The purpose of this study is to develop a comprehensive Water Utility Rate Structure that will equitably recover funds for the long term viability of the Water Utility. The Water Utility Rates Study will provide recommendations to Council for a cost recovery system to financially manage the utility, provide a structure that conserves water use, and provide equity in rates for all users.
The Water Utility Rates Study will be used as a:
Guide to initiate rate changes in the Fees and Charges Bylaws;
Basis for adopting innovative, sustainable approaches to water conservation;
Basis for discussions with other agencies including the Ministry of Forests, Lands and Natural Resources, Interior Health, Water Stewardship, and Okanagan Basin Water Board; and,
A communication outreach tool for customers.
The process will include public consultation; more details will follow once Council has provided input.
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Consumption Based Billing
Consumption-based billing is already implemented or is being implemented in most jurisdictions in the Central Okanagan, and elsewhere, for reasons including climate change and system sustainability.
Consumption-based billing is used in West Kelowna for five additional reasons:
To ensure recovery of operations and maintenance costs;
To create fairness and equity among all customers and customer classes;
To maintain transparent and understandable water rates;
To reflect the community’s environmental stewardship and water conservation objectives; and,
To guarantee water revenue stability from year-to-year
Residents in the specified Westbank Water Service Area pay for costs of borrowing to build the $17 Million Powers Creek Water Treatment Plant. Prior to the Westbank Water System being incorporated into the City of West Kelowna's operations on January 1, 2011, the water system was known as the Westbank Irrigation District, which had its own board of trustees and a defined service area.
Residents in the service area approved borrowing $11 million to supplement the costs of constructing the 54 mega litre (million litres) per day plant and an eight mega litre reservoir. The plant is state-of-the-art and provides its customers with drinking water that exceeds Interior Health Authority quality standards.
The four other service areas in the City of West Kelowna do not receive water from this plant. Since they do not benefit from the plant, they do not pay to recover the costs of borrowing to build the plant, nor are they required to pay for its operation and maintenance. This means their rates are lower.
How Were Westbank Rates Determined?
West Kelowna Council has adopted the rates agreed to by the former Westbank Irrigation District after it commissioned a Water Rates Study in 2009, which outlined appropriate rates for water service including consideration for debt repayment, conservation and reserve building for future work.
The City of West Kelowna operates five water systems, none of which are interconnected in any way. The four other water systems are fundamentally less expensive to operate than the Westbank Water System. In future it is likely that they will require additional capital investment for treatment and filtration in order to meet Interior Health Authority water quality standards. This will impact rates.
How Were Rates for the Other Systems Determined?
At its March 22, 2011 meeting, Council supported the implementation of a consumption-based water billing component for West Kelowna Estates, Pritchard and Lakeview Water Service Areas and revised metered water rates for the Sunnyside Water Service Area.
Consumption-based billing began with the April to June 2011 quarter in the West Kelowna Estates, Pritchard and Lakeview Water Service Areas. The metered rates appeared on these customers' July 2011 utility bills.