Sierra Club Atlantic Submission to NS Utility Review Board on Setting Sustianable Water Rates

Publication Date: 
August 3, 2010

 

While the Sierra Club Canada – Atlantic Canada Chapter supports rate restructuring of water, waste water and storm utilities in the interest of improved management and sustainability, the current rate structure application does not sufficiently address questions of efficient allocation of resources, adequate revenues over time, and increased innovation and conservation.

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Direct Evidence for UARB Hearing # W-HRWC-R-10

 

Submitted by Marie Claire Brisbois with support from Peggy Cameron

 

On behalf of the Sierra Club Canada – Atlantic Canada Chapter

 

August 3, 2010

 

SUMMARY

While the Sierra Club Canada – Atlantic Canada Chapter supports rate restructuring of water, waste water and storm utilities in the interest of improved management and sustainability, the current rate structure application does not sufficiently address questions of efficient allocation of resources, adequate revenues over time, and increased innovation and conservation.

 

1.1 Witnesses on Behalf of Sierra Club Canada – Atlantic Canada Chapter

MC Brisbois, MASc – Environmental Consultant

Gretchen Fitzgerald – Director, Atlantic Canada Chapter, Sierra Club & Atlantic Coordinator for Action H2O

Peggy Cameron – Member, Sierra Club Canada

 

 

1.2 Sierra Club Canada – Atlantic Canada Chapter’s Position Regarding the Hearing of

 

While the Sierra Club Canada – Atlantic Canada Chapter supports rate restructuring of water, waste water and storm utilities in the interest of improved management and sustainability, the current rate structure application does not sufficiently address questions of efficient allocation of resources, adequate revenues over time, and increased innovation and conservation.

 

With a projected infrastructure deficit of close to one billion dollars, it is acknowledged that rate increases are necessary in order to achieve inter-generational equity. However restructuring rates without providing incentives for conservation will place the Halifax Regional Water Commission (HRWC) and Halifax Regional Municipality (HRM) residents on track for ever-expanding infrastructure and treatment costs as the volume of water being processed increases with population. This expansion ensures that further rate hearings and price increases will be necessary in the future.

 

Precedence exists for structuring of water, wastewater and storm water utility rates that use intelligent water pricing to encourage innovation and conservation to decrease treatment and distribution burdens and encourage environmental sustainability. The HRWC is currently in a position to adopt such a rate structure and commit to a truly sustainable water pricing structure. 

 

 

2.0 SPECIFIC CONCERNS WITH THE HRWC PROPOSAL

 

2.1 Lack of Support for Conservation Initiatives

 

The HRWC rate application does not address conservation as a solution to deficit issues. Conservation is encouraged through volumetric pricing with higher levels of use corresponding to higher costs per unit of water. The current flat rate plus charges based on volumetric usage is a good start but will be more effective if increasing use is met with increasing charges to discourage unnecessarily high levels of water use. This type of rate structure also has the effect of providing funds to pay off infrastructure deficits or subsidize low-income water users.

 

The recent decision by the United Nations declaring water a basic human right can help to define future HRWC pricing policies. The most effective system will ensure access to a minimum basic quantity of water per person per day, regardless of income levels, with usage above this level subject to volumetric charges at rates that increase with volume.

 

2.2 Incomplete Pricing Reforms

The proposed rate application deems water rates to be sufficient and therefore leaves them untouched. Water rates should be included in the application as a conversion from the current flat rate plus charges based on volumetric water use to a flat rate plus increasing charges with increasing volumetric water use. Since a single meter reading is used to set volumetric charges for water, wastewater and the environmental protection charge, this change will provide more efficient price signals for consumers leading to greater conservation.

 

Further to this, under a volumetric system with increasing rates, innovation is encouraged. Water saving techniques such as grey water recycling, rainwater capture, etc., will have a tangible and beneficial effect on HRWC treatment and distribution costs, as well as on larger ecosystems, and should be promoted.

 

2.3 Fiscal Concerns

With the stated infrastructure deficit, HRWC should be looking at ways to decrease costs instead of providing opportunities for expanding costs. Focusing on conservation through pricing will decrease treatment and distribution costs and may reduce, delay or eliminate the need for costly infrastructure upkeep and expansion costs.

 

As well, addressing only wastewater and stormwater rates in this application means that truly effective rates are further delayed and will need to be addressed in a future rate application process. It is logical to address all necessary rate changes at the current time instead of dividing the process into costly separate application procedures.

 

2.4 Increasing Greenhouse Gas Emissions

Without conservation initiatives, the burden of greenhouse gas emissions will continue to increase. From 1997 to 2002, corporate greenhouse gas emissions due to treatment and pumping increased from 22,000 tonnes to 26,000 tonnes.  This increase is greenhouse gas emissions is contradictory to the stated goals of the HRM Regional Municipal Planning Strategy, such as:

 

“Manage[s] development to make the most effective use of land, energy, infrastructure, public services and facilities and consider[s] healthy lifestyles.” – p. 12 (HRM Regional Municipal Planning Strategy, 2006)

 

“E-22 HRM shall prepare an Emissions Reduction Functional Plan which shall identify

programs and methods to reduce the level of air pollutants and greenhouse gases.” – p 35 (HRM Regional Municipal Planning Strategy, 2006)

 

 

2.5 Lack of Full Cost Accounting

The proposed rate application does not account for all costs inherent to the water supply and treatment process and therefore is economically unsound with respect to full cost accounting. Preconditions for changes to water rates should follow a comprehensive water budget and include accounting of the opportunity costs of source inputs such labour, capital, materials and raw water inputs as well as source and outflow ecosystem impacts. Ignoring these costs means that either HRWC or another group will ultimately be responsible for covering incurred costs that have not been accounted for.

 

2.6 Confusion Concerning Future Stormwater Rates

There is confusion in the rate application with respect to the proposed conversion of a flat rate for stormwater to a variable rate based on permeability. Factors influencing this variable rate should be articulated in order to provide developers and consumers with the necessary information to responsibly manage their property in a manner that contributes to overall system sustainability.

 

3.0 SUSTAINABLE ALTERNATIVES TO PROPOSED RATE STRUCTURE

Precedence for full cost accounting with respect to water quality and ecosystem impacts exists in the form of the European Union Water Framework Directive. It dictates that all water and sewage treatment facilities incorporate the economic values of raw water supplies and ecosystem impacts in to their pricing structures.,

The Sustainable Water and Sewage Systems Act of the Province of Ontario provides further guidance on accounting procedures. All water suppliers and sewage treatment facilities must set prices according to a full cost accounting system however this system is not as complete as that established by the European Union as the ‘full cost’ defined in the act does not place economic value on many ecosystem services that have been established to have economic value. This is an area which HRWC can improve upon. 

 

In congruence with the establishment of water as a basic human right by the UN, a set quantity of water, or a ‘lifeline’ amount, should be guaranteed for all people. Volumetric water pricing which employs increasing rates with increasing water use is encouraged. These rates must be applied to both water and waste water. Full cost accounting which assesses raw water and ecosystem value and incorporates these costs into rates is necessary.

 

4.0 CONCLUSION

As a national leader in water resource management, HRWC currently has the opportunity to set a precedent in the appropriate and effective pricing of water-related services. The current rate application is a small piece of a much larger puzzle and will be ineffective at stemming growing economic costs and environmental burdens without expansion to include water as well as modification to address conservation.

 

References

Halifax Regional Municipality Corporate Local Action Plan To Reduce Greenhouse Gas Emissions. 2005. www.halifax.ca/environment/.../HRMCorporateClimateLocalActionPlan.pdf. Accessed August 3, 2010.

Chave, P. 2002. The UE Water Framework Directive: An Introduction. Colchester, UK: IWA Publishing.

Water Information System for Europe. 2008. Water Note 5: Economics in Water Policy: The Value of Europe’s Waters. European Commission. Available online at < http://ec.europa.eu/environment/water/participation/pdf/waternotes/water...

Renzetti, S. 2007. Are the Prices Right? In: Eau Canada: The Future of Canada’s Water. Ed. Bakker, K. Vancouver, 263-279.
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