We're using less water but paying more - why?
The Region's water and wastewater systems are highly capital intensive. The majority of costs (close to 90 per cent) to maintain this infrastructure are fixed. Therefore, the costs do not decrease regardless of how much water is conserved. As consumption decreases and the majority of Region's costs remain fixed, rates will increase.
How much more will I be paying?
Due to declining volumes water and wastewater rates will continue to increase. For an average family, this represents an increase of approximately $29 in 2010 for Regional costs. However, wholesale rate structures are charged to the local municipalities. Local municipalities then establish retail rates based on their own goals, objectives, and costs and in consideration of the Region's wholesale rate structure. The retail rates ultimately determine how all costs will be recovered from customers. Decisions will continue to be made by each of the respective local municipalities as to the most appropriate retail rate structure.
How does the Region balance its goals of achieving stability and encouraging conservation?
In our cost recovery methodology, the Region sends a clear message that conservation is important, because only a quarter of the Region's fixed costs are recovered on a fixed basis from the area municipalities; the other 75 per cent are charged to area municipalities on a volumetric basis.
What are some of the challenges facing the Niagara Region's water and wastewater operations?
Over the next 10 years, the Region is projected to spend $478 million for the replacement/refurbishment of its existing water and wastewater infrastructure. In addition, to remain compliant with Provincial and Federal requirements, the Region will be required to spend upwards of $102 million to upgrade and/or rehabilitate facilities. The Region is also estimating that it will need to provide an additional $156 million in growth related capital projects.
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