Safe water systems are essential to health

Transcription

1 Are Our Water Systems at Risk? Assessing the Financial Sustainability of BC s Municipal Water and Sewer Systems John Weninger Chair, BCWWA Infrastructure Management Committee BC Water & Waste Association 1 Safe water systems are essential to health» 1 in 9 People in the world do not have access to clean drinking water (Source: WHO/UNICEF)» Half Of the world s hospital beds are filled with people suffering from a water-related disease (Source: United Nations) 2 1

2 There is no substitute 3 Water and sewer systems are aging» 40% Percentage of BC residents served by water mains that are more than 50 years old (Source: Environment Canada, 2011)» $13 Billion Unfunded liability in BC to renew and replace water and sewer infrastructure (Source: Are Our Water Systems at Risk?) 4 2

3 Are Our Water Systems at Risk? Assessing the Financial Sustainability of BC s Municipal Water and Sewer Systems 5 BCWWA s Mission & Goals Safeguard public health and the environment GOAL 1 GOAL 2 GOAL 3 GOAL 4 Water users, regulators, and elected officials make informed decisions about water services BC/Yukon has a competent and sustainable water sector workforce BC/Yukon has an influential and cohesive network of water practitioners Leadership and innovation is fostered within the water community 6

4 Project Partners 7 Methodology» Gathered audited financial statement data for 162 local governments» Reviewed asset management plans for select communities 8

5 Guiding Questions» How well are BC communities financially positioned to meet the need for investment in water and wastewater infrastructure?» Where do financial gaps exist? 9 Financial Indicators Operating Surplus Ratio Do rates cover full cost to operate and sustain the system? Infrastructure Deficit per Capita How much is needed to sustain our infrastructure? Financial Sustainability Reserves to Operating Expense Ratio Are we resilient to unexpected change? Interest Cover Ratio What is our capacity for debt? 10

6 Results Segmented by Community Size & Quartile Step 1: For each community size grouping, rank results from highest to lowest value Step 2: Identify mid point of upper and lower quartiles, and median Upper Quartile value Median value Lower Quartile value 11 Results Full report: 12

7 Example: Operating Surplus Ratio Do rates cover full cost to operate & sustain the system? Revenue Op. Expenses Revenue» Revenue includes sale of service, user fees, charges. Does not include development cost charges.» Expenses includes all operating costs, replacement value amortization, and interest on debt. 13 Operating Surplus Ratio Water Systems Operating Surplus Ratio 50% 0% -50% -100% -150% Lower Quartile Median Upper Quartile 19% 10% 2% 5% -1% -6% -1% -8% -20% -19% -25% -25% -33% -40% -45% -54% -84% -89% -108% -125% -200% -174% ,000-2,499 2,500-9,999 10,000-24,999 25,000-49,999 50,000-99,999 >100,000 Community Size 14

8 Financial Indicators Operating Surplus Ratio Do rates cover full cost to operate and sustain the system? Infrastructure Deficit per Capita How much is needed to sustain our infrastructure? Financial Sustainability Reserves to Operating Expense Ratio Are we resilient to unexpected change? Interest Cover Ratio What is our capacity for debt? 15 The Ratio Results Highlight 4 Concerns» The majority of BC communities are not covering the full cost of providing water and sewer service through water and sewer revenues.» The majority of BC communities have insufficient reserves to provide resilience in the event of abrupt changes to costs or revenues.» Smaller systems have greater financial gaps. The most prominent financial gaps are with smaller communities (<10,000).» $13 Billion unfunded liability exists today, to renew and replace water and wastewater infrastructure when it comes to the end of its useful life. 16

9 Where Are We Going? If you do not change direction, you may end up where you are heading -- Lao Tzu Unsustainable service Financial hardship User fee instability 17 How Did We Get Here?» Reliance on grants» Lack of asset management planning» Deferred maintenance & investment» Urban sprawl» Perceived lack of public support for full cost pricing 18

10 $180 $160 $140 $120 $100 Residents value water and wastewater services at $170 per month $170 per month BC residents are willing to pay $86 per month for clean, safe tap water $80 $67 per month $60 $40 $20 $42 per month Actually pay for water & sewer services Believe they currently pay for water & sewer services BC residents are willing to pay $84 per month for sewer services $0 19 BC residents prefer to allocate fees today to pay for replacements tomorrow How would you prefer to pay for upgrades or replacement costs for the systems that supply tap water to your home / remove sewage and wastewater from your home? Tap water Wastewater Don't know 22% Don't know 21% Savings [PERCENTA GE] Take out a loan 14% Savings [PERCENTA GE] Take out a loan 16% 20

11 How do we move towards financial sustainability?» Adjust water & sewer rates to cover full cost of service Ensure revenues are covering full costs of service provision.» Implement asset management processes Assess state of infrastructure, evaluate risks, set priorities for investment.» Rank water & wastewater renewal as top priority Protect public health and the environment.» Smart growth Ensure the costs of development are well understood and funding for lifecycle costs of contributed assets is included.» Foster collaboration among all levels of government Senior government can play a support role in transitioning communities toward financial sustainability. 21 Is Your Community at Risk?» Self Assess What are your ratio results?» Compare to peer communities How do you compare to communities of a similar size?» Start the conversation in your community about: The value of water & wastewater systems to public health, the environment, and quality of life The need to set clear priorities and plan ahead 22

12 23 To access the full report, go to For more information, contact John Weninger at 24