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2008/04/14SEVENTH MEETING Monday, April 14, 2008 4:00 p.m. City Hall, Committee Room #2A & B 1) 2) a) b) 3) 4) 1) 2) a) 3) 4) Approval of the March 31, 2008 Community Services Minutes. REPORTS: R-2008-15 Bob Gale Complex Construction Update R-2008-14 Dr. Afrukhteh Art Collection NEW BUSINESS: ADJOURNMENT: Approval of the February 25, 2008 Corporate Services Minutes. REPORTS: CPS-2008-17 Water & Sewer Rate Structure Review NEW BUSINESS: ADJOURNMENT: a) Resolution to go into Closed Meeting. STAFF CONTACT: Denyse Morrissey Denyse Morrissey STAFF CONTACT: Ken Burden . FOURTH MEETING IN CAMERA MEETING Cotrtmittee Room 2 Fet~ruary 25, 2008 Council met on Monday, February 25, 20D8 at4:00 p.m. in an In Camera Session. Councillors Thomson, Kerrio, loannoni and Wing were absent due to a conflict on the matter. Councillor Pietrangelo presided as Chairman. Following consideration of the items presented, the In Camera Session did rise and report in open session. DEAN IO~ID/ ,CITY CLERK R.T. ED SALCI, MAYOR *.**k REGULAR COUNCIL MEETING Council met on Monday, February 25, 2008 at 7:00 p.m. for the purpose of considering Regular Business matters. All members of Council were present. Councillor Kerdo offered the Opening Prayer. Following the opening prayer, Eilis Wilson, a g rade 8 student at St. Gabriel Lalemant School sang the National Anthem. ***R* ADOPTION OF MINUTES Councillor Wing indicated an addition to the wording of the motion regarding the Afrukhteh Art Collection, page 15 to include that information on the condition and cost of the collection be provided for Council's information. ORDERED on the motion of Councillor Kerrlo, seconded by Councilor Maves that the minutes of February 25, 2008 be approved as amended. Carried Unanimously *k*k* DISCLOSURES OF PECUNIARY INTEREST Councillor Kerrio indicated conflicts from the February 11" meeting, for which he was absent, for PD-2008-14 and the In camera matter regarding Development Charges. He continues to have a conflict on the In Camera matter re: Development Charges on the agenda for this meeting. Councillor Thomson indicated a conflict to an In Camera matter, re: Development Charges. Councillor loannoni indicated a conflict to an In Camera matter, re: Development Charges. Councllor Wing indicated a conflict to an In Camera matter, re: Development Charges. 2 - February 25, 20D8 Council Minutes CORPORATE SERVICES COMMITTEE AGENDA Councillor Pietrangelo presided as Chair for the Corporate Services meeting. Municipal Utility Budaet F-2008.10 -Chief Administrative Officer - 2008 Municipal Utility Budget It is recommended that the Corporate Services Committee recommends: -the approval of the 2008 Municipal Utility Budget -the approval of the 2008 water and sewer rates and charges per Schedule A. -the approval of the amending bylaw to Bylaw 2007-161 for the imposition and collection of rates - the 2008 water and sewer rates be reviewed following the consideration of the Water acid Sewer Rate Structure Review report ORDERED on the motion of Mayor Salci, seconded by Councillor Moves that the report be approved pending possible amendments after Council receives the Loudon Report. Motion Carried with Councillor Thomson and Fisher opposed. ~.... Operations Budaet F-2008-11 -Chief Administrative Officer- 2008 General Purposes Budget It is recommended that the Corporate Services Committee recommends that approval of the 2008 General Purposed Budget as amended. ORDERED on the motion of Councillor Diodati, seconded by Mayor Salci that the report be approved. Motion Carried with Councillors Kemio, Thomson and Fisher opposed. TS-2008-15 - Chiet Administrative Officer -Proposed Adjustment to Parking Fines It is recommended that: 1. Council approve the proposed adjustment to set f nes; 2. That staff forward the attached schedule to the Ministry of the Attorney Generals's Offce for approval; and 3. That Council forward a resolution to the Regional Municipality of Niagara requesting that they adjust their set fines to align with the proposed adjustments outlined in this report. As well, that they eliminate the voluntary payment option. ORDERED on the motion of Councillor loannoni, seconded by Mayor Salci that the report be approved as recommended. Carried Unanimously .<.«, ORDERED on the motion of Councillor Kerrio, seconded by Councillor Thomson that Council listen to the Board of Museums presentation next followed by the capital budgetpresentation. Carried Unanimously - 3 - February 25, 2008 Council Minutes Presentation by the Board of Museum Don Jackson, Board member and Kathy Powell, Museum Manager made a brief presentation outlining expansion plans for the Lundy's Lane Historical Museum and how these plans fit with War of 1812 bicentennial initiatives. The costs and the timelines of the project were outlined. It is hoped that matching Federal and Provincial funds will be sought and available. Jon Neuert, Architect, Baird Sampson Neuert, gave a brief presentation on the concept plan for the Lundy's Lane Historical Museum proposed expansion. ORDERED on the motion of Mayor Salci, seconded by Councillor Wing that the proposed expansion to fhe Lundy's Lane Historical Museum be referred to the 5 year capital budget forecast for consideration. Motion Canied with Councillor loannoni opposed. •k,lff Caoital Budget The Chief Administrative Officer made a brief powerpoint presentation on the proposed 2008 Capital Budget. ORDERED on the motion of Mayor Salci, seconded by Councillor Diodati that the capital budget discussions be deferred to a future strategic planning meeting. Motion Carried with Councillors Wing, loannoni, Fisher and Kerrio opposed. ORDERED on the motion of Councillor loannoni, seconded by Mayor Salci that staff investigate and report back on possible funding opportunities for Grade Separation forthe future strategic planning session. Carried Unanimously ORDERED on the motion of Councillor Wing, seconded by Councillor loannoni that an update on the consultants roads and infrastructure report be provided for the future strategic planning session. Carried Unanimously ..,.. Miscellaneous CAO-2008-01 -Chief Administrative Officer-Council Strategic Priorities 2007-2010 It is recommended that this report be received for information. ORDERED on the motion of Mayor Salci, seconded by Councillor Kerrio that the report be received far information. Carried Unanimously x~s~• ORDERED on the motion of Councillor Fisher, seconded by Councillor Moves that the Corporate Services meeting be adjourned at 9:35 p.m. Carried Unanimous ~~~~~ MAYOR'S REPORTS. ANNOUNCEMENTS Mayor Salci extended condolences to Jim Moves, a Niagara Transit Employee, on the recent Icss of his step-father William Miller. Mayor Salci advised of some recent events: Bill Clark, a long time employee of the City for 33 years has announced his retirement; St. Michael's High School held its 3'" Annual Valentine's Day Semi Formal, the Bowl for Kids Sake fundraiserwhich was a huge success and the Niagara Falls Civic Convention Centre has announced their executive team. April 14, 2008 CPS-2008-01 ~._ ~l l~$.~ ~~.~~a~~~.l~~' Councillor Victor Pie#rangelo, Chair c n ~ ~ n ,~ and Members of the Corporate Services Committee City of Niagara Falls, Ontario Members: Re: CPS-2008-41 Water and Sewer Rate Structure Review RECOMMENDATION: 1. That Committee receive the Water and Sewer Rate Structure Review report prepared by R.M. Loudon Ltd., dated April 2, 2008. 2. That Committee recommends that Council adopt the list of principles as identified in the Loudon report. 3. That Committee recommends to Counci! the formation of a Public Consultation Committee for Water and Sewer Rate Structure Review. 4. That Committee recommends that Council directs the Public .Consultation Committee to make recommendations on rate structures that comply with the adopted principles. That R.M. Loudon Ltd. return to Committee with a prepared list of definitive BACKGROUN©: recommendations. - That the report be deferred to allow Mr. Bielawski`~time to review and re are a response for Committee. On December 10, 20Q7,~Council approved the engagement of R.MpLo~tdon Ltd. to conduct a Water and Sewer Rate Structure Review. The review took place immediately as outlined in the report of April 2, 2008, a copy which has already been distributed to Council. Staff worked with Michael Loudon and with Mr. Ed Sielawski, who provided several documents of information for Mr. Loudon's review. The report does not give a recommendation for a particular rate structure but identifies several principles that could be the criteria for considering a different rate structure. The Principles are as follows: • Revenue Adequacy & Revenue Security • Legality • Practicality • Fairness & User Pay • Affordability • Simplicity • Conservation & Wa#er Use Efficiency • Encourage Development Mr. Loudon has suggested that~~e°Principle of 1=airness and Equity is the most important principle related to the water~a"nd sewer rates, as iden#ified at the public consultation sessions. Staff sugges#s~#~ie next step is that Corporate Services Committee recomirientls ~-- ""~~"~'"""'-'~" ~" to Council th~e}bg:tio of the Principles. i Workirrg.:Togetlaer to Serve Darr Cojr:munity ~ Corpor~U SC p iicwoD9partment ,, F .r .~a:_ April 14, 2008 - 2 - CPS-2008-01 Mr. Loudon's review provides an examination of the components of a rate structure, whether it is a fixed cost or a variable expense, either a monthly charge or a volumetric rate. To explain the impact of changing the rate structure, Mr. Loudon chose a sample rate structure for comparison. The report shows the impact of changing the current method. Staff cautions that although this is a good example of a change and what the impact would be, it should not be considered to be the specific recommendation of the consultant. Mr. Loudon's review includes a variety of rate structure alternatives. The review covers the basic components and several volumetric rate formats. Other issues discussed include Volume Only Rates, Revenue Security, and Metering of Condominium/Townhouse Developments. Further study can be performed by City staff, however, public input is necessary in order to appreciate what the range of impacts may be for various sectors in the community. Staff is requesting that Committee recommend to Council the formation of a Public Consultation Committee, made up of staff and public representatives. Members of the public should be selected to provide representation from residential, institutional, commercial and industrial interests. The Public Consultation Committee would be directed to prepare recommendations on the appropriate rate structure and its compliance with the adopted principles approved by Council. CONCLUSION: In summary, Staff suggests that the Water and Sewer Rate Structure Report from R.M.Loudon Ltd. be received for information, that the report's Principles be adopted by Council and a Public Consultation Committee, made up of representatives from a variety of sectors in the community, be formed to make recommendations on a rate structure to Council. Recommended by: Ken Burden, Executive Director of Corporate Services ~1 Respectfully submitted: 3 .~~ ,> >' MacDonald, Chief Adm Officer ;' ,i V:12008000NCIL10804141CPS-2008-01 Water and Sewer Rate Structure Review.wpd City of Niagara Falls GYater & Sewage Rate Structure Review City of Niagara Falls Water ~ Sewa Rate Structur R. M. Loudon Ltd. April 2, 2008 Final Report 'aee 1 of 78 NF User Rate Repay Apri122008 Frnnl. doc ~ R.M.LoudonLtd.- Cite ofAriaga'a Fa!(s Water & Sewage Rate Struchrre Review TaUle of Contents 1 2 3 4 Fina! Repor! 'aee 2 of 78 Executive Summary ............................................................................................. ....... 6 Background ........................................................................................................... ...... 9 Public Forum ......................................................................................................... .... 15 Existing Water & Sewage Information ................................................................. .... 18 4.1 Water & Sewage Rate Structures .................................................................. .... 18 4.1.1 City Retail Rates ....................................................:~............................... .... 18 4.1.2 Regional Wholesale Rates ............................... .......'......................... .... 22 ,, . 4.2 Customers ..........................................................................:}~.:~tr.. ................. .... 23 4.3 Consumption ........................................................................ .>;............ ....23 ~.. ~; 4.3.1 Regional Water Supply & Sewage Treated Volumes ... ~ a ~ `... .... 23 „; 4.3.2 Annual Consumption ....................... .,..... ~' ... ,. ..... .... 24 . 4.3.3 Consumption Profile ........................ n.,. ~ ............... .... 25 ~ ~ A_, 4.3.4 Largest Users ...............................................................:......................... + .... 27 4.4 Budget .................................. ..... ....... . .......................... ....29 s 4.5 Conservation /Water Efficient Use Prog'rarns:.,.. ................................ .... 30 Alternative 2007 User Rates.......: °' ........................... ~ ... 33 5.1 Principles ....... kry .......................................... .... 33 5.1.] Reveiiue;Adequacy 8z Revenue Seciar~ty ................................................. - .... 33 ~ ~-- 5.1.2 L"egality ......... ;' .....:........................................................... ....33 r „- 5.1.3.:": Practicality ...... ry~ :................................................................ .... 34 ~_ ;;:- . S.It4 '~,EairnessE& User Pay......... .................................................................. .... 34 5.1.5 Affordability ............................................................................................. .... 35 ~~-,~: 5.1.6 Srmpllc;ty .................................................................................................. ....35 5.1.7 Conservation &''Water Use Efficiency ..................................................... ~ ~ .... 35 , 5.1.8 Encourage,D'evelopment .......................................................................... ....35 5.19 Principle's Summary .................................................................................. .... 36 5.2 Rate Format ................................................................................................... .... 37 5.3 Residential Sewage Bills and Seasonal Usage .............................................. .... 39 5.4 Alternative Rate Calcu]ation ......................................................................... .... 42 5.4.1 Fire Protection Cost .................................................................................. .... 42 5.4.2 Cost Allocations to Service Charge & Volumetric Charge ...................... .... 44 5.4.3 Service Charge Calculation ....................................................................... ....46 5.4.4 Volumetric Rate ......................................................................................... ... 48 5 NF User Rnte RepmT 9pri! 2 2008 Finol.doc 2 R.M. Loeidon Lrd. City of Niagara calls fYater R Sewage Rale Stnrchrr'e Review 5.4.5 Current vs Alternative Rates ................................................. 6 Impact (25% in Service Charge) ........................................ 6.1 Cross Section of Customers ....................................... 6.2 Impact on Large Customers ....................................... 6.3 Rates Comparison With Other Municipalities........... 7 Other Issues ........................................................................ 7.1 Volume-Only Rates-No Service Charge ................. 7.2 Revenue Security ......................................................: 7:3 Metering of Condominium Townhouse Developmen 8 APPENDIX A -Rate Structure Alternatives .................... 8.1 Basic Components ..................................................... 8.2 Volumetric Rate Format Alternatives.. 8.2.1 Single Block Rate (SBR) ................. i........s ;_'r: 8.2.2 Declining Block Rate (DBR)........... :'...,:. 8.2.3 Increasing Block Rates (IBR) ~,^~ ", ,. 8.2.4 Humpback Rate (HBR).... ...: :....... .: 8.2.5 Lifeline Rate (LR) ...~; ` ........ ,:...::.. ,, W 8.2.6 Seasonal Exce"ss Use Rate (EUR).... :....... 8.2.7 Seasonal Rate (SR) ...... ::, .,.... 8.2 8 Multpleor Combined-Rate Format's Firva! Reyort 'aQe 3 of 78 ....................... 49 ....................... 50 ....................... 50 ...............:..... 52 ...................... 54 ...................... 57 ................... 57 9 ., , ~. ,. Attachment 1 -City of Niagara Falls Study of Water & Sewer Rates Following Metering - Final Report November 2000 -Loudon &Fortin ........................... 74 10 ..... -' ~ `- ,., Att ehment 2 City ryof Niagara Falls Report F-2000-74 -Utility Rate Structure.... 75 I1 ~ t ~. Attachment°3~-Material Presented by Mr. Ed Bielawski to the Corporate Services Comrmttee'of the City of Niagara Falls on July 23, 2007 ...................................... a 76 f , 12 Attachment 4 Niagara Falls Terms of Reference for Review of Water & Sewer ~ ,_~~- Rate Structure November 9, 2007 ............................................................................ 77 13 Attachment 5 =City of Niagara Falls Review of Water & Sewer Rate Structure Proposal - RM Loudon Ltd ..................................................................................... 78 NF User Rate Report Apri12 2008 Final.doc 3 H. M. Loudon Ltd. City oJAliagara Falls Water & Sewage Rate Structure Review Exhibits Final Report 'aze 4 of %8 Exhibit 1 Regional vs Local Cost Share (2001 to 2007) ............................................. . 10 Exhibit 2 Data Requests ............................................................................................... . ] 3 Exhibit 3 November 2000 Report Proposed 200] Water/Sewer Rates (monthly) - Recom mended in Bold Italics ................................................................................... . 18 Exhibit 4 Proposed vs Final 2001 Water/Sewage Rates ...................................... .. ] 9 . ..... . Exhibit 5 Retail Water & Sewage Rate Summary (monthly) :2001 to 2007 ............. . 20 Exhibit 6 Retail Water & Sewage User Rates (monthly) 2007 ` : ..................... . 21 Exhibit 7 Calculation of2007 Retail Volumetric Water & Sewage Rates ................ . 21 Exhibit 8 Niagara Region Wholesale Water & Sewage Rates - 2000 to 2007 ............ . 22 Exhibit 9 Water & Sewage Customer by Meter Size -2007&:2008 ...........:.:.:....... } .23 Exhibit 10 z, ~ „° Water & Sewage Volumes Purchased from Region 2005to 2007........ . 24 Exhibit 1 I ~ Y.~ R Consumption vs Supply (000 m3 & %) ~20051to 2007 _ . .................... . 25 Exhibit 12 Water Consumption Profile (m3 &;°10) - 2007r~` .................... .26 Exhibit ]3 u .> v 10 Largest Customer Consumption (r'ri3),- 2007 r ................................. . 28 Exhibit ] 4 Water & Sewage Utility Budgets 2007 &~r2008 .................................. . 29 Exhibit 15 >- _'~,-, Summary~of Prmciplss for F~inanctal & User Rate Policy ...................... . 36 Exhibit 16 Niagara Falls Water+ Sewage Bills Converted to Volumetric Only for Standa rd Meter~Customer .:. ..................................................... ..~. . 39 ,~. .. F. ~f Exhibit 17 Water ,System Fire Protection'Costs - 2007 Budget ................................ . 44 Exhtblt318 a r~ ~ x' ~,< $ Allocations to Service Charge & Volumetric Rate (25% SC) - 2007... .. . 45 ag= .x Exhibit 19 ~ ,~ Seryrce Charge Calculation (25% SC) - 2002 ....................................... . 47 Exhibit 20 _. ,:~ Volumetric Rate Calculation (25% SC) - 2007 ....................................... . 48 Exhibit 21 -~-, .. Curient vs Alternative Rates (25% SC) - 2007 ........................................ m . 49 Exhibit 22 ~:. Impact_on Cross Section of Customers (25% SC) - 2007 ........................ ,.; . 51 Exhibit 23 Impact on Large Customers (25% SC) - 2007 ......................................... . 53 Exhibit 24 Water Rate Formats in 16 Municipalities - 2007 ...................................... 54 Exhibit 25 Water/Sewage Charges in 15 Municipalities (240 m3/year) - 2007 ......... 55 Exhibit 26 Water/Sewage Charges in 15 Municipalities (227,000 m3/year) - 2007 .. 56 Exhibit 27 Volume-Only Rate Calculation - 2007 ..................................................... 57 Exhibit 28 Iinpact of 2007 Volume-Only Rates ......................................................... 58 Exhibit 29 Single Block Rate Structure ...................................................................... 65 NF User Rnre Report Apri12 200fi Frnal.doe 4 R.M. Lmrdan Ltd. City of Niagara Falls Water & Sewage Kate Structure Review Exhibit 30 Declining block rate ...................... Exhibit 31 Increasing Block Rate ................... Exhibit 32 Hump-backed rate ......................... Exhibit 33 Excess use rate .............................. Exhibit 34 Seasonal Rates .............................. Final Report Page S of 78 .............. 66 ................................................... 68 ................................................... 69 NF User Rote Report April 2 2008 Final.doc 5 R M Loadan Ltd. City ofNiagara Falls Water & Sewage Rate Structure Rei~ieiv City of Niagara Falls Water & Sewage Rate Structure Review 1 Executive Summary Final Report 'aee 6 of 78 This report is intended as a resource and reference for Council related to discussions on future water and sewage rates for the City of Niagara Falls. The following is a summary of the findings of this report. xe a ~ ~, _ Comment A 1 i~ Report Location _ __ _ _- .. `y __ _ - _ • The current Ci volumetric rates recover Re zonal volumetric ., ~' g _ _ __ Section 2 charges and the fixed service charges recover City osts This s `; approach was Option 1 in the November 2000 report?"Ctty of ~;~ ~ ;~ i Niagara Falls Study of Water & Sewer Rates Following Metering -Loudon & Fortin". "~*=,_,X; • Attachments to this report provide background material related to At back of report j the steps from the Nouember 2000.~ecommended raics~prior to implementation to the°preparation~oftliis-rate rcv~ew: ~~ • Since 2001 City costs have~increased re{ative to Regional charges Exhibit 1 with the resuit~tkfat the fixedEservice charges-have also increased 1 relative tottie volumetric charge ; • A pubhc'forum was held January'24 ;2008 at City hall to obtain Section 3 customer input The hvo most mentioned issues were that the servic ~ehargejare`too High and from gardeners that the inclusion ~ ~ °`;-, of seasonal,uaage in summer sewage charges is unfair. ~ ic{ t3.'# • A water consumption analysis indicates that residential users are Section 4.3.3 likely not excessive'users on average with 50% of customers s - ~ i Exhibit ]2 .= ~ s using about 18 m month or less. The City has a few very large users with 1 % of eastomers using 45% of consumption. • The user rates should be based on an agreed set of principles. A Section 5.1 list of optional principles is provided for Council consideration ~ and adoption. Some, such as legality, are required. Foremost in terms of public perception is Fairness & User Pay. _ __ - _.---_ __._ _ . _ • An in-depth discussion is carried out m regard to the issue raised I Section 5 3 by some customers regarding the use of water consumption to bill . for sewage. The issue relates to seasonal usage. It is noted that water meter readings are actually used as the basis for billing sewage because they allocate costs between customers based on A~F User Rate Report Apri! 2 2008 Final doc Fi R.M London Lid. City of Niagara Falls Water & Sewage Rafe Structure Review Final Report 7 of 78 relative system usage. Other methods are generally more for optics since sewer rates would have to be increased to raise the required revenues. It is concluded that combining water and sewage into a common rate will promote conservation and eliminate or greatly reduce the perception of unfairness related to seasonal usage. • In accordance with the proposal for this study an Alternative rate Section 5.4 I structure is developed with a lower service charge and higher volumetric charge. Rates are calculated based on 2007 data for discussion and comparison with existing. ;.,_ • The Alternative rate structure service charges are fixed charges Section 5.4.3 based on a customer's meter size and are calculated to recover ~~ r Exhibit ] 9 25% of budget costs compared with 43% recovered from the -'A ~`* ' s y~ ew•rent service charges. The costs are distributed by meter size `~°~~' using cost allocation factors developed by the American Water ~ ~ ~ , Works Association (AWWA). Three different types of costs are ,, ~~ allocated including uniform, cost-based and capacifjr-based osts 4 , each with specific allocation factors. "~- ~, • The Alternative rate structure single-block volumctric rate rs Exhibit 20 _ calculated to recover 75% of budget costs ~ ~'", ~" ~ "~ ,. • The Alternative Rates are compared with the existing rates below. Exhibit 2] ~ Existing Rates': Alternat ive Rates Water' Sewage .Combined -Water Sewage Combined Service Char e s /month `s - , Meter Size ~`~- ~+ _ a'4~ ~~~ j (mm) (inches ~ ~ ~ y~~ , ~" 18 ;/<" ~ $ 20.07 $ '1 8'.58 $ 38.65 $ 10.26 $ 12 89 $ 23 15 25 -1 x $ 20.07 $ 18:58 ~$` 38.65 . . $ 15.24 $ 18.04 $ 33 28 37~ ` 1Yz $ ~ 60.21 $ 55.7~4~$ 115.95 . $ 28.88 $ 23.20 $ 52 D8 50' ' 4 2 $ 120.42 $ 111:48 $ 231.90 . $ 51.19 $ 37.37 $ 88 56 75 3 "~~ ,_$~ 240.83 $ 222.96 $ 463.79 . $ 155.88 $ 141.74 $ 297.62 100 4 t ?$ 441.52 $ 408.76 $ 850.28 ~ $ 270.30 $ 180.39 $ 450.69 150 6 ~ ~$ ,842.91 $ 780.37 $ 1,623.28 $ 656.08 $270.58 $ 926 66 200 8 $"1 505.19'" $ 1,393.50 $ 2,898.69 . $ 1,297.06 $ 373.66 $ 1 670 72 j 250 10 $ 2;107.27 $ 1,950.91 $ 4,058.18 , : , . $ 2,243.48 $ 489.62 $ 2 733.10 Volumetric Rat 7 3 es f$!m 1 , All Consumptio $ '' 0.6024 $ 0.8544 $ 1.457 $ 0.858 $ 1.037 $ 1.895 NOTE: Test Year = 2007 Costs in SC = 25% Niagara Falls User Rates 2008.x1s Rate Summary _ 30-Maw OS • The impact of the Alternative Rates would be to decrease Exhibit 22 charges to small to average customers (mostly residential) Exhibit 23 j ranging from 15% reduction to about 6% for the average customer. Larger customer would pay progressively more with the largest customers paying increases from 20% to 29% Niagara Falls charges are the currently highest at $813 per year Exhibit 25 NF User Rote Repor( April Z 2008I~ inal.doe 7 R.M. London Ltd, City of Niagara Falls Final Report Water & Seirage Rate Structure Review Page 8 of 78 __. _, or a fairly typical customer using 20 m /month compared with Exhibit 26 15 other medium to large sized Ontario municipalities. The Alternative rates would reduce charges to $732 per year behind Kingston and Windsor. For a large customer using 227,000 i m3/year a customer would be 6`h lowest and with the Alternative rates 5`~ highest out of 15 municipalities. ~ • Volume-only rates are calculated for comparison purposes. Section 7.1 This is a radical change from existing and results in small i customers saving 37%, average customers saving about 15% and increases soaring for larger users up to a 71% increase,for the largest user. ,_; __, ~ • It is suggested that a Rate Stabilization Reserve Fund be 4; ~ =: Section 7.2 considered to provide revenue security against revenue `.~_ fluctuations resulting from a higher volumetric rate. '~,,y • The issue of individual metering of condominiwn units is ~ SecYioo 7.3 ~ discussed. It is concluded that bulk meters are preferred x ` , Report prepared by M. Loudon & Submitted April 2, 2008.-- ~:. M. Fortin ~~ ~_ x,~p: , .,~' r x r NF User Rate Report Apri! 2 2008 Finat.dac Q R. M Loudan Ltd. City aftvicr~ara Falls Final Report 13~ater & Se~~rage Raie Structure Revre~c _ Page 9 of 78 2 Background The City completed a universal metering program in 2000. In late 2000, a report by Fortin & Loudon ~ provided two Alternative rate structures. • Option 1 calculated a volumetric rate which covered Regional charges and service charges by meter size which covered local costs. This resulted in a rate which stressed -~.-. revenue security, an important consideration with a largenumber ofnewly-metered customers. `'- ~:: • Option 2 was based on a volumetric rate which covered 80% of costs au charges by meter size which recovered remaining costs Th{s`o tion had ~.;> ~. - ,, conservation element. ,_ ~ - Option 1 was preferred due to its revenue Staff recommended Option 1 in Report°F 2000-74~ v4hich~was considered at the ,~ December I I, 2000 Corporate Services Committee meeting. The minutes of the meeting state: ~ ~ _~~ ,- -~t~~: z e ~ `: ~' r ~%`_ :. '..:, "That the proposed use based`tiilling structure be adopted for determining ,~x+ater/sewer utflity~rates and tliatthe proposed use-based billing structure be ~, "~ ~ appl d to~,t~h~ 2000~Budget expenditures to set rates for the new Water By-law." Council later in unanimous approval to this resolution. ~ Copy attached-see Attachment 1 -City of Niagara Falls -Study of Water & Sewer Rates Following Metering -Final Renort Novemher 2000 -Loudon & Fortin a Copy attached -see Attachment 2 -City of Niagara Falls Renort P-2000-74 -Utility Rate Structure NF User Rme Repwx Aprrf 2 2008 Fina{.dac 9 R.M Laxdan Ltd. Ciry of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 10 of 7~ The approved rates recover Regional costs from the volumetric charge with the local costs in the service charge. The current rates are calculated on the same basis. The resulting structure has a high fixed charge component. Exhibit 1 below provides share of Regional versus City costs in the user rates as well as the impact on a customer using 20 m3/month of including these costs in the volumetric and service charges respectively. Exhibit 1 Regional vs Local Cost Share (2001 to 2007) 2003 2004 ;"?:2005 2006 2007 Water Regional 5,300 City/Other 5,649 Total 10,949 Sewage Regional 9,900 City/Other 3,310 Total 13,210 Combined Water+Sewage Regional 15,200 City/Other 8,959 Total 24,159 Combined Share (%) ~ Regional ~ 63% City/Other 37% NF Regional vs City Sewe and~Water Cosfs Of to $; 5,955 6,399 6,892 7,040 ~y8;;177 8,424 5,875 6,431 7,262 8,007 =7 5Z8 ,..8,004 11,830 12, 830 14,153 _ ' X15, 047 15; 754:.- ` 16,428 s°, Ti ; 10, 382 11,188 11_,415 10.481 11,620 11,166 3,724 3,536 _;4;427 ~ ' 4,912,. _=F'5,697 7,061 14,106 14,724 T5,842 15,393 ~ 17,317 18,227 ° . ~. i ., 16,33717`587, , 18,306; 17;521 19,797 19,590 9,599 `~ 9 967 1x1,689 ~ ~12 919 13 275 15 066 25;936:- 27,555 `x-29;995' 30,440 33,071 34,655 q s^ r ~ •,a: ~`~' 63% P~ 64% 61% 58% 60% 57% ~ 37% ~~36%," 39% 42% 40% 43% Over the peiiod 2001 to 2007 the City~poition of the budget has increased from 37% to 43% ofrEhe"combined water and sewage budget and the Regional share has decreased an ~ 9 ~ti~ equivalent percentage. Since the user rate service charge is tied to the City budget and the user rate volumetric charge is tied to the Regional volumetric the service charge has trended upwards since-the'metered rates were introduced in 2001. The awareness of the relatively high fixed service charges came to the fore in 2007. Council actively considered alternatives for updating fhe water and sewage rate structures, particularly in relation to the relative magnitude of the volumetric and service charge levels. There was a strong sentiment expressed by one customer that the current rate structure was inappropriate. On July 23, 2007, the Corporate Services Committee of the City of NF User Rate Repwr April2 2008 Finnl.doc 1 Q H M Landon Ltd. City of Niagara Falls Wa[er & Sewage Rate Struc[ure Review To study the financial impacts from changing the existing Niagara Falls received a deputation from Mc Gd Bielawski. The material presented by Mr. Bielawski is appended -see Section ] 1. Mr. Bielawski provided examples to back up his contention that the service charge is much too high and in fact would best be eliminated entirely with avolume-only charge applied. At a meeting on 29 October, 2007, Council authorized staff to engage consulting services to review the City's water and sewer rates and that Loudon and Fortin be invited to provide a proposal on the water and sewer rate review. As a result~a request for proposal was issued; see Section 12, with the following objectives rate structure. 2 3 4 t:. '"t On Decem To examine the optional rate structures accordance with all legislation and distribution systems. %. To compare.theadvantages~and di: in relation to the public concerns`f ~r ~~ rte. ~~:. To•r'ecommend a water aodsewer x services tha~complles with=all"rele ~ ~ . 'satisfies t}Ce public concerns" Fina! Repar[ ue 11 of 78 sewer vices, in and sewer of appropriate rate structures, of water and sewer services. structure(s) for water and sewer legislation and regulation, and best Council considered proposals for the Review, including a proposal from The following order on~Ltd. dated December 4, 2007 -see appended Section 13. passed at that meeting: "That Council approve the engagement of Loudon & Fortin to conduct a Water and Sewer Rate Structure Review: ' The target completion of the study was end of January 2008. With the mid-December award date and Christmas holidays impending time was of the essence. NF User Fare Report Apri! 2 2008 F[na[.doc I I R.M Loadon Ltd. Ciry ofNiagara Falls Wafer & Sewaze Raie S[nrciure Review Final Report 12 of 78 The study was initiated immediately. Because the generation of needed customer and financial data is usually the task that takes more time than expected, a list of data needs from the City was included in the Loudon & Fortin Proposal so that the City could have an early start on gathering. As soon as the consultant selection was known, discussion papers on Princip]es and on Rate Options were forwarded to the City. A meeting was arranged with staff for December 14, 2007 to refine the initial data request, obtain available data, discuss data gaps and obtain initial feedback on the issues raised in the Discussion Papers. ,, A list of the agreed data requests with date information received by the`~ci provided below in Exhibit 2. Some of the data proved more time-consum `~'. than expected with the result that some key informahon was not received .:~_ original target completing date. ~'~ ~" ,¢ is the NF User Rate Report Apri122008 Finol.doc 12 R.M. Lovdon Ltd City of Niagara Falls Ii~aler & Sewage Rate Structure Review Exhibit 2 Data Requests Final Report 1.3 Of 7c4 Category` `' Data.Descriptont ~ ~~=`; ~3 ' ~ ~~x * ~Fina1`R ce~pt~' ~, _ , ~ Usage ~ Monthly volumes billed by class X -Largest 10 users Jan 15/Fcb 22 -Information on residential customer billing profile Feb 22 -individual customer examples for impact analysis. List will include a cross section of customers in terms Feb 7 of volume used and category. ~, -Regional water & sewage volumes ~~~„ ~`~ Jan 22 Customers -Number annually since 2000 ~~ X - Number by class y,~ ~ - Number by meter size ~ ~ ~3~. Jan 15;~ ~~~ ~~ ~_£ ~ Operating Initially provide broken down by maJor cafegones T he Dec 31~ Budget ~ ~ degree of detail will depend on the rate format selecteil.;~ „_~ Capital -Budget documents providing hst of protects. ; X Budget ~ _ Debt principal & interest > y~'a' ~~"' ~ ~~' Jan 15 ~ - Identification of capital programs related to meeting - X legislative upgrade requirements such as~the>Eederal P2 requirements: -~- d," Revenue Broken down b cate o '~`~ ~'• Y g rY Dec 31 Budget s ~ provde~actuals-for2006 ~3"~ Dec 31 Rates fi?tq Regional rates and billingsanonthly 2001 to 2007 Jan ] 5 ;~ City water•;and sewage r£tes;2001 to 2007 Jan 16 `~; f. ~ '-~ ,* ~~~ ~i Note that those items marked "X" were not supplied, but were not crucial to the Wit; ~ completion of the study F„oi•~example, the customer data by class was not available ~_.~~, because the billing reports did not produce Yhis information in this manner. Thus specific residential versus non-residential analysis could not be carried out. Similarly, consumption information could not be provided broken down by month so consumption could not be discussed in terms of seasonality. Detailed budget data related to projects or legislative upgrade requirements was not needed and that request was eliminated. NF User Rote Report Apri/ 2 2008 Finol.doc 13 R.M Loadon /.td City afNiagara Fa((s Fina( Repori Water & Sewage Rate Structure Review page j ¢ p, f 7$ Supplementary information provided by the City not covered in the initial list included a summary of the public meeting (February 19), a report on Regional rates (Feb 19), and information on conservation programs (Feb 29). The interested customer, Mr. Bielawski, has gathered considerable Niagara Falls water and sewage related background and made it available to the Study. He had carried out research on usage by meter size as well as associated number of units (such as in hotels) as well as user rate practices elsewhere and freely made his data~available. In addition, r ,. _;_ relevant information has been shared with Mr. Bielawski who has been, kept abreast of the Report progress. Numerous emails and telephone calls were exchanged,in order to share data and information. 4"~, r~~;;. The target schedule for the study was provided in Schedule 1 of the proposal`s see <e _ _ Section 13. According to the schedule, data would be provided by the ~ify in December, the public forum would be held on January 18„andxhe report completed by February 1, 2008. As can be seen from the data request~`u~ Fxhiliit'~1, some crucial information was not available until February 22. A first drafr report was then completed and sub~fltted to Staff and copied to Mr. Bielawski Marc6Y3 followed by additional draft-updates March 5 and March 17. Every _-~ ~,~ Y' effort has been made to,provide oppoi1ianities for comments so they can be considered ~~: and incorporated where a"greed. The finahreport was finally scheduled to be issued April 2, 2008. ; ~`°' -`{'"~ NF User Rare Report Apri112008 Final.doc 14 R.M. Landon L(d. City of Niagara Falls Water & Sewage Rate SU~ucture Rei~iew 3 Public Forum Final Report ee I5 of 78 A public information session was planned for January I6 or 17, 2008. Due to notice restrictions, the City delayed the public forum by one week to January 24. Afternoon and evening sessions were organized. Notice of the public forums was posted in the Niagara Palls Review. Direct contact was also made via emails regarding the pubbe forums with the following stakeholders: • Chamber of Commerce • Lundy's Lane BIA • plain & Ferry BIA • Victoria/Centre BIA • Pallsview Tourist Area BIA • Clifton Bill BIA • Downtown BIA • Niagara Falls TounsmY` Interest in this water and sewa"g'~ ~~, ,:{ Round tables were sefun with s to ask study was~tugh'. A coffee table approach was used. :z~. consultant resource personnel present and sGoiis and express opinions. Written comments including Mc Bielawski, with a high degree of interest and contribution. The following is a summary of the results of the two sessions: Concerns; Issues; Feedback: 1. Paying sewer consumption charges that are calculated by the amount of water they consume which is measured by their water meter. 2. Large lawn & gardens that are very expensive to water in the summer months. NF User Rare Repm-~ d pr!! 2 2008 FlnaLdoc 15 R.M. Loardon L[d. City of Niagara Falls Final Report Wader & Sewage Rate Slructm~e Revieto Page 16 Of 7$ 3. Matching of sewer costs based on water use; why should there be sewer charges on water that never enters the sewage treatment centre? 4. When meters were installed, there wasn't anything to measure what goes down the sewer; a concern especially in the spring & summer months. 5. High monthly charges; low consumption makes the total cost seem very high. 6. Service charges should be based on consumption rather than fixed rates. 7. Oversized meters should not be penalized when consumption should be considered. '~ :., the sewage ;filling, etc. Cu Su; ~e sewer shold. neters. uy through April/May); any increase in the summer months above this base is lawn watering and is therefore not going to the sewage treatment plant. ] 0. Use grey water for external use. 11. Seasonal rates for specific residential areas. Basically, the major concerns fell in to two categories: NF User Rate Report Apri121008 Frnal.dac ~ ~ 16 R.M. Loudon Ltd. 8. Being charged sewage treatment rates for water that never g©es;to, plants. E.g. watering lawns/gardens, car washing, swimming pool City afNiagara Falls Fina! Reya7 Water & Sewage Rate Struch(re Review Page 17 of 78 I. Service charges too high. 2. Using water consumption in the summer to bill for residential sewage charges is not fair since seasonal usage does not enter the sanitary sewer. The presentation in this report of an alternative rate structure with a reduced service charge and increased volumetric rate addresses the first major concerns expressed at the public forum. It is also consistent with the study proposal which stated that an option would be provided "with a higher consumption charge and lower fixed charges". Methods for addressing concerns about charging for sewage m the=sui~Iner based on "~ ~ , water usage are provided in Section 5.3. These methods include those~suggested during the public input sessions as well as how this issue is dealt w~th,in other manic~pahties, :,~ .,` t. including: • Method ] - A maximmn sewage bill for • Method 2 -Residential discount. • Method 3 - Using a customer's billing. #; for summer sewage summer. by combining water and sewage rates NF User Rote Repay Apri112008 Finol.doc l7 R.M. London L(d. City oJNiagara Falls Final Report Wa[er & Sewage Rale Structure Review Pate 18 Of 78 4 Existing Water & Sewage Information 4.1 Water & Sewage Rate Structures 4.1.1 City Retail Rates The Option 1 and Option 2 rate structw~es provided in the November 2000 Study of Water Rates Following Metering report were as shown in Exhibit 3 below: i=;~,. Exhibit 3 November 2000 Report Proposed 2001 Water/Sewer~Rates (monthly) - _, ~~;~., Recommender) in Bold Italics ~ ~ ~~;, ~ ~. ~ ~•~:. ~~ } ~ ~~ . d*,~ryrE~ ~~~~~ ~~ t~{,y~Opt~on~ ~ ~ ~ ' ~ ~~ ~ ~n`~Ojt on 2 %~~ ~ ~ w~~ '~ ~~'~'~~ a?'~~~x~.I 3 f.' Y`5' `.~~~' "CA E+ (Volumetric~rat ~recover~ ~ A`m e• . ~ (Uolumetrictrate~ ~E ~ ~ ~ ~ ,~~ t» , ~~ rte ~ ~~ ~~Re a al~ char es~~ g g ) N ,~ ~' °~" ?=ecouers 80/a ofcosts) , ., .. ~~: . <..-,s~.~.~,: . a . .: Volumetric Rates ($/cubic metre) $1 309 $1 549 . . Y Service Charges ($/month) ~ "~~~ ~~~'~~' A -Single Uniform Charge $26 ~35~ $] 6.] 82 - B-Charge Variable by~IvIeter Size~~ ' ~'^.i, ~' 15 mm '_x,_$22.54 $13.90 18 mrn ~" -r._, =;;;$22.54 $13.90 ¢~ 25 mm ~gt'~' s._ $22.54 $13.90 _;~` 37 mm..~fi ~ _~<<<_. $56.35 $34.75 ~. ~, 50 mm ~ $135.23 $83.41 ;~ 75d~nm $270.46 $ ] 66.82 100 mnr $495.84 $305.83 150'm~rn,~ , ," $946.61 $583.85 200 mm'''`u $1,690.37 $],042.59 NF User Rafe Report ~pri122008 Final.doc l8 R. M. Laxdan Lrd City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 19 Of 7$ As noted previous]y in Section 2, Staff recommended ®ption I in Report F-2000-743. The minutes of the meeting state: "That the proposed use-based billing structure be adopted for determining water/sewer utility rates and that the proposed arse-based billing structure be applied to the 2000 Budget expenditures to set. rates for the new Water By-law." The actual 2001 rates compared to those recommended in the November 2000 Study of Water Rates Following Metering as shown below in Exhibit 4"~ "~ ,~~ Exhibit 4 Proposed vs Final 2001 Water/Sewage Ratcs Volumetric Rate ($/m3) ~ ~~$1309~~~~ ~ $1.22 Standard Service Charge ($/month) °1=$22 54 ~'~~`` ,.~~ $21.37 The final rates are a little different than~l ~;; water and sewage budget- for example's} $24,861,000 used in the Noverf}~er 2000 to to changes in the combined ecreased from a projected budget level of $24,158,700. The adoptedacvater and sewage 1 to 2007 are summarized below in 3 Copy attached -see Attachment 2 -City of Niagara Falls Report F-2000-74 - Utiliri Rate Structure NF User Hare Report April 2 2008 Final doc 19 R.M. Loudon Ltd. City of Niagara Falls Final Report Wader & Sewage Rate Structure Review Page 2~ of 7$ Exhibit 5 Retail Water & Sewage Rate Summary (monthly) - 2001 to 2007 'r ;~~ Year ~'"'"~ ~ k ~ ~~Uoluinetr~c Raies ($/in3) ~~ ~ `` „~W'at ~ ~ `Sewage"'~ Totals ~ ~ Ser~vicesCharge (standa ~'°~`Water='~ -~Sewa e~ _..~~. .g ~ rd meter) ~" ~~Total` ,,,, 2001 $0.41 $0.81 $L22 $13 92 $7.45 $21.37 2002 $0.44 $0.81 $1.25 $15.30 $9.09 $24.39 2003 $0.48 $0.89 $1.38 $16.61 $9.62 $26.23 2004 $0.51 $0.89 $1.41 $18.67 $11.16 $29.83 2005 $0.56 $0.88 $1.44 $2044,, ,x,,$11.96 $32.40 2006 $0.58 $0.88 $1.46 $1956 ^ -'$13.82 $33.38 2007 $0.60 $0.85 $1.46 $20.07 $18:5'{8: $38.65 Over the period 2001 to 2007 the volumetric rates increased about~20% whereas the ` 'y '.~ service charges increased about 81 %, reflecting htgher City budget increases compared to Regional cost increases. This meant that the impact of an annual average percentage rate <'~ increase would vary depending on how much a custoer used aridlthe meter size. Small users would have higher percentage increases than large volume users. This could lead to confusion since a customer may be expecting tpe average increase and may in fact be ~= faced with one that is,more or less`dependmg on volume used and meter size. Fixing the x- ,." ~, percentage of total budget costs recovered from the service charge (e.g. the "Alternate" <,;,_ rate calculated later) would eliminate thts confusing situation. All customers would receive theasarne percentage rate increase. The full 2007 wafer~~and sewage rate schedule is provided below in 1;xhibiC 6: NF User Rate Report Ap~i12 2008 FinaLdac 20 R.M. Lavdan Ltd City of Niagara Falls Water & Sewage Rate Structure Revteiv Exhibit 6 Retail Water & Sewage User Rates (monthly) - 2007 Final Report 21 of 78 Rate Component ~~~.~~~- P~ ~Water~'~ ~ r~ Sewage, ~ 'Total Volumetric Rates ($/cubic metre) $0.6024 $0.8544 $1.4568 Service Charges ($/month) 15 to 25 mm $20.07 $18.58 $38.65 37 mm $60.21 $55.74 $115.95 SO mm $120.42 ,$111`:48 $231.90 75 mm $240.83 $222.96 ~? $463.79 100 mm $441.52 $408.76 ,A~$850.28 ,. 150 mm $842.91 " $780.37 $;1;623.28 200 mm $1,505 19 ,~ $1,393':5-0 -:~ $2,898.69 250-mm $2,107.27 .~,~~ $1,950.91 ~ ~ $4,058.18 The City water and sewage` linked to"the Region's wholesale rates as shown below m Exhibit 7. ~~ c,~, rt ~nL L• xIllULL I . ;-I,AJI'LLlallOn OI LVU/slgera rt` ll V pmm6CYIC WateY S' .~eWage KatCS ' z ,,~~ a e Y ~ £sw`i:Li °a~""" .. '~ ^s3*.r,`..~ ~~~ Component ' °~.~ ~ .n ~~d-x??`ry, a`" t v5 }iv.~'~'? T a: .~ ~ ~ater t~~ ~~°~Sewa e Regional Volurne,,(m) ~ ~< :~ ~.8... u,n,g w .. ~~, 16,452,757 18,214,832 Wholesale Regio'almRate ($/m3) $0.5120 $0.6130 Regional Charge~~~~._ a=~ $8,423,812 $]1,165,692 City Billed Consumption (m3) 13,984,843 ]3,068,836 City Volumetric Rate`"($/m3) $0.6024 $0.8544 City vs Regional Volume 85% 65% Note that the City (retail) rates must be higher than the Regional rates because retail billed volumes are less than the Regional volumes. This is due, in the case of water, to unaccounted for losses (such as main leakage and fire fighting) between supply and City NF User Rate Report Aprrt 2 200& Final.doc 21 R.M. Loudon ltd. City of rViagara Falls Final Report Water & Sewage Rate Structure Review Page 22 of 78 customer of about 15% of the volume purchased and, in the case of sewage, there is about 35% flow added into sewers between customer and treatment due to inflow (surface water) and infiltration (groundwater). 4.1.2 Regional Wholesale Rates The Region's wholesale rates and rate increases from 2000 to 2008 are as shown in Exhibit 8: ~~ ~ 3~~ Exhibit 8 Niagara Region Wholesale Water & Sewage Rates~~2000 to 2007 xN~~ ~ ~Raie==($/ms)~:~~~ ~~ > Rate n crease m ~ ~ ~~g~~r „~ Year ; ~Water~~„~ ~, Sewage.*~ =~Water ~ Sewage ~Effechve ~Date ~ ti~~~ ~,~;~~~ ;.; r: ~ ~ . ~ ~s _ - .~,. r>r mss, ~ ~... ~ ~ o_ , . ~~..~ ,.~ ~ ,a ~ ~ ~..~. r s ~ .~~M,~~ x~ 2000 0.300 0.489 3% 2% ~~ Jan ] to~Dec 3l, 2000 ... -,_ 2001 0.318 0.489 3% 2% Jan I to•Dec 31 200] ~ - , 2002 0.340 0.503 7% ' ~ ~~ 3%= J n~`1 Yo Dec 31, 2002 4 2003 0.364 •:0:521 ~~`7%. 4% ~' "Jan 1 to Dec 31 2003 ;, ~.. , 2004 0.400 0.547. 10%4~", 5%~ Jan 1 to Dec 31 2004 y , 2005 0.400°"x 0.547 -, 0% ~ 0% Jan 1 2005 to Feb 28 2005 , ,~-; , , 2005 ~~`0.446 0.579 .~= .t12% ' 6% Mar 1 2005 to Feb 28 2006 ~ , , 2006. ~~ ``r`~=0.49] >- `~~0:608 1`0% 5% Mar 1 2006 to Feb 28 2007 < . ~~.; .~ , , 2007 ~.. 0 512- tu 0.613 4.3% 0.8% Mar I, 2007 to Feb 29, 2008 2008 g ~ 0.554 0.655 7.6% 6.4% Mar 1, 2008 to Feb 29, 2009 Until 2007, the Reg~on,charged for both water and sewage based on the calculated rate times the volume treated. Water charges continue using This method. However, for sewage, the total annual charge is determined in advance by multiplying the rate times the average flow over the prior three years. Thus the 2008 sewage charge has already been determined to be $11,730,523 based on Niagara Falls actual 2005 to 2007 sewage flows and the sewage rate of $0.655/m3. In addition to the wholesale rates, The Region levies a capital charge amounting to $] 64,802 for water and $124,953 for sewage in 2007. NF User Rate Reporl Aprr122008 Fitaol.d°c 22 R. M. Lo~idon Ltd City oJNiagara Falls Final Report Waler & Sewage Rate Structure Review Page 23 Of 78 4.2 Customers The number of water and sewage customers by meter size is provided in Exhibit 9: Exhibit 9 Water & Sewage Customer by Meter Size - 2007 & 2008 ~; ~~ ~ '€'" ~ Wa ter ~~~Se~w e ~ ~I a . ~~ r~ Meter Size ~ ~Ra tro~ , ~ ~~ ~ g ~ „ ; ~ ~°~ ~~~~ ~2 7 ~r ,~ ~~rr ~ ~200$ ~~ ~ ° ~ 2007~~ ~ ~~ ; r2 a ~ .~ ~a~„ _ ~ _ 00 , , ;~ - unmetered 1 250 125 ~ a~ ~ 120: 121 ~:_~ .~ 15mm 1 25,114 25,401 25,137~~ ; ~`~25,255 , ~: s 18mm 1 482 482 475 ~~ r, ~~`,477 .~,~ 25mm 1 357 362 ~''"~'r 35;4 356 37mm 3 222 231` ~ `_ 227.; ~ r ~ >„ 228 SOmm 6 _ 293 301 ~ .,~ 294 ~~ 29 75mm 12 71 X74_ ~'~ 72 72 IOOmm 22 =- ~-=39, 38 ~~~2."'~ 36 ~ 9fi 3 :~ __ 150mm t 42 ~ ~ 17 ~~~ 17` ~ 15 -]5 200mm ~= ~~75 x`° ~; 2 2 1 1 ~.. 250mm' 1,05 '` ~ 2 r ~ 2 2 2 ,` ; ,Total;. 26,849 27,035 26,733 26,858 ~.., ere are ewer sewagextllan water customers, 0.7% in 2008, because there are some water only customers with no sewers in the more rural areas. 4.3 Consumption 4.3.1 Regional Water Supply & Sewage Treated Volumes The Region wholesales water supply and sewage treatment and bills Niagara Falls based on the volume at the treatment plants. The volumes billed monthly and annually for water and sewage to the City by the Region from 2005 to 2007 are shown below in Exhibit 10. NF User Rnte Repa't Apri12 2008 Finol.doc 23 - R.A3.'Lmidon Ltd. City of Niagara Falls Final Report !Pater & Sewage Rate Structw-e Review Page 24 of 78 Exhibit 10 Water & Sewage Volumes Purchased from Region - 2005 to 2007 Month 2005 2006 2007 2005 2006 2007 January 1,308.48 1,184.17 1,136.60 1,863.86 1,928.67 1,862.03 February 1,405.91 1,086.69 1,120.99 1,626.08 1,428.86 1,099.99 March 1,286.66 1,206.82 1,217.53 1,801.69 1,416.75 1,800.64 April 1,268.52 1,223.58 1,174.84 2,142.62 1,357.08 1,456.80 May 1,432.55 1,415.64 1,442.70 1,310.43 1,293.83 1,070.47 June 1,698.68 1,675.65 1,802.10 1,257.68 1,143.02 1,136.39 July 2,005.93 1,823.90 1,567.72 1,332.07 rt~~1,408.11 1,303.84 August 1,835.63 1,704.76 1,720.57 1,466.$5 ~' ~1~292.83 1,240.58 September 1,475.99 1,312.07 1,482.43 1,455.19 1,486.55 1,187.96 October 1,341.94 1,203.57 1,298.38 1,715.46 2`1~85~16 1,166.91 November 1,170.57 1,114.49 1,108.71 1,633.82 1,444~19 ~„ 1,267.92 December 1,203.26 1,100.67 1,163.21 1,510.61 1,76913 r-,:;,161698 Total 17,434.15 16,052.00 16,235.78 19,116.35 ~r4,18,154.17 `°"16;240 51 NF Data 2008.x1s Region Flows 1SMar 08 ,-._ 'f"' The monthly water flows are used to bill the current Regionahwater charges for the same period. Up to 2006 this method was used for sevv$ge. Startixig m,2007, historical 3-year 9 { average flows are used (i.e. 2005 Co 2007 average for 2008 bill) so that sewage charges ~, ~r for a given year are fixed-amount lrnown.in advance ~ r`? ..,_~ ., :: ,_ ru .. - ~;.__ 4.3.2 Annual Consumption~.~ ,, ~~_-. ` ~~~,, Annual purchased water volume compared with~the volume of water the City billed to customers for 2005 to 2007 is compared ih Exhibit 1 l below. NF User Rate Report Apri122008 Finof.doc 24 R.M Loudon Ltd. City of Niagara Falls Nlater & Sewage Rate Stnrcture f2evieiv Exhibit 11 Consumption vs Supply (000 m3 & %) - 2005 to 2007 Final Report Qe 2J of 78 y S ! ~~ ~'~c'- 9 ~ s~== ~~ ~~~ ,~ ~ .+i ~ ~ Cam. ~ Actual ~ y"€^k_ -v£k34~ ~-~~~ A~`- `~ ra ~e3T. ~-~ Budget Descr/ptton , . ~~ ~~ v ~ 2005-r, t,~ ~ . ~~,~ 2006: ~# - ;~~2007 `%~ ~ X20072008.' Water Consumption ] 3,915.68 ] 3,488.56 ] 4,211.98 13,872.1 ] 3,984.8 Supply 17,434.15 16,052.00 16,235.78 16,257.1 16,452.8 UFW 5,407.6 4,558.7 3,]40.6, UFW (%) 20.2% 16.0% 12 5% ~= , Summer weather Very dry Very Wet Very Diy~~, ~~ Sewage ~~ Billable (City) 13,446.64 13,113.23 13,614.96 13 391 6~~ 13,068.8 Treated (Region) 19,111.87 18,154.]7 16;210 51~., 17 909 Z°9 X18,214.8 '" :'t~ lE~. -, e ~, x ` :,,A~ ~ F Unbilled Water Consumption (UWC)° is a as watermain leakage, as well as usage suc ~. Unaccounted for water (UFW) has beeri'd`e t..__~, ~^., 2007. The A W WA suggests that it is"~not~ui omenon and includes losses such o .<~~ shirig'aid~fire fighting/training. n"20:2% in 2005 to 12.5% in ;~` find UWC to he over 20% in systems. was about 3% higher than 2006, a wet by all customers in 2007. From this a peen derived, as shown in Exhibit 12, ° Formerly refereed as Unaccounted for Water (UFW), the American Waterworks Association (AW WA) now prefers the term Unbilled Water Consumption. s A W WA Water Conservation Programs - A Planning Manual - 2006 NF User Rate Report Apri722008 Final.doc 25 R. M. London Ltd. City of Niagara Falls Water & Sewage Rate Structure Reviex= Exhibit 12 Water Consumption Profile (m3 & %) - 2007 Final Report ~e 26 of 78 __ _. '~~~.rm 4~' ^»tss'.er:- r Cbnsump 3 X~ ~e.+ 3'~ tton (m } ~~ ~y ~;.~~ 'xa f1.:'zv"?-`v x - S .c ~ ~ Percent us~ng~-Uolu y, :. 1".,..:..Fu me Shown or LessTM: ~ iY .~. ~ 48£/E9}E ~A ully ~~ +"~4=riL 2`S f£'~v`.+'S.. /- Monthly, =s e S3!~'Y~ ~F ~ ~~~'Gustomers ~ Hi - fi~8 ~` ~ 33F Ublume` '~ } ,a ; ' ,~~ ;~ ~ ~ 25 2.1 5%0 0% 55 4.6 ] 0% I 80 6.7 15% 1 102 8.5 20% 2% 123 10.3 25% ~ r,~ 3% 142 11.8 30% 5% 160 13.3 35% 6% 177 14.8 40% X98%o.c'' 193 16.1 45% wl'0% zii 17.6 so~i° iz°i° 230 ]9.2 55%„ 15% 249 20.8 ~ ~=~',,- 60%'3 ~ ~ 17% 269 22.4 ~~ "b5% ~ 20% 293 24.4 . ~ r,' ;. 70%' 23% 319 26.6 " ~c ., 75%0 26% . 351 ~~ . ; ~ 293, ~.a ~~~~ 80% 29% 395 ~_ ~ ~ 32 9 s ~ ~ 85% 33% 46I 38.4 ~}'~"~ ''~ 90% 38% _* ~ ~~655~ "- 54.6 ~~~ 95% 43% , ~ 4 235 "J "~ 352.9 99% 55% 884 720 „t~~i , 73,726 100% 100% 'f',: An example of how to read this table is about 50% of customers use 211 cubic metres per year (17.6 m3/month) or less and they represent only 12% of consumption. This means that the median customer uses 21l ms/year or 17.6 m3hnonth or Iess.6 According ~ The median customer is in the middle in terms of consumption; about 50% use more than the median and 50%useless. NF Usw~ Rate Report Apri(2 2008 FinaLdoc 26 R.M. L°vdon Ltd. City oflJiagara Fa11s Wader & Sewage Rate Structure Revietm Final Reporf 27 of 78 to Environment Canada, average 2001 residential water use in Ontario was 285 litres per capita per day (Ipcd)'. Statistics Canada reports a 2001 Niagara Falls population of 78,8] 5 and 32,447 private dwelling units equivalent to 2.43 persons per dwelling8. Based on this median Niagara Falls residential conswnption was about (21 ] _ 365 - 2.43 x 1000 =) 240 Ipcd. This would indicate that residential usage in Niagara Palls is probably average or less and thus not wasteful water users. At the other end of the scale there are a few very large users which. represent a large share ~~ of usage. 1 % of customers (294 customers) use 45% of consumphori 3The remaining 99% :,~" , of customers (26,555 customers) only use 55% of total usage. -~- ~~. 4.3.4 Largest Users A list of the 10 largest users is provided below in Exhibit-l3..,These ciistamers are listed because they will be the most impacted by an increase in the volumetric rate and decrease µt a~ in the service charge. 'Municipal Water Use 2001 Statistics -Environment Canada $ Statistics Canada website NF' Usw' Rale Report Apri! 2 2008 Final.dac 27 R.A1 London Ltd City of Niagara Falls Water & Sewage Rate Structure Review Exhibit 13 10 Largest Customer Consumption (m') - 2007 Fina! Report Qe 28 o j 78 =Customer` ~ ~ ' 'Meter Size (mm) } ~' v ~ ~Voiume~{mom) ~ ~ Niagara Falls View Casino I50 mm (6-inch) 884,720 Strabag Incorporated 200 mm (8-inch) 269,420 Niagara Parks Commission 250 mm (10-inch) 210,350 Ontario Power Generation ] 50 mm (6-inch) ,F?: 203,] 90 Niagara Water Park Properties I50 mm (6-inch)- ~' 1p77,720 Marineland 250 mm (10-inch) 169 850., ,, 2095527 Ontario Limited 100 mm (4-inch) 151 370 `~~, :~~`_~ Canadian Niagara I-lotels 150 mm (6-inch) ~'~ -143 050 ~ Hilton Niagara Falls 150 mm (6-inch) ~; 128;880 Casino Niagara 150 mm (6 inc~) .121 060 ~, aP, , t Total ~ ' ~~2,459,610 Total ConsumptiomAll Customers -t, `~'x 13,938,983 Top 10 as a %''of~Total ~ 18% ~~~.~_ ~z~-~ ;~_ err ~ a„ 2006~Tota1 2,108,798 ;4 } "=~ ~ 2005 Total 2,145,883 _;~ f ``` The 10 largest`eustiomers used 18% of total consumption in 2007. NF User Rate Report Apri! 21008 Finat.doc 28 R.M Loudon /.td. City ofNiagara Falls Water & Sewage Rate Structure Reviera 4.4 Budget Final Repa~t Qe 29 of78 The 2007 and 2008 water and sewage utility budgets are provided below in Exhibit 14. l;xhibit 14 Water & Sewage Utility Budgets - 2007 & 2008 Water B ($) ($) ($) Expenditures O ~ ~) perations T°, ~f~=-=r Local Operations 3,064,351 3,240,015 2,209;528 3,068,611 Billing Costs 601,136 601,164 ~0: ~, 0 Total 3 665 487 3 841 1791-~ 2 209 528r ~ ~-a3 068 611 Capital ,^z"`:s'`~s -~ e'z~:°' Long Term Debt Principal 94,137 .98,718 °'~"'~81 654 r 85,861 f Transfer to Own Funds 4,080,000 4;500,000;6. ~4~635,000 4,500,000 Total 4,174,137 4;598-,718: 4;726;654 4,585,861 Regional Charges _ Fixed Charges 164,802.. ~ 164,802 r ~-X124,953 124,953 Volumetric Charges 8,423;812-_ X9,006 450 : X11 135 692 11 730 523 Total 8,588,614 ~~,9;1~71,252 - 11,260,645 11,855,476 Total Expenditures ,816;428,238 17;611--;]49 18,196,827 19,509,948 Regional Cost Share ~',. 52% ~;. ~~~ .~,..+52% 62% 61% Operations+Regional -~ 12 254;101 13,012,431 13,470,173 14,924,087 Revenues ' >~ _r,` Non-User Rate (OtFier)_Reven ues ~4.; ~r.' r" Tank Truck ~=~''j -" , . ,E s ~`-..- SO,OQO` F , 50,000 0 0 Sundry ~ r`.?.-115,000 115,000 0 0 FireHydrants ~,; l"':274,694 274,694 0 0 Sewer Later;,Cleaning 0 0 30,000 30 000 SudryRevenue - 0 0 100 000 , 100 000 Other ~;r ~' 0 , 0 0 , 0 Sub-total Other Revenues 439,694 439,694 130,000 130 000 Net from UserRatesr'-?~;, '~' ~ 15,988,544 17,171,455 18,066,827 , 19,379,948 : , :, Niagara Falls User Rates 2008 icfs ,. Budget 26Mar-08 NF User Role Reparr Apri121008 Final doc 29 R.M. Landon Ltd City of Niagara Falls Final Report Waler & Selvage Rate Structure Review Page 30 Of 78 4.5 Conservation /Water Efficient Use Programs The entire Niagara region is covered by a watershed-based protection strategy known as the Niagara Water Strategy. WaterSmart Niagara9 was released in October, 2003. It is a strategy that works towards the common goals of protection, restoration and management of water resources across the Niagara watershed. Operation of the strategy is organized as follows: 1. Steering Committee -Comprised of municipal and Regic senior staff from MOE, NPCA, Niagara Region and area of Niagara Falls is a member. 2. Action Coordination Team -Includes Region, NPCA, MOE, watershed munici 3. Water Advisory Group & stakeholders and genera c WaterSmart Niagara has 1. 2. 3. Flooding at public land six ceritral;themesand goals: and The City etc. Staff, community water for our safe consumption otiment -Water ofa sufficient quantity and quality in natural areas = ~<~, sand streams ensuring healthy plants, species and the integrity of the - Protection for our residential, commercial, industrial and from detrimental flooding and erosion. 4. Recreation -Sufficient clean water to support and sustain recreational uses such as beaches and natural areas. 9 information on WaterSmart Niagara can be accessed by logging on to vww.watersmartniagara.ca NF User Rote Repot Apri! 2 2008 Final doc 30 R.M. Lovdon Ud. City of Niagara Falls Finaf Report Water & Sewage Rute Structure Review Page 31 of 78 5. Commerce -Clean and abundant water for commercial users. 6. Agriculture -Clean and abundant water for agriculture operations. A nwnber of actions have been developed to be addressed over 30 years, organizedunder 11 action programs: 1. Education and awareness building 2. Watershed and natural heritage system study W at hints for reducing water usage. anon of . provides many There is no apparent direct impact of the water strategy on the formulation of water and sewage rates. However, it is expected that water usage per residential customer will reduce over time due in part to changes in customer usage habits as encouraged by initiatives such as the WaterSmart Tip Calendar, as well as the plumbing code which NF User Rate Report~pri122008 Final.doc 31 R.M. Lavdon Ltd. 3. Data collection and monitoring ,_ City of Niagara Falls Final Report 4T~ater & Sewage Rate Structure Review Page 32 of 78 requires water efficient fixtures in new construction and more water efficient appliances such as washing machines. The City of Niagara Falls implemented a voluntary water conservation program in 2000 which continued until 2003. This program included an education campaign, low flow showerheads and rain barrels. The program costs were shared with other utilities. The program was discontinued in 2004 due to funding constraints and declining interest. The City is revisiting this initiative as a component of its Pori Combined Sewer Overflow (CSO) Abatement Strategy and is new program over the next 16 months that includes; The by f and implement a e consumption NF User Rnte Report Apri! 2 2008 Final.doc 32 R.M. London L td. City oftViagara Falls Flnal Report Water & Sewage Rate Sbucture Review Page 33 of 7$ 5 Alternative 2007 User Rates 5.1 Principles There are a number of principles and objectives to be considered when formulating metered water rates. Some seem rather obvious; others may be harder to choose. Some may not go well together so a choice is needed as to which is preferred. Some are basic objectives that are compatible with others. Otliecs yi' Y:i result that choices may have to be made. But in any case it is usef decide what principles will be used before deciding cost recovery developing the format of the charges. ~~ ~:. In any case it is important for the City to agree them a adopt a rate format and to explain and defend the user The following is a list of possible is~ay conflict with the ul o~consider and methodsand _;$_ a "_:~ ~ ., ed to-set strategy, i= ~ome'rs. t; has been drawn from various sources and used by the consultant in the developinent of user rates for a number 5.1.1 Revenue Ad Revenue§`tmust be ad =' ~ "~ achieved Metering'6 '~. influenced by year=to ~.> „,-;. ~; ~., fluctuations. The usei some extent it comes 5.1.2 Legality rity needs. This is a basic principle that must be s a degree of revenue instability due to rate revenues being ar variations in consumption due to seasonal precipitation e,totmat can be finessed to improve revenue security, but to <,,: sacrificing the extent to which charges are tied to usage. The financing and cost recovery methods must be consistent with existing legislative authority. This means that the methods used must be allowable under provincial legislation. The Provincial legislation does not prescribe or proscribe the format of the rates. The legislation focuses more on ensuring that the cost recovery levels are N/' User Rnte Reyon AprD 2 2008 Fireal.doc 33 H.M. Loudon Ltd of municipalities. City of Niagara Falls Water & Sewage Rate Streecture Review Fina! Report ee34of78 appropriate. For example, as previously mentioned, Regulation 244/02 of the Municipal Act requires that water and sewage fees should not exceed the cost of service. Bill 175, the Sustainable Water and Sewage Systems Act, speaks to ensuring that utilities budget and recover the full cost of water and sewage systems. Legality would also be a basic requirement. 5.1.3 Practicality The rates must be practical to apply. The main constraint for metered-rates that target peak usage is the practical and economic frequency of meter reading T}%fability to meter and bill based on instantaneous peak usage rates has long been available m-the electricity a`=`°; industry. Thus rates that reward customers for staying av_o5dmg hrgh usage during~peak ~, demand periods have long been common in the electric,industry `Such meters have only recently become available in the water industry and peak'time of-use billings are not yet applied for water. A second limitation, related•fo the practicality of calculating complex bills, became a minor consideration once rrianual billings were replaced by computerized systems. The capabilities of the can considered. 5.1.4 Fairness & User Pay as close system to tiahdle rate formats must be e to the actual cost of providing the service to each=customer. The location or class of customer in Niagara Falls would not be ~~. a factor. All ci sto`~ners are treated equally. The advantages of common municipal systems ~mw a; .u are shared. For example a.customer located near the water source does not pay a lower k.~> rate than one more distant. This principle is probably the one most important if customers are to believe they are being treated fairly. Thus user pay is a basic principle that should be followed for both legal and fairness reasons. Charges based on user pay are the easiest to defend. NF User Rate Repm~~ Apri12 2008 Firxal.dac 34 R.M. Laxdon Ltd City of Niagara Falls Water & Sewage Rate S1ruclure Rev}eiv 5.1.5 Affordability Final Report ze 35 of ?8 The ability of customers to pap for essential services staoh as water supply and wastewater h~eatment can be an important issue. Metering of water does give the opportunity to manage costs if affordability is an issue. 3n some jurisdictions where affordability is of concern, water rates can be formulated with affordability in mind. "Lifeline" rates are of this type. Usually water rates are not used to implement social policy and affordability is addressed with programs specifically~designed for this purpose. 5.1.6 Simplicity Customers should be able to understand how the charge: r =.,:, Charges should be simple enough to explain and bill without.undue oomplication. The ,~,,-~ simplest format would be a single-block volumetric rate for al] usage with no other ~""~ t~ z f ~'' charges. However, this may not be a fair way to `allocate costs and•also revenue security may suffer due to year to-year seasonal variations ~~~ ~ *w r u` e 5.1.7 Conservation & Water Use Efficie cyw y 3 _~ ~~ a,,. +bi. Fair and equitable pacing will encourage the efficient use of water. However, there are seve7 al rafe'~formulat~ons that can targaYrspecific types of use whether year-round or ,~~ ~> ~ ~r seasonal:'` Charges are formulated to target a certain type of water usage pattern. Where ~s~ total water availability is limited, all usage may be targeted. Where supply is constructed x.. p ~'~ e to meet peak summer usage,~residential use is then targeted. BuC fairness might be sacrificed if specific customer classes or usage patterns are targeted with punitive charges. 5.1.8 Encourage Development This would occur when charges are tilted or biased to a particular customer or class of customer to encourage them to locate in the municipality. Charges are depressed for that customer or class of customer and the differential is shared by all customers or paid from some other source. This type of rate structure violates several other objectives including NF User 2a1e Report Apr i7 2 2Q08 Final.doc 3 5 ~ - R.M. London Ltd City of Niagara Falls Water & Sewage Rate Sirtrclure Review Final Report Qe 36 of 78 user pay and fairness. Moreover, cities usually have other more effective methods to attract development for example by the provision of serviced land. 5.1.9 Principles Summary It is essential that the user rates be set on a sound roster of principles. Exhibit 15 lists the principles and provides an initial assessment of how they might be ~~~ ~-.. weighted, for discussion purposes. ~ , ~, ? ~~'". Exhibit 15 Summary of Principles for Financial & User Rate Policy `~"- ,. '~!. -`.toY~ ^:^~ i£d F ~.e""3..y~'.'S $i..~ Princ~ples~.~°~', ~ ~-3 ,~~~;~ . ~ ~~. F Ya4 ~.. e-TSC`9F =i ~ ^:' $i 3C4 "Y°'M ~'Lr ~~'L,~.; Imtial Assessment ~„_= r ~: ~ ~ ~ ~ r , ~ Revenue adequacy & security It is essenttal~that these be satisfied. Customers Legality should be~ushfied;m ttieir~assumption that these are being satisfied. Practicality ,r Fairness & User Pay -; ,*~ This is the most'i'mportantprtority when it comes to supporting the rates to the public The user rates should be based on the ~.,.. principles of fairness and user pay. Affordability a Whether affordability should be an issue in ~~ ;, ;_., ` "- ~ ~;focmatting the rates needs to be decided. Simplicity F.r~. ~ ~z- The charges should not be so complex that fr =~ I ~~ ,~~~ customers cannot reasonably understand them. ~^.A,. Conservation & Wateruse efficiency ` ~ Simply by metering and basing bills on volume ~ _, ~, used plus combining sewage and water charges ~r pry, encourages conservation. >;ncourage and su triaLdevelopment Biasing rates to encourage development would ~~~ ~"' come at a cost to other objectives such as ~ ~:; conservation and equity. ~, This list has been generated over time based on discussions in a nwnber of municipalities. There may be other items of importance in Niagara Palls that could be added. Although there are a number of principles listed, the most important from a public view point is that they should be fair and equitable. The following policies are related to achieving the principles: NF User Rare Report April 2 2008 Final.doc 3 6 H.M. Lovdwt Ltd. City afNiagara Falls Fina! Report Water & Sewage Rate Sb~ucture Review Page 37 Of 78 • Metering -Although metering has already been adopted, it is worth noting its value in increasing user pay, addressing affordability (customers can control their water and sewage bills) and conservation/water use efficiency. • Decreased Service Charges- Increased Volumetric Rate- Making the user rates more volume-oriented will enhance several of the objectives. It increases user pay. It also assists with the affordability principle since by reducing usage; customers can decrease their water and sewage bill. Also conservation wrll;be,.assisted if a higher proportion of the bill is volume-related. • Combined Water & Sewage Rates-Several municipalities alrea~ and sewage rates including the City of Toronto and several_raunici Region including Markham. This will increase been found that a combined water and sewage bilks customers in the summer than a separate sewage bill • Single Block Volumetric Rates rate. Asingle-block-rate format f approach for the,City since th'e,ra supply costs~and the City purcli only ~s~a single block fair, it has A set of on which the user 5.2 Rate Format City ;ity ofahe rates: It has also *~ ~ acceptable to residential 9 on water consumption. a single-block volumetric licity. It is also the fairest >ns foi•~riiulti=block rates are primarily due to water from the Region at a single-block rate. Not perception of fairness to the public compared to are charged the same rate. suited to Niagara Falls should be agreed and should be the basis ~re~established. Alternative rate formats are reviewed in detail in Section 8. For metered rates, a volumetric charge is essential. Usually, but not always, it is combined with a fixed charge, to form what are called "two-part" rates. NF User Rafe Report Aprit 2 2008 Final.doc 37 H.M. London Ltd. City of Niagara Fa(Is Final Report 7Nater & Sewage Rate Strrrekrre Review Page 38 of 7r This combination is considered a fair way10 to recover costs and improves revenue stability over volumetric charges alone. The AW WA states "From a utility's standpoint, both revenue stability and equity are generally enhanced as appropriate types of costs are recovered Through fixed costs."~~ The use oftwo part rates with both fixed and volumetric components is common by other utilities as well -gas, hydro and telephone all have two-part rates. Cable is an exception with fixed charges only that vary by service package. ~, In the review of water and sewage charges in 16 Ontario municipalities"in Section 6.3 it was found that 81 % have adopted two-part rates. ~` The water service charge component usually vanes by meter size~iii,order to allow costs Y 3Ev ,,.iS< to be allocated to customers in proportion to their cost aFservice lt`is_amore complex ,~,, approach than volume-alone, but this factor is outweighed by increased fairness. With regard to the volumetric rate component, as pointed out in~Section 5.1 above, a single-block rate is consistent with the siinplicity and fairness principles. Customer bills based on rates that include bothservice charges and volumetric charges <; ~ Fri. ~. will vary depentling on how much~a etastomer uses. If the total bills are divided by the ~~ volume used, the resulting volumetric unit:r`ate will vary somewhat since it includes the impact~of the,fixed charge~This is illust ated by drawing from an example provided by ~~,. i~ Mr. Bielawski~in?his presentation to Council July 23, 2007 -see Section 1 ] (fourth last ,,., . ~ page of his mater'al)~_ 10 The Canadian Water and Wastewater Association suggests this approach in their Municipal Water and Wastewater Rate Manual " Principles of Water Rate, Fees, and Charges - AW WA Ml - Pifth Edition-Pg ] 18 NF User Rate Report 9pri7 2 2008 FFnal.doc 3 g R.M. Lrnidon L[d. Cily of Niagara Falls Wager & Sewage Rate Sintcture Review Final Repast axe 39 of 78 Exhibit 16 Niagara Falls Water+ Sewage Bills Converted to Volumetric Only for Standard Meter Customer Monthly Bill Equivalent Unit Costs ($/m~ Usage Service Service (crrt/month) Charge Volume Total Charge Volume Total 5 $38.65 $7.28 $45.93 $7.73 $1.46 $9.19 10 $38.65 $14.57 $53.22 $3.87 $1.46 $5.32 15 $38.65 $21.85 $60.50 $2.58 ~T$1.46 $4.03 20 $38.65 $29.14 $67.79 $1.93 _ .= `.-$1.46 $3.39 26 $38.65 $37.88 $76.53 $1.49 $1~46x $2.94 30 $38.65 $43.70 $82.35 $1.29 $1.46 , $2.75 Rate = $ 1.4568 /m3 g rvicyara i aiu vxi na<ra <wu.h~a UIIII l.(AS'( l.Ull{Jd/IS(X7 „~ ~ _ JV-N!2( - ~ Rz9 ..~'~': Columns have been added above compared to Mr. Biela~yskr;s matenahto provide the n.ry~ ~. ~~.: total unit costs including both service charge and volumetric charge,°The unit costs ~ ., shown are not part of the normal rate calculation bubhave been calculated only to illustrate the impact of converting both fixed and volurnetrc~charges back to a per volume rate. s. . ~, l Usage 1 element for achieving user-pay for I for sewage charges based on water billing Nage meters are not available for measuring Water meter readings are commonly used to allocate sewage costs as well as water costs. A customer's water meter reading is used to bill sewage since it is the only mechanism available to assess the customer's actual utilization of the sewage system. A customer's metered water consumption is a surroeate used to determine share of sewa e costs Basically urine water meter readings to bill both water and sewage is a method of h'F User Rnte Repast Apri! 2 2008 Final.doc - 39 R.b1. Loudon Ltd City aJNiagara Fa71s Water & Sewage Rate Structure Review Final Report Qe40of78 allocating the costs incurred by both systems based on a customer's relative usage of the system It is a method of sharing costs. The public readily accepts the use of water meter readings to achieve user-pay to recover water system related costs. The use of water meter readings to calculate sewage bills to recover sewage system costs is for the most part also accepted, except during the summer when water meter readings include usage that does not directly go to the sewer. This was an issue raised by some residential customers at the City's public forum on January 24, ''~:~,. 2008 -see Section 3 Public Forum. ,__~ One customer at the City public meeting suggested the installation of sewage,_meters. However, there are no practical or effective sewage meters a'v'ailable for ~esid-~ntial~ 4s_ :~, customers. Using water meter readings is an economic and practteal~method of achieving user pay. Note that customer meters do not measure a number of flo`,w categories affecting water supply such as water system losses and sewage treatment such as sewage system inflow and inf ltration. However the us of citstomer water meter readings allows "v 34~ these costs to be shared irtproportion to customers usage.:"` v. # `~ The vast majority of Ontario muhicipahites bill=foc sewage based on water meter readings wrthouf'adju`stment However there are~aTfew who have adopted special methods roan attempt to increase the"perception of fairness related to seasonal usage. av " t <> •; A~,'~ ~' + '+'.. i_ • Method 1~ „NTazimum Bill - Ban~ie Ontario has a maximum sewage charge of 45 ,~. m3/month for.residential customers. Barrie previously has a maximum sewage charge '~ ,~ of 30 m3/month but~found that too many customers were qualifying. The increased a,.:° threshold has resulted in a flood of complaints. Halton also has a maximum threshold of 60 m3hnonth,'but has found that only large users qualify and many of these some users have high usage year-round. Consideration is being given to abandoning this concession. • Method 2 -Discount -Peel Ontario -For residential customers the sewage rate is applied to 85%oftotal water consumption year-round. Peel also once had a NF User' Rn(e Report Apri121005 Final doc 40 R.d4 London ltd. Ciiy of Niagara Falls Final Report Water & Sewage Rate Sb~ucture Review Page 41 Of 78 maximum sewage bill feature of 30,000 gallons quarterly (136 m3) but that practice has been discontinued. • Method 3 -Winter Usage - Essentially a customer's winter usage level is used to bill for sewage in the summer. This was one method suggested at the public meeting. This method is not known to be used in Canada. One municipality using it is Portland Oregon. Portland uses water meter data for billing sewage, but has developed methodology to exclude outside water usage when billing residential sewage in the ~~ ;a summer. A number of rules have been developed in Portland to accomplish this. As a -~~;, starting point, winter residential water consumption by a customer is=used to calculate a ; ~, the summer sewage billing. Winter usage is assumed to start in about`January and end in April (depending on billing frequency). However; a mmnnum bill featui'ehad to be ~ ~. added due to a large number of "snowbirds" who were away durii~g,the winter but ,,~ were home in the summer. These customers no longer could be,Goiisidered user pay. ~~' Also pool filling during winter months led~toSan appeals prooess so that their usage could be reduced to reflect sanitary.:only usage Iri some cases summer water usage prorated to a 30 day pa`riod is lower than winter average. Using the actual winter ~. average would result in customers paying more than their actual summer average k -~. ~ ;s~ '; .. water usage. To caner the situation when summer water consumption is less than the ~. winter average, actual summer average water usage is used for the sewage bill. Apparently a significant proportion:of~customers fall into this category. t ~~ ~~. ~~; z,n< • Method 4 `Decreased Sewage Rate in Summer -This was another customer- ~~ ~ suggested mettod~Since`overal] rates would have to be increased to produce the same F ~~~~,.~}'.' revenues it is concluded that such an approach would result in customers paying the same amount, and the approach would only be to make the charge appear fairer, in effect "window dressing". • Method 5 -Combined Water & Sewage Rates - By combining water and sewage charges into one rate the perception that seasonal sewage charges include a component which does not discharge to sanitary sewers is decreased. It has the advantage of showing the total impact of rates on water usage, thereby increasing the NF User Rare Report April 2 2008 Final.doc 41 R.M. Loudon Ltd City of Niagara Falls Final Report Water & Selvage Rate Sb-ucture Review Yage 42 Of 7$ incentive to moderate water usage in the summer - a water conservation objective. It also has the advantage of not requiring special policies that complicate billing thereby simplifying the utility billing process and customer understanding of rates. Methods of adjusting for non-sanitary summer residential usage are rarely used, but they have been available for many years. To a great extent they are more for appearance since revenue targets must still be met and that is done by increasing sewage rates to offset the lower consumption figures used to calculate sewer bills. ~ r,;, Method 5, which combines water and sewage charges into one rate;'-"s'hould make the use m fire recovered nsidered is costs from :hydrant ich costs from 1 water system fire protection costs from property taxes altogether, due to pressures on the property tax. Where fire protection costs are included in the water rates, they are often included in the service charge since it is a cost that is largely unrelated to volume used by a customer. The City currently recovers a portion of water system fire protection costs from the property tax and the balance from the user rate. In 2007 the amount budgeted for the property tax was $274,694 and the revenue category is referred to as "Fire Hydrants". A'F User Rate Report Aprr! 2 2008 F'inal.doc 42 2.M Laadon Ltd. of water meter readings to calculate the bill year-round simpler to under'st City of Niagara Fa!]s Final Report Water & Sewage Rate Structatre Review Page 43 of 78 The actual total City water system fire protection costs are calculated below based on the fallowing: • Local System -The proportion of fire protection costs for local systems varies, for example, by size of main as well as size of municipality. In terms of main sizing, local mains are sized primarily for fire protection and so receive a relatively high percentage. Larger mains have a smaller share. In terms of municipality size, large municipalities have a relatively smaller fire protection percentage and smaller -. municipalities a larger percentage. A detailed fire protectton cost<calculation can be time consuming. Considering that the results will be used in this cae distribute costs in the service charge, information is used from detai other municipalities of similar size. The allocation analysis of other systems where detailed analysis • Billing Costs -Billing costs have no • Regional Charges -.This relates storage which Is t efilleii from the impact on actual vol The used in=the water in Exhibit 14. The calculation on to of for fire fighting is kept in at a later time. Fire protection has no ~t:rTfius the allocation is only for-the of total usage on an annual basis. protection cost calculation is based on the fire protection cost is carried out below in Exhibit 17. '~ Percentage taken from a detailed study of the Peterborough water system "Water System Fire Protection Costs -Coopers & Lybrand/1ZM Loudon Limited 1983" which calculated the fire protection cost share for mains at 19%. Peterborough is a mid-sized city similar to Niagara Fafls. NP User Rate Report Apri12 2008 Final.doc 43 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Exhibit 17 Water System Fire Protection Costs - 2007 Budget Budget Component Fire Share Bud et Fire Protection Total Local Operations (1) 20.0% 2,710,051 542,000 Billing COSts (2) 0.0% 601,136 0 Capital (1) 20.0% 4,528,437 906,000 Regional Charges (3) 0.5% 8,588,614 43,000 Total 16,428,238 1, 491,000 Less Hydrant Charge 100.0% 274,694 275;000 Tota I 16,153, 544 1, 216,000; Percentage of Total Budget g% NOTES: (1) Based on likely capacity in local mains for fire. (2) Billing casts not related to fir e protection (3) Supply share bas ed on annu al volume used fo r firertneeds. Niagara Falls User Rates 2008.x1s FP Cost ~"~17-7v1arv08 Total 2007 fie protection costs are estimated at $1,491;1100 w total water budget. This is in line with findings;el'sewhere. Afi t .., revenue from property taxes, the residual cost !s $1;2~1`6,000.~ rt service charge calculation,below ~~ r ~z~a"~~ Final Report 49 of 78 > ._ .'.. ~. represents 8% of the ducting $275,000 cost is allocated to the 5.4.2 Cost Allocations to Service Charge&`~Volumetric Charge Approximately 52% of water costs and`62%,,of sewage costs are related to the Regional ,~.. _~. ~,y,., charges aThese costs are`currently reco e ed from the service charge which results in very k„~ "z- higli service cfiarges'rThis has the advantage of revenue stability. It also allocates loca] ,. costs, which are,largely fixed and not variable by volume, to the fixed charge portion of ':~ ~, the utility bill In this respect the charge can be considered fair. However, there are many -,."~;. reasons for decreasingtfie fixed charge share. A high service charge: • Decreases the incentive for conservation. • Decreases the opportunity for savings on the water/sewage bill. • Affects low income customers since they have less control over the level of their water/sewage bill. • Results in relatively higher bills for small users and lower bills for large users. NF User Rate Report ~Ipri! Z 2008 Final.doc 44 R.M Lovdon L!d City afNiagara Falls lNater & ServaQe Rate Structure Review Final Report 95 of 78 A service charge is an appropriate method for recovering certain costs such as billing costs, fire protection costs and local capital costs. For revenue stability and fairness reasons a service charge is appropriate, but at a lower level. A target level of cost recovery from the service charge has been set at 25%oftotal costs with the volumetric charge recovering the remaining 75%. In essence this decreases the service charge by more than 50%. These are referred below as the "Alternative Rates" with Exhibits involving this calculation refered as "25% SC". Costs have been allocated to the service charge and the volumetric rate in Exhibit 18 below. For water and sewage combined, 25%oftotal 2007 rates revenue regmred is $8,503,848, _A' Y. .~£r which is allocated to the service charge. _ti ~~_,~ __ Exhibit 18 $ Allocations to Service Charge & Volu`metrrc Rate(25% SC) - 2007 -: ,~~ Budget Component Water Sewage Cornbinedl< "SC Allocation Method Rates Revenues Required ~ ' ; ~,` Operations 3,665,487 -- , "' 2,209 528 '~ 5,875,015 Capital ';_ 4174137 Y! 4,726654 r7~$900,791 ~ Regional Charges =~ 8,588,614' ~"3;4,260645 ~" 19849259 Total Expenditures 16„428,238 ~r18'196,827 `" 34,625,065 Deduct Other Revenues ~~~ ~ ,z 43.9;694 ~`:13p p00 569 694 Rates Revenues Required°° ""`=' 15,988;544. 18,066,827 34,055,371 N-f' R t R b C ' a es evenues y omponent, Percent Service Charge ~= , ~ ~ . 25% ~ ; 25% 25% ServiceCha~ eRevenue 3,997,136 4,516,707 8,513 843 - Fire Protect on F~~ t°`" 1,216,000 0 , 1,216,000 Based on Capacity -Billing Charges Fx~ `~- 601,136 0 601,136 Uniform -Capital Financing (1) '?"rd=,, 2,18D,000 4 516 707 6 696 707 Based on Cost .~ Volumetric Revenue }',.r.._.<.-' 11,991.408 13.550.120 955a15vR NOTES: (1) Capital Financing`is the residual after deducting the other listed cost sectors from total SC Revenue Niagara Falls User Rates 2G08.xls Rev 1~4 25Mar-08 NF User Role Report Apn! 2 2008 FlnoLdoc 45 R.M. Loadon Ctd. City of Niagara /'ails Water & Sewage Rate Structure Review 5.4.3 Service Charge Calculation Fina! Report ee 46 of 78 The service charge is calculated based on meter size. The allocation of costs is done by percentages, of which there are three categories. 1. Uniform Allocation -Some costs, such as billing costs, are allocated equally to all sizes. 2. Cost Basis -Some costs, such as capital costs are relative costs of building works of different sizes.. to the This The Wa The size American ated by meter NF User Rote 2eporl dpril2 2008 Final.doc 46 R.M. Loxdon Lt2 ~ N ~mcoDa mmnNaM ro mmnma~aMa~D n nnanom~n tonvlNM nO~ONaOJmNMN ro ~NfOnMNNOroNm O NNMnamMnl0maa ~ M N ~ O n m ~ n ~ ro n ~ n N O a M O m n a n n N ~- N N M ro P1 0 N O N O M C N NMIDOa~ MME MM h o>O nMM mr;m 7~7 a am MMn OOn OP1m ~ rotp W ONNMMN~- m ~ronron rona ~a N Mmaan ~On Mt0a N > ~ N « ~ O m m ~- PI P) ~ M N N ~' PI N ~ ~ ci v M M c v ~ ro ro nv>wwwwranve tnw cn nm mroroe»tnww ntn vi wwwwviw awwl»v>u, mmN mmM mnrom m mma DnromnN.- ~ DDOOOOOOOD m NNN ro(pM ~tOnO roroONmO MNIDN aat~M N~Ma ~D ro ^OONrotpn ON~OM ~ NNm MOJ CI OOM W ] ~"NO Na Na a n 'j 0 ' 0 N NNMnNma 0 ~~~NaO roan [0 S O Mj CIMNNOO NON 6 ' E c~~ ~ NNNN N E - - N ~ ~ NM p W E N NMU1DaNNn M N ~ ~ iC ~ ~Nam(pn ~ ~ ~ N fL " ~N ~ ~ roam rorom roro roro MroroM roro MMro~ ~M ro~romroFAroW F ~ n o m p OON roN~a~~~ N ODacOro0O0O0 ~! OO aNNpMON~ ~ ~- ~- ~- N N ~'N ~ N eN5 ~ ~ ~ ~ c1 ro a N N ero) N ~- ~ ~ N a O m O N~ N 4., N any LL ~+~ a ~(1NM~-O;MnO N-N:~ aat9NOa OOa M m mr NONn OMa m as Dro N;N NamO roW Mm(pn ronaD NNa N~MO~a0 NOth, 00~ Pl roo]O~mO MNO ro OOtONMNatOro ~- p p 0 tD f0 tp Mom ro m W M :*. 0 N N ro M of M O O N of 0 m m (O a N N O m ~ M E ' E v N 7 roNn M ~.-.-Na O ron nm E~-~NCIn PI fDmN N ~ oD ~ ;Myf9-1fl f9 f9 f9 fA 19 f9 f9 ~ ,W_biro MIAro MUiroro roNWf9 (9 f9 f9 bi f9 f9 %: o I~ O U .r ~ z+-,.,~: *'~ te a C a Nna n O LL0 :.. t D a ._, mOro O r. NNW N ~ ~ R N~ ODOO m0O ODV roro roa~mm NW OOaro WO maN ODaW[pOOD0O V _ N L' ~ ' ' = `- ~ ~ ~ M ~ N N M ~ ~ ~ M N,~ ~- m M N N E ~ ~ ~ ~ M W a ~ m ro n . N LL NNM SN NNM Q W , V ro T U -` Zro ro X3~,'-+ ~ f919 Hi ~. N mroN ~ MONa m P1NO]P1 .-MONam m mmmoM m v mNa mmm roo Mmm Na oNNn~nma,~mrn p oNNn~nma~mm = M ~ O a A N N a a N a `:t ~:~~~~_. E N N a a N ro W r ~ 0 ro ~ ro ~; ,„ O to N F ~ ~ `~ ~ N ~ O 5..f :e,~ .. . v U 0 ~-N . ~,- ~N rofA F9ro Oro19M Vl to ro M'fA ro69 fA Wf9`19 d1-'E;;fA df fA bi tliro UfroroO 0 a t .$' ~ ~ 0 MON 'eas bn~~~:`~, O ~ a i Cml O N ''~ : m~yr' D ~ N : M ~t N N 3 LL N ~~NN. ~~NNM ~ Mn Nam aN m W~ a Na V] ro ro v' fA !9 - m e e _ _ n n n M M M M M M CJ S~ K3: n n r M M M M M M t0 '~ N « . °wmrorommm~~~ a~~ ~~ oz Mm MMMmM~. ro ro ro ro lO t0 t9 O N ~D`F~=~ ... m E~~.-ciMri MrimM E .. ,.E ~.r ~ .~'- r ' C1 ttlM ~ N tt ~ _ M Mlm=,M ~i v _ «q L bi di f9 tl3 f9 dfMl9 Yf b3 di hA t9 f9 Yf d3 W19 f9N bi Hf l9 fA f9 Yl~f9 (9~f9 ' y 2 a#`:i a ~ U nM~ m. n 's t ~ ~ V m N ~~~N NNNNNN N~ ~~~NNNNNNN N 00100000000 ~ ~~ LL ;wj~ N N N N N N N a ~ ~ N i. CC :: ro ~ (9 ro .. ro S U ~ ~ N N N NMN~.-aronNNN ^ ~-Nt0WP1NNPJ~Nro ^~MW mOro MnlONNn N[o lD MOn Mr M NMNNmnro~ N NONMmnM ~- a U ~ ~ ~NMNM O ~ .-NNNN ~ ~j~NMNN ~ S ~j 7 > N v ~ L Z Q N ~ N N ~ p N N > Q ~L ~ ^ ~ N w ~ ~ N ~ ~ ~ ~ ti ~ U \ ~ n ~ ~NMa NOJ ~ ~ ~ ,\°~ ~NM am W ~ N 0 n ~~NMalO W ~ C 6 ~ z. ~ ~vro ~N~ N p a L N D ~ .0 d C ~ m C ~ ry .. .. 0 ~ 0 0 0 0~ N 0 0 0 0 0 ~ ~ D m O U ~ W N ~ ,. N v v m N NM 10 P1 ~ 0> v U O PIDN 0> U vm Nro ONON OPl O N M N r O O O ~ E 0 N M m n ~ E ~ ~ N N F J 6 _' 3 E~ N N {- ] O.= w E~ N N F tl ~ E ~ o'xcOc ~] WW~ N WW~f-7 W Q N 0 4 C (` V s c N Q d d K j z City of Niagara Falls Final Report GYater K Sewage Rate Structure Review Page 4cY OT 78 Notes in Exhibit 19 are as follows: (1) Equivalent meters calculated by multiplying factors time number of meters and totaling. (2 Costs are allocated uniformly but adjusted for bimonthly bills to 19pmm, monthly for larger users. (3) Fire Protection costs are allocated based on capacity - A W WA factors used. (4) Capital Financing costs are allocated based the relationship between size and costs - AWWA factors used. „'~~ ~~~ (5) Factors are calculated from the total rate. (6) Rates rounded up to the nearest cent. 5.4.4 Volumetric Rate The volumetric rate is calculatec ~xhibit20 Volumetric.Rate System ~~~ ",~';n €, Revenue ~Uolume~ ~ ~~'~`<,~~~Ratet " ~ ri Water ~~'` 11,991 408 ~~ 13,984,843 $0.858 Sewage,„~~ ~ ~~13,572,620 ~~~~~`,'" 13,068,836 $1.039 Total °-_ ~' .` `25;564,028 •' $1 897 . NF User Rate Repot Apr i! Z 2008 f'inal.doc 48 R.M Loudae ltd City of Niagara Fa](s Water & Sewage Rate Struchere Review 5.4.5 Current vs Alternative Rates The current versus Alternative rates are summarized below in Exhibit 21. Exhibit 21 Current vs Alternative Rates (25"/" SC) - 2007 18 '/< $ 20.07 $ 18.58 $ 38.65 $ 25 1 $ 20.07 $ 18.58 $ 38.65 $ 37 1 Y: $ 60.21 $ 55.74 $ 115.95 $ 50 2 $ 120.42 $ 111.48 $ 231.90 $ 75 3 $ 240.83 $ 222.96 $ 463.79 $ 100 4 $ 441.52 $ 408.76 $ 850.28 $ 150 6 $ 842.91 $ 78D.37 $ 1,623.28 ^y 200 8 $ 1,505.19 $ 1 ,393.50 $ 2,898.69 250 10 $ 2,107.27 $ 1 ,950.91 $ 4,058..18 $ Volum etric Rates ($Im3) `~~ ~~' ~ ~ s AIICons umptio r $ 0.6024 $ 0.8544 $~ J 1.457: .$' NOTE: Test Year= 2007 ' `~~'' ~ Cosi Niagara Falls User Rates 2008 xlsL~ '~ Rate?Summary Final Report ge 49 of 78 10.25 $' `=;12':89 $ 23.14 15.22 $ 1804:::: $ 33.26 28.86 $ 23 2Q~$., 52.06 56.69, $ 48 97 $ ~:;1-05.66 37 33 ,~ ~ 103 08 $fi'r'`240.41 270 15 $;1,80 38 -$ 450.53 655.87 $;2'70.57 $ 926.44 296:76 $ 373'x65 $ 1,670.41 243.09 $=489.61 $ 2,732.70 58 $ 1.039 $ .= 25% 78-Mar-0B 1.897 NF User Rate Report rlpril2 2008 Final.doc 49 R.M. L"udan Ltd City aJh'iagara Falls Final Report Water & Sewage Rate Structure Review Page 5~ Of 78 6 Impact (25% in Service Charge) 6.1 Cross Section of Customers A cross section of customers including both residential and non-residential, with different annual consumption and meter sizes has been chosen to illustrate the impact of the Alternative Rates compared to the current rate structure. The sample includes, for residential, single family dwelling, wndominiwn, townhouse anchapartment _ s;>r„ development. For non-residential a variety of customers are tepreserted and also provide examples. ' n_ _ The results of the comparison for rates with 25% of costs in the's~rvice charge'eare~' provided below in Exhibit 22. Some observafions on the impact areas follows: {y k 7` r • The bulk of residential customers would pay less if the Alternative Rates were ~~ t- implemented. In the examples shown the customers using 29,E m3/year and less see ~ ~., : ,. reductions. A cross section of usage is'provided m~Ekhibit22, which indicates that u .~. customers using 293 ~m3/year or less iepcesent 70% of "al] customers. • The three towiifiouse customeise~use large result (since the volumetric rate s'ncreas Imes of water per customer and as a pay much higher bills. • T'he"co~dominiurn fias'the lowest ins ,~ relatively Iow;per unit consumption. ofthe multi-unit customers due to its • The motel and mall'areaow users per unit and both see savings. • The other non-residential customers see mixed results, depending on their combination of meter size and consumption. A'T User Rote Report April 2 2008 Ginal.doc 50 R.M. London Ltd. ~ O ~ ~ ~ r ~L ~0 O W tl 2 0 U N U h Y~ v a r O O N U E r.'Sl V 0 C U 0 U C O U a H N N .~ k oooaaoooooe vooooo0 C p e V] V <O tD N (O V a M CD ~ I~ M N M O V LO N ~ ~~ N N ~ N N N ~ U ~ r f0 r [p O 4] ~ m N [D N (p V M N ~ V N y - T O O LO L`O N r l0 4'] M (O (p 1~ O] M r N > ~ M (O fp M N N ~ r ~ N W O ~-- vv Q ~ ~- _ V V M [O O ~ fA v _. (A (fl V3 E9 !A fl3 fA Vi tR V3 Efi V> tl3 M V3 (f3 ff3 Vi Q> u7 r O r (D (O r V [O r O Oi M M CO N M C ~ N V (p O> N N M ~- RfJ N V l0 N O V' ~ (O (O V W ~ (O r r M O (O 'cf RI> O M M N ~ ~ N ~- W D) r (D ~ O N U Vi V3 V3 FA to 4i N3 fA 69 K V) EA f1j (f3 fA 43 ER 4i .~ m N V O r (D N r ID O) .- ~O O M M of N M ~ N M V (O O~ r 0~ ~-- (O c0 N V ltJ N O V N N ~ (D t0 N N ~- (O T O r u7 (D m r RO O O> M N O N V W D7 ` (O r ~ ~ N N N H M t0 N N N EA ~ V3 V3 69 fA fA M Vi EA EA tJ3 EA fq t1j f33 M Ui EA U3 N ~~ > ' N .~ N RO O) M N O~ [D RfJ o7 ~O (O N O) N N M N of ~ ~ V V'-RO [O V r CO N N O~ W N r r l° N N M C t0 O M CJ. V V (O V' O O V N f~ t0 V tf) W O N N % T - ~ M M uJ of ~ ~ N d' V T of O O O fA M Q ~ ~=dj (A M(A fA fA V3 4i EA V? fA f9 Vi to EA V3 V3 V3 ~ °~r O V l"..tO::r tO N r V V1 r N ~- N RO O 'V '= r ro r r - d . Nja O N lD N r N V r O O [O O `~ "- N N M M N N 6J 6> M N of V N O) N D7 V V i ' r N c- r Vj s°. '~ (n Vf UT H3~ (A f9 69'fiY Ui Vi EA E9 4i Vl f9 f9 EA fA A ,~ ~ t- (O O~LO'{p r Rl] (O y=O W M O7 'c]' O N O N lIJ C N M V`01..V N o> W?V O O (O 61 r CO N N (O .~~-~ ~ r r V' W- M RO'LO ;M N lD V' M 1~ W M M ~.: ~ N •:C N t?js` of c0 T V N ~ N U Ul tR di to kA EA (9 f13 69 E9 M~ Hi EA EPr to (/1 E~ N F ~ ~ ~A (O O r [0-r . .- ~ N H N M " ~ V' O N O N uJ N M O a7:. V' N N V [O ~ ,M "O M r ~D N N CO y cp ~ r r W W M M Mcst'..(p M ~- V M r cO M M O i O F- N OJ OJ{~IJ E(D CO V RO CO OJ m ~ N ~ }N-N V N p ~ y r to V3 b3 U3 to EA 4A ~ fA EA £A f9 ~~'iA Ui (A fA fA c ~ a ° r. r m M co V N v`o co y r M v~v ~n rn m r r r r N~ m o'- v ro m m ~ v-v o M ` ' U S 'M V r tu N M M V V (O M ~-_ N __.~ N (O oJ`l° ~ O T ~'~V LL> r e~„yN N V d' O W N O . . E~ ~ r N , ~ `~ t9 fA V3 fi-> f9 ff3 (9 fA tR EfJ !/Y;` rt fA Vi EA E/3',`* fl3' fN' fn Is y. ~~ m ~ r W M W r OJ M O7 N,>. O VJ 1~,^Ip Q) r N [O V VJ c- N O M ~ cD O'i'.- O) V Rf'! Fr N O M M V~ t!J O r .- (p m R(J~n".Qi N N M j T ~ c0 07 ~- ~- O N ~M' M T (D O ~i fA ~- ~ N } 49 1H N ffl K Nj Vi to FA en Vl 4JlEl'T:.tH fn V3 Vi Vi ~C ~ O M r r T N M 'V N R[J O) VJ ~"+If> ~ w ro rn c° r r r w N o co M " N T N V N M M 1(J .M . W 3 ~ a r r7 ~ M ~ ~ ~ 4. O ~' M ~ O M M r OJ VJ N [p O O N l0 Ou> O W N W of O O) (O r O N RO V O O N:-.M O ~- ~ N N V N M M (O M V' o, so~ym T N F_ an ~ .N- ~ ~ ~ 67 ..~M `" ~ * E ~u - ~i, ~ N ~ m m m m m m r r u~ r u, M M r r 0 0 0 _ M N VJ RO N ~ < <- N ~- ~ ~ M M VJ M ~O O C M M r M ~ Ip ~- J D a [D ~' d' ~' Q E~ o o~ o K ~ a ~~ -O N (n (n ~ ~ VJ (7 O UJ C J v ~ -6 -6 a E_ ~ U m o o r o E a o N~ E E w o ° oa ~ m o ~ L° .°° o t ~ -j a o ~ ~ ~ ~ o A ~ v m m m m v d ~ ~ (/1 Vl N = L _h ~ ~~ ~ w U N E d O O O O N N O K L C O L E~ ~ ~ C C -O C~ U O a ` N D 0 O. O D D d O G O N LL LL~ LL LL LL o 0 0 0 2 O O c6 N t0 U S N Oi K (n fn O Vl (n U H H U h Q Z~~ ~ U fn J Q Z ti V U K tl c 0 e 'o C `a a j Z City afNiagara Falls Neater & Sewage Rate Structure Review 6.2 Impact on Large Customers Final Report 52 of 78 The impact on large customers is provided below in Exhibit 23. The shifr of charges from the Service Charge to the volumetric charge affects large volume water users the most. r,-3:< NF User Rate Report April 2 2008 Finol.doc 52 R.M Loardon Ltd. C N a r ~. tf 0 ~. V m a 0. r m s h a a 0 0 N U e v L d O 7 U LA R c 0 u C H M N r k W ~~° ~~~~ .~ N N N N _ V V I~ t` co ~~~~ ~~~µ~~~~~~3~~~ ~~ ~ ~Q~`pM~~N~~~~op~~~~~Epp~ ~j Y~-S•'~E~- cam., mw : ~} fli f~'x El}"^'Ep fn El}.`.El} fn `-' ~ ~ ~N~~=~"~ V ~ M ~ fA EtT Ki (li Hi ~~ ~v~M~~3~~1~~~3~"~, ,~ vssv3f»v3e»e»e~v3F»~».,.. ~~~~E~~~s~~Ev N r ~ t v E9 (ti Efl Hi Ki Hi EA Hi H} El}'`-"~~ ~f) OJ ~ ~ ~ ~ ~ 6J m OJ Ni EA Eli ffl EA Hi Hi ER flT di ~~ ~~~5~~~~343~8~353~, x V ~ ~ ~ ~- Q ~~ O M r jj~~ ~fl [O to M v~ .~ ti N M V ll) (D I~ W ~ ~ V z s M `a N r e 'o v v C a z City of Niagara Fa!!s GYaler & Sewage Rate Structure Review 6.3 Rates Comparison With Other Municipalities Fina! Report J4 of 78 Water and sewage rates information has been gathered for 16 mid to large-sized Ontario municipalities in order to provide context for the current and alternative Niagara Falls user rates. A synopsis of the rates formats used is provided. Comparisons of 2007 combined water and sewage charges for two customer categories are provided for each municipality and for Niagara Falls both current rates and Alternative Rates. A summary of the water rates formats for each municipality is p~ ovided in Exhibit 24. Exhibit 24 Water Ratc Formats in 16 Municipalities - 2007 Munici alit 2001 (1) Service Charge {$/eno)'y~ , ~ Vohiinetric Rates (2) p y Po ulation P l9-mm 100-mm : *s ~_]00vs19 ~ TSB&~ `IBR DBR Other Belleville 45,986 $15.89 $90.36 '`r :6 ~, _:`~~`' X Cobourg 17,172 $10.45 $16,1:.35 x,15 ~. ,-n.,~ _ . X Durham Region 506,901 $10.25 ' _ -~$307~45~~,E 30~~~` X Halton 375,229 $8.99''"- $588 83 ~ "~^~'b5 Hump Hamilton 490,268 $6.55 ~ =$101.52 ~ Y 15 X Kingston ~ , 114,195; -_$8.55 $57:5fi~ 7 Res ICl London ~~336,539 ~'$Os52 ~`~ $39.36 76 Res ICI Newmarket's -;65,788 s; $600:-- ~~~ $6.00 1 X Niagara;Current ~78~815 $20,07 $441.52 22 X Niagara A~Iternate~° `~ 78,815 $10.26 $270.30 26 X Ottawa ~ ``~ ~. ,,, 774 072 t... - - X Pee] Region ~' ,988,948 - - X Port Hope I~5,605 $4.44 $28.43 6 X St Catharines `©129,170 $10.00 $36.67 4 X Toronto 2,481,494 - - Hump Waterloo City 86,543 $2.42 $51.86 21 X Windsor 208,402 $16.84 $373.85 22 X Seasonal Summary 81%have S.C. 8 4 4 3 Notes: (1) Statistics Canada website (2) Abbreviations -Single Block Rate, Increasing Block Rate, Decreasing Block Rate, Humpback, Seasonal NF User Rare Report April 2 2008 Final.doc 54 R. rN Loudon Lrd. City ofNiagara Fa(!s Fina( Report Water & Sewage Ra[e Struchtre Review Page 55 Of 7$ The approaches to water rate formats vary. Most convnon is the use of two-part rates with 81% adopting this practice. Service charges for l9-mm and 100-mm meters are shown. Virtually all increase with meter size, from very little to a maximum of 76 times larger in London. Niagara shares the middle ground with Durham, Waterloo City and Windsor at about 25 times larger. In terms of volumetric rate formats about half use single block rates and one-quarter using increasing block rates and one-quarter using decreasing block rates. The first water and sewage bill comparison is for a customer us~rigy240 m3/year (52,800 ~~''. gallons) which would be fairly typical for an average residential custoiner_and is shown in Exhibit 25 below Exhibit 25 Water/Sewage Charges in 15 $1,000 $.900 % $soo vI $C70~ $VOQ U $500 3 $400 C $300 _ $200 Q $100 $- , M, ~ 10> [- N ~ _ - ~ M •M tip fA . ~ o a ~.~~ -OJ ~ ~ ~ ~_... ~ O (D. _~ N y ... ~_ ~'=M N-,NCO ' ~ ~ ~ fA :. _ M •-. V " fR. .HT M W as '::lR M ~ Y:: " £b' N. ~ _~~- ,' y. ~ z ., a p o o ~ m ~ ~ a ~ > E u. N a H U a = O ~ 3 J m t Y ~ V Q a o ~ LL Z U 2 The chart shows total annual water/sewage charge (vertical bars with annual bill) and percentage of bill that is fixed (black dot and percentage at right side of chart). 2007 charges were highest in Niagara Falls, but drop behind Windsor and Kingston with the Alternative Rates. NT User Xa(e Report dpri! 21008 Final.doc $5 R.M. London Lrd. 100% .90% ~ L 80% 70% U 60% 50% _X 40% LL 30% ~ 20% i 10% a 0% City ofNiagara Fa!!s Fina! Report Water c@ Sewage Rate Structure Review Page 56 or78 Peel, Toronto, Ottawa, Waterloo and London fixed charges represented less than ] 0% of a residential bill. The average fixed charge level was 30%with about half between 20% and 40% including the Niagara Falls Alternate rate. Four are above 40% with the highest about 70%. The second comparison is for a large customer using 227,000 m3/year and a 100-mm meter which would be 3`d largest user in Niagara Falls. The results are graphed below in 1;xhibit 17. ,,,~_ Exhibit 26 Water/Sewage Charges in 15 Municipalities (227 $600,000 $500,000 m Qr $400,000 m $300,000 ~ $200,000 Q $100,000 $0 - 2007 m o v st m n om: N i car °° r m m v m y - . _ _ m o ~ ' _.o v ro v v v ~ f» ~ N a - sv r» ~ _ -N _ - - H~ ` to f A fA _ ~: N -M N M n ry- _~ ~ - ro - m ~ ui b~.. . <o -N N N N W _ ~ ~ 1 , r~ 0 w S 0 m a C ~ o .° c ° ~ a v a E m ~ ~ o c d 3 v ~ m ~ ° - 2 ° c o p F .~°'c R E m Z ~ o w ~ x ~ °' E ~N Y m v +" ¢ o, n z w a ° = ~° o o ~ 3 v ~ m m ; :°, O m y z With current rates a large customer would be 6n' lowest out of ] 5 and would increase to I 1 ~' lowest with the Alternative Rates. NF User Hate Repa'(Apri722008 Ffnal. doe 56 R. M. London Ltd. City oJNiagara Falls Water & Sewage Rate Structure Review 7 Other Issues 7.1 Volume-Only Rates -No Service Charge Finn! Report 57 of 78 Some municipalities have adopted avolumetric-only water and sewage rate structure. 1;xamples are Peel Region and the City of Toronto along with a few others. Although not part of this rate study proposal (see Section 13), the option of a volume- only rates structure has been advanced by Mr. Bielawski and as a result will likely be of interest to Council during deliberations. In order to provide a compaeison to the ;,. Alternative Rate format calculated in Section 5, information on a volume-pniy block rate ~,zw.. structure has been calculated and its impact provided below,. _~ :~.r;-> 2007 Niagara Palls volume-only user rates are Exhibit 27 Volume-Only Rate Calculatiori~=`2007 ~. ° ~ ~~ .z... ~System,~` -{ Revenue Requued~ `~'s~U~lume~(iri~)~ ~ ~ ~ Rate ($/m3) -- Water _ 15;988544 ~~ `-_~ ~ ]3,984,843~~ , , $1.144 Sewage 18,096,827 ~~ ,13,068,836 $1.385 Tota] ;~~`;~ ,.34,085 37r1 ~~' $2.529 The 28. ~~ ~`ga irt'4 y service charge completely is illustrated below in Exhibit NF User Rate Report Apri12 2008 Final. doc 57 R.d9 London Ltd. O d S ~i ti OY O 7 0 V ~} N v C m 3 N C O h d _~ C Cd G 'n.l O r O O N t~+ CC Cr H N A s x W U !-, n (O ~ C M O O N W O E ~ M N~ N~~ ~ N M W n .L°- O~ O N Sn ~ ~p N N v ~ W CO S O N O~ o] OJ M tp ~- r N ~ O c0 M O V O OJ I~ M c' D7 r N v ~ ~ 3h N~ N~~ O) r M~~ W O Q7 N '- EA fA fA fA fA fNNH fA 69 f(pA EA EA EA EA H3 f9 to !yyA E/3 tf(fJ3 Ui (fl to ff3 4i f~~pA} tf3 U3 fA V O O ~_ N ~ ~ Q M ~ ~ V (° Nl iD O ~ V c~O"l O~ W ~ u] I~ ~ [D of ~ ~ _ ~ --M rnoc6o ~ r cp M m (n N N N [O ~ ~ V UO tV EA (fAp fA 69 Ef3 fNNA H3 EA EA ftlM~! to 6Y fpR U1 EH fF3 (fl to U3 ~EOA ffl f~A fA Vj EA f^A W fA Q r ~ ~ N ~ n ~ N ~ N (O f~0 [+J t~0 ~ ~ ~ M m OJ ~ lYJ W I~ ~ ~ ~ ~ tM ~ ~- M V N V Ql O t0 O ~ r ~ M m D7 N ~~p ~[J F~ M M~ V r N N N~~ ~[J ~ V~ (7 M N f9 Nf fA to fA E~ppA (A fA fA fA fA EA EA to U3 EA Efl EA U1 M !A f9 U3 fA W H3 fA (A n' N N V~ I~ O Ol O r ~~ N~ N r I~ to of N N r} V pmt Coif > ~ t0 ~ u1 ~ ~ ~ o~ ~ N ~ ~ ~ r ~ tM'l ~ ~ V ~~p N (poi p~~ V c9 W ~ ~ { .r- ~ ~ N ~ ~ N ~ ~S) fl7 O ~ ~ cr'1 N ~ N tNl O Ol a EA EA EAyEA EA EA fA to fA EA E9 EA fA 69 fA fA lA fA fA EA EA W H3 !A (fl N fA ffj .O O c7 M.~ ~ O ~ (NO W (~D ~ O M ~ ~t°fJ O ~~[J .N- N ~ ~ th ~ ~ ~ V V ~ p e yN N M M ~fl op ~ T ~~ ~ m~ " (V V V r~ a7 [V ~ V M O~ n~ V~ ~~ O_ M N N N ~ ~ ~ .- tt i" to fA 69 Ni~fR fA 69 _ffl Hf fA fA fA Hi to tt3 EA (fl 69 EA fA EA V3 (A W fA EA fA (A ~ p ~cp~ tp~ C N~~fW(~ M ~ ~~~;:~ O N~ O~ro~N~m N~~ V ~ V ~~~ ~~: ~ ~,~'~ N f ~ W c0 m~ N O N .. •~ ~~ Vie' ._ !7 V M M N ffj (A'FA fA fA to EA to EA to EA ~°z::EA f9 to (f! fA to N3 Efi 69 EA fA EA EA fA fA f9 EA ~ r W ~•,~ C7 M ~ ~ ~ p~p ~<~ O i~ ~ tN") ~ ~ N ~ Q ch ~cMp- ~ ~ N N O N E N O D7 ~IJ_~ N V V N W cEl Ql V~ O N~ 1° r W~ N O ON] ~ ~ t~7~p'.~. 4 si -. ~ V M N N N (V EA f9 fA M f9 E9 EA b3'~M-N (A EA (f1. ,H3;tli;EA fA fA fA fA to (~ K fA fA EA fA fA ~ D7 M (D V N p r "M V<, ~ ~ N ~ ~ ~ O M ~ W oOJ ~ ~ 'N~ M M V V [Np M ~ 8 ~E~ ~ `ON (p ~ ~ r O tN~ ~Opl C~7 DN7 N ~(] N ~fl Q r ~, ~ a' V lfl N ~N N V V O O] N:(D.'Q O N (O (~O ~ [~l Ol N S ny,,; ~4 r N N ~ r ~ ~ r r ,•i'd.. . t ..: fA tU~~i Vf Uj Hi fA ffi fA fA EF3 UNi "`'=". Ef3 U3 H3 OJ N ~ ~ O ~ NzIA~ EA fH b3 Ef3 v3 H3 (A ff3 fA EA ff3 _. v3 fA v? V3 ~~ V N Q N M M~ N~ ~'~ ~~ O M MM pp~~ ~pp~pp~~ app p e~~ W W~ N Q N [h M [~O ~ Q m~~ ~< N` M r OI ~ Ci V N ~ N_ :~.:E9 69 to EA fA EA fA EA H3 EA N ~ O [h S ~ ~ t0 [~[nn ~Nn r c~n (O O m N M r _N m 6> orD ro 69 fA fA EA E9 M (fl fA.:.tA H3 fA lA ONl ~Sn:.. V ~ ~ m ¢IE t°JWk N,. N M O V~~,T'O ~ O O W N a),.O:~M r 47 m c0 t°.r."O ~ ~ ~ ~ r N;N N w m m m co ro M m ~ M ~ ~~~~ g~ g p p o 0 0 0o 0 p N O~ ~ ~ N S N N N .- N ~ .- .- CM"1 t+] r M m [D r ~- r ~ ~ .- ~ .- ~ ~ O~ ~~ ~ n [p ~ t0 N M CD ~N ~ ~ ~ C C d' C ~ N -O ~ d' oN Z' `~ ~S a a ~-o ~ ~ ~ 0 0 0~ - x E J .- m o o 0 ° ~n S E E ° ° O€ ~ ss~ ~ o o E o E ~ QQom' S E E S ~~Q ~2 ~F°F° 8~~ ~ 2~ti00~ °~ m ~ ~' E EEE ~ m mm m a ~ ~ .~ wwv_i '3 7 7 ~ C ~ 'J J 3~ J v ~ r r o f ~~ ~ 3_ ~ m°~ ~~ C N C C C a~ o o a o 0 0~~~~ c° ~ g~ y `3 'c :z' ~~ m m~ N m R'(~(nO~N~FF-cgf-~~~~~c`4 cSi9 $c4~~~x°t°-ix°=c~ Z 4 U V V K C a a ~v rv N Q v C x z City of Niagara Falls Final Report Waler & Selvage Rate Structure Review Page 59 Of 7$ A volumetric-only rate would result in small customers pay much less and large users pay a lot more compared to current rates. One advantage of this approach is that all customers pay the same volumetric charge. It has been argued that this would be the fairest approach. However, small users and customers who are away; such as snowbirds, would be contributing nothing even though the water and sewage systems are in place, ready to serve, and costing money on an ongoing basis even if the customer is not actively using themg For,example, meters are read and bills sent out as well as fire protection being available ev n away. Thus it can be argued that at least some service charge should recover ongoing costs which continue whether the A minimum bill feature is sometimes used to ensure that absent customers pay at least something to cover ongoin; >~~ . eliminated a minimum bill feature for restdenhaLsince it y- as the elderly were not rewarded for conservation or oche `__ ii consumption. In that case~there was already,=a service clip of recovering fixed costs. it=somenoay is ~~ ~~ be m'ptace to .-,~ or not' +~~r>` snow-bird" type _._.._ _~._ 13 true small users such Forts to save money on which fiilfilled Che function In regard to far-rness, the two-part rate~~designed for fairness by allocating certain fixed ~. `~ costs to a fixed chargeagd remaining costs To the volumetric rate. It also enhances if yk ~M _ e. revenue security by ensuring some revenues are not vulnerable to consumption K ~. ,>,,. x .. fluctuations~'However, the volume-only approach has its supporters and does remain an option that is used~m severahOntario municipalities. A minimum monthly krill of 5 m3/month has been suggested. On an annual basis this would be equivalent to 60 m3/year. Based on the consumption profile in Exhibit 12 this minimum bill level would impact about 10% of customers. i3 The Region of Durham eliminated a minimum bill for standard meter customers (targeted at residential) in the 1980's but retained it for meters 25-mm and larger NF User Rote Report Apri! 2 2008 Flnal.doe 59 R.M. London Ltd. City of Niagara Falls Water & Sewage Rate Structure Review 7.2 Revenue Security Final Report 60 of 78 The decrease in fixed charges and increase in volumetric charges will make annual revenues more vulnerable to changes in consumption patterns due to conservation over the long term and seasonal usage on a year-to-year basis. Revenue shortfalls can occur due to a wet summer (low seasonal use), economic conditions (business closure) or reduced usage due to conservation or plumbing fixture replacement. Protection against negative revenue variances can be accommodatedsby acombination of: • By basing revenue projections used to calculate the next year rates consumption projections. This would be done by penet~~ation of ]ow-flow plumbing fixtures and appliances and~l&w seasonal usage. • The maintenance of a rate stabilization possible revenue shortfalls. A surplus at year-end would be contribiftad;to the s ' offset excessive accumulation of reserve fund"bal w ,. a. moderate rate increases but only to the extent nee ~~ levels14. ~ 'r . _~__ fund with~~sufflcienf balance to offset ~'~.:` Nf~. _„ ~~: ,. Zate Stabilization Reserve Fund. To ~' tces; funds would be applied to 'd to keep the Reserve Fund at target The Ra'te~Stabilizatton~Reserve Fund level can be established by an analysis of historical and fluctuations and the resultant impact on revenues. Both basic trends and seasonah~variations would be considered. As a guide it is noted that the Region ~., considered a range of5%~to ] 0% of revenues as a target balance and adopted a level of 10% for water and 5% for sewage. The lower value for sewage is presumably a result of adopting a fixed annual charge approach where sewage revenue variations are more predictable. 14 Altema[ively, surplus funds could be directed to capital needs such as major projects to avoid debenturing or asset management [o provide capital funds for needed replacement projects. NF User Raie Report Apr? 21008 FrnaLdac 60 R.M. London Ltd. City of Niagara Falls Final Report {4rater & Sewage Rate Structure Review Page 6] Of 7$ 7.3 Metering of Condominium Townhouse Development In the past Niagara Falls has agreed to the installation of Ciry meters in individual condominium units in a few condominium developments. The City issues bills to those individual units. However, in the majority of condominiums bulk meters are installed and the condominium corporation is billed. Most Municipalities have tended to avoid installing individual teeters for each unit within ~'~" multi-unit developments (such as condominiums), for several reasons: • The ability to shut off individual customers for non-payment of watera~apd sewage bills is compromised since the shut-off valve to individual:customers {s~or,pr~vate property and the master shut-off to the condomm{uai~`developirient, wh~ch~s at the property line, would shut off the whole complex. This would lie=a~difficult situation ,,,. _,x since Che other customers, who likely have,paid their bills would received a service interruption due to a single customer ~~~ ~ 3 ; ~1 ~~ t • The individual meters'do not mea"sute~losses m the private mains and services. Leaky ~. ~ ~. ~'~r , private mains would be uncharged To addtzss this a master meter would be needed. ,~r~. _s. This would~becoxne problernaticsince rt is unlikely that even under the best of ~I consumption is unlikely to match the master not being able to read all the meters at exactly meter accuracy limitations. • Clearances, constrwction_and maintenance standards for roads and other facilities within private dev~l'_bpment may be lower within private property compared to public streets which could impede access by utility vehicles. • The allowance of metering of this type on private properties could lead to the argument that separate meters should be installed in malls where policing of illegal connections would be virtually impossible because plumbing is often hidden, but easily accessible if somebody wants to make an illegal connection. NF User Rafe Report Apri12 2008 Final.doc 61 R.M. Lovdom Lid. City of Niagara Falls Water & Sewage Rate Structure Review Fi~aal Report 62 of 78 It is recommended that multi-unit customers such as condominiums be bulk metered and billed by the City using bulk meter readings. Individual metering, meter-reading and billing of each unit should be the responsibility of the property owner or condominium corporation. This does not apply to freehold townhouse development or other customers where there are individual services from City mains-these customers would continue to have individual City meters since they could be shut off if required for water and sewage bill collection action. NF Usw' Rale Report April 2 2008 Final.doc 62 R.M. Loerdon Ltd. City of Niagara Falls Fina! Repor] Water & Sewage Rate Structure Review Page 63 Of 78 8 APPENDIX A -Rate Structure Alternatives 8.1 Basic Components Water user rates are charges levied to serviced customers on an ongoing basis to recover recurrent water system costs expended to provide the service. There are basically two types of charges that can be used to make up the user rates: • Fixed Charges-In the case of unmetered systems, only fixed charges, referred to as flat rates, are levied. For metered systems, fixed charges are optional, but common. They are usually known as service charges, but other names are sometimes used, such ~. as basic charges. Sometimes a single fixed charge is apphed,to all customers.,NIore often the charge varies in relation to the size of customers' meters Ftxed charges ~ , cover some costs that are unrelated to usage volume(such as billing,costs). In addition to being a fair way of recovering certain costs,tithey provide a level of ,za, revenue stability to the utility. '''~`~ • Volumetric Charges ;:These are charges that are tieil'fo the actual volume of water used by a customer. Meters.are needed foi•,volumetri~c charges to be levied. There are a number of optional volumetric rate formats=for~water utilities to choose from. °- .. Various options are discussed m more detaihbelow. ,3,~ ~,. For metei•edFrates, a vo`lu'metric charge;is~essential. Usually, but not always, it is ,. .,. ,~, combined vvtth~a fxed charge, to form what is called "two-part" rates. This combination is considered the"fa~r'est way to recover costs and improves revenue stability over volumetric There are a couple of other rate features to consider: • Minimum Bills -The fixed charge may or may not include a minimum consumption allowance. Where it does it is referred to as a minimum bill. The minimum bill provides the customer with a specified consumption allowance at no additional cost. The customer pays the minimum charge plus the volumetric consumption charge on any water used in excess of the consumption allowance. The minimum bill can be NF Use+'Rote Report Apri(22008 Fimol.dac 63 R.M. Loudam Ltd. City of Niagara Falls Finn! Report Water & Selvage Rate Structure Review Page 64 of 7$ justified as a means of covering some fixed costs that are ongoing whether a customer uses water or not. It provides a municipality with a revenue cushion that is unaffected by annual variations in use (usually related to seasonal use fluctuation for cooling and irrigation). The consumption allowance with a minimum bill should be sufficiently low that only a small percentage of customers pay only the minimum bill. Otherwise, the minimum bill starts to function like a flat rate charge. • Demand Charge -This is a fixed charge per billing period,tfiat is based on a u ~. customer's peak demand. Different approaches may be used to measure peak demand, but for a retail rate, maximum month demand ui the previous year is appropriate. The measure of peak demand for a customer remains constant for the billing year. The demand charge eau replace the meter ehar°ge.as a fixed charge. This ~._ F charge is common for electricity sales but not usualfor water ~"-r • Unmetered Fire Line Charge-This is a fixed monthlycharge_fo`oustomers with fre lines. A fire line would serve hydrants, sprinklers or standpipe on standby for fire protection. W~ volume used. Costs are normally userlates An unmetered fire"hne 8.2 V There are 8.2.1 Single BI ii9iYies such as private fire systems include capacity for fire fiKtitinQ is not sold based on customers by means of water form part of this. of optional volumetric rate formats: BR) A single volumetric rate is applied to all usage. The rate is simple to understand and the customer bill is simple to calculate. A SBR does not attempt to refine the allocation of costs to customers in relation to their usage characteristics, other than the total volume. NF User Rote Report Apri! 2 2005 Final.doc 64 R. M London Ltd. Cify of Niagara Falls Waler & Sewage Rate Structure Review Exhibit 29 Single Block Rate Structure Price/cu.metre $0.0 Structure of the Volumetric Rate Sample calenlation of a customer bill Volumetric rate = $1.SO1m3 ~_ , Water bill/m~. $O.t] 0.0 Customer water use in one mo'izth_= 24 m3 ~ Monthlv.water bill = 1.50hn3 x 24im3: _ 8.2.2 DecliningBlock Rate (DBR) Final Repor! ~~e 65 of 78 use/month. Bill A declining block rate,4deoreases in steps as usage increases. Traditionally the consumption limits for the first block were set to encompass the largest amount that a customer in asingle-family dwelling might use. The upper consumption limits for the 2nd block would encompass the consumption ofmost industrial, commercial and institutional customers, and the 3rd block covered larger industrial users. Sometimes more blocks are used. There has been an ongoing shift away from this type of charge due to their poor reputation for water conservation. It is argued that they do not promote water NF User Xnte Report Apri! 2 2008 Final.doc 65 R.M. Loudon Ltd. 0.0 Water use/month. City of Niagara Falls Final Report 13'aler & Selvage Rate Structure Review Page 66 Of 78 conservation since the price ofwater declines as more water is used. But this reputation is more a matter of optics than reality. Like any other volumetric tariff structure, the declining block volumetric charge always provides the customer with an economic incentive to conserve water since the water bill always increases as the amount ofwater used increases. Declining block charges were originally designed to achieve an equitable allocation of costs among customers. Costs for building and operating the excess system capacity that is used to satisfy peak demands are recovered primarily from residential customers who, ~. ~ , as a customer class, are the main cause of peaks demands. The rate design is cost-based and is not meant to favour industry in order to promote economic Exhibit 30 Dccliniug block rate 0.0 Water use/month. the Volumetric Rate Monthly Water Bi^ NF User Rnte Report Apri122008 Final.doc 66 R.d1 London Ltd. City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 67 of 7$ Sample calculation of a customer bill with the DBR structure: Volumetric rates: 0 to 24 m3/month = $1.207/m', 24.1 to 200 m3/month = $1.000/ms, 200.1 to m3/month = $0.700/m3 Customer water use in ou~e month = 28 mj ~ Monthly water bill = ($1.207/m3 x 24 m3) + ($1.000/m3.x~Am') _ $32. 8.2.3 Increasing Block Rates (IBR) The block rate increases with inereasing,use. This strucinre is designed to encourage ~, a ._,~ C: water conservation The~fi st block for a customer class would be designed to cover the normal use of an auerage cust m~ in that class~For~subsequent blocks, the differential in the charge level sfiou`]zi be designed~tovgive a clear and strong economic incentive to the ;r. customer to conserve water. However rate,differentials between the blocks of 5%, 10% `.~~.`r or evenz25~oamay not bye enough to change water use by some domestic customers ~~ because total{water charges are still relatively low compazed to other utilities. This type `~{,~{ of charge ~s normallya,3appropriate for residential customers since they are the ones most -~~ likely to be causing peak seasonal demands (usually the hardest and most expensive to t.r# ~, supply). It would be suitable for industrial customers where water availability limitations outweigh the disadvantages of shifting the cost burden to the largest users. NF User Rate keport Aprr! 2 2008 Finnl.dor 67 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Strucku~e Review Exhibit 31 Increasing Block Rate Price/cu.metre i i i $0.0 I 0.0 Water use/month. Structure of the Volumetric Rate Sample calculation of a customer bill with Volumetric rate: 0 to 10 ms/month at $0.350/m3, ~ '7~ ] 0 to 25 m'/month at $0:700/m3, s ~.. 25.1+ m'/month at-$1 Customer water use ii ~ Monthly water bill r ($1.400~m'~x,(35 m3.- 8.2.4 Humpback Final Report ~Qe 6s ar7a Water bill/mo. e ater use/month. + ($0.700/m' x (25 m3 - 10 m')) + Bill This looks like and inverted "U" when the rates are graphed. It is a hybrid of the increasing and decreasing blocks. Calculation of hump back blocks requires an analysis of costs similar to the analysis used to set declining blocks. Costs are allocated to the same functional cost categories. The subsequent assignment of allocated costs to component blocks then creates a peak charge for the consumption block that captures most of the seasonal demand of residential customers. This format encourages conservation by residential customers by using the increasing block limits to encompass NF User Bate Report Apri] 21008 Final.dru 6g R.d9. London Ltd. Crry of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 69 of 7c4 residential usage, while at the same time offering large industrial users declining charges which reflect the economies of scale of providing such customers with water. Exhibit 32 Hump-backed rate Price/cu.metre ~~ i i i ~ ~_ $0.0 0.0 Water use/month. Structure of the Volumetric Rate Sample calculation of a customer b Volumetric charge: 0 to 25 m3/month at $0.6t70/m3, 25.1 to 75 m3/month at $1.400/m3, 35.1+ m3/month at)$0,600/m3 Customer water use in one month +`% ~ Monthly water bill s=;($0.600/m3 x 8.2.5 Lifeline Water bill/mo. i;; fir' $0.0 ~ - 0`0~ Water u e/month. ~ s Monthly Water Bill F. + ($1.400/m3 x 10 m3) _ $36.40 This format features atsubsidized volumetric charge covering an estimate of the minimum volume of water needed for to meet basic residential needs. They are designed to assist low-income households. Lifeline rates can be incorporated into increasing or decreasing block rate structures. NF User Rote Report Aprrf 2 2008 Finat.dor 69 R.M. LauJon Ltd City of Niagara Falls Water & Sewage Rate Structm'e Review Calculatio^ of a customer bill with the LR structure: Volumetric charge: 0 to 5 m3/month - $0.750/m3 5+ m3/month - $1.350hn3 Monthly meter charge: Customer water use in one mmath = 28 naj, -~ Monthly water bit l = $0.750/m3 x 5 m3 + $1 8.2.6 Seasonal Excess Use Rate This is a high volumed tc charge that t season in excess of athreshold'~Tkte tl g~~ ; ~, ~" peak season~onsumption or a modest winter demand. A base rate is used fo' season (2: Fina! Report ~ge 70 of 78 lies 1o all demand during the peak water demand hold is;'sgt equal to a customer's average off- ~_,.:. dhple of this amount, for example 1.3 times 1~--usage during the off-peak season and to lies below the threshold. NF User Rate Report Aprrf 2 2008 Final.doc 70 R.M. Lnndwr Ltd. City of Nagara Fa1Ts Water & Sewage Rate Structure Review Exhibit 33 Excess use rate Price/cu.metre Water 'til l/mo. t summer excess use threshold $0.0 ~ 0.0 Water use/month. Structure of the Volumetric Ratc Sample calculation of a customer bill with the Volumetric charge: >>' Base charge: $7.000/m3, ~,; Excess use charge: $3.145/m3 ~ ~ ~ x~ ~~ ~~ ~ ~ ~,.~ n. ~~~ , ~~ ~,. ~,.. 0.0 Excess use applied to demand abover1~20°/u of kvinter ccu~sumption ~. I t., Gustonaer;yJater use to one;month 16 m3 in the winter c~ 28 ntj in the summer Final Report ee 71 of 78 use/month. a'ter BiII -~ Winter btll ^~ , '-~ bv~, `.fir#~. } .., to winter $l 000/m ~~X~] 6 m3 = $22.00 _.~, In Summer = $1.000%m3 x (1.2x16 m3) + $3.145/m3 x (28 m' - 1.2x] 6 m~) _ $46.88 8.2.7 Seasonal Rate (SR) A seasonal rate is one that is higher than the off-peak rate and is charged to all water used during the peak season. The off-peak or base rate applies to water consumed during the NF User Rate Report Apn! 2 2008 Final.doc 7 I R. M London Ltd City of Niagara Falls Final Report Water & Sewage Rate Structtrr'e Review page 72 pf'78 remainder of the year. Seasonal charges promote water conservation where seasonal demands are the target of conservation efforts. The rationale for a seasonal charge is that peak demands require over sizing of supply facilities relative to the capacity required to meet demand for most of the year. With a seasonal charge, the extra costs of this excess capacity are recovered directly from that component of demand that causes those costs. Rxhibit 34 Seasonal Rates Price/cu.metre w aier summer rate bill/mo ;~,~,;._~ summer winter rate $0.0 0.0 Water use/month': Structure of the,Volumetric Rates==-. Sample calculation=of a 1.000/m', Peak season rate:~$1t462/m3 bill with structure: winter charge Water use/month. Monthly Water Bill Customer water use zn oiae month = 28 m3 in the sumrner and 16 m3 in the winter ~ Monthly water bill In winter = $1.000/m3 x 16 m3 = $16.00 In smnmer = $L462/m' x 28 m3 = $40.94 NF User Rafe Repow Aprit 2 2008 Fina! doc 72 R.M Landon Lrd City of Niagara Falls Water & Sewage Rate Structure Review 8.2.8 Multiple or Combined Rate Formats Final Report rze 73 of 78 Some municipalities will apply different rate formats to different customer categories. On combination frequently encountered is increasing block rates for residential and decreasing block rates far ICI customers. Another applied by Toronto is a humpback rate up to large customers and a declining block afrer the upper hunchback rate threshold is exceeded. NF User Rate Report ~pri122008 Final.doc 73 R.M. Loudon Ltd City of Niagara Falls Final Report Grater & Sewage Rate Structure Review Page 74 of 78 9 Attachment 1 -City of Niagara Falls -Study of Water & Sewer Rates Following Metering -Final Report November 2000 -Loudon & Fortin (See following pages numbered 1 to 16) NF User Rate Report Apri121008 Fina(.doc 74 R.M. Loudon Ltd. City of Niagara Falls Study of hVater & Sewer Rates Following Metering Final Report CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING SYNOPSIS This report reviews the current water and sewer rates and makes recommendations on future rates to be implemented as a result of the metering program. The level of the rates is based on preliminary budget data and should be reviewed and revised based on final budget data once it is available. The following swnmarizes the report findings: • Metering Program -The City has completed the metering of approximately 22,500 customers billed flat rates. Most of these are residential, but there are a few commercial customers. Current Situation -There are approximately 3,100 customers currently billed metered rates. The current rates are two-part with a fixed charge variable by meter size and a volumetric charge with 6 declining rate blocks. Proposed Two Part Rates -The proposed rates are also two-part with a fixed charge variable by meter size and a volumetric charge. The proposed volumetric charge is single block-there are no reduced volumetric rates for large volume users. This proposed change to a single rate block is recommended due to the fact that water is purchased wholesale from the Region at a constant rate for all usage and as a result there are no large-volume savings realized by the City that could be passed on to large volume users. Water/Sewer Combined -The sewer charges are currently billed as a 150% surcharge on the water bill. The City 2000 water and sewer budgets are prepared with the water and sanitary sewer costs combined. As a result, a single combined water and sewer rate has been calculated. This approach is increasingly used as it simplifies the customer billing and improves the flexibility of financially managing the water and sewer utilities. Toronto has followed this approach for years. Recommended Volumetric Rate Option -Two options are provided for the volumetric rates. Option 1 links the retail volumetric charge to the Region's volumetric charges. The volumetric charge would recover about two-thirds of the user rate revenues. Option 1 is recommended since it minimizes revenue uncertainty while maintaining a high enough proportion of charges based on volume to encourage conservation. Option 2 is provided as an alternative. It allocates 80% of the costs to the volumetric charge, which would increase the conservation element, would allow more control by customer's of their water bills, but would decrease revenue security during years with low seasonal use. Recommended Service Charge Option -Two service charge alternatives are provided. Alternative A is a single service charge for all customers. It has the advantage of simplicity. Alternative B has service charges variable by meter size. This is recommended as it more closely allocates the costs to each customer. This is the same approach as is currently used, except that the service charges proposed are higher for larger sized meters than those currently applied. • Implementation - An implementation plan is suggested in Section 8 of the detailed report. NFRateReport. doc 1 Lotrdan & Fa~tin City of Niagara Falls Study of T~ater & Senrer Rates Following Metering Final Report Proposed 2001 Water/Sewer Rates (monthly) -Recommended in Bold Italics Option ] (Volwnetric rate recovers Regional charges) Option 2 (Volumetric rate recovers 80% of costs) Volumetric Rates ($/cubic metre) $1.309 $1.549 Service Charges - A -Single Uniform Charge $26.235 $16.182 - B -Charge Variable by Meter Size 15 mm $22.54 $13.90 18 mm $22.54 $13.90 25 znm $22.54 $13.90 37 mm $56.35 $34.75 50 mm $135.23 $83.41 75 mm $270.46 $166.82 100 mm $495.84 $305.83 150 mm $946.61 $583.85 200 mm $1,690.37 $1,042.59 NFRareReport doe 2 Loudon & Fortin nr_.._„,x_._ ~nnn City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING DETAILED REPORT INTRODUCTION During 1999 and 2000, the City of Niagara Falls has carried out a program of installing meters on the water services to all customers. Formerly only non-residential customers were metered. The metering program mostly is for single family dwellings, but has had the benefit of identifying some other larger customers that escaped metering in the past and that are also now being metered. A previous study was carried out of water rates following metering that provided preliminary rates recommendations. That study recommended two-part water rates with a single volumetric charge and a service charge variable by meter size. The method used was as set out in the Canadian Water & Wastewater Association Municipal Water Rate Manual. In the following study, the estimate of water consumption following metering has been refined based on preliminary readings taken on the newly metered customers. Expenditure data is also based on preliminary 2001 budgets. CURRENT WATER & SEWER RATES The 2000 water and sewer rates are as follows: Exhibit 1 2000 Volumetric Water User Rates (quarterly basis) Block limits (gallons/ uarter) Industrial $/000 gallons Commercial & Residential $/000 gallons 0 to 99,000 $3.13 $3.52 100,000 to 199,000 $2.74 $3.13 200,000 to 299,000 $2.35 $2.74 300,000 to 499;000 $2.20 $2.35 500,000 to 699,000 $2.04 $2.20 700,000 & over $1.87 $2.04 Note that some larger metered customers are billed monthly rather than the quarterly basis used for most metered customers. ' City of Niagara Falls Residential Water Metering Study Financial Analysis-prepared by Fortin & Loudon in conjunction with Acres & Associated Limited- August 1998 ' NFFtaleReport.doc 3 _ (.oudan & Fortin Ciry of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 2 2000 Service & Minimum Charges (quarterly) Meter Size Service Charge Minimum Bill (millimetres) ($/quarter) Charge ($/quarter) Nominal Volume Allowance (m3 / uarter) -see note IS mm $].25 $43.00 11,000 18 mm $2.00 $57.00 ] 5,000 25 mm $2.50 $95.00 26,000 37 mm $3.00 $155.00 44,000 50 mm $4.00 $231.00 66,000 75 mm $7.50 $385.00 125,000 100 mm $12.00 $768.00 285,000 150 mm $30.00 $1,158.00 529,000 200 mm $50.00 $1,932.00 967,000 NOTE: The minimum consumption allowance volume is approximate only. The dollar volume is applied rather than the published volume. The metered rates are mostly applied every three months (quarterly). The flat rate charge is billed every four months at $82.46. Sewer charges are levied on the water bill as a surcharge. The sewer surcharge is currently 150% of the water charge. CUSTOMERS By the time the metering program is complete, about 22,500 unmetered customers are expected to be converted to meters. When added to the 3,100 customers previously metered, this wil] bring the total number of meters to the following: NFRateReyort.doc 4 Loazdon ~ Farlin nr,.,.,, _,r,,,.. ~nnn City of Niagara Falls Sludy of Water & Sewer Rates Following Meterir7g Final Report Exhibit 3 Number of Metered Customers by 2001 Meter Size (millimetres Nwnber 15 mm 24,250 18 mm 387 25 mm 343 37 mm 221 50 mm 291 75 mm 52 100 mm 42 I50 mm 18 200 mm 3 Total 25,607 CONSUMPTION Wholesale -The City pays wholesale charges for the volume of water supplied and the sewage treated by the Region of Niagara, which is responsible for this service. The City only has jurisdiction over the retail operation of distributing water and collecting sewage. The Region charges the same wholesale rates year-round and to all of the area municipalities. The wholesale rates over the past 3 years are as shown below in Exhibit 4. Exhibit 4 Niagara Region Water & Sewer Charges ($/m') Water Sewer 1998 $0.275 $0.465 ~ ~ 1999 $0.291 $0.479 2000 $0.300 $0.489 The 1999 water and sewage volumes which the Region billed the City are summarized in Exhibit 5 below: NFRateReport.doc 5 Loudon & Forlin ai,...,,.__a _.. ~nnn City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 5 1999 Water & Sewage Volumes Billed to Niagara Falls by Region (m') Month Water Sewer January 1,269,279 1,821,812 February 1,122,577 ],754,075 March 1,233,599 1,836,082 April ],274,006 1,738,828 May 1,746,304 1,6] 6,411 June 2,242,640 1,582,608 July 2,820,323 1,723,472 August 1,849,745 1,814,831 September 1,661,525 1,666,689 October 1,441,157 1,697,414 November 1,297,101 1,73 9,527 December 1,315,656 1,747,952 Total 19,273,912 20,739,701 The monthly water and sewage flows billed by the Region starting in 1998 and up to September 2000 are graphed in Exhibit 6. This graphically illustrates the normal seasonality of the water purchases. Monthly water flows in the summer of 1999 reached almost three times the spring level. There was much less of an increase in 2000, a wet year. The sewage flows, on the other hand, show less variation, with only a modest decrease in the summer and occasional higher flows in the spring and fall, no doubt due to inflow and infiltration. There are sewage flow variations in the summer of2000 are not consistent with historical trends, but could relate to the dates that the meters were read. NFRa~eReportdoc 6 Loudon & Fortin nr,,..,,_,+..._ ~nnn Cit)~ of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 6 Niagara Falls Monthly Water & Sewage Flows NIAGARA FALLS MONTHLY WATER & SEWER FLOWS a so _ (000,000 m3) 0 3 00 m 1~~';`~f=~' ~ '7`z ~'x*'~ ~ ` ,.~ -"~ '~','• -a-Water F Sewer , m 150 - ~li~a- ~ •>;r :~. -~R ~}fl ~ Ja Ma Ma J Se No Ja Ma Ma J Se No Ja Ma Ma J Se n- r- Y- ul- P- v' n- r' Y- ul- P- v- "- r- Y- u~- P- 98 98 98 98 98 98 99 99 99 99 99 99 00 00 00 00 00 Month Consumption by Currently Metered Customers-There are about 3,100 customers currently charged metered rates. Most are billed quarterly, but the larger customers are billed monthly. Their consumption for the past 2 years is as shown in Exhibit 7. Exhibit 7 1998 & 1999 Mctered Customer Consumption (mJ) 1998 1999 Quarterly metered 7,172,986 6;736,805 Monthly metered 671,582 699,483 Total metered 7,844,568 7,436,288 Pumpage 19,541,564 ] 9,646,127 Unnetered use 11,696,996 12,209,839 Unmetered Use - To narrow down the likely range of wait consumption by the newly metered customers, meter readings were specially taken in May and June of all meters installed to that point. There were 17,823 meters read. There were 105 customers with meter reading dates errors. There were some very large meter readings -the largest 10% or 178 customers were as a result treated separately. The results of the reading program are summarized in Exhibit 8. ,NFRateReport.doc 7 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 8 Newly Metered Customer Consumption Results Summary to June 2000 Descriptio^ Number of Customers Average Total Monthly Consumption (m3 /month) Unit Consumption (m3/month/customer) Date errors (note 1) 49 N/a N/a 0 reading 56 0 N/a Normal residential ] 7,540 431,865 24.6 Larger customers 178 38,158 214.4 Normal + Larger 17,648 470,023 26.5 Note: The reading dates were not feasible such as1980 installation or installation date after the date of the latest meter reading The customer name and address, meter serial number; meter installation and reading dates and volumes were input in Excel spreadsheet format. Meter installation was spread out from about May 1999 until the date of the special readings. The average monthly usage for all customers was 26.5 m3/month. Much of this consumption was not in the summer. Only about 20% of the customers had been metered by the end of last summer. The customers are mostly residential, but there are some non-residential customers including some larger users. Jf the largest 1 % of users is removed from the calculation, the average use drops to 24.5 m3/month. 99% of the customers used less than 90 m3/month. Usage by the top 1%ranged up to in excess of 1,000 m3/month. Exhibit 9 illustrates the average consumption by customers and includes the variance in level depending on how long customers have been metered. Customers that have been metered the longest include both summer and winter usage. These are plotted on the right hand side of the graph. The average monthly consumption level of customers that were metered prior to July 1999 was about 29.5 m3/month. These customers were metered for a full year. But as customers are progressively metered and customers with only winter consumption are included in the average, the level drops. This can be seen by as the vertical bars get shorter during the winter since usage by these customers only includes winter usage. NFRateRepori. doe $ - Lo¢~don & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 9 Consumption vs Mmith When Customer Metered CONSUMPTION versus MONTH WHEN CUSTOMER METERED I ao 100% 29 ~'.?~- ~~"' fi ®Average Usage ~.3,TM ;K ~ > so% ~ ~ ~' ~-* ~ ~Perce n t Metered ~.ep~r~ ~'' £'. Bg% 20 gq .yy _ ~" o o ='»=32- 2J _v..exa; ` F ~.. a'Bk....,.-~e~E':¢a.'_`t " ` z m<:~ z"`ra 60% as O N W is m ~ ~y ~ ., y=am.- :: 9 ~ c ~ t ~ - _ ~ "- ~ ~ - 2e% a Q 24 ~ - ~ "'~ W Jun-99 M apW AprvW fAar-W Fe0-W Jan-00 Dec-99 Nov-99 Ocb 99 Sep~99 Aug~99 Jul -99 Month Based on the initial consumption levels, and recognizing the fact that summer usage is much higher than winter, ii seems feasible that the average usage for these newly metered customers might well be about 28 m3/month. Unmetered use is a combination of unaccounted for water (UFW) losses such as watennain leakage, hydrant flushing, sewer flushing etc plus water used by unmetered customers (i.e, flat rate customers). Exhibit ] 0 illustrates possible combinations of UFW and unmetered customer consumption in 1998 and 1999 based on 22,500 unmetered customers. An average level of 28 m3/month /customer over a full year is equivalent to 23%UFW. This is relatively high, but not unreasonable compared to previous staff estimates of about 19% UPW. Full meter reading will clarify this calculation. Ifthe top ]%ofnewly metered customers are excluded, then this is equivalent to about 26 m3 /month /customer for residential customers. In the original metering financial studyZ it was concluded that residential usage by unmetered residential customer is about 27 m3 /month /customer. That conclusion was based on other municipalities as well as a small sample of metered flat rate customers in the City. 2 City of Niagara Falls Residential Water Metering Study Financial Analysis-Draft Discussion Paper- Fortin & Loudon in association with Acres & Associated Ltd.-August 1998 page 14 NFRateReporr. doc 9 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 10 Possible Combinations of Unmetered Unit Consumption vs UFW Impact of Metering -Experience with the impact of metering varies. There are many influences, primarily cost level and amount of discretionary use (primarily summer use). Often there is an initial impact followed by a rebound, since the water is not really high compared to other utilities. Water and sewer combined is less than cable television charges. A typical residential customer is likely to use in the range of 18 to 22 m3/month, based on experience in other similar Ontario municipalities. Excluding the I% largest users in the newly metered group, the likely consumption now is about 26 m3/month. According to research by Environment Canada3 reduction in water use doe to metering is likely to be 30% or more. A drop to 20 m3/month afrer metering would represent a decrease from 26 m3/month of 23%. Combining this information, it is asswned that consumption will drop by 25% in the first year. The level of consumption following metering is calculated in Exhibit 12. ~ Guidelines for Municipal Water Pricing -Environment Canada - McNeill and Tate -page 7 NFRatel<eporl.doc ]Q Loudon & Forlrn v_..,. _.i_.. ~nnn City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report 5 Financial The 2001 draft water and sewer budget has been prepared with water and sewer costs combined. In the past these costs have been kept separate and the water and sewer tariffs set separately. There is a trend in Ontario towards issuing a single combined water and sewer charge -see Section 6 below. The water and sewer budgets are summarized in Exhibit 1 I . Exhibit ll 2000 Budget & 2001 Draft Budget BUDGET Revenues Sewer Surcharge 14338000 13514300 13514300 Water Sales 9677000 11347400 11347400 Service Charges 89000 40000 34000 74000 Sewer Lateral Cleaning Fees 25000 25000 25000 Discount -612000 p Total 23517000 11412400 13548300 24960700 Expenditures Administration 832500 245600 245600 491200 Regional Charges 16244600 5500000 11300000 16800000 Sewer Maintenance & Operation 2105100 2214300 2214300 Water Maintenance & Operation 1230300 1296500 1296500 New & Replacement Mains 450000 1000000 1000000 New Equipment 17500 17500 17500 Contribution to Capital Budget 720000 1000000 1000000 Water Metering Program 50000 61000 61000 Cathodic Protection 250000 600000 600000 Debt Charges 1617000 1196500 283700 1480200 Total 23517000 10917100 14043600 24960700 USER RATE REVENUE REQUIREMENTS Total Expenditures 23517000 10917100 14043600 24960700 Less Other Revenues Water Sales 89000 40000 34000 74000 Service Charges 25000 25000 0 25000 Sewer Lateral Cleaning Fees -612000 0 0 0 Total -498000 65000 34000 99000 User Rate Revenue Requirements 24015000 10852100 14009600 24861700 Less Regional Charges (in volumetric rates) 16244600 5500000 11300000 16800000 Local Costs (in fxed charge) 7770400 5352100 2709600 8061700 NF2ateReport.dac 1 j Laudon & Portire Caty of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Tariff Calculations The current water tariffs are two-part with both fixed (variable by meter size) and volumetric (decreasing block). The following is recommended: • That water and seeder tariffs be billed as one combined rate. This is done in several municipalities in Ontario, the largest being the City of Toronto. This was also the practice followed in many of the six local municipalities in Metropolitan Toronto previously. The Town of Markham has also followed this practice for many years. The Town of Markham is similar to the City ofNiaga~~a Falls with respect to their being the retail provider of water and sewer services inside the Region of York which bills for both wholesale services based on volume (both water and sewer are billed based on water volumes at the wholesale level, however). This year the Town of Newmarket has also switched to a combined water /sewer charge. The use of a combined charge provides much greater flexibility with regard to budgeting these services and allowing for annual revenue fluctuations. Eliminate Declining Block Rates -There is little or no cost justification for declining block rates in Niagara Falls. There are economies of scale for large wafer users, but these occur mostly in the water production area, which is a Regional responsibility. It does not affect the City's costs. The following comments are also added regarding the water and sewer rates: Note that the use of water consumption as a basis for billing sewer charges is common in Ontario. This is the most feasible way of approaching user pay for recovering sewer costs. Water meter readings are a surrogate for measuring sewage flows. During 1999, total Niagara Falls sewage flows billed by the Region were close to total water flows, only about 6% higher and in 1998 sewage flows were about 10% higher than water flows. In Niagara Palls, as in most other municipalities, customer metered water flows are used in the calculation of a customer's sewage charges. Overall this is a fair way of achieving user pay for the sewage costs. It is meant to allocate sewer costs in proportion to each customer's use of the system. Although there are flow differentials between water and sewer systems due to seasonal water use in the summer and for sewer due to inflow and infiltration, these variations more or less even out over the year. The use of water consumption is a reasonable surrogate for sewage flows and is the only practical way of achieving user pay for sanitary sewer charges. Seasonal Charges -Note Chat water consumption normally has a very high seasonal component in Niagara Falls. Water consumption in the summers of 1998 and 1999 exhibited very high increases -see Exhibit 6. The wet summer of 2000 showed very little increase. Since the cost of meeting summer peaks occurs at the Regional level; there is little justification for the City to consider seasonal rates. This may have to be reconsidered if the Region decides to utilize some form of seasonal rates to moderate the high summer peak water flows. The combined water and sewer rates are calculated in Exhibit 12. NFRateReport.doc 1 Z Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 12 Proposed 2001 Water Rate Calculation Step 1 -Consumption (cubic metres) Consumption Current Consumption Levels Reduction Level for Consumption Cons. Cons. Due to Metered Rate Customers lmo.lcust. Monthly Annually Meterin Calculation Metered now -billed quarterly 6700000 1 % 6633000 Metered now- billed monthly 700000 1 % 693000 Newly metered -tap 1% 178 x 241 = 42898 514776 15% 437559.6 Newly metered -residual 22322 x 24.6 = 549121.2 6589454.4 23 % 5073879.888 Total Annual (with resulting percentage difference) 14504230.4 11 °/ 12837439.49 Volume Usetl for Rate Calculation (m'J 12837439.49 Step 2 -Volumetric Rate Calculation Option 1 -Volumetric Rate Recovers Regional Charges Annual Regional Charges = $ 16,800,000 Volumetric Charge = $ 16,800,000 > 12837439.5 Op[ion 2 -Volumetric Rate Recovers 80% of Costs Cast Share = $ 24,861,700 x 80% Volumetric Charge = $ 19,889,360 - 12837439.5 Step 3 -Service Charee Calculation _ $ 1.309 !cubic metre _ $ 19,889,360 _ $ 1.549 1 cubic metre Cost included in service charge A -Single Uniform Service Charge Number of Meters Monthly Charge ($lmon[h) B -Variable Service Charge -Varies by Meter Size (see also chart below) Option 1 Option 2 Local Costs 20% $ 8,061,700 $ 4,972,340 25607 25607 $ 26.235 $ 16.182 Meter Size Meters Allocation Raiio Equivalent Number of Meters Service Char e ($Imonth) Option 1 O lion 2 15 mm 24250 1.0 24250 $ 22.54 $ 13.90 18 mm 387 1.0 387 $ 22.54 $ 13.90 25 mm 343 1.0 343 $ 22.54 $ 13.90 37 mm 221 2.5 552.5 $ 56.35 $ 34.75 50 mm 291 6.0 1746 $ 135.23 $ 83.41 75 mm 52 12.0 624 $ 270.46 $ 166.82 100 mm 42 22.0 924 $ 495.84 $ 305.83 150 mm 18 42.0 756 $ 946.61 $ 583.85 200 mm 3 75.0 225 $ 1,690.37 $ 1,042.59 Total 25607 29807.5 Two options are provided: Option 1 -Recover Regional Volumetric Charges from Volumetric Rate -This approach is based on revenue security plus relating obviously variable charges to the volumetric rate and largely fixed charges to the fixed service charge. It is a fair approach. Unfortunately, the conservation aspect of metering is weakened since only about two-thirds of costs in the volumetric rate. Option 2 -Recover 80% of Costs in the Volumetric Rate -This alternative would recover al] of the Regional costs in the volumetric rate, plus some of the City costs. It would have a higher conservation element, which may translate into reduced usage and reduced Regional charges as a result. NFRateReport.doe ] 3 Loudon & Fortin Ciry of Ariagara Falls Study of Water & Sewer Rates Following Metering Final Report The service charge is calculated both as (A) a single charge for all customers and (B) one variable by meter size. The volumetric rates and service charges are provided in Exhibit 12. Impact The impact of the proposed rates compared to the current rates is provided in Exhibit 13. For flat rate customers, those that use below average volumes pay less and above-average users pay more. The average customer pays slightly less. For currently metered customers, most pay more due to the elimination of the volume discounts. 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W oo= ~ ~ o~ ~xJZ~ m o ~ m v, m a mmmrv m mm vn ~~nm a ~~~w m O w mwrn»o.mmww m a a a ~nmma~ m Nvmm m O o m NNN r <m ~NVmm m~mMm4~y Wbi tAW O n. m N W N n U L ~ ~ N m VI O N O a CU ~--N u o E 3 ` ~ O d a > m N O N O O O O O O N N m O~ n` ~ O L E U ~ N m v) n 0 L ~ .- N U d -- u ~ E L N O Yl IO V m M O O N Y mrvv ~ ~ .m o°om a m Nv mmm E L o m N v a n 0 ., ~mwN o m oU N .-NO ~ in a .n m m o m m m N r mom a .- ~ " r mm~noa m ~navv E 000000 0o0a00 dtt w wwwwww ~»asmwai b p,' n d V g O O O r N N o m a:' mn0mm- m 0 N ~~ : E N .-Nord ~ e m m _ c y o E Y ~ E 0 0 0 ^ o v U > 0 E U S C O > O 4L N c 0 o z i 0 v C z City of Niagara Falls Study of Water & Sewer Rales Following Metering Final Repw~t Implementation The following suggestions for implementation are made. • There should be public notices in advance of the impending rates and how they might affect customers. • The bill should include a phone number where customers can ask questions about their bill. • The new tariffs should not be first applied during the summer season as the differentia] from the flat rate charges will highest at that time. • The billing staff should be prepared to answer questions about why customers' bills have changed. They should also be helpful in suggesting ways to reduce usage. • Also there will be high residential water users who will not be happy with paying for what they use. It must be emphasized that this is now a user pay system and that customers have a measure of control over the size of their bill. • For larger customers, notification should go out in advance of their expected increase. This will often avoid adverse reaction once the bills are received. • Some municipalities choose to initially send out demonstration bills to illustrate the potential impact of the metered rate charges, so that customers can adjust usage before the real billings start. NFRateReport.doc I ( Loudon & Fortin City of Niagara Falls Water & Sewage Rate Structure Review Final Report gee 75 of 78 10 Attachment 2 -City of Niagara Falls Report F-2000-74 -Utility Rate Structure (See following 16 pages-not numbered) h'F User Rote Report ~pri! 2 2008 Final.dac 75 - R.M Loudon Ltd. Corporate Services Department The City Of Finance Niagara Fall 4310 Queen Street P.O. Box 1023 COr10d~ Niagara Falls, ON L2E 6X5 web site: www.city.niagaratalls.on.ca Tel: (905)356-7521 Fax: (905) 357-2016 E-mail: kburden@ci[y.niagarafalls.on.ca December 11, 2000 Alderman Wayne Campbell, Chair and Members of the Corporate Services Committee City of Niagara Falls, Ontario Members: Re: F-2000-74 -Utility Rate Structure RECOMMENDATION: F-2000-i4 Ken Burden Director I) That the proposed use-based billing structure be adopted for determining water/sewer utility rates and 2) That the proposed use-based billing structure be applied to the 2000 Budget expenditures to set rates for the new Water By-law. BACKGROUND: In February of 1999, Council approved the installation of water meters for the residential sector. Council permitted the flat rate billing structure to continue until Staff could study and recommend a use-based billing structure that provides for the equitable distribution of costs. In the spring of 2000, R.M. Loudon Ltd. was engaged to assist Staff with the study of future rate structure recommendations. A copy of the Consultant's Report is attached for the Committee's consideration. The basicsecommendation from the consultant's report provides for atwo-part rate structure. The first part is a service charge distributed on the basis ofthe number ofineters (constant rate regazdless of meter size) or the number and size of meters (vanes with meter size). 't'his service chazge funds the maintenance ofboth the water and sewer systems. It is chazged commencingwith the connection of a private water system to the City water system and terminates when the private water system is permanently disconnected. The second part of the rate structure is the volumetric or consumption charge. It is designed to fund the expenditures for water and sewer chazges from the Region. The volumetric charge only occurs when water is consumed. Working Together to Serve Our Community Clerk's Finance Human Resources In/ormation Systems Legal Planning & Development December 11, 2000 - 2 - P-2000.74 Staff recommends that the utility rate structure be based an the service charge that apportions maintenance expenditures based on meter size, and a volumetric charge that allocates water and sewer services charged to the City by the Region. This rate structure distributes the Water/Sewer Utility Expenditures equitably among ratepayers and provides ause-based system that fairly charges the small consumption ratepayers or those ratepayers who have historically controlled usage through conservation methods. . Restating rates for the 2000 Budget according to this recommended utility rate structure indicates that the average residential consumer will find this rate structure revenue neutral, low consumption consumers will save but high consumption consumers may experience billing increases (Exhibit 1). Commercial consumers as shown in Exhibit 2 may experience billing increases, however, the rates as proposed equitably shaze the cost of the Water/Sewer Utility among the consumers that are serviced by the City. In addition, Staff also recommends that rates based on the 2006 Budget be shown in the new Water By-law until the 2001 Budget is adopted by Council. With the adoption of the 2001 Budget, the schedules of rates accompanying the Water By-law will be amended accordingly. Prepared by: Re~tfully submit T~ ~ E.P. Lustig Manager of Revenue Chief Administrative Officer Recommended by: ~~~.~ ~~~ K.E. Burden Director of Finance Approved by: V ~P6lti~ T. Ravenda Executive Director of Corporate Services Attach. N.~NRFILFS~Cwmw~K\F-xo00-l~. Uiny 0.a~~ S~~uc~ve.wp] a r x w o C `'' O ~ y , 1 ~ ~ y O M ~ N `` / ~ ~~. 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M1~ V OlD 1~ (O cNc~~r ~`7 ~. C, M of N c`') V N Cr0 d ~ LLI ~ co mooo~mo~m U(D (DO V OWN N ooeooaiuircov W Nf~O N(O I~ f~f~ r~ '~1 O V W V O W NN.N W OM~)~ Nr NN ~f ~~~ '~ IA fA Vi N3 w N L 0 0 0 0 0 0 0 ~ L 0 0 0 0 0 0 0 N ~- 0 0 0 0 0 0 0 ~ ~u~oooooo r W O O ~ cu~oooo0o V ~ LrOrN y ~~nooooo0 QrO M ~ N~M O ~ E i ~NM V 'U d M ~ ~ c - ' V ~ ~ ~ U o. 7 U a 7 U d °' CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES F®LLOR'ING METERING DETAILED REPORT INTRODUCTION During 1999 and 2000, the City of Niagaza Falls has carried out a prol,~ram of installing meters on the water services to all customers. Formerly only non-residential customers were metered. The metering program mostly is for single family dwellings, but has had the benefit of identifying some other lazger customers that escaped metering in the past and that are also now being metered. A previous study was carried out of water rates following metering that provided preliminary rates recommendations. That study recommended two-part water rates with a single volumetric charge and a service chazge variableby meter size. The method used was as set out in the Canadian Water & Wastewater Association Municipal Water Rate Manual. In the following study, the estimate of water consumption following metering has been refined based on preliminary readings taken on the newly metered customers. Expenditure data is also based on preliminary 2001 budgets. 2 CURRENT WATER & SEWER RATES The 2000 water and sewer rates aze as follows: Exhibit 1 2000 Volumetric Water User Rates (quarterly basis) Note that some lazger metered customers are billed monthly rather than the quarterly basis used for most metered customers. Exhibit 2 2000 Service & Minimum Charges (quarterly) ;TS_mm $L2s_--- -$43.00_.___... _--.. ___ x1,000 _. _..-----------~ j 78mrit _; $2:00 $5T.00__ __ ' I5,000- _.__..-_- _ - ---- 25 Trim $2.50 ..._ ;..$95:00. _ 26;000 -- _. _- --- -~ 37 inm ' $3:00 _ $155.00___. - -_ i-44,000 _ --- 50nim ! $4:00--- : $23T:00 _ - _ ~b6~006___ __.._._. _ 75 miii ; $7:50---__ $385:00._ - - __ -I25;000 ~ -_ _. ` I~0 mm ~' $12 00 -- `-$768 00 - - - ~ 283;000 --- -.-- - -.----i volume is applied rather than the published volume. The metered rates are mostly applied every three months (quarterly). The flat rate chazge is billed every four months at $82.46. Sewer charges aze levied on the water bill as a surcharge. The sewer surchazge is currently 150% of the water chazge. 3 CUSTOMERS By the time the metering program is complete, about 22,500 unmetered customers are expected to be converted to meters. When added to the 3,100 customers previously metered, this will bring the total number of meters to the following: Ezbibit 3 Number of Metered Customers by 2001 i uu mm ISO inin - -260 mrn- 4 CONSUMPTION Wholesale -The City pays wholesale charges for the volume of water supplied and the sewage treated by the Region of Niagaza, which is responsible for this seance. The City only has jurisdiction over the retail operation of distributing water and collecting sewage. The Region charges the same wholesale rates year-round and to all of the azea municipalities. The wholesale rates over the past 3 yeazs are as shown below in Exhibit 4. Exhibit 4 Niagara Region Water & Sewer Charges ($/m3) ater ewer ..1998. _ _ _.. _ .. _ $0275 - _ _ $0.4b5 --_. i_Ig99 _ __ __ --$0:291__._..- - _- __. .86:479 _ X000_ __ _ ___ _ --~ $0:300 -__ ---- __-- -$0:89- The 1999 water and sewage volumes which the Region billed the City are summarized in F~xhibit 5 below: Exhibit 5 1999 Water & Sewage Volumes Billed to Niagara Falls by Region (m3} on ater I ewer I anuary i , , > e ruary , , , azc ~ , , - , I Pn , , _ aY ; , , j une , , , uy ~ ,~•, I ugust , ~,8' eptem er I , > , i cto er ~i , , - , - , ovem er , , ~ eeem er , , ' > o I , , , The monthly water and sewage flows billed by the Region starting in 1998 and up to September 2000 are graphed in )Exhibit 6. This graphically illustrates the normal seasonality of the water purchases. Monthly water flows in the sutrimer of 1999 reached almost three times the spring level. There was much less of an increase in 2000, a wet yeaz. The sewage flows, on the other hand, show less variation, with only a modest decrease in the summer and occasional higher flows in the spring and fall, no doubt due to inflow and infiltration. There are sewage flow variations in the summer of 2000 aze not consistent with historical trends, but could relate to the dates that the meters were read. Consumption by Currently Metered Customers -There are about 3,100 customers currently chazged metered rates. Most aze billed quarterly, but the larger customers are billed monthly. Their consumption for the past 2 yeazs is as shown in Exhibit 7. Exhibit 7 1998 & 1999 Metered Customer Consumption (m3) _ _ _ 1998 _. _. - _- - _ ._1999 -- _ -- -- __ uarterlymetered _ __ 7772,-986 - - 6;73b;365_ - "" "" Monifilymetered _ ' b7I;582........__._...._._ ... ----_ b99-483 -_._. _..._--- Total meieied f 7;844568 _ _ -7,436;288 _ - Pumpage _ __ ]9;541,564 _ 19;646,12 Unriietered use- ; ] 1696,996 - -i2;2~9,839 - `- Unmetered Use - To narrow down the likely range of unit consumption by the newly metered customers, meter readings were specially taken in May and June of all meters installed to that point. There were 17,823 meters read. There were 105 customers with meter reading dates errors. There were some very lazge meter readings -the largest 10% or 178 customers were as a result treated separately. The results of the reading program aze summarized in Exhibit g. Exhibit S Newly Metered Customer Consumption Results Summary to Tune 2000 Larger customers after the date of the latest meter reading The customer name and address, meter serial number, meter installation and reading dates and volumes were input in Excel spreadsheet format. Meter installation was spread out from about May 1999 until the date of the special readings. The average monthly usage for all customers was 26.5 m3/month. Much of this consumption was not in the summer. Only about 20% of the customers had been metered by the end of last summer. The customers aze mostly residential, but there are some non-residential customers including some lazger users. If the lazgest 1 % of users is removed from the calculation, the average use drops to 24.5 m3/month. 99% of the customers used less than 90 m3/month. Usage by the top 1 % ranged up to in excess of ],000 m3/month. x ' i illustrates the average consumption by customers and includes the variance in level depending on how long customers have been metered. Customers that have been metered the longest include both summer and winter usage. These are plotted on the right hand side of the graph. The average monthly consumption level of customers that were metered prior to July 1999 was about 29.5 m3/month. These customers were metered for a full year. But as customers aze progressively metered and customers with only winter consumption are included in the average, the level drops. This can be seen by as the vertical bars get shorter during the winter since usage by these customers only includes winter usage. Based on the initial consumption levels, and recognizing the fact that summer usage is much higher than winter, it seems feasible that the average usage for these newly metered customers might well be about 28 m3/month. Unmetered use is a combination of unaccounted for water (UFW) losses such as waterrnain leakage, hydrant flushing, sewer flushing etc plus water used by unmetered customers (i.e. flat rate customers). xhibit 10 illustrates possible combinations of UFW and unmetered customer consumption in 1998 and 1999 based on 22,500 unmetered customers. An average level of 28 m3 /month /customer over a full yeaz is equivalent to 23%UFW. This is relatively high, but not unreasonable compared to previous staff estimates of about 19%UFW. Full meter reading will clarify this calculation. If the top 1 % of newly metered customers aze excluded, then this is equivalent to about 26 m3 /month /customer for residential customers. In the original metering fmancial study it was concluded that residential usage by unmetered residential customer is about 27 m3 /month /customer. That conclusion was based on other municipalities as well as a small sample of metered flat rate customers in the City. Impact of Metering -Experience with the impact of metering varies. There are many influences, primarily cost level and amount of discretionary use (primarily summer use). Often there rs an initial impact followed by a rebound; since the water is not really high compared to other utilities. Water and sewer combined is less than cable television chazges. A typical residential customer is likely to use in the range of 18 to 22 m3/month, based on experience in other similar Ontario municipalities. Excluding the 1% largest users in the newly metered group, the likely consumption now is about 26 m3/month. According to reseazch by Environment Canada reduction in water use doe to metering is likely to be 30% or more. A drop to 20 m~/month after metering would represent a decrease from 26 m;/month of 23%. Combining this information, it is assumed that consumption will drop by 25% in the first yeaz. The level of consumption fol}owing metering is calculated in Exhibit 12. Financial The 2001 draft water and sewer budget has been prepared with water and sewer costs combined. In the past these costs have been kept sepazate and the water and sewer tariffs set separately. There is a trend in Ontario towards issuing a single combined water and sewer charge -see Section 6 below. The water and sewer budgets aze summarized in Exhibit 11. Tariff Calculations T'he current water tariffs aze two-part with both fixed (variable by meter size) and volumetric (decreasing block). The following is recommended: • That water and sewer tariffs be billed as one combined rate. This is done in several municipalities in Ontario, the largest being the City of Toronto. This was also the practice followed in many of the six local municipalities in Metropolitan Toronto previously. ?'he Town of Mazkham has also followed this practice for many years. The Town of Mazkham is similaz to the City of Niagara Falls with respect to their being the retail provider of water and sewer services inside the Region of York which bills for both wholesale services based on volume (both water and sewer are billed based on water volumes at the wholesale level, however). This year the Town of Newmazket has also switched to a combined water /sewer charge. The use of a combined chazge provides much greater flexibility with regazd to budgeting these services and allowing for annual revenue fluctuations: • Eliminate Declining Block Rates - There is little or no cost justification for declining block. rates in Niagaza Falls. There are economies of scale for large water users, but these occur mostly in the water production azea, which is a Regional responsibility. It does not affect the City's costs. The following comments are also added regarding the water and sewer rates: • Note that the use of water consumption as a basis for billing sewer chazges is common in Ontario. This is the most feasible way of approaching user pay for recovering sewer costs. Water meter readings are a surrogate for measuring sewage flows. During 1999, total Niagara Falls sewage flows billed by the Region were close to total water flows, only about 6% higher and in 1998 sewage flows were about 10% higher than water flows. In Niagara Falls, as in most other municipalities, customer metered water flows are used in the calculation of a customer's sewage chazges. Overall this is a fair way of achieving user pay for the sewage costs. It is meant to allocate sewer costs in proportion to each customer's use of the system. Although there are flow differentials between water and sewer systems due to seasonal water use in the summer and for sewer due to inflow and infiltration, these variations more or less even out over the yeaz. The use of water consumption is a reasonable surrogate for sewage flows and is the only practical way of achieving user pay for sanitary sewer charges. • Seasonal Chazges - Note that water consumprion normally has a very high seasonal component in Niagara Falls. Water consumption in the summers of 1998 and 1999 exhibited very high increases -see Exhibit 6. The wet summer of 2000 showed very little increase. Since the cost of meeting summer peaks occurs at the Regional levol, there is little justification for the City to consider seasonal rates. This may have to be reconsidered if the Region decides to utilize some form of seasonal rates to moderate the high summer peak water flows. The combined water and sewer rates are calculated in Exhibit 12. Two options are provided: • Option 1 -Recover Regional Volumetric Chazges from Volumetric Rate -This approach is based on revenue security plus relating obviously variable chazges to the volumetric rate and lazgely.fixed charges to the fixed service chazge. It is a fair approach. Unfortunately, the conservation aspect of metering is weakened since only about two-thirds of costs in the volumetric rate. • Option 2 -Recover 80% of Costs in the Volumetric Rate -This alternative would recover all of the Regional costs in the volumetric rate, plus some of the City costs. It would have a higher conservation element, which may translate into reduced usage and reduced Regronal charges as a result. The service charge is calculated both as {A) a single chazge for all customers and (B) one variable by meter size. The volumetric rates and service chazges are provided in Exhibit 12. 7 Impact The impact of the proposed rates compared to the current rates is provided in Exhibit 13. For flat rate customers, those that use below average volumes pay less and above-average users pay more. The average customer pays slightly less. For currently metered customers, most pay more due to the elimination of the volume discounts. Implementation The following suggestions for implementation aze made. • There should be public notices in advance of the impending rates and how they might affect customers. • The bill should include a phone number where customers can ask questions about their bill. • The new tariffs should not be first applied during the summer season as the differential from the flat rate charges will highest at that time. • The billing staff should be prepazed to answer questions about why customers' bills have changed. They should also be helpful in suggesting ways to reduce usage. • Also there will be high residential water users who will not be happy with paying for what they use. It must be emphasized that this is now a user pay system and that customers have a measure of control over the size of their bill. • For larger customers, notification should go out in advance of their expected increase. This will o8en avoid adverse reacfion once the bills aze received. • Some municipalities choose to initially send out demonstration bills to illustrate the potential impact of the metered rate chazges, so that customers can adjust usage before the real billings start. i to }~" m y K ..y, * ~ A ..y.~ r . g., ~t}, f' ~r ~ ~'e + ~i. ~ k f k ~ ~~ ~ ~ ~ - } ~_ ~~. d~ ~ .. i - ~ M~1 ~ ~ G ~, 07 .~ , .x i ~ t~ ~Q 7 Y~' ~ 1 « ~,/W^~ ~3C ..~ 1 '~4 V/ F . n 1 0 ~. Q?, ~ y ~ ~ a ` 0 -r O 99,, fi. ' ~ L l ~ ~ Y f 'Y ~Q ~ W '~ n 66 W ~ ~~ti ~ o~j -66a _ a~ n! ~ ~~' ~ & ~ B . ~~O w Q h n c $ ss J ~ o ~ ~' ~ T ~y 6 ~ _ F ~ o ~ `'h~ ~ z ' c~ ~~6 ~ n 86 J ~°~L tat ~sa° R s+ ~S Q a ~ ''n Q 8~7. P Z ly 9~ JAL Y u~i e7 °o u~ °o h o S 1+7 t`I N r r o tD S ~G~n O (rug 000'000) uo~Ba~ ~(q paolonu~ ewn~on ~~ 3 tL P a Z ~~•~~~ annum •i.i •v hbl^ v~ ors, ~c•ri n~-tT-nn m unnoyg y;uopy o; do papa;aw;uaoaad '^ V/ ~ r 4Oi ~ a~ oo ~Qp` ~e W (~~• ~ 4~'f tt ~ N r O W~ :1i' ~}6, ~' V t ~~~~' ~' ~ ~~~ ~ ~ ~i) ~ ~ ~ , t ~{'i ~~ lU~i f 7~ Ys 7 O F , rn N g I ~'' Q ' m ~' U Z t .~ '~~.f~ ~titi~' `~ ~ W .~ 9 'a : ' V = Q to ~ d ~ > Z d m Z W ~ ~ ~ '~ ~ ~ ~ ` .. ~ .~ o E ~ I- LlJ ¢ 0. 11 .. ~ ~ R i rn N ~ , T ~ ~ V ... ~ ~ .Qa C LL ~ Z O ~ n.~ p Q a a ~ 0 ° u~ ~ g . o ~ 00 ") 0~ , 0p 0op a o 0 N N N N e (V N N (lauao;sna/y;uow~tw) OOOZ aunt o; do uo~;dwnsuo~ ~~4;uopy a6e~any a LL e ...~ .~r.nnn~ •,.i •v ,:'~.fo c7J Olfi brf ri n7-11-(10. m s ~;~. ~.. i . K - .. v r f~') • 5 R .W~ ~~ Y ~, { ~, Z ~ ~ k . ~ r P r ~ ~•'~ ~ q W ~ i r "' L W ~ ~_\ Z ~`~" a o ~ LL. N '~ . ~ N Z o r i ~ C G o a n o a Z ~ ~ a N ~ n M O V ® ' + V ~ r • r+ U `~ ~ J [fl r °i r Q ~ ~!' ~ ~ y'~ qq '~!' ~f ~ ~ ~ " N 47 ~ N lf> O h O 1 ~ M r ~- {%) Je;gym ao; pa;unoooeu~ ~~ A Z ~~ rr-i rnn •n i'~ Alnnnn'1 •L~ .~ {, ~.r0 v7 nrti fir. nt nD_r L_nn CITY OF NIAGARA FALLS WATER 8 SEWER SYSTEM 2000 BUDGET 8~ 2001 DRAFT BUDGET !5) 2DOo EXHIBIT 11 Revenues Sewer Surchar0e Water Sales Service Charges Sewer Lateral Cleaning Fees Discount Iota{ Expendiwrea Adminlslration Regional Costs Sewer Maintenance ~ Operation Water Maintenance 6 Operation New 8 Replacement Mains New Equipment Contrtlwllon to Capital Budget Water Metedn0 Program Cathodic Protection DeM Charges 113CR DT REV N IF RFDIrIR MENTC Total Expenditures Less Other Revenues Water Sales Service Charges Sewer Lateral Cleaning Fees Total User Rate Revenue Requiremenjts Less Regional Charges (n volumetric rates) Local Costs (infixed charge) Nfdeta.xk ,~ 14,338,000 13,514,300 13,514,300 9,677,000 71,347,400 11,347,400 89,000 40,000 34,000 74,000 25,000 25,000 25,000 -6t2 000 0 23,517,000 11,412,400 13,548 300 24,980,700 832,500 245,800 245,600 401,200 18,244,800 5,500,000 11,300,000 16,800,000 2,105,100 2,214,300 2,214,300 1,230,300 1,296,500 1,288~OD 4 50,000 1,000,000 1,000, 000 17,500 17,500 17,500 720,000 1,000,OOQ 1,000,000 50,000 81,000 81,000 250,000 600,D00 800,000 1,817,000 1,198,500 283,700 1,484,260 23,517,000 10,917,100 14,043,600 24,960,700 23,517,000 10,917,100 14,043,600 24,980,700 88,000 40,000 34,000 74,000 25,000 25,000 0 25,000 ~s12,o60 - a 6 0 -498,000 85,000 34,000 89,000 24,015,000 10,852,100 14,009,600 24,881,700 16,244,600 _ 5,500,000 11,300,000 16,800 000 7,770,400 5,352,100 2,700,600 8,061,700 ~- 'FGfenciel' 20.Nov-QQ r.bin C77 Oih Irerl nz-I1-00, CITY OF NIAGARA FALLS EXHIBIT 12 COMBINED WATER & SEWER RATE CALCULATION PROPOSED 2001 BteR 1 -Conpumatron fcublc rsetrea) Consumption Curtest Canaumption Levels Redudjpn ~ Level for ConaJmonth Cons. Cora. Duo to Metered Rete Customers /customer Monthly Annually Metering Celculetlon Metered now -billed quarterly 8,700,000 1% 8,833,000 Metered now - billed monthly 700,000 1% 893,000 Newly metered-lop t% 178 x 241 - 42,898 514,778 15°h 437,580 Newlymeterad-reslduai 22,322 x 25 549,121 8,589,454 23% 5,073880 Total Annual (with resulting percentage difference} _ 14,504,230_ 11%_ _12,83743 9 Votump !!ax for Rate Calcu/altos (m') x 12,837,43D eo 2 -Volumetric Rata CaI Optlonl -Recover Regions! Chu9ea Annual Regional Charges = S 18,800,000 Volumetric Charge = S 16,800,000 S Optlom2 - Percentage Coat Recovery Cost Share = S 24,88!,700 x Volumetric Charge = S 19,869,380 + S ~teb 3 -Sarviae Charge Calculatloa 12,837,439 = E 1.309 /cubtcmetre 80% = 510,889,380 12,837,430 = S 1.549 /cubic metre Cosf Included In seMce charge A-8ingle Servlea Vnlform Charge Number of meters Monthly Charge (EJmonth) 8 - 8ervka Charge Variable by Meter 8izs (sea also blow) EquNalent Number of Meters Equhrelent Monthly Service Charge Charges distributed by meter size (sae OpBons 1 & 2 below) Option 1 Option 2 Local Costa 20% E 8,001,700 54,972,340 25,807 25,807 S 28.235 S 18.182 29,808 29,008 S 22538 5 13.901 Dlatributlon of Service Charge Coats by Meter Slze otor Slze eters AilocaUon Ratio Equlratent Number of Meter SeMce Cher a S/month lion 1 O Uon 2 16 mm 24,250 1 24,250 S 22.54 S 13.00 16 tnm 387 1 387 S 22.54 S 13.90 25 mm 343 1 343 S 22.54 S 13.90 37 mm 221 3 553 S 58.35 S 34.75 50 mm 291 8 1,748 S 135.23 S 83.41 75 mm 52 12 824 E 270.48 E 188.82 100 mm 42 22 924 S 496.84 S~ 305.83 150 mm 18 42 758 S 948.81 S 583.85 200 mm 3 75 225 S 1,890.37 S 1,04269 total 25 807 29 808 rxi.t.xa •awc.a• 2oN°v~o nip ninnnrr~ •i.i •v tiFra c» ors. ir••r•f n~_ii_nn City ofNiagara I tills Final Report Water & Sewage Rate Structure Review Page 76 of 78 11 Attachment 3 -Material Presented by Mr. Ed Bielawski to the Corporate Services Committee of the City of Niagara Falls on July 23, 2007 Two Parts - Deputation by Mr. Ed Bielawski 5 pages -not numbered - Presentation material 12 pages -not numbered NF User Rate Report Apri! 2 2008 Final.dac 76 R.M. Lmtdon Ltd. JA~l-p1-199b C3J: p2 P. C~3%DE+ background. You are on C;ty Council and I sought out Kim Craitor and I went through what I found out. I asked Wayne to arrange a meeting with senior staff so we can go through this and I present to you what Ifound - it certainly isn`t fair. So we had a couple meetings and the last one we had was Friday morning. That's when I was shown that my name was being used. I said that this was rather strange that someone would make a recommendation. I am totally unaware that my name's there. So F took some of the reports khat I prepared that are qu9te extensive they would fill a suitcase almost. All the data I col{ected, was very difficult to co{lect because what you have is a system that doesn't lend itself any business type of atmosphere. So now we can proceed to page 1, What you see before you are the objectives taken from a report dated March 27, 1995, These were the objectives. It was a well written report. The first objective and on the recommendation on that report was that we establish awater/sewe'r utility. Now that says that you are going to establish a utility and its going to be run as a business, This utility is no different that Niagara Falls Hydro, And if you take a look at these objectives, you'll find that none of them would say why, why aren't these achieved, these are the objectives of the new system. The answer is simple, if you don't a utility, you don`t have anyone responsible and therefore you have a fragmented system, which this is as it exists today. It Is still a totally fragmented system. On the second page, the conclusions which become obvious as we go through the charts I prepared. Go to page 3 you will see how the system works. Number 1, you have the homeowner, The homeowner pays $39.65 In service Charges, monthly. They have one meter, 'Tile second one shows that condominium complex with 28 units, which is probably the only one in the city that has 28 one inch meters as a consequence pays $1,082.20 as a service charge. Now that $1,082,20, the highest user in this city pays $1,623.22. As a resident of one of these condominiums, I couldn't even find the office for a refund because there is nothing here, you can't talk to anybody. The third one, you'll see 21 condo units, which Is typical condo units broken up in units, and it has one meter, a 2 inch meter and they pay $231.90 in other words $11.04 versus what residents pay compare to $38.65. If we go to a 22 Condo unit that is split up, you have 2 one Inch meters. Those 2 one Inch meters, the total service charge is 577.30 for 22 units which works out to $3.51. The next scenario you have in the city is 5 one inch meters servicing 55 condo units. They pay $3.28. Now if we go to apartment complex - 120 unit apartment, which uses a 3 inch meter, pays a service charge of $4.03. Then we have the 78 unit condo apartment which has a 2 inch meter pays $231,40 which equates to $2.97. This is a family unit obviously - $2,97 versus the homeowner who pays $38.65 for the same service. We've had these meetings and to this day I can't find anybody who will say ~ JRN-81-199E pD~E~3 P.44%D6 you don't know what the hell you're talking about. That' s what I came to see. Now, go to page 4, you have the rate increase which was published in the paper as 6.89b far a family using 30 cubic meters a month. well that`s a fine thing to say, but you'll notice 2 things about this. You'll notice that this is the Frst time when you receive the water rate schedule that you do not have a rate increase in there. It says you wlll pay a charge of $5.20. Because it isn't a 6,8% increase, it's a 7.4% increase. This little lady that was brought up in 1995 that was on a fixed income. She was struggling and concerned and was using somewhere around IO cubic meters. Weil isn't that wonderful -she will pay 11% increase...for her a lI% increase. If you go to the next page, these are the actual consumption rates of the 6 inch meter customer so tt shows you that par the 6 inch meter you have al! types of volumes associated. The highest user is the 52,200 cubic meters and it stops as high as 72,000 cubic meters, That person is charged~3 cents a cubic meter, The high user that wlil incur incremental costs of bringing a huge volume in and what is the equivalency rate of that? That fi inch unit meter means nothing...nothing. What we have here, if we look at in simple terms we now have moved up a flat rate from one scenario in 2001 to a flat rate which shifted down to the service charge. What is a service charge? It's not a variable that they say In all of these reports, The service charge happens to be a flat rate in essence - $38.65 fora 5/8 inch meter; $38.65 fora 3/4 inch meter; $38.fi5 for a one inch meter. One inch meter uses up to TODD, 1100, 1200 cubic meters in the lawn. So if you want to look at in lament terms, we now have a flat rate and service charge which impacts the poor little lady that uses 10 cubic meters and there's no conservation. I'd Ilke to summarize this, I only had Friday afternoon to get the volume of reports that I have...I had to make it as simply as I could. Now, we go to page 6. You wi11 see a comparison of the increase in your rate. By this rate structure, you will note that if we use the homeowner, 26 cubic meters, we have a rate increase of 7.4o/n. If you go to the lady with a fixed income, her increase is li%. But now you go to the high user and this is based on 50,000 cubic meters, his rate increase is .x89%. Now factor that-take .0289°!° and elevate it to 11%, and yeah, that's not a 100% increase, that's not a 20D3'o increase, you are now moving into the regimen of 100D% increase. Thousands. That's fairness? That's equity? Not by engineering know how. Councillor Ianonn(: Mr, Bielawski, so what you're telling us and I noticed you used the Casino, I see that that's the number-the user you have there. So the little old lady whys trying to save Is using 10 cubic meters, her rate Is going up and the casino who's using 50,000 meters, their rate is going down, So the richer are paying less, and the poorer are paying more. E.B.: The more you use, the less you pay, That's the whole purpose of this. JRN-DS-1?9b 00'D3 - -"~" P. D5~85 Councillor Ianpnni: You're scenario is, the more you use, the less you pay. E.B.: Yes. As a matter of fact, when I brought this report to a senior staff member, he said that is your opinion and I said I beg your pardon, that is my opinion? These my good man, are Your numbers. It has nothing to do with me and opinions -these are your numbers. So now we jump to the high user -you can see we don't have here, We have a shopping plaza which has umpteen restaurants; we have a hotel and this is what we're talking about. Now, think of the people that are competing against -this guy is paying 3.2 cents per each cubic meter and yet he has 17 places, he has 10 restaurants when I frst did this scenario and so what we have is all these all these businesses get hidden under an umbrella of a huge complex, Because we put them all under one roof and use only one meter, we say that's great,,.well not by my standards, not by the numbers that this reveals. I indicate to you that this a totally flawed system, Now, if you recall one of the things in there mention that here we are and now in 2001 we sent out this particular flyer. This was sent in the mail. And what it said was, if you take a look it says calculating charges. But if you take a look at that paragraph, it has nothing to do with calculating charges, all it says Is that they were going to save you administrative costs. Looking at putting this bill into this envelope. Listen, that's wonderful, that's true genius, But in the 3'd paragraph, they say oh by the way, don't worry about it, we are going to save you here...we are going to turn around and read your meter every 2 _ months. 5o we're going to have that guy take 6 trips. We are going to have this done. I can't think that way, 50, we went through this qulckly...you're going to have to digest it and when you have gone and read this,,..and whoever wants to conduct a meeting, I can to into all the details, I can bring out all my Files and everyth(ng else. So we ge*. to the point where we have a recommendation. And the recommendatlan says, let's call in a new consultant. That makes no sense to me as a business man. Lowden is a very reputable firm, so therefore it makes no sense, its not ethical to turn around to jump in and say hey get somebody else in here, What I recommend that this Council recommends is simply this, you're calling Mlke Lowden, and you say, Mike, you know in 2001 we had this scenario and we all agree that this system was Fair to people, would be fair and equitable, So you say, Mike sit down, let's go through and see and prove that this guy is crazy, doesn't know what he's tacking about. He`s only an old engineer, a senior, turns around and plays with some numbers and see how he can test the system. So to me, that is a proper recommendation, you use the same man who prepared those lengthy reports both in 1997 and in 2000 prepared the final report. Now that type of scenario is the type that I would sit down with_ That this is the only thing you can do -sit down with the man and say let's go through this. Just find out -why did the system fail? Why did it fail...it was a good system? I'll tell you why it failed..,simple...wha[ you don'i have and it JRN-U1-]99E F~1~03 P. D6 '06 is the most important thing you should have is a utility, A sewer/water utility. In 1445, you say ok, let's establish a utility, let them run their business, let him select the building system, let him do these things, because that's what business is ail about. The problem that I have is that this existing scenario makes no sense. You have to go to turn around and there's no utility and there's no place to tali. You call over to Niagara Falls NYdro and want to speak to a Customer Service Supervisor. Oh we're only the building, we don't anything about that. Sa T call another number and I said who do I speak to, who's the supervisor? 5o I look at the organization chart and it doesn't even mention the word utility. But if have no responsibility, you have no accountability, you have nothing but a flawed system. You tail up Nydro, for instance, for me to get information, it kook F weeks in one case to get information back. It makes no sense, but that's what happens when you have a fragmented system. Everything is all over the place, no ane is accountable. rara~ P. D6 CONCLUSIONS -the City has NO water/sewer utility - the use-based principle for water billing is applicable Z ONLY for the CONSUMPTION charge j -the use of meter size for allocation of service charge is TOTALLY flawed -all multi unit structures that have a single meter are `" SIGNIFICANTLY SUBSIDIZED BY RESIDENTIAL customers -the pricing policy for water and sewer service is UNFAIR AND NOT EQUITABLE -yearly percentage rate increases as reported are not `'° factual -the FACTOR USED to calculate weighted meter is unrealistic and thus totally flawed ©L1~Q~~ 2 CUSTOMER SERVICE CHARGE COST /UNIT No. of Meter Service Service Charge Meters Size Charge Cost /Unit 1 Homeowner 5/8" $38.65 $38.65 28 28 unit condo 5/8" 1,082.20 38.65 1 21 unit condo 2" 231.90 11.04 2 22 unit condo 1" 77.30 3.51 5 55 unit condo 1" 192.25 3.29 1 120 unit apartment 3" 483.79 4.03 1 78 unit condo apt 2" 231.90 2.97 ©~ d~U 3 2007 RATE INCREASE AS A FUNCTION OF USAGE (HOMEOWNER) Usage 36 m' 30 m' 26 m' 10 m' 5 m' 2006 $85.80 77.06 71.24 47.94 40.66 2007 91.07 82.33 76.51 53.21 45.93 6.1 % 6.8% 7.4%* 11.0% 11.3% " -Actual 2007 increase based on 26 cubic metre usage. ~° °[~~ 4 6 inch meter 2006 SERVICE CHARGE COST I CU81C METRE Monthly Usage(cu. m) Cost ($/cu. m) 1,330 1,22 2,320 0.70 3,520 0.46 4,090 0.40 4,630 0.35 5,520 0.29 6,630 0.24 9,340 0.17 12, 830 0.13 12,940 0.13 13,020 0.12 13,670 0.12 20,290 0.08 21,960 0.07 52,200 0.03 {Service charge: $1,623.28) DD ~~u 5 L v1 U_ ~ ~ ~U O N N ~ n L (II O O r N r J O U N L L C ~ ~ N ~ O T- t (O tD ~ N O O ~~ v 2 0 T L L O ~ C U ~ ~ a ~t f~ O N N ~ r t~ o U 2 ~ N O O O O O O O O N N N N -"n L--J Rooms Restaurants/Dining Areas Retail Shops Service Charge Water Usage Service charge cost/cu. metre FALLSVIEW CASINO 368 17 23 $1,623.28 50,000 cubic metres I month $0.032 D °~a~~ CALCULATING CHARGES -The City of Niagara Falls has already taken steps to keep your bill as low as possible. Administration costs were reduced by having water and sewer charges included in your Hydro bill. The discount offered to residents who pay their bill promptly was increased over last year. The city plans to spend over 3.4 million dollars in 2001 on improvements to the water and sewer infrastructure. Among other things, the improvements will reduce leakage from the system which keeps rates under control. CAN THIS SYSTEM REDUCE MY BILL? -To determine how much water you have used, your meter is read at the same time as your Hydro meter. Every two months, your water & sewer charges are included in your Hydro bill. 8 ~_~_~, d = C d ~ V Z a a a ~~~~s a o= a~ a~ N_ ~ ~ p $T ~ ~-!• ~ -SKN S w ~O~ y "' S m a ~ E a -., e; > ~ r C M rna g_~ ~+ ~~ G~ _ O d' ~^ ° ~ d ~~ q } C a N v~!1s-~ 2o°,tia a.o N t o= 0 3 a N a .c N a N m d 0 0 a m m vdi ~~yyw -i N ~~ F N V v ~i Y S d ~V E E ~z `0 0 v m `'V N ~ .°n a a+ r s V V c p o E ~ D D ~ v x E 0 Z rn t ~ v M ~C m [m M1 ^ r r r ~ (`~ 1r W m ~ r N .o ~q ~n O~ Ol m r N D ~~ W c ~- vu r e m~ v ~ P~~ O m p G h C Ov Y e ti v i m ~' E E E F E E£~ E i m rv m u0i ^ i u~i O .~ v t ~ ~' ~ E E E 17 as dQ d mam ~ry~ m G M 2 5 N ~ r E c a o_~ t G ° E E E Q 6 b~ ~ ¢^N b a ~ ~ I d O N L N ~= A .~„~'~ v a w p V c= °' d n m '~ p ~+ 6 jai ~ y = o E °' i c F p ~ 'L U m ~+ n °1 N Q N p = J p`~ a' b m 4' ~ S r ~E~s. L ~ ~ N [3 Ol C $.y N T ~ Z d r C q °~ IO G 5~ C ll ~ d O T .a T~ G C ~ ` Y y c L T d d° y ~ _ ~ y Y ~ °= v° b T a u °'o r u. = F O J p -- +y i= o _ N (p o c`. a rv p = _ v E rnaa v W Od ~ 'J ~ T d ~ ~ d p= 4+ ? LT _ N O N t -- N ~ c. 3 L _ a _c _ " C y' _ N ~ - ._ T r ~ C= G C L ~ G 7~ V = ry L ~ ~ v ai p _ _ i -_O Cpl. .~ L _ . S p E P O q . S ~ ~ - ry v o .G ~ ' r ~ o ~ c m _ m -c ~ 3_ ~, •~ i Q c c , _ , .n o E~ ~ .. E E ~ E c v ~ ~ ° c pm ~' s c s '° Zx '' `° aU o > -° o a o a A y c ~ ~° a~ o rc E o Y LL F~ c E c o c ¢ E to . xl ~ `~ -O a G . n o m ~ ~ ~. a _ c = '^ ° a ~ C ~ ~ : C '^ v .~ L m m . a ~ l .n g -D M r O ~ i C T .n ~ r ~ O d~ Q ~ O p c c O O ~ ... D'o ~ r ~ a ~ tn= i - a d i ~ . -- E . R m rs~ 'e a~ y. w E E ~L a -S p o ' L E ~ o- = q }' 'C P -O L .yn S a r me G F ~ - ~ =' p ~' dz D' c a ~.v iT C v E G O 2 L E a L'I Z .L D ~ F p ~ L . 2 d .- ` LT N T ~ ~^ Q _ .G m C O i d- a L p m R` ~ E _O /' _ N A ~ p C E N C N _ ~ S m E V d ~ m _ p D~ p ~ E O =~ ~ C A C C G d O-~ 0 ' ' E? . a _ p _ G d y ~ s ~ L r °. °.'' Q. ~ c E G m ° a c a E G 2~ .`~ o E w ~ .En ~° W ~ ~ ~/ c ` ~ - o m rn u p m a a a E ~_- •~ ~ E U a ~ „ M v o c ~ E ~' ~ rc m c E o~ a. ~ .~ a c ~ a- ~ $ ~' Z 't b o o E_ ~ G °{ ~ .. ~~ c a o m v ~ -c a s E a ~ ~ °i v ° ~~ E _ = lc c d ~ E .:° d C _ v -° o s 5 a, ? ~ _ N p L~ iGN Oi. p a a ~ N~ ~ ~~ ~ ~ 6 ~ Ql v = M A ~ a ~U p Qt d a > z' ~ ~ 6~ ~ N . D 10 ,0 r ~ r-. o d ',~ E i e E~~ a ~ N - ~ m o _ m a~ E v, ` jg = rn91>`cc ..~:o a ~ o`~-p m c 3 c ~0 c = o v c 3 a ~ DlN ,',°o ° c_ m LL E o ~, °' :o a .g ~ ° m m ,.. ^' a w E c O ~ a o a ~ rn ~3,.~ "~ ~ C C d ~ ... ~ ~ ' ~ E ~ i E o, ~r r ~ ~ _ t0 ~ 9" r _ N O O N N y v 'p ~ ~ ` „ ~ w ~ Q Z E A n S = ~ ~ v~ c a ~ ° a a ,' E~ a o m °' a ~ A m m c e, Z~ m o ~ .~ ~ b m m a v E = a ~ as .. o m a ~ ~ ~ v `a n ° E = .n 3 `D Y ~ ~ `a E & _ v P' (° A a 2 E' ~ a rc o c ~ K ° ~ m 3 d z c ~ ? ~ ° C -e ~ w E' E o E « a h Z - . - ._ o GBQF.H 3.S :BP.ZBS£SOB 1"6'd LT~fI LO%hClAp 518 inch meter MONTHLY CONTRIBUTION TO SERVICE CHARGE Monthly Usage (cu. m} Cost ($/cu m) 5 7.73 10 3.87 15 2.58 20 1.93 26 1.49 30 1.29 (Service charge: $38.65) DQa~~ 1 inch Month # of Meters Consumption Average January 219 32,560.6 148.7 February 230 37,611.9 163.5 March 236 34,643.5 146.8 April 204 30,657.2 150.3 May 208 29,059.8 139.7 June 243 44,063.6 181.3 July 204 37,097.0 181.8 August 252 54,896.1 217.8 September 219 46,527.0 212.5 October 250 51,700.7 206.8 November 205 34,695.4 169.2 December 233 38,460.4 1.65.1 471, 973.2 DQQ~ i~ 4 inch meter SERVICE CHARGE COST /CUBIC METRE Monthly Usage(cu. m) Cost ($/cu. m) 2,000 0.43 3,000 0,28 4, 000 0.21 5,000 0.17 6,000 0.14 7,000 0.12 8,000 0.11 (Service charge: $850.28) DQQ~~ ~t r."';~~AI ~ ~ ~ ~ W N CIl ~ ~ W ~ ~ ~ O ~ W -~ W V CO O U7 O ~ -~ N N -~ Cfl CIi O ~I CO CO O ~I O O ~ CJi N W ~ ~ ~ (J~ N CO O O CJ7 -~ O W W N 1 .~ N O -~ 1 O ~ ~ O ~ v ~ W N ~ ~ N .(~ .p ~A CJ's O -P a ~ 1 0 ~ ~ CJt N ~ o w o a ° rn -o co W Cn -~ O (D Q W N (T O ~A N W (n ~l O O N ~I U1 01 N --1 ~ N O W ~ W ~ O W W .A. -~ ao cn ao 0 rn o 0 0 o~ o o w m ~A N N o rn o v CSi N CO W --~ W .~ ~ W O 1 W .s .~ 1 N O O O 2 m C~ `C`^ VJ O m ~l O Z 2 r C rn W m -~ m ~_ IV m City of Niagara Falls Final Report Water & Sewage Rate Structure Review page ]] a f78 12 Attachment 4 -Niagara Falls Terms of Reference for Review of Water & Sewer Rate Structure November 9, 2007 (See following 2 pages -not numbered) NF User Rafe Report Apri12 2008 Finaf.doc 77 X.M Lm~don Lid. Terms of Reference City of Niagara Falls Review of Water and Sewer Rate Structure November 09 2007 A. Introduction In an effort to create a greater understanding of the cost for water and sewer services, the City of Niagara Palls' Council has directed City Staff to proceed with a review of the existing water and sewer rate structure. Questions have focused on the fairness and equity of rates, especially the use of fixed monthly charges. Other concerns have focused on the increasing costs for services, and the ratepayers' ability to control costs by reducing usage. City Council is responding to these concerns by directing a review ofthe existing water and sewer rate structure that was implemented seven years ago, when a universal water metering program was completed in 2000. The metering program enabled the City to cease the pre-existing flat rate billing system, which for many ratepayers was a significant concern. At that time, an extensive multi-year analysis prefaced the Council's approval of a two-part rate structure. Today's rate structure includes a fixed monthly charge and a volumetric rate. The fixed monthly charge is for the annual maintenance and capital costs for the water and sewer systems. The volumetric charge is for the Region of Niagara's costs for water supply and sewer treatment. City Council, in its direction to Staff, is considering a change in the water and sewer rate structure. This review is intended to provide the Council with appropriate, timely, and accurate information about changing water and sewer rates. B. Objectives The objectives of the review are: 1. To study the financial impacts from changing the existing water and sewer rate structure. 2. To examine the optional rate structures for water and sewer services, in accordance with al] legislation and regulation governing water and sewer distribution systems. 3. To compare the advantages and disadvantages of appropriate rate structures, in relation to the public concerns for the costs of water and sewer services. 4. To recommend a water and sewer rate structure(s) for water and sewer services that complies with all relevant legislation and regulation, and best satisfies the public concerns. C. Tasks The Water and Sewer Rate Structure Review should include a variety of analytical tasks. The tasks would include (but not limited to) gathering relevant information, seeking public input, analysis of rate structures, and comparative study of the financial impacts on ratepayers. These tasks would conclude in a final report and presentation to City Council, or a Standing Committee composed of all Council Members, that identifies a recommendation for changing the water and sewer rate structure. ll. Work Schedule City Council has directed Staff to complete the review as part of the 2008 budget process. The review work would be ideally completed by the end of January 2008. A delayed completion may interfere with the Council's ability to approve a change that could be implemented in a timely manner. F. Staff Assistance City Staff will be available to provide assistance. Regular contact between the consultant and Staff will be managed by the Acting Executive Director of Corporate Services. As required, the consultant is expected to meet with Staff for interim written/verbal progress repal .The final written report (including twelve paper-copies and one electronic copy) will be submitted to the City Clerk. F. Deliverables The consultant will provide awork-plan that identifies and timetables the tasks for the review within the suggested work schedule. Upon Staff s approval of the work-plan, the consultant will implement the work-plan, provide interim written/verbal reports to Staff, submit the final report to the City Clerk, and conclude with a presentation to City Council. G. Conclusion Council has directed City Staff to proceed with a review of the existing water and sewer rate structure. To engage a consultant's assistance for this review, this Terms of Reference document is intended to guide the consultant in preparing a Water and Sewer Rate Structure Review Proposal. Page 2 Ciry of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 78 of 78 13 Attachment 5 -City of Niagara Falls Review of Water & Sewer Rate Structure Proposal - RM Loudon Ltd. (See following pages numbered I to 7) NF User Rafe Report April11008 Final. doc 78 R.M. Loudon Lid. City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M Loudon City of Niagara Falls Review of Water and Sewer Rate Structure Proposal 1 Introduction This proposal is in response to Terms of Reference related to review the City of Niagara Falls water and sewage rates, dated November 9, 2007. As stated in the Terms of Reference, the current rates are two-part with a volumetric charge which recovers Region of Niagara charges and a fixed charge which varies by meter size and recovers local system costs. The rates format was originally adopted based on a 2000 report for application when universal metering was completed. Since that time the format has been retained, but rates adjusted to reflect annual costs. Two options were offered. The recommended option was adopted. The second option had a lower service charge and a higher volumetric charge. The selected format was the preferred alternative at the time of adoption primarily based on an objective of providing revenue security -customer consumption can be highly variable when meters are first introduced. By tying the volumetric charge to Regional costs, decreases in usage due to metering should relate closely to reduced bills by the Region. The approach was arguably fair since variable costs were linked to the variable portion of the rate. Since that time the fixed charge component has gradually increased compared to the volumetric charge. There is now a feeling that the fixed charge component is too large compared to the volumetric component. This will be a very important issue in the review of the water and sewage rate structure. 2 Objectives & Tasks The objectives stated in the Terms of Reference are as follows: 1. To study the financial impacts of changing the existing water and sewer rate structure. 2. To examine the optional rate structures for water and sewer services, in accordance with all legislation and regulations governing water and sewer distribution systems. ~ City of Niagara Falls -Study of Water & Sewer Rates Following Metering -Loudon & For[in - November 2000 NF Water Hare Smd~~ Proposal Dec 4 2007. doe 13/03/2008 Ciry ofNiagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M Loudon 3. To compare the advantages and disadvantages of appropriate rate structures, in relation to the public concerns for the costs of water and sewer services. 4. To recommend a water and sewer rate structure(s) for water and sewer services that complies with all relevant legislation and regulation, and best satisfies the public concerns. A variety of tasks are needed to fully reach the report objectives. The Terms of Reference stated a few: 1. Gather relevant information 2. Seek public input 3. Analyze alternative rate structures 4. Compare financial impacts on ratepayers. These tasks form the core of what is needed. 3 Proposed Work Program 3.1 Establish Principles It is very important that the rates be formulated based on a sound set of agreed principles. At the outset, prior to any meetings, a discussion paper on a range of principles for water and sewage user rates will be provided to City staff for [heir review. The preferred approach would be for staff to have read the material before the first meeting so that they are familiar with the concept and options. In any case the issues can be reviewed and discussed at the first meeting. Most principles will probably be easily agreed at that time; however, some may need further discussion or may be appropriate for further consultation. Others might be added. 3.2 Discuss Rate Format Options A discussion paper on alternative rate approaches will also be provided prior to the first meeting. The paper would set out different rate approaches and discuss the advantages and disadvantages of each. The rate options; as well as the recommended rates would be consistent with Provincial legislation related to water and sewage systems. Again the first meeting would be a good forum to perhaps narrow the options down, establish a preferred option, or initiate a strategy for further discussion. Principles and alternative rate option formats are possible issues to include in public forums. 3.3 Data Requirements To some extent the data request can be massaged to accommodate availability and ability of the City to extract information from financial and billing databases. NF Waxer Rate Smdy Proposal Dec 4 200Zdoc 13/03/2008 City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M Loudon The following is a preliminary list of data requests covering both water and sewage. Note data in Excel spreadsheet format is much preferred: Category Data Description Billed Consumption • Annual billed since 2000. 2005, 2006, 2007 YTD • Monthly volumes billed by class • Largest ] 0 users by billing period • Information on residential customer billing profile (discuss) • Individual customer examples for impact analysis- 2006. List will include a cross section of customers in teens of volume used and category. Customers 2005, 2006, Number annually since 2000 2007 • Nwnber by class • Number by meter size Operating Budget 2007 • Initially provide broken down by major categories. The & 2008 degree of detail will depend on the rate fonnat selected. Capital Budget 2007 & Budget documents providing list of projects. 2008 & projected to 2012 • Debt principal & interest • Identification of capital programs related to meeting legislative upgrade requirements such as the Federal P2 requirements. Revenue Budget 2007 & • Broken down by category 2008 • Provide actuals for 2006 Rates 2000 to 2007 • Regional rates and billings monthly • City water and sewage rates Water & Sewage Monthly 2005, 2006, 2007 YTD Regional volumes Again, the list may be augmented, and will be finalized based on discussion of availability and need as the project progresses. NF Water Rate SniJy Proposal Dec 4 2007.dac 13/03/2008 City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M Loudon 3.4 Public Input Given the interest already expressed in the current rate format, it is important that an opportunity be provided for those concerned to provide feedback. A change in the current rate configuration will have varying degrees of impact, depending on the format chosen and customer usage and meter size characteristics. The type of information provided and required as well as timing, format, participants and target groups need to be decided. In addition to views already expressed, target groups would include large users and residential customers. In terms of timing, it would likely be after enough material has been assembled and organized to be useful in presenting to the target groups, but prior to finalization of the approach to rates. It is suggested that this be discussed to achieve City objectives and utilize most effectively the resources available. 3.5 Financial Plan A projection will be made of expenditures and revenues for the period 2008 to 2012 based on financial and customer data as available in consultation with the Region and City staff as well as utilizing available projections. This will be used to project annual rate increase requirements. A Financial Plan offers an opportunity to tie rate increase needs with relevant issues such as government regulations as well as asset management needs for replacement. 3.6 User Rates Water and sewage user rates will be calculated for 2008. It is expected that two options will be required, one status quo and another with higher consumption charge and lower fixed charges. The options calculated and the complexity ofthe calculations will be influenced by discussion and public input. 3.7 Impact The following impact calculations will be carried out: Impact ofrates on a variety of typical and specific customers, including a range of residential customers, a variety ofnon-residential customers covering a range of types and volumes as well as the largest customer (perhaps top ] 0). The specific examples will be decided in discussion with City staff. • Calculations will be made using 2007 City rates as well as for each optional 2008 rates. NF Woter' Rate Snedy A~aposa7 Uec 4 2007.doc 13/03/2008 4 City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M. Loua'on • Comparisons will also be made for a typical customer and a large customer with a cross section of selected municipalities, nearby and comparable across the Province. 3.8 Implementation It is possible that the preferred option will have significant impact on some customers. If this is the case then a well thought-out implementation plan will be important. Customers are more likely to accept changes if they think they are fair and they have some warning. If required, an implementation plan will be discussed. 4 Timing & Project Organization 4.1 Timing The target completion date is the end of January 2008. This timing coincides with the City's 2008 budget process. A delay may interfere with Council's ability to approve a change that could be implemented in a timely manner. Schedule 1 following is a timetable formulated to achieve this goal. The timing is extremely tight, but if fo]lowed the end-of-January target can be achieved. City of Niagara Falls Review of Water 8 Sewage Rate Structure Work Plan Prepared by M. Loudon Task Description 74-0~ 1 Establish Principles - Preliminary X - Finalize 2 Discuss Rate Format Options -Preliminary X - Finalize 3 Data Requirements X 4 Public Input 5 Financial Plan 6 User Rates 7 Impact 8 Implementation Write Report Meetings Staff NF WS User Rafe Study Work Plan Dec 4 2007.x1s x x Schedule 1 x x X x x x x X X x X x X X Staff Public Input Staff Council NF Waster Rate Sfndy Proposal Dec 4 2007.doc l 3/032008 5 City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M Loudon The critical path includes data generation by the City in December, public input at the beginning of January and report preparation during January. 4.2 Staffing City Staff have been offered to provide assistance. This is critical to the success of the project not only to provide the data that only is available from City resources, but also to provide valuable input in the formulation of different aspects of the report. The report should be a cooperative effort. The consultant will provide Mike Loudon and Mike Foriin as needed to complete the report. Both were involved in the original rate report and have worked to together on many projects. CVs of both are provided. 4.3 Level of Effort The level of consultant effort in days per task as well as an estimated cost is provided below in Schedule 2. City of Niagara Falls Schedule 2 Review of Water & Sewage Rate Structure Cost Estimate Prepared by M. Loudon Task Description Estimate Estimated Time (days) 1 Establish Principles 0 Discuss Rate Format Options Data Requirements/Analysis Public Input Financial Plan User Rates Impact Implementation Write Report Meetings Total Projected Cost Daily Rate (7.5 hours / $130lhr) Fee Disbursements Total Cost (excl taxes) 3 21 $ 975 $ 20,475 $1,500 $ 21,975 NF Watw' Rnte Study A'oposa( Dec 4 2007.dac !3/03Q008 City of Niagara Fulls Proposal Review of Water & Sewage Rate Structures Prepared by M. Loudon The estimated cost ofthe consultant contribution is based on the above proposed work plan, but could be modified in discussion if a different work plan is preferred. One task that could affect the cost would be the degree to which the consultant is involved in the Public Input phase. Prepared by M. Loudon R.M. Loudon Limited Phone 416 225 2081 Fax 416 225 8144 Email mloudon(a~ica.net December 4, 2007 NF Water Rate Smdy Proposal Dec 4 2007.doc 13/03/2008 7 The City of ~liagara Falis, Ontario Resolution No. Moved by Seconded by WHEREAS all meetings of Council are to be open to the public; and WHEREAS the only time a meeting or part of a meeting may be closed to the public if the subject matter falls under one of the exceptions under s. 239(2) of the Municipal Act, 2001. THEREFORE BE IT RESOLVED THAT on April 14, 2008 Niagara Falls Council will go into a closed meeting to consider a matter that falls under the subject matter of 239(2)(c) of the Municipal Act, 2001, a proposed or pending acquisition or disposition of land by Che municipality. AND The Seal of the Corporation be hereto affixed. DEAN IORFIDA R T. (TED) SALCI CITY CLERK MAYOR