Town Hall Slide Presentation

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Town Hall Slide Presentation John Braam, P.Eng. Managing Director Environmental & Engineering Services & City Engineer This is Julian... He was born in London in May 2011.

Regional water supply map By a happy accident of geography and through good planning, London is the one and only city in Ontario and in Canada that receives its clean water from two great lakes.

1 Town Hall Slide Presentation John Braam, P.Eng. Managing Director Environmental & Engineering Services & City Engineer This is Julian... He was born in London in May When he's all grown up, with children of his own, he will need to know that the water he drinks is safe, clean and plentiful just as his parents know now. Regional water supply map By a happy accident of geography and through good planning, London is the one and only city in Ontario and in Canada that receives its clean water from two great lakes. Canada s Great Lakes that can be seen clearly from space hold twenty per cent of the world s supply of fresh water. pipes to the city s reservoirs. London s water comes to us from Lake Erie and Lake Huron through two regional water supply systems that treat the water to regulated standards and then pump it through a network of mega 1

Our clean water, which we purchase from the regional water supply systems, then flows through our municipal network of treatment facilities, pumping stations and pipes 4,300 km of pipes to our homes,

London s water system has three components: water, wastewater and storm water.

2 Our clean water, which we purchase from the regional water supply systems, then flows through our municipal network of treatment facilities, pumping stations and pipes 4,300 km of pipes to our homes, our businesses and industries and to our world class hospitals and university and college. But clean water is only part of the story of our water. London s water system has three components: water, wastewater and storm water. Jeremiah The Thames River running through the city provides a natural route for wastewater and storm water that once treated is returned to the river Complexity and Value This complex and interconnected system began in 1878 when Julian s great-greatgreat grandparents first experienced the convenience of indoor plumbing. Greenway is just one of our six sewage treatment plants. Did you know? The City of London drinking water consists of: 6,400 fire hydrants, 1500 kilometres of pipes buried under 2m of ground 7 active pumping station 2

3 The City of London sewage system consists of 1, 327 Km of sanitary gravity sewer 47 Km of forcemain 19,875 maintenance holes 34 pumping stations The City of London storm water drainage system consists of 1,322 Km of storm gravity sewer 18,472 storm access holes 100 storm water management facilities 2288 catchbasins 500 outfalls Financial Stability 2012 Water and Sewer Budget: $135 Million Total System Value: $4 Billion Through generations of Londoners our water system has been operated, maintained, updated and expanded until today as it serves 110,000 residential, commercial, industrial and institutional customers and represents a capital investment of $4 billion. It is a huge, complex, efficient and valuable system and you own it. We at the City of London operate it and maintain it for you, but you own it. We all own it and we are all responsible for it so that when Julian is grown and has children and great-grandchildren of his own the system will still be operating efficiently at an affordable price. Under the current rate structure the price we pay for water does not cover its full cost and does not reflect its true value. We are currently paying for the water we use but not adequately for the system that cleans it, stores it, pumps it and delivers it to our homes and offices, our industries, our schools, our college and university and our hospitals. 3

4 Our water rates don t cover the operating and maintenance costs of the network that takes the used water away, treats it and sends it to the river. It costs $135 million a year to operate and maintain London s water system. The system is run on a non-profit basis meaning the price charged to use it needs to cover the costs to run it but we do not make a profit. Revenue Base The current funding model that has been in effect for the past 20 years does not allow for full cost recovery. If we do not cover costs, we end up in a deficit position. Over the next five years we can project an operating deficit for the entire system - water, wastewater and storm - of $500 million. We need a new funding model that will help close the gap between cost and revenue and that will allow for life-cycle planning and infrastructure renewal. 4

5 (Conservation graph) The relationship between water use and the type of rate structure can be displayed by a basic economic supply and demand curve. On the left it shows how a purely volumetric water rate structure can affect conservation, i.e. there is significant incentive to reduce. On the right it shows the incentive to conserve with a purely fixed water rate structure. We are aiming to be on the left side of center Water Conservation is Important 26% reduction in Residential demand between 2001 and 2012 $100 Million in deferred infrastructure costs There has been a 26% reduction in water use by residents between 2001 and 2012, which means the City was able to defer $100 million in expenses and upgrades. As a community London should be proud of its efforts to conserve water. Water conservation is not only the right thing to do it is the smart thing to do. By conserving water you are paying less but you are also contributing to cost savings for the system. Because Londoners have been using less water we have been able to delay for many years the costly replacement of the water treatment plant at Lake Erie. 5

6 What is pipe value? Comparison of Residential and Industrial Pipe Distribution Each square represents the same area. The square on the left is residential and the square on the right is industrial. The land area is exactly the same but the length of pipe is much greater in the residential area, which costs more to service then the industrial area that has much less pipe length. 6

ICI accounts for 11% of the water accounts, generating 40% of the revenue and about 60% of the water used.

7 Metered Revenue and Pipe Value ICI (Industrial, Commercial and Institutional) customers account for 20% of the pipe value vs. a residential pipe value of 80%. ICI accounts for 11% of the water accounts, generating 40% of the revenue and about 60% of the water used. Residential accounts for 89% of the water accounts and only generates 60% of revenue and 40% of the water used. Annual Costs About 75% of our costs are fixed which are not dependent on the amount water used. Only 25% of our costs are variable and based on the amount of water we use. 7

New Model The purposed new model will look at balancing the fixed and variable

8 Current Model The current rate structure only has a 1% fixed rate and 99% is variable and based on the amount of water used. New Model The purposed new model will look at balancing the fixed and variable cost. Were all users will pay a fixed cost, and still pay for the water they use which will promote water conservation. 8

Economic development All new developments in the city, pay development fees, which in turn pays for their

One way to attract new business to London and to retain those that are already here is to ensure that they have

We need a new funding model that will support and encourage economic development and job creation and retention that

9 Economic development All new developments in the city, pay development fees, which in turn pays for their infrastructure. One way to attract new business to London and to retain those that are already here is to ensure that they have efficient and cost-effective access to an abundant and secure supply of safe, clean water. We need a new funding model that will support and encourage economic development and job creation and retention that does not put the burden of covering the cost on the residential sector Managing the Balance Each square represents the same amount of area, the square on the left is single meter homes, the square on the right is primarily bulk metered housing (apartments) 9

10 Industrial Customers Industry A is about the same area as Industry B but they pay substantially different amounts for their water. With the purposed change this will fix the inequities in the same rate class. 10

Institutional Customers Under the current funding model the storm water charge that this large institution pays is the same amount the 8 residential homes pay.

11 Institutional Customers Under the current funding model the storm water charge that this large institution pays is the same amount the 8 residential homes pay. The purposed rate structure will fix this inequity. Final Thoughts There is an old Irish proverb that goes: We do not know the value of water until we go dry. Well we re not about to go dry. We have the Great Lakes and an enviable water system. And we do know the value of water. Water is the source and sustainer of life. London s water system is vital to our quality of life, our personal and public health, fire protection, economic development and environmental protection. The proposed new funding model that will attempt to balance all of these different needs will be presented to the Civic Works Committee on October 22 for review. You have an opportunity between now and then to continue the dialogue on the value of water and to contribute your thoughts when the new funding model is presented to Council at a public meeting in November. 11

City of Ottawa Water, Wastewater and Stormwater Rate Structure Review

City of Ottawa Water, Wastewater and Stormwater Rate Structure Review The City of Ottawa is developing a new rate structure to fund its water, wastewater and stormwater infrastructure. We need your help