2008-11-03_Agenda Packet--Dossier de l'ordre du jour�1
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City of Saint John
Common Council Meeting
Monday, November 03, 2008
Committee of the Whole
1. Call to Order
5:00 p.m. 8th Floor Boardroom City Hall
1. Freedom of the City 10.2(4)(b)
2. Negotiations 10.2(4)(c)
Regular Meeting
1. Call to Order — Prayer
5:30 p.m.
2. Approval of Minutes
2.1 Minutes of October 20th, 2008
3. Adoption of Agenda
4. Disclosures of Conflict of Interest
5. Consent Agenda
5.1 N.B. Crime Stoppers (Recommendation: Refer to City Manager for Budget
Deliberation)
5.2 Seniors' Resource Centre Letter (Recommendation: Refer to City Manager for
Budget Deliberation)
5.3 Constriction of Watershed Protection Facilities - Phase III (Recommendation
in Report)
5.4 Canada Games Aquatic Centre - Request to Pre - approve an Expenditure for
the 2009 Capital Program (Recommendation in Report)
5.5 Future Use of the Jewish Synagogue- Carleton Street (Recommendation in
Report)
6. Members Comments
7. Proclamation
7.1 Crohn's and Colitis Awareness Month
7.2 Family Violence Prevention Month
8. Delegations/ Presentations
9. Public Hearings
10. Consideration of By -laws
11. Submissions by Council Members
11.1 Tracking of Council's Motions (Councillor Snook)
11.2 Recycling in Saint John (Councillor Titus)
113 311 Municipal Phone Service (Councillor Snook)
12. Business Matters — Municipal Officers
12.1 Update of Electronic System in Council Chamber
12.2 Setting Time for Budget Deliberation
13. Committee Reports
14. Consideration of Issues Separated from Consent Agenda
15. General Correspondence
Committee of The Whole Open Session
6:30 p.m.
1. Presentation of Consultant's Report- Review of Water Rates and Rate Stricture
Options
7:30 p.m.
2. River Road Community Alliance
3. St. Joseph's Hospital Foundation
4. Enterprise Saint John
5. Update on Saint John Harbour Clean -Up
16. Adjournment
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City of Saint John
Seance du conseil communal
Le lundi 3 novembre 2008
Comite plenier
1. Ouverture de la seance
17 h Salle de conference, 8' etage, hotel de ville
1. Droit de cite — alinea 10.2(4)b)
2. Negociations — alinea 10.2(4)c)
Seance ordinaire
1. Ouverture de la seance, suivie de la priere
17h30
2. Approbation du proces- verbal
2.1 Proces- verbal de la seance tenue le 20 octobre 2008
3. Adoption de l'ordre du jour
4. Divulgations de conflits d'interets
5. Questions soumises a 1'approbation du conseil
5.1 Echec au crime Nouveau-Brunswick (recommandation: transmettre au
directeur general aux fins de deliberations budgetaires)
5.2 Lettre du Seniors' Resource Centre (recommandation : transmettre au
directeur general aux fins de deliberations budgetaires)
5.3 Constriction de la phase III du projet d'installations de protection du bassin
hydrographique (recommandation figurant au rapport)
5.4 Centre aquatique des Jeux du Canada — Demande visant a obtenir la
preautorisation d'une depense dans le cadre du programme d'immobilisations de
2009 (recommandation figurant au rapport)
5.5 Utilisation fiiture de la synagogue juive de la rue Carleton (recommandation
figurant au rapport)
6. Commentaires presentes par les membres
7. Proclamation
7.1 Mois de sensibilisation aux maladies inflammatoires de l'intestin
7.2 Mois de prevention contre la violence familiale
8. Delegations et presentations
9. Audiences publiques
10. Etude des arretes municipaux
IL Interventions des membres du conseil
11.1 Suivi des motions du conseil (conseiller Snook)
11.2 Recyclage a Saint John (conseiller Titus)
113 Service telephonique municipal — 311 (conseiller Snook)
12. Affaires municipales evoquees par les fonctionnaires municipaux
12.1 Mise a jour du systeme electronique dans la salle du conseil
12.2 Fixation de Meure aux fins de deliberations budgetaires
13. Rapports deposes par les comites
14. Etude des sujets ecartes des questions soumises a 1'approbation du conseil
15. Correspondance generale
Comite plenier (seance publique)
18h30
1. Presentation du rapport du consultant — Evaluation des tarifs d'eau et options
relatives a la grille tarifaire
19h30
2. Alliance communautaire du chemin River
3. Fondation de 116pital St. Joseph's
4. Enterprise Saint John
5. Mise a jour relative au nettoyage du port de Saint John
16. Levee de la seance
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COMMON COUNCIL/CONSEILCOMMUNAL
OCTOBER 20, 2008 /LE 20 OCTOBRE 2008
COMMON COUNCIL MEETING — THE CITY OF SAINT JOHN
CITY HALL — October 20, 2008 6:30 P.M.
present
Ivan Court, Mayor
Deputy Mayor Chase and Councillors Court, Farren, Killen,
Higgins, McGuire, Mott, Snook and Sullivan, Titus
-and -
T. Totten, City Manager; J. Nugent, City Solicitor; G. Yeomans,
Commissioner of Finance and Treasurer; P. Groody,
Commissioner of Municipal Operations; K. Forrest,
Commissioner of Planning and Development; W. Edwards,
Commissioner of Buildings and Inspection Services; D. Scribner,
Inspector for Saint John Police Force; E. Gormley, Common
Clerk and J. Taylor, Assistant Common Clerk.
SEANCE DU CONSEIL COMMUNAL DE THE CITY OF SAINT JOHN
A L'HOTEL DE VILLE, LE 20 OCTOBRE 2008 A 18 H 30
Sont presents :
Ivan Court, maire
le maire suppleant Chase et les conseillers Court, Farren, Killen,
Higgins, McGuire, Mott, Snook, Sullivan et Titus
et
T. Totten, directeur general; J. Nugent, avocat municipal;
Greg Yeomans, commissaire aux finances et tresorier;
P. Groody, commissaire aux operations municipales; K. Forrest,
commissaire a I'urbanisme et au developpement; W. Edwards,
commissaire aux services d'inspection et des batiments;
D. Scribner, inspecteur du service de police de Saint John; ainsi
que E. Gormley, greffiere communale et J. Taylor, greffier
communal adjoint.
Call To Order — Prayer
Mayor Court called the meeting to order and Councillor Snook offered the opening
prayer.
Ouverture de la seance, suivie de la priere
La seance est ouverte par le maire Court, et le conseiller Snook recite la priere
d'ouverture.
2. Approval of Minutes
2. Approbation du proces- verbal
3. Approval of Agenda
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that the agenda of this meeting be
approved.
Question being taken, the motion was carried.
3. Adoption de I'ordre du jour
soit adopte.
Proposition du conseiller Titus
Appuyee par le conseiller McGuire
RESOLU que I'ordre du jour de la presente seance
A I'issue du vote, la proposition est adoptee.
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COMMON COUNCIL/CONSEILCOMMUNAL
OCTOBER 20, 2008 /LE 20 OCTOBRE 2008
4. Disclosures of Conflict of Interest
4. Divulgations de conflits d'interets
5. Consent Agenda
5.1 That the Saint John Free Public Library 2007 Financial Statement be received for
information.
5.2 That as recommended by the City Manager, Common Council authorize the
Common Clerk to sign an application to:
1. Amend the Municipal Plan by redesignating PID Numbers 40014, 39875, 37747,
55108062, 37481, 37739, 37762, 37507, 37499, 37515, 55088900, 55094908 and
55084420 as shown on Schedule 6A- Future Land Use of the Uptown Strategy from Low
Intensity Mix to High Intensity Mix; and
2. Rezone PID numbers 40014, 39875, 37747, 55108062, 37481, 37739, 37762, 37507,
37499. 37515, 55088900, 55094908 and 55084420 from B2 General Commercial to B3
Central Commercial.
5.3 That the letter from Mary Hanson requesting a waiver of Building Permit fees be
denied.
5.4 That as recommended by the City Manager, the tender in the amount of $42,250.
Plus tax, for the demolition and salvage of heritage items of the Broderick Building at 97
Union Street, be awarded to the low bidder Maintenance Services Limited (Bulldog
Demolition).
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that the recommendation set out for
each consent agenda item respectively be adopted.
Question being taken, the motion was carried
5. Questions soumises a I'approbation du conseil
5.1 Que les etats financiers de 2007 de la Bibliotheque publique de Saint John soient
acceptes a titre informatif.
5.2 Que, comme le recommande le directeur general, le conseil communal autorise
la greffiere a signer une demande visant a :
1. modifier le plan d'amenagement afin de faire passer la designation des NID 40014,
39875, 37747, 55108062, 37481, 37739, 37762, 37507, 37499, 37515, 55088900,
55094908 et 55084420, comme le montre I'annexe 6A - plan d'amenagement futur des
terres de la strategie de Uptown Saint John - de zone de melange a faible densite a
zone de melange a forte densite;
2. rezoner les NID 40014, 39875, 37747, 55108062, 37481, 37739, 37762, 37507,
37499, 37515, 55088900, 55094908 et 55084420 afin de faire passer la designation de
zone commerciale generale « B -2 » a zone commerciale centrale « B -3 ».
5.3 Que la lettre de Mary Hanson demandant une dispense de frais relativement au
permis de construire soit rejetee.
5.4 Que, comme le recommande le directeur general, le contrat relatif a la demolition
et a la recuperation des objets qui ont une valeur historique du batiment Broderick situe
au 97, rue Union, soit accorde au soumissionnaire le moins - disant, Maintenance Service
Limited (Bulldog Demolition and Environmental Services), au montant de 42 250 $,
taxes en sus.
Proposition du conseiller Titus
Appuyee par le conseiller McGuire
RESOLU que les recommandations formulees
relativement a chacun des points de la section Questions soumises a I'approbation du
conseil soient adoptees.
A I'issue du vote, la proposition est adoptee.
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OCTOBER 20, 2008 /LE 20 OCTOBRE 2008
6. Members Comments
Council members commented on various community events.
6. Commentaires presentes par les membres
Les membres du conseil s'expriment sur diverses activites communautaires.
7. Proclamation
7. Proclamation
8. Delegations /Presentations
8.1 Saint John Theatre Company
Referring to a submitted report, Stephen Tobias, Executive Director of Saint John
Theatre Company, provided an overview of the Saint John Theatre Company and made
a request to Council for funding.
On motion of Mayor Court
Seconded by Councillor Sullivan
RESOLVED that the report from Saint John
Theatre Company be referred to the City Manager.
Question being taken, the motion was defeated with Deputy Mayor
Chase, Councillors, McGuire, Snook, Titus, Killen, and Mott voting nay.
On motion of Councillor Titus
Seconded by Councillor Farren
RESOLVED that Common Council suspend the
procedural by -law to allow Council to make a motion with respect to the Saint John
Theatre Company's request for funding.
Question being taken, the motion was carried.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that Common Council provide
$25 000. to the Saint John Theatre Company.
Question being taken, the motion was carried.
8. Delegations et presentations
8.1 Compagnie theatrale de Saint John
Faisant reference a un rapport depose anterieurement, Stephen Tobias, directeur
general de la Compagnie theatrale de Saint John, donne un aperqu de la Compagnie,
puis fait une demande de financement.
Proposition du maire Court
Appuyee par le conseiller Sullivan
RESOLU que le rapport de la Compagnie theatrale
de Saint John soit transmis au directeur general.
A ('issue du vote, la proposition est rejetee. Le maire suppleant Chase
ainsi que les conseillers McGuire, Snook, Titus, Killen et Mott votent contre la
proposition.
Proposition du conseiller Titus
Appuyee par le conseiller Farren
RESOLU que le conseil communal suspende
I'arrete sur le reglement interieur afin de pouvoir presenter une proposition relative a la
demande de financement de la Compagnie theatrale de Saint John.
A ('issue du vote, la proposition est adoptee.
Proposition du conseiller Titus
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COMMON COUNCIL/CONSEILCOMMUNAL
OCTOBER 20, 2008 /LE 20 OCTOBRE 2008
Appuyee par le conseiller McGuire
RESOLU que le conseil communal attribue
25 000 $ a la Compagnie theatrale de Saint John.
A I'issue du vote, la proposition est adoptee.
8.2 Independence Plus
Referring to a submitted report, David Black, Executive Director of Independence Plus,
updated Council with respect to the Handi Bus service and their current financial
challenges and made a request to Council for additional funding.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that the request from Independence
Plus Handi Bus service for additional funding be referred to Saint John Transit for
consideration when preparing the Saint John Transit budget proposals.
Question being taken, the motion was carried.
8.2 Independence Plus
Faisant reference a un rapport depose anterieurement, David Black, directeur general
de Independence Plus, met le conseil au courant du service Handi -Bus et des defis
financiers actuels de ce dernier, puis fait une demande de financement supplementaire.
Proposition du conseiller Titus
Appuyee par le conseiller McGuire
RESOLU que la demande du service Handi -Bus de
Independence Plus visant a recevoir du financement supplementaire soit transmise a la
Commission des transports de Saint John afin d'etre examinee au moment de preparer
les propositions budgetaires de la Commission.
A I'issue du vote, la proposition est adoptee.
9. Public Hearings 7:00 P.M.
9. Audiences publiques a 19 h
10. Consideration of By -laws
10. Etude des arretes municipaux
11. Submissions by Council Members
11. Interventions des membres du conseil
12. Business Matters - Municipal Officers
12.1 Municipal Plan Update
Referring to a submitted report, Mr. Forrest updated council with respect to the proposed
changes to the Municipal plan.
On motion of Councillor Killen
Seconded by Councillor Titus
RESOLVED that Council establish a Municipal Plan
Council Committee and that the matter be referred to the Nominating Committee.
Question being taken, the motion was carried.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that Common Council receive the
presentation entitled Municipal Plan Update for information, and further that the City
Manager be directed to make every reasonable effort to provide the necessary financial
resources available in the 2009 Operating budget
Question being taken, the motion was carried.
12. Affaires municipales evoquees par les fonctionnaires municipaux
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COMMON COUNCIL/CONSEILCOMMUNAL
OCTOBER 20, 2008 /1-E 20 OCTOBRE 2008
12.1 Mise a jour du plan d'amenagement
Faisant reference a un rapport depose anterieurement, M. Forrest met le conseil au
courant du projet de modifications futures du plan d'amenagement.
Proposition du conseiller Killen
Appuyee par le conseiller Titus
RESOLU que le conseil forme un comite sur le plan
d'amenagement et que la question soit transmise au Comite des candidatures.
A ('issue du vote, la proposition est adoptee.
Proposition du conseiller Titus
Appuyee par le conseiller McGuire
RESOLU que le conseil communal regoive a titre
informatif la presentation sur la mise a jour du plan d'amenagement et, de plus, que le
directeur general soit charge de deployer tous les efforts raisonnables afin de fournir les
ressources financieres necessaires disponibles dans le budget de fonctionnement
de 2009.
A ('issue du vote, la proposition est adoptee.
12.2 An Action Plan for Safe, Clean Drinking Water
Referring to a submitted report, Mr. Groody presented Council with a proposed action
plan for safe, clean drinking water by explaining the infrastructure that would be
required, the estimated costs, and the proposed timeframe.
On motion of Councillor Farren
Seconded by Councillor Sullivan
RESOLVED that Council extend the Common
Council meeting beyond 10:00 p.m.
Question being taken, the motion was carried with Councillor Titus voting
nay.
Councillor Titus called a Point of Order in response to a remark made with respect to his
conduct towards a City staff member earlier in the meeting. Councillor Titus noted that
he was expressing his views and that he believes that he did not act inappropriately
towards the staff member. The Mayor spoke on the matter and an apology was offered
to Councillor Titus.
On motion of Deputy Mayor Chase
Seconded by Councillor Mott
RESOLVED that the report entitled An Action Plan
for Safe Clean Drinking Water be referred to the City Manager and that Staff produce a
report providing Council with direction for 2009.
Question being taken, the motion was carried.
12.2 Plan d'action pour la salubrite et la proprete de I'eau potable
Faisant reference a un rapport depose anterieurement, M. Groody presente au conseil
un projet de plan d'action pour la salubrite et la proprete de I'eau potable en expliquant
('infrastructure requise, le cout estime et le calendrier prevu.
Proposition du conseiller Farren
Appuyee par le conseiller Sullivan
RESOLU que la seance du conseil soit prolongee
au -dela de 22 h.
A ('issue du vote, la proposition est adoptee. Le conseiller Titus
vote contre la proposition.
Le conseiller Titus formule une objection en reponse a une remarque relative a son
92-
COMMON COUNCIL/CONSEILCOMMUNAL
OCTOBER 20, 2008 /1-E 20 OCTOBRE 2008
comportement a 1'egard d'un employe municipal plus tot au cours de la seance. Le
conseiller Titus mentionne qu'il ne faisait qu'exprimer son opinion. 11 ne croit pas avoir
agi de fagon inappropriee envers 1'employe municipal. Le maire se prononce sur la
question et le conseiller Titus presente ses excuses a 1'employe.
Proposition du maire suppleant Chase
Appuyee par le conseiller Mott
RESOLU que le rapport relatif au plan d'action pour
la salubrite et la proprete de 1'eau potable soit transmis au directeur general et que le
personnel fournisse au conseil un rapport d'orientation pour 2009.
A ('issue du vote, la proposition est adoptee.
13. Committee Reports
On motion of Councillor Killen
Seconded by Councillor Snook
RESOLVED that the report entitled Fundy Region
Solid Waste Commission 2009 Operating Budget be received for information.
Question being taken, the motion was carried.
13. Rapports deposes par les comites
Proposition du conseiller Killen
Appuyee par le conseiller Snook
RESOLU que le rapport relatif au budget de
fonctionnement de 2009 de la Commission de gestion de dechets solides de la region
de Fundy soit accepte a titre informatif.
A ('issue du vote, la proposition est adoptee.
14. Consideration of Issues Separated from Consent Agenda
14. Etude des sujets ecartes des questions soumises a I'approbation du
conseil
15. General Correspondence
15. Correspondance generale
16. Adjournment
The Mayor declared the meeting adjourned at 10:30 p.m.
16. Levee de la seance
Le maire declare que la seance est levee a 22 h 30.
Mayor /maire
Common Clerk/greffier communal
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47 Erin Drive,
Baxter" s Comer,
New Brunswick,
E2S 2L9,
Mayor and Council, City of Saint John,
P.O. Box 1971,
15 Market Square,
Saint John, NB,
E2L 4L L
Dear Mayor and Council,
As the 2008 calendar year draws to a close, we are reviewing our budget requirements for
the forthcoming year. We make this submission to you at this time in order that
consideration can be given during your budget process this fall.
Since the inception of Saint John and Western District CrimeStoppers in 1986, we have
had to raise money by various fund raising activities in order to ensure sufficient funds
are available to pay for the important work that we do and to pay for the important TIPS
that provide substantial aide to our police force in solving crimes.
In consideration of our financial needs, we ask that the Mayor and Council of the City of
Saint John budget the amount of $2500 to support the ongoing efforts of Saint John and
Western District CrimeStoppers for the year 2009.
Our Board of Directors would be most happy to make a presentation to your Council
regarding the important work and service of CrimeStoppers or provide you with further
information that you may require.
I thank you for your attention to this matter and should you need to contact me, I can be
reached at 6964483 anytime.
Yours truly,
William Brown,
President.
W
Seniors" Resource Centre
Brunswick Square, Level III
39 Kung Street, Saint John, NS, E2L 4W3
Phone: 633 -8781; Fax: 693 -6052; Email: coin
September 12, 2008
Mayor Ivan Court
City of Saint John
P.O. Box 1971
Saint John, NB
E2L 4A3
Dear Mayor Court:
The Seniors' Resource Centre serves a population base of 24,365 people who have been identified by the
2006 census as being over 50 years of age. This is 35.9 % of our total population. Our area has a higher
percentage of seniors than the national average. As the population ages, seniors will make up an ever
increasing percentage of our population. It is, therefore, vitally important that our Centre be able to
adequately respond to the information needs of our senior population, their families, and concerned friends.
Many seniors and their families are not aware of programs and services that are available to them and thus
miss out on the many opportunities that are available to them. The mandate of the Seniors' Resource Centre
is to meet these needs.
In 2008, the City of Saint John supported the Seniors' Resource Centre with $3,000.00. We are seeking your
support for 2009 for the same amount. Thank you for your very generous support in 2008 and in previous
years. We are constantly working within a limited budget. Our funding sources are always and forever
concerned with the needs of the Centre and the thousands of seniors looking for the services which we
provide.
As well as our continuing efforts to encourage seniors to become active and stay healthy, our emphasis for
the coming year will be to promote the use of readily available assistive devices for use in daily activities and
to set up a web site so that we can reach more seniors and their families with our information and resource
services. We are also wanting to produce PowerPoint presentations that can be shown to senior groups to
assist with the coping skills associated with aging.
Thank you again for your past donations. We area registered charity under 4891432042RR0001.
Sincerely,
Don S , President
Dr. Elsie Wayne, Tra surer, Honourary Lt. Col.
12
M & C 2008 - 328
October 30, 2008
His Worship Mayor Ivan Court
and Members of Common Council
Your Worship and Members of Council:
SUBJECT:
Contract No. 2008 -26: Construction of Watershed Protection Facilities — Phase III
PURPOSE
Im
The purpose of this report is to request the expenditure of available funds for installation of
additional guiderail under the watershed protection facilities project.
BACKGROUND
The 2008 Water and Sewerage Utility Fund Capital Program included fiinding for the
constriction of watershed protection facilities. On September 25, 2008, Common Council
approved the recommendation of M &C 2008 -299 for the award of Contract 2008 -26:
Constriction of Watershed Protection Facilities — Phase III to L. Halpin Excavating Limited at
their tender price of $143,694.19.
ANALYSIS
There is a need for additional guiderail installation at two locations near Spruce Lake. After
reviewing the contract unit prices for Contract No. 2008 -26: Constriction of Watershed
Protection Facilities — Phase III, staff are of the opinion that there are cost savings to be realized
by installing the additional guiderail under Phase III to take advantage of the competitive
contract unit prices. Constriction on this project is presently underway and is scheduled to be
completed by November 30, 2008.
13
M & C 2008 - 328
October 30, 2008
Page 2
FINANCIAL IMPLICATIONS
In the report submitted to Common Council on September 25, 2008 (M &C 2008 -299),
the analysis concluded that a total amount of $250,000 was provided in the Water & Sewerage
Utility Fund Capital Program Budget and that the projected completion cost of the project
included in Contract 2008 -26: Constriction of Watershed Protection Facilities — Phase III was
estimated to be $167,320.51, including the City's eligible H. ST. rebate — a $82,679.49 positive
difference.
The estimated cost for the constriction of the additional guiderail is $48,870.24. Assuming
Council gives approval for installation of the additional guiderail, the projected
overall completion cost including the work already approved by Council (M &C 2008 -299)
is $212,051.40, including the City's eligible H.S.T. rebate — a net $37,948.60 positive difference.
RECOMMENDATION
It is recommended Council authorize the constriction of the additional guiderail near Spruce
Lake to be completed under Contract No. 2008 -26: Constriction of Watershed Protection
Facilities — Phase III at an additional cost of $48,870.24 as calculated based on estimated
quantities.
Respectfi lly submitted,
J. M. Paul Groody, P. Eng.
Commissioner
Municipal Operations & Engineering
Terrence L. Totten, F.C.A.
City Manager
14
OPEN SESSION
M & C 2008 — 327
October 30, 2008
His Worship Ivan Court
and Members of Common Council
Your Worship and Councillors:
SUBJECT
Canada Games Aquatic Centre — Request to pre- approve an expenditure for the
2009 Capital Program
BACKGROUND
Facility Management, on behalf of the Canada Games Aquatic Centre (CGAC), is
facilitating the replacement of the roof of the building. Although the replacement
project was originally planned to be over a multi -year period, inspection by a
roofing consultant engaged by Facility Management found that the roof is in need
of replacement within the next 12 months.
This project was identified as a priority for 2008 and all facility - related capital
funds for the CGAC were allocated to this project. Due to the deteriorated
condition of the roof, it is advisable to complete the roof replacement in its
entirety. It is recommended that a tender be issued as soon as possible. It is
anticipated that this project could be complete by July 1, 2009.
With the reallocation of the 2008 capital budget to this project, there is currently
enough funding available for phase one of this project. In order to award this
project in its entirety this year (phase one and two), it will be necessary to receive
pre - approval from Council for the 2009 capital budget of $550,000 of the CGAC
capital submission. The total cost for Phase I and II (which will complete the
project) is estimated to be in the order of $950,000.
15
M & C 2008 — 327 - 2 - October 30, 2008
RECOMMENDATION
It is recommended that Common Council pre- approve a portion of the 2009
Capital Program for the Canada Games Aquatic Centre in the amount of $550,000
for phase two of the CGAC roof replacement.
Respectfully submitted,
Amy Poffenroth, P.Eng. MBA
Deputy Commissioner
Buildings and Inspection Services
Terrence Totten, FCA
City Manager
10
M&C #2008- 329
October 30, 2008
His Worship Mayor Ivan Court
And Members of Common Council
Your Worship and Members of Council:
SUBJECT: FUTURE USE OF THE JEWISH SYNAGOGUE— CARLETON STREET
The city of Saint John
At the end of November, the City of Saint John will be acquiring title to the Jewish Synagogue
on Carleton Street,
At the time Council approved the purchase of this facility it was anticipated that this building
would be demolished as part of the Peel Plaza development. However, as a result of significant
public consultation, the foot print of the development has changed. Also, it became apparent that
many in our community were very much protective of the existing strectscape on Wellington
Row.
The question that now needs to be addressed is, "What useful purpose can this facility serve?"
City staff have discussed a number of possibilities, but in the end concluded that it would be
useful to ask the Community Arts Board to take on the responsibility of convening a public input
session related to all possible options, including some that could fall well beyond the particular
interest or the mandate of the Arts Board. In any event, Mr. Wenneberg has graciously
volunteered that the Community Art Board would pursue this initiative on behalf of Common
Council.
RECOMMENDATION:
That Common Council request the Saint John Community Arts Board to convene an appropriate
community input session exploring all possible future uses of the Jewish Synagogue on Carleton
Street with pch sessions to Meld at the Synagogue and no later than January 31, 2009.
Terrence L. Totten, FCA
CITY MANAGER
17
(60L)r-
SAINT JOHN
VjW1610 MIT, rK, V i V Me, I
WHEREAS: Crohn's and Colitis Awareness Month is a call
to action to advance public understanding of
Crohn's disease and ulcerative colitis; and
WHEREAS: Crohn's and Colitis Awareness Month will
celebrate the courage of some 200,000
Canadian men, women and children living
with these two debilitating diseases; and
WHEREAS: Crohn's and Colitis Awareness Month will
encourage Canadians to help find a cure for
Crohn's disease and ulcerative colitis; and
WHEREAS: Canada may be a leader in educating other
countries about inflammatory bowel disease.
NOW THEREFORE: 1, Mayor Ivan Cour t
of Saint John do hereby proclaim that November 2008 be
observed as Crohn's and Colitis Awareness Month in the City
of Saint John.
In witness whereof I have set my hand and affixed the
official seal of the Mayor of the City of Saint John,
P.O. Box 1971 Saint John, NB Canada E2L4L1 I wwwsaintjohn.ca � CA 1971 Saint John, N.-B. Canada E2L4L1
M
(94--
SAINT JOHN
# 110 4, �
WHEREAS: the consequences of family violence affect all of us;
and
WHEREAS: family violence include
youth, of older persons,
with disabilities; and
abuse of children and
of a partner or persons
WHEREAS: it can take a number of forms: physical assault,
emotional and sexual abuse; and
WHEREAS: family violence is one of the most widespread,
insidious issues affecting our province and our
society; and
WHEREAS: the Muriel McQueen Fergusson Foundation, a
charitable trust, was established to fund research
into the causes, incidence and forms of treatment
of family violence as well as to promote and
sponsor effective public education programs to
counter widespread ignorance of the problem;
NOW THEREFORE: I, Mayor Ivan Court, ( of
Saint John do hereby proclaim the month of November 2008 as
"Family Violence Prevention Month"
In witness whereof I have set my hand and affixed the official seal
of the Mayor of the City of Saint John.
RO. Box 1971 Saint John, NB Canada E2L 4LI I www.saintjohn.ca I C.P. 1971 Saint John, N.-B. Canada E2L 4LI
19
October 30, 2008
His Worship Ivan Court and
Members of Common Council
Your Worship and Councillors:
Subject: Tracking of Council's Motions
I feel it is necessary for the city manager to create a systematic and routine way to
communicate with Common Council on work being done in response to motions made
by Councillors. I believe regular and consistent reporting between staff and Council in
regard to this matter will facilitate a greater level of efficiency and accountability. I
recognize that some motions include "time frames" which addresses the question of
when staff should be prepared to have the motion's work completed. Every motion,
however, should be "tracked" and have realistic time restrictions applied.
Motion: I propose that the city manager present on a regular basis progress
reports to Council in regard to motions passed by council. These reports,
whenever possible, should include realistic time frames and deadlines for the
completion of work.
Respectfully Submitted,
(received via e-mail)
Councillor Snook
G40- - . . . . .............. . . ... . . ... . . . ..................................................................... . - -------------- ---- - - ------ - - ------------- ______
SAINT JOHN RO. Box 1971 Saint John, NB Canada E2L 4L1 � wwwsaintjohn.ca I C.P. 1971 Saint John, N.-B. Canada E2L 4L1
20
October 30, 2008
Mayor Ivan Court and Members
Common Council:
RE: Recycling in Saint John
As Council's Representative for Fundy Solid Waste, I would like to provide Council with
an update regarding recycling and dispel any misinformation that may exist in the
community.
Respectfully submitted,
(source verified)
Councillor Chris Titus
Gw� �--
SAINT JOHN RO. Box 1971 Saint John, NB Canada E2L 4LI I wwwsaintjohn.ca � C.R 1971 Saint John, N.-B. Canada E2L 4LI
21
Tice City of Saint John
October 30, 2008
His Worship Ivan Court and
Members of Common Council
Your Worship and Councillors:
Subject: 311 Municipal Phone Service
On several occasions citizens of Saint John have expressed to me frustration about the
customer service they have received when a call is placed to the City of Saint John. I
have also heard from several current Councillors and city Staff the desire to constantly
look for ways to improve the delivery of city services. I believe we need to explore
various ways we might achieve a greater level of efficiency. As a part of this process, I
am suggesting that Council consider implementing a 311 Municipal Phone Service,
311 is a contact number to access non-emergency municipal services. This system is
proving to be successful in places like Calgary, Alberta to improve the accessibility,
responsiveness, consistency and quality of municipal services.
The establishment of a 311 city phone service would provide the citizens of Saint John
one number to access and find out information on all city services. We need this! It will
help our city become more effective and efficient in the delivering of services to the
citizens of Saint John. It will also help facilitate better communication by linking people
with resources and vital service supports.
Motion: I propose that the city manager present a report to Common Council on
the implementation of a 311 municipal phone service for the City of Saint John.
Respectfully Submitted,
(received via e-mail)
Councillor Snook
SAINT JOHN P.0, Box 1971 Saint John, NB Canada E2L 4L1 N wwwsaintjohn.ca I C.R 1971 Saint John, N.-B. Canada E2L 40
22
,
November 3, 2008
His Worship Mayor Ivan Court
And Councillors
Subject: Update of Electronic System in Council Chamber
Your Worship and Councillors,
Background
The electronic system in the Council Chamber that enables structured debate and
interpretation is in need of upgrading. Our information technology department informs
us that the Mayor's laptop that controls the microphones and the associated software,
initiated in 2003, is nearing the end of its useful life and needs replacing. Council
members are aware of the importance of the efficient operation of this system.
With that in mind the Clerk's office had planned to replace the laptop in 2008, and hoped
to purchase a voting system for Council to eliminate any voting misunderstandings. This
system would allow each member of Council to register his or her vote via an electronic
control located on the microphone. The results would then be transmitted to the Mayor
and Common Clerk as well as posted on a LCD screen for instant viewing by the public
and media, ensuring accountability, transparency and accurate record keeping. The
system would integrate with the current equipment in the Council Chamber and would be
installed and supported by the same Canadian Company we have been working with
since the previous equipment upgrade in the Chambers.
Our research revealed that many other municipalities are utilizing electronic voting
equipment in their Council Chambers. Recently, our Staff contacted the Municipal Clerk
from the Regional Municipality of Cape Breton where this exact equipment has been
used since 2009. The Clerk explained that they have found this equipment to be
excellent emphasizing that it is a necessity with respect to eliminating human error and
creating an atmosphere of transparency to the public.
Financial and Other Implications
As the 2008 budget year comes to a close a budget analysis reveals that there are
savings in the Clerk's budget arising from the lack of a full complement of staff for
several months during the year.
The cost to upgrade the present electronic system by the same Canadian company that
we have dealt with for years would be approximately $38,000.00 with tax and labour
included. This amount is presently available in the 2008 budget.
SAINT JOHN P.O. Box 1971 Saint John, NB Canada E2L41.1 � www.sahqohn.ca I Cep; 1371 Saint John, NA. Canada E2L4'L1
--�-
23
The choice of these systems is somewhat restricted because of their limited and specific
use. If Council agrees with the purchase of the integrated system, the City would have to
sole source this acquisition to Duoson Multimedia, and issue a purchase order to obtain
the system.
Recommendation
That Council approve the purchase of a software upgrade and new electronic voting
equipment from Duoson Multimedia at the quoted price of $38,163.63.
Respectfully submitted,
I lizabeth Gormle
Common Clerk
24
DIGITAL VERSATILITY IN
CONFERENCE MANAGEMENT
25
Our reference;
Company:
ProjecL :
Quotation dale;
I
PROPOSAL
SYMt-MES DE. DISCUSSION MULTI-MICROPHONES / MULTI-MICROPHONFS CONFERENCFNG SYSTEMS
SYSItME DE RE PONSE [N-rERAC-11F SAN S FIL / W IRELESS INTERACT RESPONSE SYSTEMS
MREWU�r�l
ECLA I RAG E / LIGHTING SYSTEM
Name.
City of Saint -John
LBB 3525/00 needed only if voting units are
Company:
City of Saint-John
Address
PO Box 1971,
Address:
PO Box 1971,
Saint John (New Brunswick)
Saint John (New Brunswick)
LBB3590
Canada
3
194,64
Canada
Contact:
11
GENERIKV
Contact
Phone.
506 333 -9432
647,78
one
ext.
Fax-
89,76
Fax -
987,36
E- Mail
GENERIKV
E-Mail
I Code
Description
266,44
Total
26
LBB 3525/00 needed only if voting units are
not flush
mounted
Choose between LBB3541100 OR LBB3542/00
1
LBB3590
Logiciel DCN Startup Software Bosch
3
194,64
3
194,64
11
GENERIKV
LBB 3540/15 Muti purpose connection unit
967,98
10
647,78
11
GENERIKV
LBB 3525/00 Desk Top housing
89,76
987,36
11
GENERIKV
LBB3541100 Basic Voting panel
206,04
2
266,44
11
GENERIKV
LBB3542/00 LCD voting panel
350,88
3
859,68
1
GENERIKV
LBB 3575/00 Parliamentary Voting
4
311,54
A
311,54
1
GENERIKV
LBB 3584/00 Video Display software
2
737,68
2
737,66
1
GENERIKV
Custom display software
1
588,00
1
588,00
I
GENERIKV
Cabling & connectors
343,00
343,00
26
duosonli
MULTIMEDIA
Our reference:
CISJ000I00002
Company:
City of'Saint-John
Project :
Voting City Hall
Quotation date:
08/10/23 & 13:57
Account manager:
Gilles Goudreauft
Conditions:
30 Days - Cheque
Page 2 of 3
IIIn. JVFUZ���
Option A; Actual system f adding voting panel no LCD: $29,913,44
Option B: Actual system+ adding LCD voting panel - $31,506,68
27
PROPOSAL I
SUMMARY TOTAI,
WUIPMENT 29 936,12
LABOUR: 3 117,00
SHIPPING: 720,00
SUB-TOTA• 33 773,12
HST: 4390,51
NOTE PST.- 0,00
Labour costs associated with this event are given as an indication only. These costs
will be revised to reflect the total numbers of hours effectively done, No refund on
piece(s) of equipment ordered but not used.. TOTAL: 38 163,63
AC'CEPT'ED BY:
City ofsaint -John
SIGNATURE.:
NAME:
TITLE:
DAi,r:
a 10101 1,0101
28
Our reference:
CISJOOOI00002
duoson
Company:
City of Saint-Johr
MLJLTIMEDIA
Project:
Voting City Hall
6125, rue Corbeil
Quotation date:
08/10/23 i 13:57
Trois-Rivi6res (Qudbec)
Account manager:
Gilles Goudreault
Canada G8Z4S6
T616phonc: (819)3734701
Conditions:
30 Days - Cheque
T616copicur :(819) 373 -6604
Page 3 of 3
PROPOSAL I
SUMMARY TOTAI,
WUIPMENT 29 936,12
LABOUR: 3 117,00
SHIPPING: 720,00
SUB-TOTA• 33 773,12
HST: 4390,51
NOTE PST.- 0,00
Labour costs associated with this event are given as an indication only. These costs
will be revised to reflect the total numbers of hours effectively done, No refund on
piece(s) of equipment ordered but not used.. TOTAL: 38 163,63
AC'CEPT'ED BY:
City ofsaint -John
SIGNATURE.:
NAME:
TITLE:
DAi,r:
a 10101 1,0101
28
M&C #2008
October 31, 2008
His Worship Mayor Ivan Court
And Members of Common Council
Your Worship and Members of Council:
SUBJECT: SETTING TIME FOR BUDGET DELIBERATION
As Council is aware, city staff has been compiling information necessary for inclusion in the
2009 Operating and Capital Budgets, as well as for longer term planning purposes. At the same
time, Council has received a number of requests from various groups seeking financial support
from the City of Saint John.
From everyone's perspective, it would be helpful if Council were able to schedule a series of
"Open Committee Meetings" to receive presentations as to the financial needs and issues facing
the Administration as well as Commissions, Boards and other Agencies.
The presentations and requests would be "as submitted'" to the City Manager. In other words,
Council and the public would be given. every opportunity to gain a full appreciation of all of the
various issues. At the same time, it would provide the City Manager the opportunity to listen to
comments from elected officials, so that he and the Commissioner of Finance are better able to
eventually submit a budget that could be supported by the majority of Common Council.
RECOMMENDATION:
That the Mayor, working with other Members of Council, endeavour to schedule a series of Open
Committle Meetings bet en Monday, November 17 and Friday, December 5.
Terrence L. Totten,
CITY MANAGER
29
M &C2008 -331
October 30`h, 2008
His Worship Mayor Ivan Court
And Members of Common Council
Your Worship and Members of Council,
SUBJECT: PRESENTATION OF CONSULTANT'S REPORT
REVIEW OF WATER RATES AND RATE STRUCTURE OPTIONS
BACKGROUND
r�
k � TM
a �o
The Cater of Sahu john
Saint ,John Water provides utility services to customers on a cost - recovery basis. As such,
pricing is required to cover the full cost of operations and service delivery, including
debt charges associated with capital construction. The New Brunswick Municipalities Act
requires user -pay and balanced budgets for water and sanitary sewage services.
The City of Saint ,John accepted the proposal of R.V. Anderson Associates Limited
(Touchie Engineering) to undertake a full analysis of rate structure alternatives and rate
adequacy for Saint ,John Water; to help redefine the basis for pricing policies and to
assure the public that equity and fairness are reflected in the charges for water and
wastewater services. Two requirements are fundamental to equitable cost allocation
and, hence, equitable user - rates: (1) a solid set of principles upon which to base the
system of charges; and (2) a logical approach for rate structure and rate calculation.
Purpose of Report The consultants will present their (attached) report "Review of
Rates and Rate Structure Options" to Common Council.
ANALYSIS
Saint ,John Water seeks to control operating expenses and infrastructure costs; to deliver
high quality, reasonably priced services for generations of Saint ,Johners. Charges need
to reflect true costs and induce efficient water consumption, promote optimization and
least -cost solutions, achieve equity and affordability in cost - sharing practices, and
i
¢(n lrU
PRESENTATION OF CONSULTANT'S REPORT OCTOBER 30TH, 2008
REVIEW OF WATER RATES AND RATE STRUCTURE OPTIONS PAGE 2
assure the long -term viability of the water and wastewater utility. The system of rates
must support sustainability of services, systems and infrastructure.
Users, customers or ratepayers of the utility, however, are not all the same. They range
from single family households to large industrial enterprises that consume huge
volumes of water, and everything in between. The challenge for Common Council in
setting user rates is to equitably distribute utility costs across its diverse customer
groups; to allocate charges in a manner proportionate to the cost burden associated
with servicing the various classes of customer. In other words, those who utilize water
and /or sewerage services should be charged their fair share of overall system costs.
FINANCIAL IMPLICATIONS
User rates have increased substantially in recent years and will continue to rise into the
future to support the essential upgrades being made in wastewater treatment,
enhancement of drinking water quality and adequate investment in infrastructure
renewal. The attached report should provide guidance in what charges should be.
RECOMMENDATION
It is recommended that Common Council consider the consultant's presentation and
refer their report to the City Manager and staff for analysis and recommendations.
Respectfully submitted,
J.M. Paul Groody, P.Eng.
Commissioner,
Municipal Operations and Engineering
Terrence L. Totten, FCA
City Manager
!�
Gregory j. Yeomans, CGA, MBA
Commissioner of Finance
Engineering
a division of RI.V. Anderson Assmwjle�, Limited
32
TTouchie Engineering
Consulting Engineers and Technology Managers
a division of R.V. Anderson Associates Limited
October 30, 2008
City of Saint John
175 Rothesay Avenue
Saint John, NB E2J 2134
Attention: Mr. Paul Groody, P.Eng.
Commissioner
Municipal Operations and Engineering
Re: Saint John Water
Review of Rates and Rate Structure Options
860 Main St., Suite 801
Moncton, New Brunswick, Canada E1 C 1 G2
Telephone: (506) 857 -8525
Fax: (506) 858 -5972
E -mail: moncton@touchieengineering.nb.ca
Web Site: www. touch ieengineering.nb.ca
File: 061105
In accordance with our Proposal and Terms of Reference, we are pleased to submit this
comprehensive Water and Sewer Rate Report to the City of Saint John.
This report has developed from an initial review of rates to a complete Business Plan
review of the Utility, similar to the report that was completed in 2002. An extensive
review of the current practice carried out by the City in setting water and sewer rates
was carried out, the public was asked for their input, and an entire section of the report
reviewed affordability to the customers of Saint John Water.
An "Executive Summary" and "Appendixes" have been included under separate cover to
the main report.
We wish to express our appreciation for the cooperation and assistance of Staff during
the course of this review and appreciate the opportunity to be of service on this very
important project.
Respectively submitted,
TOUCHIE ENGIN
Jo". W. Gallant, P. E
33
Review of Rates and Rate Structure Options
FINAL REPORT
Prepared for:
The City of Saint John, NB
This report is protected by copyright and was prepared by Touchie Engineering, a division of R. V.
Anderson Associates Limited in association with R.M. Loudon Limited, for the account of the City
of Saint John. It shall not be copied without permission. The material in it reflects our best
judgment in light of the information available to Touchie Engineering at the time of preparation.
Any use which a third party makes of this report, or any reliance on or decisions to be made
based on it, are the responsibility of such third parties. Touchie Engineering accepts no
responsibility for damages, if any, suffered by any third party as a result of decisions made or
actions based on this report.
Touchie Engineering
Consulting Engineers and Teelmology Managers
a division of R.V. Anderson Associates Limited
860 Main Street, Suite 801
Moncton, NB E1 C 1 G2 Canada
Tel: (506) 857 -8525
Fax: (506) 858 -5972
Email: rnonctorl _ touchieerlgjrl�.nb.ca
RVA 061105
October 30, 2008
34
City of Saint John
CITY OF SAINT JOHN
Page 1 of 198
Review of Rates and Rate Structure Options
1 INTRODUCTION ................................................................................. ............................... 9
1.1 Purpose of This Report .................................................................... ...............................
9
1.2 Background ................................................................................... ...............................
10
1.3 Technical Basis of User Rates ....................................................... ...............................
12
2 CURRENT WATER SYSTEM STATUS ............................................ ...............................
14
2.1 Water System Configuration .......................................................... ...............................
14
2.1.1 Potable Water System ........................................................ ...............................
14
2.1.2 Loch Lomond Supply ......................................................... ...............................
16
2.1.3 Spruce Lake Supply ........................................................... ...............................
16
2.1.4 East Musquash Replenishment of Spruce Lake ................. ...............................
17
2.1.5 Little River System ............................................................. ...............................
18
2.2 Current By -Law Rates and Charges .............................................. ...............................
19
2.2.1 Volumetric Rates — Metered Water Customers .................. ...............................
20
2.2.2 Service Charge — Metered Water Customers ..................... ...............................
22
2.2.3 Flat Rates ........................................................................... ...............................
22
2.2.4 Rate for Wastewater (Sewage Rate) .................................. ...............................
23
2.2.5 Late Payment ..................................................................... ...............................
24
2.2.6 Miscellaneous Charges ...................................................... ...............................
24
2.3 Customers ..................................................................................... ...............................
26
2.3.1 Flat Rate ............................................................................ ...............................
26
2.3.2 Metered Customers ............................................................ ...............................
27
2.4 Contract Customers ....................................................................... ...............................
28
2.4.1 Irving Pulp and Paper ( IPP) ................................................ ...............................
29
2.4.2 Irving Oil Limited (IOL) ....................................................... ...............................
33
2.4.3 Irving Paper — Little River Spillage Charges ....................... ...............................
36
2.4.4 Coleson Cove Thermal Generating Station ........................ ...............................
38
2.4.5 Town of Rothesay ( "Kennebecasis Park" System) ............. ...............................
39
2.5 Consumption ................................................................................. ...............................
40
2.5.1 Supply Volumes ................................................................. ...............................
40
2.5.2 Flat Rate Customer Consumption ...................................... ...............................
42
2.5.3 Total Consumption ............................................................. ...............................
46
2.5.4 Largest Users ..................................................................... ...............................
48
2.5.5 Seasonality ........................................................................ ...............................
49
2.5.6 Consumption Profile ........................................................... ...............................
49
2.6 Expenditures .................................................................................... .............................51
2.7 Revenues ...................................................................................... ...............................
55
Review of Rates and Rate Structure Options Final Report
RVA 061105 October 14, 2008
35
City of Saint John Page 2 of 198
!
2.7.1 Total Revenues .................................................................. ............................... 55
2.7.2 Actual Consumption & Revenue Analysis .......................... ...............................
56
2.7.3 Fire Protection Charge ....................................................... ...............................
58
2.7.4 Storm Sewer Charge .......................................................... ...............................
64
3
AFFORDABILITY ................................................................................
.............................67
3.1
Purpose ......................................................................................... ...............................
67
3.2
Definition of Affordability ................................................................ ...............................
67
3.3
Overview of the Affordability Issue ................................................. ...............................
69
3.3.1 Measuring Affordability ....................................................... ...............................
69
3.3.2 Responsibility for Affordability ............................................ ...............................
72
3.3.3 Options to Improve Affordability ......................................... ...............................
73
3.4
Scan of Canadian Municipalities .................................................... ...............................
75
3.4.1 Purpose ............................................................................. ...............................
75
3.4.2 Methodology ...................................................................... ...............................
75
3.4.3 Results of the Scan ............................................................ ...............................
77
3.4.4 Summary of Findings ......................................................... ...............................
80
3.5
Affordability in Saint John .............................................................. ...............................
80
3.5.1 Is Affordability a Problem? ................................................. ...............................
80
3.5.2 Evaluation of Affordability Measures .................................. ...............................
83
3.5.3 Poverty Alleviation Measures Currently Used in Saint John
.............................. 85
3.5.4 Conclusions ....................................................................... ...............................
86
4
USER SURVEY ................................................................................. ...............................
88
5
STRATEGY ISSUES ......................................................................... ...............................
91
5.1
Purpose ......................................................................................... ...............................
91
5.2
Historical Perspective .................................................................... ...............................
91
5.3
Future Needs — A Multi- Barrier Approach to Water Supply ............ ...............................
93
5.4
Future Direction - Vision 2015 ....................................................... ...............................
94
5.5
Source Protection .......................................................................... ...............................
95
5.5.1 Watershed Protection Areas .............................................. ...............................
95
5.5.2 Watershed Ownership ........................................................ ...............................
96
5.5.3 Watershed Protection ......................................................... ...............................
97
5.6
Water Treatment ............................................................................ ...............................
97
5.7
Transmission & Distribution ........................................................... ...............................
97
5.8
User Pay Billing — Flat Rate Customers ......................................... ...............................
98
6
FINANCIAL PLAN ............................................................................ ...............................
99
6.1
Overview ....................................................................................... ...............................
99
6.2
Capital Stabilization Reserve Fund, Rate Increases & Debenturing
............................ 100
6.3
Operating Costs ........................................................................... ...............................
101
6.4
Fiscal Services ............................................................................ ...............................
103
6.5
Capital Program ........................................................................... ...............................
105
Review of Rates and Rate Structure Options
Final Report
RVA
061105
October 14, 2008
!
City of Saint John Page 3 of 198
Review of Rates and Rate Structure Options Final Report
RVA 061105 October 14, 2008
37
6.5.1
Upgrading ........................................................................ ...............................
105
6.5.2
Replacement ........................................ ............................... ............................106
6.5.3
Growth ............................................................................. ...............................
110
6.5.4
Breakdown of 2007 Investments by Category .................. ...............................
111
6.5.5
Capital Budget 2007 to 2012 ............................................ ...............................
113
6.6
Other Revenues .......................................................................... ...............................
114
6.7
2007
to 2012 Financing Strategy ................................................. ...............................
114
6.7.1
Water System .................................................................. ...............................
114
6.7.2
Sewage System ............................................................... ...............................
115
6.7.3
Projected Debt Charges ................................................... ...............................
116
6.8
Summary ..................................................................................... ...............................
119
7
PROPOSED WATER AND SEWER RATE STRATEGY ................. ...............................
120
7.1
Principles
and Objectives ............................................................. ...............................
120
7.1.1
Equity - Fairness & User Pay ........................................... ...............................
120
7.1.2
Revenue Adequacy .......................................................... ...............................
122
7.1.3
Legality ............................................................................ ...............................
123
7.1.4
Source Sustainability ........................................................ ...............................
123
7.1.5
Technical & Administrative Feasibility .............................. ...............................
124
7.1.6
Affordability ...................................................................... ...............................
124
7.1.7
Public Acceptance ............................................................ ...............................
124
7.1.8
Equality ............................................................................ ...............................
125
7.1.9
Water Use Efficiency ........................................................ ...............................
125
7.1.10
Encourage Development .................................................. ...............................
125
7.1.11
Summary .............................................. ............................... ............................126
7.2
Rate
Structure Alternatives .......................................................... ...............................
127
7.2.1
Special Factors Affecting Future Water Rate Format ....... ...............................
127
7.2.2
Fixed Charge Options ...................................................... ...............................
128
7.2.3
Single Block Rate (SBR) .................................................. ...............................
130
7.2.4
Declining Block Rate (DBR) ............................................. ...............................
131
7.2.5
Increasing Block Rates (IBR) ........................................... ...............................
132
7.2.6
Humpback Rate ( HBR) ..................................................... ...............................
134
7.2.7
Lifeline Rate (LR) ............................................................. ...............................
135
7.2.8
Seasonal Excess Use Rate (EUR) ................................... ...............................
135
7.2.9
Seasonal Rate (SR) ......................................................... ...............................
137
7.2.10
Multiple or Combined Rate Formats ................................. ...............................
138
7.3
Rate
Formats Past & Future ........................................................ ...............................
139
7.3.1
Block Rate Formats Proposed in 2002 ............................. ...............................
139
7.3.2
Block Rate Formats Adopted Since 2002 ......................... ...............................
141
7.3.3
Recommended Water Rates Format ................................ ...............................
142
7.3.4
Future Rate Format Post Water Treatment Plant ............. ...............................
145
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37
City of Saint John Page 4 of 198
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!m
7.3.5
Recommendation Regarding Flat Rate Equivalent Volume .............................
148
7.4
Water
Rates Calculation Basis ..................................................... ...............................
150
7.4.1
AWWA Recommends Sound Funding Using Defendable User Rates .............
150
7.4.2
Rate Calculation Methodology .......................................... ...............................
152
7.4.3
Water System Criteria & Allocation Factors ...................... ...............................
153
7.4.4
Rate Formulation Features ............................................... ...............................
158
7.4.5
Consumption Data for Rate Calculations .......................... ...............................
159
7.5
Step 1
— Adjust 2007 Rates to Meet Actual Revenue Requirements ...........................
161
7.5.1
Budget Update ................................................................. ...............................
161
7.5.2
Full Cost Recovery Rates - Current Rate Format ............. ...............................
162
7.6
Step 2
— Convert 2007 Water Rates to Recommended Format ... ...............................
164
7.6.1
Features of New Format ................................................... ...............................
164
7.6.2
Revenue Requirements by Function ................................ ...............................
166
7.6.3
Functional Costs Allocated to Rates Components ............ ...............................
170
7.6.4
Service Charges ............................................................... ...............................
172
7.6.5
Volumetric Rates .............................................................. ...............................
176
7.6.6
Flat Rate .......................................................................... ...............................
179
7.6.7
Sewage Surcharge ........................................................... ...............................
179
7.6.8
Rates Summary ............................................................... ...............................
180
7.6.9
Impact .............................................................................. ...............................
181
7.6.10
Observations ........................................ ............................... ............................182
7.7
Step 3
— Increase Rates to Meet 2009 Financial Plan Requirements ..........................
183
7.7.1
Features of 2009 Rates .................................................... ...............................
183
7.7.2
Rates (Proposed for 2009) ............................................... ...............................
184
7.7.3
Impact .............................................................................. ...............................
184
7.7.4
Observations ........................................ ............................... ............................185
7.8
Impact
of Moving from Existing 2007/2008 Rates to Recommended 2009 Rates .......
186
7.9
Spillage
Rate ............................................................................... ...............................
188
7.10 Negotiations Pending - IPP & IOL Lapsed Agreements Moved to By -law Rates - 2007
188
7.10.1
Basis of Calculation .......................................................... ...............................
188
7.10.2
Rates ............................................................................... ...............................
189
7.10.3
Impact .............................................................................. ...............................
191
7.10.4
Observations ........................................ ............................... ............................192
8
RECOMMENDED STRATEGY & IMPACT ..................................... ...............................
194
8.1
Strategy ....................................................................................... ...............................
194
9
FINDINGS
AND RECOMMENDATIONS ......................................... ...............................
194
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RVA 061105 October 14, 2008
!m
City of Saint John Page 5 of 198
Exhibits
Exhibit 1
Water Customers and Water Production Breakdown - 2007 .. ...............................
11
Exhibit 2
Water Supply System - 2007 .................................................. ...............................
15
Exhibit 3
Water Production Summary - 2007 ........................................ ...............................
16
Exhibit 4
Musquash Pumping Provincial Royalty .................................. ...............................
18
Exhibit 5
Volumetric Water Rates 2002 to date (monthly) ..................... ...............................
21
Exhibit 6
Water Service Charges (January 1, 2002 to date) .................. ...............................
22
Exhibit 7
Water & Sewage Flat Rates 2001 to 2007 (Effective January 1) ...........................
23
Exhibit 8
Miscellaneous Charges & Fees - 2008 ................................... ...............................
25
Exhibit 9
Flat Rate Billings - 2007 ......................................................... ...............................
26
Exhibit 10
Flat Rate Customers & Units - 2007 ................................... ...............................
27
Exhibit 11
Metered Customers- 2007 .................................................. ...............................
28
Exhibit 12 Total Customers - 2007 ...................................................... ............................... 28
Exhibit 13
IPP Water Rates - 2002 to 2008 ......................................... ...............................
31
Exhibit 14
IPP Water Charges - By -law Rates vs. Lapsed Agreement (monthly) ...............
32
Exhibit 15
Irving Oil Agreement Rates - 1990 to 2005 (monthly) ......... ...............................
34
Exhibit 16
IOL Water Charges — By -law Rates versus Lapsed Agreement - 2007 .............
35
Exhibit 17
Schematic of Little River Private Raw Water System ......... ...............................
36
Exhibit 18
Irving Paper Raw Water Spillage Rate from Loch Lomond . ...............................
37
Exhibit 19
Irving Paper Spillage Billings - 2002 to 2007 ...................... ...............................
38
Exhibit 20
Town of Rothesay Water Rates - 2005 to 2007 ( quarterly) . ...............................
39
Exhibit 21
Water Production Volumes - 2007 ...................................... ...............................
41
Exhibit 22
Average Daily Supply Volumes by Month — 2007 (m) ....... ...............................
42
Exhibit 23
Breakdown of Flat Rate Charges 2002 to 2007 .................. ...............................
44
Exhibit 24
Consumption versus Supply Volumes — 2007 .................... ...............................
47
Exhibit 25
Annual Consumption by Largest Customers - 2007 ( m) .... ...............................
48
Exhibit 26
Seasonality of Large Users ................................................ ...............................
49
Exhibit 27
By -law Customer Metered Consumption Profile - 2007 ...... ...............................
50
Exhibit 28
Water & Sewage Operations & Fiscal Service Budget - 2005 to 2007 ...............
53
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October 14, 2008
KE
City of Saint John Page 6 of 198
Exhibit 29
Water & Sewage Shared & Total Expenditures Budget - 2005 to 2007 .............
54
Exhibit 30
Water & Sewage Budget Revenues - 2005 to 2007 ........... ...............................
55
Exhibit 31
Budget Revenues vs. Projected Actual - 2007 ................... ...............................
57
Exhibit 32
Provincial Fire Protection Cost Calculation Regulation ....... ...............................
59
Exhibit 33
Average & Maximum Day Supply Volumes - 2007 ............. ...............................
61
Exhibit 34
Water Storage Design Parameters ..................................... ...............................
63
Exhibit 35
Fire Protection Cost Calculation (2007 Budget Data) ......... ...............................
64
Exhibit 36
Calculation of Storm Sewer Charge to the General Fund - 2007 .......................
65
Exhibit 37
Combined Sewer Share of Sewage System - 2007 ............ ...............................
66
Exhibit 38
Affordability Thresholds for Water and /or Wastewater ........ ...............................
69
Exhibit 39
Low - Income Measures For Canada ................................... ...............................
71
Exhibit 40
Measures to Address Household Affordability Problems .... ............................... 74
Exhibit 41
Municipalities Included in Scan ..........................................
............................... 76
Exhibit 42
Saint John Water and Wastewater Rates - 2007 ................
............................... 80
Exhibit 43
Household Expenditure Shares for Water and Wastewater
.............................. 82
Exhibit 44
Evaluation of Affordability Measures ..................................
............................... 84
Exhibit 45
Group Notification ..............................................................
............................... 89
Exhibit 46
Survey Response Summary ...............................................
............................... 90
Exhibit 47
Map Showing Saint John Watershed Ownership ................
............................... 96
Exhibit 48
OM &A Costs 2007 to 2012 ............................................... ...............................
102
Exhibit 49
Shared Costs - 2007 to 2012 ............................................ ...............................
103
Exhibit 50
Fiscal Services - 2007 to 2012 ......................................... ...............................
104
Exhibit 51
Average Annual Replacement Costs - 2006 ..................... ...............................
107
Exhibit 52
Replacement Cost of Water Systems - 2000 to 2099 ....... ...............................
108
Exhibit 53
Replacement Cost of Wastewater Systems - 2000 to 2099
............................. 109
Exhibit 54
Cumulative Costs and Revenue ....................................... ...............................
110
Exhibit 55
Capital Program by Purpose - 2007 ................................. ...............................
112
Exhibit 56
Capital Budget Projected — 2007 to 2012 ......................... ...............................
113
Exhibit 57
Other Revenues - 2007 to 2012 ....................................... ...............................
114
Exhibit 58
Water System Financing Strategy - 2007 to 2012 ............ ...............................
115
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RVA 061105
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40
City of Saint John Page 7 of 198
Exhibit 59
Sewage System Financing Strategy - 2007 to 2012 ......... ...............................
116
Exhibit 60
Water System Debt Charges - 2007 to 2012 .................... ...............................
117
Exhibit 61
Sewage System Debt Charges - 2007 to 2012 ................. ...............................
118
Exhibit 63
Summary of Principles & Objectives for Saint John User Rates ......................
126
Exhibit 64
Single Block Rate Structure .............................................. ...............................
130
Exhibit 65
Declining block rate .......................................................... ...............................
132
Exhibit 66
Increasing Block Rate ...................................................... ...............................
133
Exhibit 67
Hump- backed rate ............................................................ ...............................
134
Exhibit 68
Excess Use Rate .............................................................. ...............................
136
Exhibit 69
Seasonal Rates ................................................................ ...............................
138
Exhibit 70
Recommended Blocks & Ranges - 2003 to 2005 ............. ...............................
140
Exhibit 71
Actual Volumetric Rates — 2003 to 2005 .......................... ...............................
141
Exhibit 72
Breakdown of Proposed Declining Block Rate ................. ...............................
144
Exhibit 73
Target Water Rate Block Format (2002 Business Plan Review) ......................
146
Exhibit 74
Target Water Rate Block Format (Updated) ..................... ...............................
148
Exhibit 75
Consumption Volume Built Into Flat Rate Charge (annual) .............................
149
Exhibit 76
Water System Criteria & Cost Allocation Factors .............. ...............................
155
Exhibit 77
Average & Maximum Day Supply Volumes - 2007 ........... ...............................
156
Exhibit 78
Water Storage Factors ..................................................... ...............................
157
Exhibit 79
Watermain Inventory Data for Cost Allocation Purposes .. ...............................
158
Exhibit 80
Customer Water Consumption Under Alternative Billing Scenarios (m3 /year)..
160
Exhibit 81
Budget Expenditures & Revenues Compared to Projected Actual Revenues
—
2007 ................................................................................. ...............................
161
Exhibit 82 2007 Rates Adjusted to Recover Budget Expenditures .... ............................... 162
Exhibit 83 2007 User Rates Adjusted for Full Cost Recovery ............ ............................... 163
Exhibit 84 Impact of Full Cost Recovery — 2007 Rates ..................... ............................... 164
Exhibit 85 Functional Allocation — Operations Budget — 2007 — Base Case ..................... 168
Exhibit 86 Functional Allocation — Fiscal Services & User Rate Revenues Required — 2007
— Base Case .................................................................... ............................... 169
Exhibit 87 Allocation Factors Applied to Functional Costs — 2007 — Base Case ............... 171
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RVA 061105 October 14, 2008
41
City of Saint John Page 8 of 198
Exhibit 88
Water Customer Data — Actual 2007 ................................ ...............................
172
Exhibit 89
Service Charge Cost Allocation Ratios ............................. ...............................
174
Exhibit 90
Service Charge Calculation — 2007 — Base Case ............. ...............................
175
Exhibit 91
Customer Water Consumption — 2007 — Base Case ........ ...............................
176
Exhibit 92
Volumetric Rates — 2007 — Base Case ............................. ...............................
178
Exhibit 93
Flat Rate Calculation — 2007 — Base Case ....................... ...............................
179
Exhibit 94
Sewage Surcharge Calculation — 2007 — Base Case ....... ...............................
180
Exhibit 95
Existing Rates vs. New Format Rates — 2007 Base Case ...............................
181
Exhibit 96
Impact of Recalculated Water & Sewage Rates — 2007 Base Case ................
182
Exhibit 97
Proposed Rates — 2009 Base Case ................................. ...............................
184
Exhibit 98
Impact of Proposed Rates — 2009 Base Case .................. ...............................
185
Exhibit 99
Existing 2007/2008 Rates vs. Recommended 2009 Rates ..............................
186
Exhibit 100
Customer Impact - Existing 2007/2008 Rate vs. Recommended 2009 Rates.
187
Exhibit 101
Volumetric Rates — 2007 — By -law for All ......................... ...............................
190
Exhibit 102
Base Case Rates vs. By -law For All Rates — 2007 ........... ...............................
191
Exhibit 103
Impact of Recalculated Water & Sewage Rates — 2007 — By -law for All ..........
192
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Final Report
October 14, 2008
City of Saint John
1 INTRODUCTION
1.1 Purpose of This Report
Page 9 of 198
The latest report on water and sewer rates was completed for Saint John Water in
20021. The 2002 Business Plan Review considered the Utility's: revenue needs, long-
term capital plans, and revenue sources. It also developed a financial model and rate
model which extended over a ten (10) year period. The 2002 Report made a number of
recommendations in setting the proposed declining block structure and rates for each
block.
In January 2005, Saint John Common Council adopted a series of recommendations to
update its strategic direction for water and wastewater services entitled "Water and
Environmental Outcomes Essential for Saint John ". An essential part of the strategic
direction is its financial management model; a plan of revenues and expenses designed
to guide policy, planning, service improvements and utility business decisions into the
future.
This review of rates and rate structure options will assist Saint John Water in redefining
the basis for the pricing policies and to assure the public that equity is reflected in
charges for water and wastewater services for 2008 and beyond. This can be
completed by developing:
1. A solid set of principles upon which to base the system of charges;
2. A logical approach for rate structure and rate calculation that is defendable in any
public forum.
In addition to these fundamental approaches to rate setting, proposed rates must also
support sustainability of the Utility, its services and its customers. A sustainable system
of water pricing is fundamental in recognizing the true value of water resources and
realizing the full potential of investments the public makes in its water and wastewater
City of Saint John Water and Sewerage Business Plan Review — Touchie Engineering & RM
Loudon Ltd - 2002
Review of Rates and Rate Structure Options
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43
Final Report
October 14, 2008
City of Saint John
infrastructure. With this sustainable focus of rate setting the City of Saint John can
ensure that the Utility will "meet the needs of the present without compromising the
ability of future generations to meet their own needs "2.
Page 10 of 198
Saint John Water operates on a cost — recovery basis, which means that's the users of
the system pay for the services it receives. The challenge the Utility has is that it must
not only show that it is equitably distributing the costs to operate the system across the
approximately 17,000 diverse customers but allocating the charges in a manner
proportionate to the cost burden associated with servicing these customers. These
customers range from households that use small amounts of water to large industrial
customers that consume very large quantities of water.
To ensure that this report is sensitive to the local needs of Saint John Water customers,
opportunities were made available through various avenues to voice concerns and
views. An entire section was completed on affordability as a reference for judging the
impact of user rate strategies on customers' ability to pay water and sewage bills.
With the development of both the fundamental approaches and user rates that support
sustainability for the Utility, the strategic directions of Saint John Common Council can
be realized.
1.2 Background
The American Water Works Association (AWWA) M1 manual entitled "Principles of
Water Rates, Fees, and Charges" is one of the leading resources used by utilities in
setting water rates in North America. The M1 manual discusses the different types of
customer classes and the inherent differences between each class. Some of these
differences can be illustrated by recognizing that customers using treated water require
facilities that raw water customers do not need. Similarly large- volume industrial
customers, wholesale customers, and other large users tend to be served directly from
major treated water transmission mains, whereas smaller users are served by both
large transmission and small distribution mains. The demand patterns of various
2 Our Common Future, World Council on Environment and Development - 1987
Review of Rates and Rate Structure Options
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Final Report
October 14, 2008
City of Saint John
Page 11 of 198
customer classes differ, depending on their peak day and peak hour rates of demand
relative to average demands'.
Most water utilities typically have three principal customer classes; the first being
residential, the second commercial, and the third industrial. Utilities define these general
customer classes differently but in very broad terms the following definitions are
common 4:
Residential: One and two - family dwellings, usually physically separate.
Commercial: Multifamily apartment buildings and nonresidential, nonindustrial
business enterprises.
Industrial: Manufacturing and processing establishments
Currently in the City of Saint John there are 16,844 flat rate customers in the Residential
category. There are 2,924 metered customer accounts, split between the Commercial
and Industrial customer classes, and 5 accounts which have been negotiated.
Although 85% of customers are flat rate, unmetered customers represented only about
7% of consumption in 2007. Special Agreement customers used 60% of water supplied
in 2007 as shown in Exhibit 1.
Exhibit 1 Water Customers and Water Production Breakdown - 2007
2007 Customer Profile
Negotie
5
Flat Rate,
16,844
Metered,
2007 Water Production
Non Bylaw
Rates
12.0
Negotiated
48.0
NRW
25.0
lat Rate,
7.0
red
8.0
3 AWWA Principles of Water Rates, Fees, and Charges — Manual of Water Supply Practises M1
4 AWWA Principles of Water Rates, Fees, and Charges — Manual of Water Supply Practises M1
Review of Rates and Rate Structure Options
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Final Report
October 14, 2008
City of Saint John
Page 12 of 198
The City of Saint John is quite unique in terms of the early establishment of a municipal
water system and the high proportion of municipal water supplied to industry. Saint John
Water has some of the oldest operable water infrastructure in Canada today. Due to the
high proportion of water supplied to a few industries, the City system could be
characterized as primarily an industrial system. In fact, approximately 63% of the water
used by customers in the system (not including NRW, non revenue water) is supplied
to one large industrial customer.
1.3 Technical Basis of User Rates
It is important to establish that recommended rates have a strong technical or objective
underpinning. To ensure that the latest techniques are applied a number of key
references were considered in preparing this report. They include:
• American Water Works Association (AWWA) M1 manual entitled "Principles of
Water Rates, Fees, and Charges ".
• National Guide to Sustainable Municipal Infrastructure (Infraguide) Water and
Sewer: Full Cost Recovery Best Practice, March 2006.
• AWWA Journal, " Policy Objectives in Designing Water Rates ", May 2007
The M1 manual identifies the process of determining water rates for Utilities into four
categories, namely:
1. Determining the Utility's annual revenue requirement to pay for all the costs
associated with providing services to its customers. This would include Capital
Works projects and other long range items
2. Classify different system costs into appropriate groups; for example to ensure
water system costs are separate from the wastewater service costs.
3. Cost allocation to each customer class.
5 NRW is total water volume supplied minus billed metered consumption minus billed unmetered
consumption by flat rate customers.
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Final Report
October 14, 2008
City of Saint John
Page 13 of 198
4. Designing a rate structure that ensures that revenues are met for the annual and
long term cost requirements.
This report utilizes these steps to first determine the appropriate rate structure and
develop water and wastewater rates that are fair to all customers.
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Final Report
October 14, 2008
City of Saint John
2 CURRENT WATER SYSTEM STATUS
Page 14 of 198
The purpose of this section is to describe the current water system configuration, user
rate structure, number of customers, and financial data.
2.1 Water System Configuration
2.1.1 Potable Water System
Currently, the City of Saint John obtains water from two watersheds. East side water
feeds from the Loch Lomond /Latimer Lake Watershed. West side water is mainly fed
from the Spruce Lake Watershed. The west system is augmented, as required, by
pumping from the east branch of the Musquash River. The water distribution system
also has an interconnection between east and west across the Reversing Falls Bridge.
This allows for water from the east to service customers west. There is also the private
Little River System which is supplied with raw water by the City on request.
A schematic of the current water supply arrangement is provided in Exhibit 2
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Final Report
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City of Saint John
Exhibit 2 Water Supply System - 2007
Musquash River
East Branch
West Side
Reservoir
Chlorine
& Fluoride
Spruce Lake
Added "•..,
`
Menzies
Lake
Lake
IIrving
TissueO
Ludgate
y Irving Pulp
Spruce 7C & Paper O
Lake
Lake R
P rivatg_Fi aw
Water System Irving Oil
Graves
Side
Pumping Flow i
Treated at`er
Station
I
Moosehead
I
Chlorine West Side O
& Fluoride Treated Water
I
<
Added /
1
ILower
West
I
Side &Port/
IColeson
Cover
Bay of Fundy
ONBEPC
Page 15 of 198
0Bayside
NBEPC
* Special
Rates
_ -.0. Irving Raw Water
Paper
Treater
Due to the relatively high elevation of the supply sources relative to City customers,
sufficient pressure can be achieved in most areas without pumping. This occurs on the
east side (Loch Lomond) and to the west (Spruce Lake) for the supplies to Coleson
Cove and IPP /Irving Tissue. Due to the topography to the west, pumping is needed for
many west side customers.
A summary of water production for 2007 is presented below in Exhibit 3. This data
includes raw water supplied to Irving Pulp and Paper, Coleson Cove, metered and
residential customers and non revenue water (NRW).
Review of Rates and Rate Structure Options Final Report
RVA 061105 October 14, 2008
49
Loch
East Side
41 Lomond
Chlorine
& Fluoride
Loch Lomond
Added "•..,
Latimer
Lake
Cara Little River
P rivatg_Fi aw
Water System Irving Oil
East
Side
Treated at`er
IW
0Bayside
NBEPC
* Special
Rates
_ -.0. Irving Raw Water
Paper
Treater
Due to the relatively high elevation of the supply sources relative to City customers,
sufficient pressure can be achieved in most areas without pumping. This occurs on the
east side (Loch Lomond) and to the west (Spruce Lake) for the supplies to Coleson
Cove and IPP /Irving Tissue. Due to the topography to the west, pumping is needed for
many west side customers.
A summary of water production for 2007 is presented below in Exhibit 3. This data
includes raw water supplied to Irving Pulp and Paper, Coleson Cove, metered and
residential customers and non revenue water (NRW).
Review of Rates and Rate Structure Options Final Report
RVA 061105 October 14, 2008
49
City of Saint John
Exhibit 3 Water Production Summary - 2007
Watershed
`000 Gallons
Cubic Meters
%
Spruce Lake
7,854,001
35,700,007
44%
Loch Lomond
9,969,442
45,315,656
56%
Total Supply
17,823,443
81,015,663
100%
Page 16 of 198
All water from Spruce Lake is used to supply customers to the west of the Saint John
River. Historically, the Loch Lomond supply has been used to supply customers on the
east side of the River as well as supplementing the supply to Irving Pulp and Paper via
a pipe across the Reversing Falls Bridge. In 2005 domestic demand in the Lower West
Side and Ports area as well as Moosehead was transferred to east water.
In 2007 approximately 56% of water production was from the Loch Lomond source.
2.1.2 Loch Lomond Supply
The most recent documentation describes the Loch Lomond Watershed as follows:
• The Loch Lomond Lake watershed area is 104 km2 and the Latimer Lake watershed
area is approximately 2 km2.
• The 1999 Water strategy indicated firm yields from these two (2) watersheds to be
35.0 MIGD (158.9 MLD) 6 in total.
2.1.3 Spruce Lake Supply
An assessment of the Spruce Lake water yield? was carried out in 2005. It indicates the
Spruce Lake catchment area is 20 km2 with a historical continuous yield at minimum
water level of 60.2 metres (197.5 feet) over 85 -year period 7.5 MGD (34.1 MLD).
6 City of Saint John Water Strategy, June 1999
Spruce Lake Yield Assessment — CBCL Limited — April 2005
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City of Saint John
Page 17 of 198
Water supplied from Spruce Lake can be more costly. The additional costs are incurred
when replenishment from the natural catchment area is insufficient to meet demands.
The level of Spruce Lake is monitored and if it drops below an established benchmark,
water is pumped from Musquash to supplement the catchment flows and rebuild the
reservoir level. When the level of Spruce Lake reached 60.Om (196.9 feet) on August 3,
2005, the 2000 hp Musquash pumps were activated. This interbasin water transfer
moves water from the Musquash River East Branch Reservoir to Menzies Lake, which
is in the upper part of the Spruce Lake watershed. Water flows through an open channel
from Menzies Lake to Spruce Lake. The pumps were turned off October 9 when Spruce
Lake elevation reached 60.9m (199.8 feet).
2.1.4 East Musquash Replenishment of Spruce Lake
The Musquash East Branch catchment area is 370.5 km2. The 2005 Report cited an
earlier report$ which stated a pump capacity of 172.8 MLD (38 MGD). Using this flow
they indicate a total Spruce Lake yield of 207 MLD (45.5 MGD) when the Musquash
pump is running. However, based on lake level measurements the 2005 Report
concludes that average pump flows are 112.3 MLD (24.7 MGD) which gives a total yield
of 146.4 MLD (32.2 MGD).
The Musquash pumping adds costs due to a combination of power costs and a
Provincial Royalty. The Provincial Royalty is related to the use of water which is stored
for power generation. The rates historically charged are summarized in Exhibit 4.
8 Spruce Lake Dam Reconstruction Report — Acres International - 2001
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City of Saint John
Exhibit 4 Musquash Pumping Provincial Royalty
Page 18 of 198
Year
Rate $ /000 gallons
Rate $ /m3
Terms
1978 to 1980
$0.015
$0.0033
Access up to 38 mgd
1981 to 1999
$0.020
$0.0044
2000
$0.037
$0.0081
CPI increase since
1981
2001 to June 2003
$0.038
$0.0084
New agreement is
currently being
negotiated
Jul 2003 to Dec 2005
Y
$0.040
$0.0088
2006 &2007
$0.042
$0.0092
Power costs and royalty for Musquash pumping in 2006 were approximately $347,000
and $89,025.16 at $0.042/1000 gal respectively.
2.1.5 Little River System
The Little River catchment area is located between the City and Loch Lomond. It
represented an early source of water for the City. As a result of a 1962 agreement
between the City and Rothesay Paper (now Irving Paper) the City completed work on
an industrial raw water supply from a dam at Silver Falls (on the Little River) in 1964.
The system consists of:
• Silver Falls Dam and Intake — This includes an intake, concrete dam and treatment
building which provides screening and chlorination. Flow is by gravity.
• Latimer Lake Diversion — There is an intake, a control gate and a pipe which
discharges into a Little River tributary. Latimer Lake is at the discharge end of the
Loch Lomond Watershed. This diversion is used when natural stream flow is low.
• Pipeline to Irving Paper — This 300 -mm diameter pipe is 2.63 km in length with
18.2m drop.
• Connection to Irving Oil — At about 2.0 km from the dam, there is a 200 -mm lateral
connection to Irving Oil.
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In 1995, the City sold the system to Irving Paper, which now owns and operates the
Little River System. Since supplementary flows from the Loch Lomond Watershed
would still be required when Little River flows are deficient, an Agreement was also
signed dated January 1, 1995, establishing how the company would pay for the volume
diverted from Latimer Lake for it's use. This is referred as the "Spillage Rate ".
Information on the Spillage Rate is provided in Section 2.4.3.
2.2 Current By -Law Rates and Charges
With the exception of two special agreement customers, water and wastewater
customers of Saint John Water are charged for water usage based on rates set through
the "By -Law Respecting Water & Sewerage ". Wastewater charges are a percentage of
the water charge and are billed in combination with water.
The By -Law also requires that only residential customers with three or less dwelling
units can be unmetered. All other customers must be metered. Residential customers
with three or less dwelling units may apply for consumption to be metered.
The City of Saint John has both metered customers and unmetered "flat rate"
customers.
Water user rates are charges levied to customers serviced by the Utility. These charges
are collected on an ongoing basis to recover the costs of providing the service. There
are basically two types of charges that make up metered user rates:
• Fixed Charges — Fixed charges represent the cost of being connected to the water
system. When billed with complimentary volumetric charges they are usually viewed
as service charges or basic charges. These cover the costs that exist no matter how
much water is used and are unrelated to usage volume (for example billing costs). In
some municipalities, a single fixed charge is applied to all customers. More typically,
the charge varies in relation to the size of the customers' meter. In addition to being
a fair way of recovering certain costs, these charges provide a level of revenue
stability to the utility. In the case of unmetered systems, only fixed charges, referred
to as flat rates, are levied.
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• Volumetric Charges — These charges are tied to the actual volume of water used by
a customer. Meters are needed for volumetric charges to be levied. There are a
number of alternative volumetric rate formats for water utilities to choose from.
Various options are discussed in more detail in Section 7.2.
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. This combination
is considered the fair way to allocate and recover costs, and improve revenue stability
over volumetric charges alone.
2.2.1 Volumetric Rates — Metered Water Customers
The Saint John metered rates are two -part with a volumetric charge which bills for the
volume of water consumed plus a fixed service charge based on meter size of the
customer. The volumetric rates since 2002 are shown in Exhibit 5.
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Exhibit 5 Volumetric Water Rates 2002 to date (monthly)
Page 21 of 198
Description
Block
1 st block
1 st
2nd
3rd
4th
5th
Increase
2002
Range
First
45.5 m3
Next
1,091 m3
Next
21,590 m3
Next
113,655
m3
Over
136,382
m3
Rate $ /m3
$0.51428
$0.41143
$0.28978
$0.23934
$0.01737
Starting 2003
Range
First
50 m3
Next
24,950 m3
Next
100,000
m3
Over
125,000
m3
No 5t"
block
Rate $ /m3
2003
$0.60592
$0.42479
$0.30425
$0.03014
17.8%
2004
$0.69752
$0.49895
$0.36915
$0.04291
15.1%
2005
$0.78267
$0.55986
$0.36915
$0.07300
12.2%
2006
$0.84664
$0.60562
$0.36915
$0.09550
8.2%
2007
$0.89553
$0.64059
$0.36915
$0.11280
5.8%
2008
$0.89553
$0.64059
$0.36915
$0.11280
0%
The 2002 Report9 recommended the existing declining 5 -block rate structure be
consolidated into 4- blocks in 2003, 3- blocks in 2004, and that the block volumetric limits
be rounded based on metric units. In 2003 this step was implemented, resulting in a
declining 4 -block block rate structure format.
The proposed consolidation to 3- blocks is currently being phased -in.
9 City of Saint John - Water and Sewerage Business Plan Review - Touchie Engineering / RM
Loudon Ltd. - November 2002
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The 3rd block charge as indicated in Exhibit 5 is being maintained at a constant of
$0.36915/m3 until the current 4t" block rate ($0.11280/m3) increases to the current 3rd
block level at which point they would be identical and the 4t" block would be eliminated.
2.2.2 Service Charge — Metered Water Customers
Service charges to metered customers in the City of Saint John have remained
unchanged since 2002. These are fixed charges and are designed to recover the cost of
servicing the customer. The 2007 water service charges by meter size are shown in
Exhibit 6.
Exhibit 6 Water Service Charges (January 1, 2002 to date)
Meter Size
Charge ($ /month)
16 mm
10.82
19 mm
15.82
25 mm
23.31
38 mm
40.82
50 mm
60.81
75 mm
109.74
100 mm
200.77
150 mm
350.75
200 mm
500.72
250 & up
700.67
2.2.3 Flat Rates
Unmetered customers are billed a flat rate semi - annually. Some municipalities, typically
where commercial customers are unmetered have a variety of flat rates tailored to the
type of customer being serviced. This is not the case in Saint John where unmetered
customers are residential only.
Flat rate charges also combine both fixed and volumetric components. The volume
component is based on estimated usage by a flat rate customer. The flat rate volume
consumption calculation is estimated in Section 2.5.2. A customer is charged based on
the number of units in a building (a single family dwelling would be one unit).
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Annual per unit flat rate charges, increases and sewage surcharge percentages since
2001 are provided in Exhibit 7:
Exhibit 7 Water & Sewage Flat Rates 2001 to 2007 (Effective January 1)
Year
Annual Charge ($ /year)
Increase Over
Prior Year
Sewage
vs. Water
Water
Sewage
Total
2001
$186.36
$223.64
$410.00
120%
2002
$194.32
$233.18
$427.50
4.3%
120%
2003
$220.90
$265.10
$486.00
13.7%
120%
2004
$246.36
$295.64
$542.00
11.5%
120%
2005
$276.38
$331.62
$608.00
12.2%
120%
2006
$299.09
$358.91
$658.00
8.2%
120%
2007
$316.36
$379.64
$696.00
5.8%
120%
2008
$316.36
$379.64
$696.00
0%
120%
2.2.4 Rate for Wastewater (Sewage Rate)
To recover the costs of the sanitary sewer system, the City currently charges a straight
sewer surcharge of 120% to a customer's water bill (including both consumption and
service charges). The 2002 Report10 recommended that the straight sewer surcharge
approach be continued but the actual surcharge percentages change to more
accurately reflect the true cost of the sanitary system. The proposed surcharge
percentages recommended were as follows:
120% in 2002,
114.1% in 2003,
105.1% in 2004, and
97.3% in 2005.
10 City of Saint John - Water and Sewerage Business Plan Review - Touchie Engineering / RM
Loudon Ltd. - November 2002
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Page 24 of 198
The recommended revisions to the surcharge percentage were not implemented.
Although the revenue would be the same regardless, modifying the sewer surcharge to
better reflect costs would enhance fairness and equity, and better allocate future capital
expenditures on water and wastewater improvements.
2.2.5 Late Payment
The current late payment penalty for water and sewerage customers is 1 1/2% per
month on all outstanding balances not paid by the due date.
2.2.6 Miscellaneous Charges
A utility can recover the cost of additional services for customers by using
miscellaneous charges. The 2008 schedule of City Miscellaneous Charges & Fees is
provided in Exhibit 8.
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Exhibit 8 Miscellaneous Charges & Fees - 2008
Page 25 of 198
Description
Charge
Certify NSF cheque
$6.00
Disconnect letter
$10.00
Broken frost plate
$25.00
After hour fee
$100.00
Final reading
$15.00
Lawyer certificate
$25.00
Meter test
$25.00
Returned cheque
$10.00
Credit card reversal fee
$25.00
Water shut off
$75.00
Water shut -off non-payment
$75.00
Official tax receipt
$25.00
Reconnection charge
$25.00
Water & sewage permit
$50.00
Violating By-law provisions
Maximum fine $200
Broken meter
- 5/8 -inch
$89.57
- 5/8 x 3/4
$93.21
- 3/4 -inch
$130.73
- 1 -inch
$165.83
- 11/2 -inch
$372.83
- 2 -inch
$497.49
Lost meter
- 5/8 -inch
$89.57
- 5/8 x 3/4
$93.21
- 3/4 -inch
$130.73
- 1 -inch
$165.83
- 11/2 -inch
$372.83
- 2 -inch
$497.49
- 3 -inch compound
$2,834.75
- 4 -inch compound
$3,667.35
Pipe Thawing
- Weekdays
$200.00
- Saturdays & Sundays
$400.00
Pipe Taping
- 3/4 -inch
$24.00
- 1 -inch
$30.00
- 11/2 -inch
$36.00
- 2 -inch
$43.00
- 4 -inch
$235.00
- 6 -inch
$275.00
- 8 -inch
$315.00
- 10 -inch
$355.00
- 12 -inch
$395.00
Data Source: City of Saint John
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For other work done by Utility forces (such as line locates, subdivision connections and
private property leak detection) customers are charged based on cost plus overhead.
These rates have been in effect since 2002 and are currently under review. The review
will consider the level of effort to carry out the tasks and related costs.
2.3 Customers
2.3.1 Flat Rate
Only residential customers with three or fewer units are allowed to be unmetered at this
time. Flat rate customers are billed per dwelling unit. One customer may have multiple
units and the flat rate charge is applied for each unit.
Flat rate customers are billed semi - annually. A summary of the number of customers
and units billed as well as the total revenue in 2007 is provided in Exhibit 9.
Exhibit 9 Flat Rate Billings - 2007
Description
Units Billed
Accounts
Water
Sewage
Customers
January to June
13,592
16,844
16,693
July to December
13,645
16,844
16,638
Flat Rate ($/ 6 months)
$158.18
$189.82
Billings ($)
January to June
$2,642,129
$3,120,518
July to December
$2,642,604
$3,120,898
Total
$5,284,733
$6,241,416
Data Source: City of Saint John
A breakdown of the number of residential flat rate customers, including single family
dwellings (SFD) and multi -unit customers as well as the number of units is provided in
Exhibit 10.
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Exhibit 10 Flat Rate Customers & Units- 2007
Page 27 of 198
Description
Water
Sewage
Customers (Accounts)
Single Dwelling Units
11,130
11,130
Multiple Dwelling Units
1,985
1,942
Total
13,115
13,072
Customers not on water
352
Customers not on sewage
172
Total Customers
13,467
13,244
Units
Single Dwelling Units
11,482
11,302
Multiple Dwelling Units
5,362
5,281
Total Units Billed
16,844
16,583
Data Source: City of Saint John
2.3.2 Metered Customers
All ICI customers are metered as well as a few residential. Virtually all are billed for both
water and sewage services. Meter sizes vary depending on water demand by the
customer. The number of metered customers by meter size is provided below in Exhibit
11.
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Exhibit 11 Metered Customers- 2007
Meter Size
Number
Inches
mm
5/8"
16
1,300
3/4"
19
626
1"
25
399
1 1/2"
38
262
2"
50
237
3"
75
59
4"
100
22
6"
150
11
8"
200
3
10" & Over
200 & over
5
Total
2,924
Data Source: City of Saint John
Page 28 of 198
Total Customers — The total flat rate plus metered customers is summarized in Exhibit
12.
Exhibit 12 Total Customers - 2007
Description
Water
Sewage
Flat Rate
13,115
13,072
Metered
2,924
2,924
Total
16,039
15,996
Data Source: City of Saint John
2.4 Contract Customers
The City has five customers with contracts for water supply, including Irving Pulp and
Paper (IPP), Irving Paper, Irving Oil Limited (IOL), NB Power - Coleson Cove and the
Town of Rothesay.
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The Special Agreements originally signed by some Contract Customers included
special water rates that were lower than By -law rates paid by the vast majority of
customers. By -law rates are set by Common Council periodically (usually annually) and
are applied to all customers except where special rates apply. Progress has been made
in moving Contract Customers to By -law rates. The number of special agreement, non -
By -law rate customers has decreased over the years as the City has sought to move all
customers to By -Law rates.
Two Contract Customers still pay special agreement rates, Irving Oil Limited (IOL for
part of its supply) and Irving Pulp & Paper (IPP). The particular agreement with IOL
expired in 2000 and the agreement with IPP expired in 2005.
Irving Paper purchases raw water supplied from the City's Latimer source, through a
sluice gate which allows spillage into Little River at an agreement rate which extends to
2010. Irving Oil also draws water from the Irving Paper system, unrelated to the piped
water system.
The following is a description of the Special Agreement customers.
2.4.1 Irving Pulp and Paper (IPP)
Irving Pulp and Paper is supplied with water from the Loch Lomond system (East) and
the Spruce Lake system (West). The East water is potable, receiving both chlorination
and fluoridation.
The water supply to Irving Pulp and Paper is covered by agreement.
o 1957 to 1981 - The first water supply contract, for 25 years, started in 1957. The
water charge was based on a fixed $35,000 annual charge plus a volumetric
charge of 10 /1,000 gallons (0.22 0/m3) for the first 9 million imperial gallons per
day (MGD) and 0.50 /1,000 gallons (0.11 0/m3) thereafter. For the consumption
used, the combined fixed and volumetric rate averaged about 1.1 0 /1,000 gallons
(0.24 0/m3). There was no escalation clause.
o 1981 to 1995 - This rate was renegotiated two years before the end of the
contract in 1980. The new contract extended 10 years to March 31, 1991. The
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rate started at 50 /1,000 gallons (1.1 O /m3) and was escalated annually using an
inflation formula that included the Consumer Price Index, labour costs and power
costs. By 1991, the rate had reached 1.478 O /m3 (6.7110 /1,000 gallons). The
terms of the 1981 agreement were extended to 1995, with the rates increasing to
1.5200 (6.8990) for 1992, 1.5360 (6.9740) for 1993, 1.5480 (7.0290) for 1994
and 1.5600 (7.0820) in 1995.
o 1995 to 2005 — The most recent agreement covers the period April 1, 1995 to
March 31, 2005. By -law rates are charged for the first 136,382 m3 consumption
monthly (equivalent to 30 million gallons). Until 2002 this was the same
consumption threshold as the By -law 5t" rate block. In 2003 the number of By -law
blocks reduced to 4 with the top block threshold adjusted lower to 125,000. IPP
consumption over 136,382 m3 is charged at an agreement rate that started at
1.432 O /m3 (6.50 /1,000 gallons) in 1995. While the Agreement was in force the
rate was adjusted annually by taking 55% of the prior year's rate and escalating it
by 1/3 each of changes in power rates, labour costs and the Consumer Price
Index. The rate for April 2002 to March 2003 is 1.516 O /m3 (6.8970 /1,000
gallons). This compares with the 2002 5t" block rate of 1.737 O /m3 (7.8860 /1,000
gallons).
The agreement also states that the By -law block rates must be increased
proportionately, unless the need for variance is demonstrated by means of a rate
study. The rates increases charged to IPP could also be limited as a result of
major capital expenditures and in any case would be limited to 10% annually in
aggregate.
o Current Charges —The current agreement expired in 2005 and has not yet been
renegotiated. With the agreement expiring in 2005, IPP has been billed and is
paying the 2004 rates.
The potable water rates used to bill IPP since 2002 are provided in Exhibit 13.
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Exhibit 13 IPP Water Rates - 2002 to 2008
Page 31 of 198
Data Source: City of Saint John
Comparative charges for 2002 and 2007 based on 2,500,000 m3 per month are
provided below in Exhibit 14.
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By -law Rates
IPP Rates
Year
Blocks
Last Block
Last Block
Threshold (m)
Rate ($ /m3)
Threshold (m3)
Rate ($ /m3)
2002
5
136,382 m3
$0.01737
136,382 m3
$0.01517
2003
4
125,000 m3
$0.03014
136,382 m3
$0.01537
2004
4
125,000 m3
$0.04291
136,382 m3
$0.01555
2005
4
125,000 m3
$0.07300
136,382 m3
$0.01555
2006
4
125,000 m3
$0.09550
136,382 m3
$0.01555
2007
4
125,000 m3
$0.11280
136,382 m3
$0.01555
2008
4
125,000 m3
$0.11280
136,382 m3
$0.01555
Data Source: City of Saint John
Comparative charges for 2002 and 2007 based on 2,500,000 m3 per month are
provided below in Exhibit 14.
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Exhibit 14 IPP Water Charges - By -law Rates vs. Lapsed Agreement (monthly)
Data Source: City of Saint John
In 2002 the By -law last block volume threshold and the IPP agreement threshold were
the same, and the last block rates were similar. This resulted in a bill differential for a
monthly of 2,500,000 m3 (550,000,000 gallons - typical for IPP), of only $5,200 or 7%
less than if By -law rates were applied. The gap in 2007 is much larger, at about
$230,000 or 72 %, primarily due to the last By -law rate block having increased
significantly.
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2002
2007
Block
m3
$ /m3
$
m3
$ /m3
$
By -law Rates
1 st
45
0.51428
23
50
0.89553
45
2nd
1,091
0.41143
449
24,950
0.64059
15,983
3rd
21,591
0.28978
6,257
100,000
0.36915
36,915
4th
113,636
0.23934
27,198
2,375,000
0.11280
267,900
5th
2,363,636
0.01737
41,056
n/a
n/a
n/a
Total
2,500,000
$74,983
2,500,000
$320,843
IPP Lapsed Agreement Rates
1 st
45
0.51428
23
50
0.89553
45
2nd
1,091
0.41143
449
24,950
0.64059
15,983
3rd
21,591
0.28978
6,257
100,000
0.36915
36,915
4th
113,636
0.23934
27,198
11,364
0.11280
1,282
5th
2,363,636
0.01517
35,856
2,363,636
0.01555
36,755
Total
2,500,000
$69,783
2,500,000
$90,980
IPP versus By -Law Rates
Monthly
- $5,200
- $229,863
Annual
- $62,400
- $2,758,356
Percentage
-7%
-72%
Data Source: City of Saint John
In 2002 the By -law last block volume threshold and the IPP agreement threshold were
the same, and the last block rates were similar. This resulted in a bill differential for a
monthly of 2,500,000 m3 (550,000,000 gallons - typical for IPP), of only $5,200 or 7%
less than if By -law rates were applied. The gap in 2007 is much larger, at about
$230,000 or 72 %, primarily due to the last By -law rate block having increased
significantly.
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2.4.2 Irving Oil Limited (IOL)
Page 33 of 198
Water is metered and supplied to Irving Oil at two points, at Commerce Drive and at
Champlain Heights. About 78% of the total water usage for IOL is through the
Champlain Heights connection, which is billed at By -law rates. This was the result of an
agreement reaches in 2000 in conjunction with the company's Refinery Upgrade Project
(RUP).
The 2007 consumption through the two meters was 1,722,393 m3 at Commerce Drive
and 6,088,653 m3 at Champlain Heights respectively.
Commerce Drive - The Commerce Drive supply was provided based on a special
agreement first established in 1958, as follows:
o 1958 to 1990 - A water supply agreement was signed in 1958 between the City
of Saint John and the Irving Refining that covered the period up to July 1, 1990.
The water supplied to Irving Oil at Commerce Drive is governed by this
agreement. The City agreed to supply up to 3,000,000 gallons per day of potable
water to the company at a rate of 10 /1,000 gallons. The rate could only change
under restricted conditions related to capital investment. The rate remained
unchanged during the agreement period. By 1990 the agreement rates at 10
/1,000 gallons were a fraction of the By -Law rates which by then averaged about
900 /1,000 gallons. There were also limitations under the agreement on other
City charges to the customer, such as taxes. Irving Oil was also granted right of
access to put water pipes and gas pipes in the City right of way.
o 1990 to June 2000 - In 1990 a new 10 -year agreement was reached, which
expired June 30, 2000. It stated that rates could be adjusted to "fair and
reasonable rates ", as agreed or arbitrated. Although steadily increasing, the rates
by 2000 were still well below By -Law rates. The rates agreed in 1990 were as
shown in Exhibit 15.
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Exhibit 15 Irving Oil Agreement Rates - 1990 to 2005 (monthly)
Page 34 of 198
For One -year Period
Starting July 2 of
Rate for usage up to
650 million gal.(extra @ 9.90)
2,954,545 m3 (extra @ 2.180/m3)
1990
4.90 /1,000 gallons
$0.0108/ m3
1991
8.80 /1,000 gallons
$0.0194/ m3
1992
12.70 /1,000 gallons
$0.0279/ m3
1993
16.60 /1,000 gallons
$0.0365/ m3
1994
20.50 /1,000 gallons
$0.0451/ m3
1995
24.40 /1,000 gallons
$0.0537/ m3
1996
28.30 /1,000 gallons
$0.0623/ m3
1997
32.20 /1,000 gallons
$0.0708/ m3
1998
36.10 /1,000 gallons
$0.0794/ m3
1999
40.00 /1,000 gallons
$0.0880/ m3
2000
Agreement expired June 2000. The 1999 rates have continued to
be charged pending renegotiation of the Agreement.
2001
2002
2003
2004
2005
2006
2007
2008
o July 2000 to date - A new agreement for this customer has not yet been
reached. The rates charged continue at $0.0880/ m3 for the first 2,954,545 m3
annually and $0.0218/ m3 thereafter as shown in Exhibit 16.
Champlain Heights — The agreement for a new 30 -inch water supply connection at
Champlain Heights to Irving Oil was signed in 2000. All water supplied through this main
is billed at By -law rates.
By -law versus Lapsed Agreement Rates - Exhibit 16 also presents the difference
between the actual Lapsed Agreement charges and the charge if By -law rates were
applied in 2007. The volume of water metered at the Commerce Drive location was
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below 2,954,545 m3. If this volume was greater than 2,954,545 m3 the additional rate of
$0.0218/ m3 would have been utilized for every cubic meter of water.
Exhibit 16 IOL Water Charges — By -law Rates versus Lapsed Agreement - 2007
Block
Rate $ /m3
Volume m3
Annual Charge
Commerce Drive Billings (Billed at Lapsed Agreement Rates)
Actual Billings at Lapsed Agreement Rates
1 st
$0.08800
1,722,393
$151,619
2nd
$0.02180
-
$_
Total Consumption
1,722,393
$151,619
Service Charge
$8,408
Total Billing
$160,027
Billings if Billed at By -law Rates
1 st
$0.89553
600
$537
2nd
$0.64059
299,400
$191,793
3rd
$0.36920
1,200,000
$443,040
4th
$0.11280
222,939
$25,148
Total
1,890,455
$660,518
Service Charge
$8,408
Total Billing
$668,926
Difference
$508,899
Champlain Drive Billings (Billed at By -law Rates)
1 st
$0.89553
600
$537
2nd
$0.64059
299,400
$191,793
3rd
$0.36915
1,200,000
$443,040
4th
$0.11280
4,588,653
$517,600
Total
6,088,653
$1,152,970
Service Charge
$8,408
Total Billing
$1,161,378
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2.4.3 Irving Paper — Little River Spillage Charges
Page 36 of 198
Irving Paper is not a large user of City potable water; it is used for domestic purposes
only.
Raw water is used for manufacturing, supplied from its own private raw industrial water
system at Little River watershed. The infrastructure includes the Silver Falls dam and
intake and a transmission main to Irving Paper. IOL also draws water from this system,
but to a lesser extent than Irving Paper. A map showing the location of the Little River
System is provided in Exhibit 17.
Exhibit 17 Schematic of Little River Private Raw Water System
Musquash River
East Branch
West Side
Reservoir
Privatg.Pa=w.. . A
Waterystem
)Irving
Spruce Lake
Oil
East Side
TreatedlWat r
Menzies
Lake
IIrving
Tissue0
Ludgate
y Irving Pulp
Spruce 7� & Paper O
Lake
Lake R
— — Graves
7.,:.,
Pumping
Fiow i
Station
Raw water
I
Paper
Moosehead
I
Chlorine West Side O
Treated ater
Fluoride Treated Water
I&
�
m
Added /
1
ILower
West
I
Side & Port/
IColeson
Cover
Bay of Fundy
ONBEPC
East Side j
Chlorine &Fluoride j
Loch L o m Added
Loch
Lomond
Latim
Lake
The raw water supply was originally built by the City of Saint John in 1964. In the
original agreement, the City consented to provide Rothesay Paper with up to 12 MGD at
a rate of 30 per thousand gallons for the first 6 million gallons and 2.750 thereafter.
There was a minimum charge as well. The original agreement expired in 1989.
Irving Paper purchased the Little River system from the City in 1995.
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Little River
Privatg.Pa=w.. . A
Waterystem
)Irving
/ •
Oil
East Side
TreatedlWat r
11
Special
Rates
`C
Irving
Raw water
Paper
Treated ater
Bayside
NBEPC
The raw water supply was originally built by the City of Saint John in 1964. In the
original agreement, the City consented to provide Rothesay Paper with up to 12 MGD at
a rate of 30 per thousand gallons for the first 6 million gallons and 2.750 thereafter.
There was a minimum charge as well. The original agreement expired in 1989.
Irving Paper purchased the Little River system from the City in 1995.
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City of Saint John
Little River flows are sometimes insufficient to meet the raw water needs of the
Page 37 of 198
companies. Supplementary flows are provided by the City from Latimer Lake to offset
the shortfall. The flow is diverted to the Little River watershed using a combination of
pipes and open channels, usually late in the year during dry periods.
An agreement dated January 1, 1995, established how the company would pay for the
volume diverted from Latimer Lake for its use. The amount paid is based on the volume
diverted, billed using a volumetric rate referred as the "Spillage Rate ".
Spillage Rate information to 2010 is provided below in Exhibit 18.
Exhibit 18 Irving Paper Raw Water Spillage Rate from Loch Lomond
Period
Rate
Free Spillage
(000,000 gals. /yr.)
0 /000 gals.
$ /m3
1995 to 1999
8.0
0.01762
350
2000
350
2001
8.091
0.01780
350
2002
8.164
0.01796
350
2003
8.272
0.01820
350
2004
8.364
0.01840
350
2005
8.457
0.01861
350
2006
8.625
0.01897
280
2007
8.754
0.01925
210
2008
Based on analysis of actual cost data
140
2009
Based on analysis of actual cost data
70
2010
Based on analysis of actual cost data
0
The Spillage Rate started at 8.00/1,000 gallons (1.7620 /m3) in 1995 and in 2000 began
escalating annually based on a formula agreed for the Irving Oil potable water supply at
Commerce Drive. The formula includes the impact of the final By -law rate block, labour
costs and the Consumer Price Index.
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City of Saint John
Page 38 of 198
To the end of 2005, spillage up to 350,000,000 gallons could be diverted at no charge.
Commencing in 2006 the free spillage allocation decreases by 70,000,000 gallons
annually, reaching zero in 2010, after which there will be no free spillage.
The billings since 2002 are summarized below in Exhibit 19.
Exhibit 19 Irving Paper Spillage Billings - 2002 to 2007
Data Source: City of Saint John
A current spillage rate is calculated in Section 7.
2.4.4 Coleson Cove Thermal Generating Station
An agreement dated May 10, 1973, between the City of Saint John and the New
Brunswick Electric Power Commission provides for the supply of water to Coleson
Cove. Initially, the City would supply water by gravity from the Spruce Lake Reservoir.
The City built and owns the transmission main that can be pressurised to deliver 18.8
MGD. A capacity of 1.6 MGD is reserved for Coleson Cove.
Water is charged bimonthly at By -law rates, with a minimum billing level of 1.6 MGD. A
"deficiency charge" at 50 /1,000 gallons (originally 40) is levied for the difference
between actual consumption and this minimum level.
Coleson Cove revenues are reported as part of the By -law metered revenues.
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Total Volume
Rate
Billed Over Threshold
Year
Gallons
x106
m3
x106
$ /000
gals
$ /m3
m3
x106
$
Period
2002
960.0
4.36
$0.08164
$0.01798
2.77
$49,851
Sept /Oct
2003
1,509.1
6.86
$0.08272
$0.01820
5.27
$95,877
Sept /Oct
2004
0
0
$0.08364
$0.01840
0
0
n/a
2005
427.8
1.94
$0.08457
$0.01861
0.35
$6,435
Nov /Dec
2006
383.61
1.74
$0.08625
$0.01897
0.47
$8,936
Aug /Oct
2007
1,556.18
7.07
$0.08754
$0.01925
6.48
$124,805
Jun /Oct
Data Source: City of Saint John
A current spillage rate is calculated in Section 7.
2.4.4 Coleson Cove Thermal Generating Station
An agreement dated May 10, 1973, between the City of Saint John and the New
Brunswick Electric Power Commission provides for the supply of water to Coleson
Cove. Initially, the City would supply water by gravity from the Spruce Lake Reservoir.
The City built and owns the transmission main that can be pressurised to deliver 18.8
MGD. A capacity of 1.6 MGD is reserved for Coleson Cove.
Water is charged bimonthly at By -law rates, with a minimum billing level of 1.6 MGD. A
"deficiency charge" at 50 /1,000 gallons (originally 40) is levied for the difference
between actual consumption and this minimum level.
Coleson Cove revenues are reported as part of the By -law metered revenues.
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City of Saint John
2.4.5 Town of Rothesay ( "Kennebecasis Park" System)
The development in the community of Renforth near the City/Town boundary on
Page 39 of 198
Rothesay Road and Park Drive is supplied by the City of Saint John in accordance with
a 1996 agreement. The Town refers to this system as the Rothesay West Water
System. It is separate from the municipal system serving the rest of the Town.
The City constructed the infrastructure required to bring treated Saint John water to the
boundary with the Town of Rothesay to provide water for customers in the Rothesay
West Water System. Costs were shared between the City of Saint John (28 %), the
Town (22 %) and the Province of New Brunswick (New Brunswick Municipal Finance
Corporation) (50 %). The City financed its share using 10 -year debt with repayment
completed in 2006. The City bills the Town for the volume of water supplied to the
Town. The billings are based on By -law rates and readings taken on the master meter
on the line serving the Town and the separately metered usage by individual customers
served by the Town main, but before the master meter. Revenues are reported as By-
law metered revenues.
The Town also supplies water from its own source to other Rothesay customers,
referred to as the Rothesay Main Water System. The rates charged to the Rothesay
West customers are higher than those supplied from the Rothesay Main system. All
Rothesay customers are metered. The 2007 Rothesay water rates, provided in Exhibit
20, are an increasing block structure.
Exhibit 20 Town of Rothesay Water Rates - 2005 to 2007 (quarterly)
Rate Component
Main System
West System (City
supplied)
Service Charge
15 to 250 mm varies $40.00 to $6,553,60 quarterly
Volumetric Rates ($ /m3)
1 st block up to 96 m3
$0.60/ m3
$1.07/ m3
2nd block over 96 to 800 m3
$0.90/ m3
$1.605/ m3
3rd block above 800 m3
$1.35/ m3
$2.4075/ m3
Saint John reports water revenues from the Town with the revenues from other metered
By -Law customers.
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City of Saint John
2.5 Consumption
Page 40 of 198
Consumption data is available for metered customers only. As flat rate customers are
not metered, their actual consumption is unknown and must be estimated in order to
determine total water sales.
2.5.1 Supply Volumes
The 2007 water supply volumes from Spruce Lake in the west and Loch Lomond in the
east are provided in Exhibit 21. Total volume supplied in 2007 was 81,015,662 m3.
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City of Saint John
Exhibit 21 Water Production Volumes - 2007
Page 41 of 198
The monthly fluctuation in supply is plotted below in Exhibit 22.
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October 14, 2008
Monthly Volume
Aver a e DailV Volume
Month
Spruce
Lake
Loch
Lomond
Total
Spruce
Lake
Loch
Lomond
Total
Days
Gallons (000)
January
458,605
785,922
1,244,527
14.8
25.4
40.1
31
February
444,030
708,689
1,152,719
15.9
25.3
41.2
28
March
463,341
772,811
1,236,152
14.9
24.9
39.9
31
Aril
484,496
755,213
1,239,709
16.1
25.2
41.3
30
May
607,012
781,940
1,388,952
19.6
25.2
44.8
31
June
709,240
882,205
1,591,445
23.6
29.4
53.0
30
July
755,420
1,030,212
1,785,632
24.4
33.2
57.6
31
August
728,817
1,189,654
1,918,471
23.5
38.4
61.9
31
September
497,736
1,379,466
1,877,202
16.6
46.0
62.6
30
October
916,056
862,148
1,778,204
29.6
27.8
57.4
31
November
868,718
405,191
1,273,910
29.0
13.5
42.5
30
December
920,529
415,992
1,336,521
29.7
13.4
43.1
31
Total
7,854,001
9,969,444
17,823,446
21.5
27.3
48.8
365
Cubic Meters
January
2,084,570
3,572,371
5,656,942
67,244
115,238
182,480
31
February
2,018,320
3,221,313
5,239,633
72,083
115,047
187,130
28
March
2,106,096
3,512,778
5,618,875
67,939
113,315
181,250
31
Aril
2,202,255
3,432,788
5,635,043
73,408
114,426
187,830
30
May
2,759,144
3,554,273
6,313,417
89,005
114,654
203,660
31
June
3,223,818
4,010,022
7,233,840
107,461
133,667
241,130
30
July
3,433,728
4,682,781
8,116,510
110,765
151,057
261,820
31
August
3,312,805
5,407,519
8,720,324
106,865
174,436
281,300
31
September
2,262,436
6,270,301
8,532,738
75,415
209,010
284,420
30
October
4,163,891
3,918,855
8,082,746
134,319
126,415
260,730
31
November
3,948,719
1,841,779
5,790,498
131,624
61,393
193,020
30
December
4,184,224
1,890,873
6,075,097
134,975
60,996
195,970
31
Total
35,700,007
45,315,656
81,015,663
97,808
124,152
221,960
365
The monthly fluctuation in supply is plotted below in Exhibit 22.
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City of Saint John
Exhibit 22 Average Daily Supply Volumes by Month — 2007 (m)
350,000
300,000
250,000
A
4s
E 200,000
41
E
7
j 150,000
100,000
50,000
0
o °act °ata ���r V9 �aa �J�e ��r1 �� °yet G °yet °yet °yet '`O
QJ � O� o °� �+�
g � O
Page 42 of 198
There is a degree of seasonality in water use with 2007 peak usage occurring over the
summer months with the highest in September.
2.5.2 Flat Rate Customer Consumption
As discussed previously, the Saint John flat rate includes both fixed and volumetric
components. The volume component is based on estimated usage by a typical flat rate
customer.
As flat rate customers are not metered, it is not possible to determine their exact usage.
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RVA 061105
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Final Report
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City of Saint John
Page 43 of 198
Historical Volume Built Into Flat Rate - The 2002 Business Plan Report determined
that the 2002 water flat rates included 255 M3 /year (56,100 gallons per year) ". It
estimated however, that actual consumption by flat rate customers was much more,
averaging about 318 m3 /customer /year. This calculation was adopted from a 1993 user
rates report. Both the 1993 and the 2002 reports estimated flat rate customers used an
average of 318 m3 (70,000 gallons) to 364 m3 (80,000 gallons) or more. The range
covered the most likely amount based on various assumptions including estimated non -
revenue water losses, experience elsewhere and a few Saint John flat rate customers
with meters.
The 2002 Report recommended a transition to 318 m3 /year (70,000 gallons) by 2005.
The 2007 and 2008 water flat rate can be broken down into its service charge and
volumetric components as follows:
• Flat Rate = $316.36/year = $26.36 /month
• Fixed Charge Component:
16 -mm service charge for metered customer = $10.82.
The 1993 rate report" calculated that the flat rate service charge equivalent of a
metered customer was 48.535 %.
Thus the equivalent flat rate service charge = $10.82 x 48.535% _ $5.25 /month
• Volumetric component of flat rate= $26.36 - $5.25 = $21.11 /month
• Equivalent volume in flat rate:
1st block rate = 0.89553/m3
Consumption implicit in flat rate = $21.11 - $0.89553/m3 = 23.57 m3 /month
--283 m3 /year
= 62,200 imperial gallons per year
11 City of Saint John Water and Sewerage Business Plan Review Consolidated Report — Touchie
Engineering — November 25, 2002 — page 127
12 City of Saint John Study and Update of Water and Sewerage Rates — Coopers & Lybrand
Consulting Group - January 4, 1993 — page 23
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City of Saint John
Page 44 of 198
The flat rates and implicit consumption consumptions for 2002 to 2007 are provided in
Exhibit 23.
Exhibit 23 Breakdown of Flat Rate Charges 2002 to 2007
Rate Component
2002
2003
2004
2005
2006
2007
Flat Rate (for Water Only)
Annual ($ /year)
$194.32
$220.90
$246.36
$276.38
$299.09
$316.36
Monthly
$16.19
$18.41
$20.53
$23.03
$24.92
$26.36
Basis
Service Charge
Metered Customer
$10.82
$10.82
$10.82
$10.82
$10.82
$10.82
Flat Rate Share (1)
48.535%
48.535%
48.535%
48.535
48.535
48.535
Flat Rate Customer
$5.25
$5.25
$5.25
$5.25
$5.25
$5.25
Volume Charge (i.e. Monthly Flat Rate - Flat Rate Service Charge)
Monthly Charge
$10.94
$13.16
$15.28
$17.78
$19.67
$26.36
Equivalent Volumes (i.e. Volumetric Charge _ Volumetric Rate)
Volume Rate
0.51428
$0.60592
$0.69752
0.78267
0.84664
0.89553
Volume m3 /month
21.3
21.7
21.9
22.7
23.2
23.57
Volume M3 /year
255
261
263
273
279
283
Volume gals /month
4,681
4,777
4,819
4,998
5,112
5,186
Volume gals /year
56,169
57,325
57,827
59,974
61,344
62,232
Note (1) - Percentage service charge share for flat rate customer determined in 1993 User Rate
Study
Some progress has been made since 2002, although much slower than recommended.
Lakewood Heights Test Area - A predominantly residential flat rate area was
monitored in June 2006 in order to provide some factual data to validate unmetered
residential customer usage levels. The Lakewood Heights Zone was selected since it is
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City of Saint John
predominantly residential and flow to it is metered as it is serviced by a metered
Page 45 of 198
pumping station. Monitoring started May 29, 2006 and continued for 19 days. Note that
during the period there was no usage for fire protection, main flushing, no main breaks
and no flows out of the zone through a normally closed pressure reducing valve.
The zone includes 10 metered customers. Water billing records were analyzed for these
customers. Their billing records covered about 71 days and were prorated to the 19 -day
monitoring period, indicating a metered customer usage of 489 m3. This is deducted in
the calculation of the flat rate customer usage.
It was assumed, based on the nature of the area, that a water loss ( "non- revenue water"
NRW) rate of 10 - 15% would be appropriate for this calculation.
Average annual flat rate customer consumption was calculated as follows:
Period =
19
Days
Total Volume =
14,994
m3
Less non - revenue
water @ 10 - 15% =
1,500 - 2,250
m3
Consumption =
13,494 - 12,744
m3
Less metered customer usage =
489
m3
Flat rate customer usage =
13,005 — 12,255
m3
Number of flat rate customers =
734
Average usage in period =
about 18
m3
Average demand per day =
0.89
m3 /cust /day
Average demand per day =
327
m3 /cust /year
The average consumption was prorated from the test period to be 327 M3 /year. Since
the period monitored was likely to have minimal lawn watering due to a lack of hot
weather, the average might be a little higher on an annual basis if some lawn watering
was included.
Conclusion — This result is a little higher than the 318 M3 /year estimated in previous
reports. However, the differential is not significant. It is concluded that the level
previously used of 318 M3 /year (converted from 70,000 gallons per year) is not
unreasonable and is used in this report as a target level — see Section 7.3.5.
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Page 46 of 198
The 2002 Report recommended that universal metering be installed. It is fairer because
it is based on the user pay principle, improves management by allowing actual usage to
be tracked and reduces usage as customers are more careful with usage. Although a
recommendation to meter all customers was adopted at the time, it has yet to be
implemented. It is again recommended that universal metering be adopted.
2.5.3 Total Consumption
As discussed in the introduction, the City of Saint John is unusual in regard to the high
level of water usage by several industrial customers. There are a number of very large
industrial water users in the City of Saint John. Based on 2007 customer usage only,
two of the biggest water customers, Irving Pulp and Paper and Irving Oil Limited, use an
estimated 64% and 13% of all water consumption respectively.
When reviewing all of the Industrial Commercial and Industrial (ICI) customers, together
they use about 91 % of the total customer consumption. This leaves flat rate residential
customers using about 9% of the total billed consumption.
Saint John Water's commercial and industrial customers are metered. However, since
most individual customers are not metered, total consumption can only be estimated.
Consumption by unmetered customer is estimated in Exhibit 24 below using the per
customer consumption estimates made above.
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City of Saint John
Exhibit 24 Consumption versus Supply Volumes — 2007
Description
Share of
Volume (m)
Consumption
Supply
Metered
By -law
I PP
1,636,364
3%
2%
IOL
6,087,922
10%
8%
Coleson Cove
1,922,070
3%
2%
Other metered
6,854,132
11%
8%
Total By -law
16,500,488
27%
20%
Special Rate
IPP
37,019,810
61%
46%
IOL
1,722,186
3%
2%
Total Special Rate
38,741,996
64%
48%
Total Metered
55,242,484
91%
68%
Flat Rate
Units billed
16,884
Estimated Usage (M3 /unit)
- gallons per year
70,000
- cubic meters per year
318
Total Flat Rate
5,372,182
9%
7%
Total Consumption
60,614,666
100%
75%
Supply
- gallons per year
17,823,446,000
- cubic meters per year
81,015,662
100%
Non Revenue Water
- cubic meters per year
20,400,996
Percent of Supply
25%
Page 47 of 198
Total 2007 consumption is estimated at 60.6 million cubic metres. This compares with
the actual water volume supplied of 81.0 million m3, for a non - revenue water level of
25 %. Non- revenue water includes legitimate usage such as fire protection and main
flushing for water quality. A figure of about 15% NRW is often cited as a "normal" level,
which would indicate that levels in the City of Saint John are above average.
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City of Saint John
Page 48 of 198
However, since this calculation includes estimates of usage by unmetered customers,
the true figure may be modestly higher or lower. If all water customers were billed on
the actual amount of volume used, this would provide a more accurate picture of the
whole system and allow the actual NRW levels in the City to be more accurately
determined. However, since flat rate usage is estimated at only 9% of total supply,
variations in the basis of estimating flat rate usage will not have much impact on the
NRW estimate.
2.5.4 Largest Users
A list of customers using more than 70,000 cubic meters annually is provided in Exhibit
25.
Exhibit 25 Annual Consumption by Largest Customers - 2007 (m)
Customer
By -law
Special Rate
Total
IPP
1,636,364
37,019,810
38,656,174
Irving Oil Limited
6,087,922
1,722,186
7,810,108
NB Power /Coleson Cove
1,922,070
1,922,070
Moosehead Brewery
963,471
963,471
NB Power /Bayside
426,395
426,395
Irving Paper
331,329
331,329
SJ Regional Hospital
245,433
245,433
UNBSJ
152,378
152,378
SUCOR
103,155
103,155
Town of Rothesay
95,509
95,509
Braxco
79,537
79,537
St Joseph Hospital
71,500
71,500
Saputo Foods
70,324
70,324
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2.5.5 Seasonality
Page 49 of 198
An indication of the seasonality of use has been calculated by comparing the bimonthly
billings for each customer with their annual average bimonthly billing, expressed as a
ratio. The five largest customers are graphed in Exhibit 26.
Exhibit 26 Seasonality of Large Users
200%
180%
160%
140%
(D
IPP
CM 120%
IOL
.....
> 100%
- -- Coleson Cove
Q
80%
■ --- Moosehead
Irving Paper
60%
v
Q 40%
20%
0%
Jan /Feb Mar /Apr May /Jun Jul /Aug Sep /Oct Nov /Dec
2.5.6 Consumption Profile
By -law customers are billed bimonthly. A profile of consumption by By -law customers is
provided in Exhibit 27.
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Exhibit 27 By -law Customer Metered Consumption Profile - 2007
Page 50 of 198
Accumulated Consumption Bimonthly
Billings
Up to m3
Volume
%
Number
%
10 m3
(15,767)
0%
2,399
13%
20 m3
434
0%
3,457
19%
50 m3
100,718
1%
6,307
35%
1 st block - 100 m3
382,350
6%
10,094
56%
200 m3
933,655
14%
13,976
78%
500 m3
1,678,578
24%
16,435
92%
1,000 m3
2,140,711
31%
17,097
95%
5,000 m3
3,496,591
51%
17,760
99%
10,000 m3
4,088,863
60%
17,845
100%
20,000 m3
4,759,648
69%
17,893
100%
2nd block - 50,000 m3
5,404,401
79%
17,911
100%
100,000 m3
6,042,622
88%
17,919
100%
177,000 m3
6,854,132
100%
17,924
100%
Data Source: City of Saint John
Exhibit 27 illustrates several things, namely:
• The total 2007 consumption for these other metered customers was 6,854,132 m3.
• The first block covers usage up to 50 m3 monthly (100 m3 for the bimonthly billings).
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Page 51 of 198
• About 56% of metered customers did not exceed the 1 st block level of consumption,
but represented only 6% of By -law customer metered consumption.
• Virtually all customers, 99.9 %, did not exceed the second block, representing 79% of
consumption.
Thus about 21% of consumption is represented by only 0.1% or 13 billings of the 17,924
issued in 2007.
2.6 Expenditures
The M1 manual definition of expenditures is, "amounts paid or incurred for all purposes,
including expenses, provision for retirement of debt, and capital outlays ".
The costs are described as follows:
1. Operating Costs —These include utility operations, maintenance and
administration costs required to meet agreed service standards, legislated
standards, and others. These are recurring costs and include wages and
salaries, materials, utilities, taxes and interest costs. For capital facilities they
relate to repair and maintenance. Replacement is a capital item.
2. Fiscal Services — These are capital costs including long -term debt (principal and
interest on existing debt) plus capital from current revenues. They can be
subdivided into three primary capital cost categories:
a. Upgrades: Upgrade costs relate to higher service levels such as the
construction of treatment facilities where treatment did not previously
exist.
b. Replacement: Replacement relates to existing facilities which have
reached the end of useful life. Replacement costs might be recovered
from rates, special charges or the General Fund; and
c. Growth: The cost of providing facilities for growth might be recovered
from the General Fund (as is now the case), from user rates or from
special capital charges.
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Page 52 of 198
Each category requires clear attention, as there are different options available for
recovery of various costs.
3. Shared Services — These include billing - related costs, and allocation of general
municipal costs as well as utility- specific costs such as engineering.
Budgeted water and sewage expenditures for 2005 to 2007 are summarized below.
Costs which are specific to water and sewage systems are provided in Exhibit 28.
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Page 53 of 198
Exhibit 28 Water & Sewage Operations & Fiscal Service Budget - 2005 to 2007
Data Source: City of Saint John
Some costs are shared between the water and sewage systems and are not identified
separately by service. A summary of shared costs plus specific costs for water and
sewage is provided below in Exhibit 29.
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Water
Sewage
Description
2005
2006
2007
2005
2006
2007
Operations
Watersheds
325,422
325,548
297,537
n/a
n/a
n/a
Treatment
1,216,874
1,531,520
1,581,494
1,690,886
1,928,284
2,096,339
Pumping /Storage
917,398
988,801
1,075,778
1,114,519
1,044,980
1,101,646
Mains
2,627,956
2,813,698
2,875.865
1,855,913
1,731,170
1,562,776
Hydrants
740,847
797,942
937,886
n/a
n/a
n/a
Metering
n/a
n/a
n/a
Total Operations
5,828,497
6,457,509
6,768,560
4,661,318
4,704,434
4,760,761
Fiscal Services
Long -term debt
- Principal
3,297,807
3,085,144
3,279,811
3,166,359
2,752,470
2,682,189
- Interest
1,193,537
1,350,413
1,358,771
1,279,101
1,066,881
797,686
Capital
contribution
713,148
1,378,044
1,889,218
713,148
1,378,044
1,889,217
Short -term
financing costs
150,000
150,000
150,000
150,000
150,000
150,000
Debt discount
86,705
87,675
112,200
70,942
134,850
65,700
Deficit 2nd
previous year
(63,655)
(37,706)
(31,173)
(63,654)
(37,705)
(31,172)
Other misc.
100,000
250,475
117,500
267,975
Total Fiscal
Services
5,377,542
6,113,570
7,009,302
5,315,896
5,562,040
5,821,595
Total
11,206,039
12,571,079
13,777,862
9,977,214
10,266,474
10,582,356
Data Source: City of Saint John
Some costs are shared between the water and sewage systems and are not identified
separately by service. A summary of shared costs plus specific costs for water and
sewage is provided below in Exhibit 29.
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Page 54 of 198
Exhibit 29 Water & Sewage Shared & Total Expenditures Budget - 2005 to 2007
Description
2005
2006
2007
Shared Services
Billing & collection
344,170
386,400
395,630
Administration & general
2,159,945
3,016,324
3,340,763
Programs & services
778,773
905,815
726,203
Engineering
1,682,006
1,018,777
904,267
Total shared services
4,964,894
5,327,316
5,366,863
Water Total
OM &A
5,828,497
6,457,509
6,768,560
Shared
2,482,447
2,663,658
2,683,432
Total
8,310,944
9,121,167
9,451,992
Fiscal Services
5,377,542
6,113,570
7,009,302
Total
13,688,486
15,234,737
16,461,294
Sewage Total
OM &A
4,661,318
4,704,434
4,760,761
Shared
2,482,447
2,663,658
2,683,432
Total
7,143,765
7,368,092
7,444,193
Fiscal Services
5,315,896
5,562,040
5,821,595
Total
12,459,661
12,930,132
13,265,788
Total Costs
26,148,147
28,164,869
29,727,081
Data Source: City of Saint John
The budgets have increased annually 7 %, 8% and 10% respectively in 2005, 2006 and
2007. For 2005 and 2006, 41% of costs are capital - related; growing to 46% in 2007.
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2.7 Revenues
2.7.1 Total Revenues
Page 55 of 198
A breakdown of budget revenues by source for 2005 to 2007 is provided in Exhibit 30.
Exhibit 30 Water & Sewage Budget Revenues - 2005 to 2007
Description
2005
2006
2007
($)
($)
($)
Water
Flat Rate
4,652,619
5,032,901
5,331,352
Metered (including lapsed
agreement)
7,559,324
7,554,583
7,847,674
Fire Protection
1,570,388
1,662,403
1,708,119
Permits
20,000
Hydrant Water Sales
1,000
Lumber Sales
Total Water
13,782,331
14,249,887
14,908,145
Sewage
Flat Rate
5,583,143
6,039,481
6,397,622
Metered
5,453,392
6,521,720
7,063,354
Storm Sewerage
1,104,280
1,128,781
1,153,960
Permits
6,000
Septage Fees
15,000
Total Sewerage
12,140,815
13,689,982
14,635,936
Shared
Interest
150,000
Miscellaneous
225,000
225,000
33,000
Total Shared
225,000
225,000
183,000
Total Water & Sewerage
$26,148,146
$28,164,869
$29,727,081
Data Source: City of Saint John
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Page 56 of 198
For the combined water and sewerage utilities, metered By -law customers and flat rate
customers are budgeted to generate a little over 89% of revenues in 2007 (metered
50% and flat rate 39 %). The fire protection charge recovers 6 %, the storm sewage
charge 4% and miscellaneous sources the remaining 1 %.
This is a summary of the Saint John Water current water and sewer rate practices,
customer information, and current practices.
2.7.2 Actual Consumption & Revenue Analysis
While completing the rate calculation analysis it was noted that there was a variance in
the 2007 data where the consumption data did not correlate with budget projections.
This variance came from how revenues from the two expired agreements were dealt
with. Exhibit 31 compares the 2007 Budget Revenues against the Projected Actuals.
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Exhibit 31 Budget Revenues vs. Projected Actual - 2007
Page 57 of 198
NOTE: 1) This water data used in sewage revenue calculation -mostly customers with both water and sewage.
2007 Saint John Pate Calc Balanced Pate July 31 2008.xis Proj Act ✓s Budget 11- Aug -08
A combined 2007 water and sewage revenue deficit of $792,241 compared to budget
revenues is estimated based on actual consumption and customer data, based on:
Flat rate water revenue is marginally less than the budget amount of $5,331,352.
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Estimated Actual
Projected
Excludes Specials (1)
Specials Consumption
Total
Total
Budget
Actual
Rate
Cust Data
Revenue
Coleson IPP IOL
Consumption
Revenue
vs Budget
WATER ($ /year)
Customers
(m) (m) (m)
(m)
Flat Rate $316.32
16,844
$5,328,094
$5,328,094
Adjustment
- $43,361
- $43,361
$5,284,733
$5,331,352
- $46,619
Total Flat Rate
$5,284,733
Metered ($ /month) Customers
Service Charges
16 mm $10.82
1,276
$165,676
$165,676
19 $15.82
640
$121,498
$121,498
25 $23.31
391
$109,371
$109,371
38 $40.70
253
$123,565
$123,565
50 $60.81
225
$164,187
$164,187
75 $109.74
59
$77,696
$77,696
100 $200.77
21
$50,594
$50,594
150 $350.75
11
$46,299
$46,299
200 $500.72
4
$24,035
$24,035
250 $700.82
5
$42,049
$42,049
Total Service Charge
2,885
$924,969
$924,969
Consumption Charges
By-Law ($ /m3)
(m)
1st Block $0.8955
1,165,350
$1,043,606
1,200 600 600
1,167,750
$1,045,755
2nd Block $0.6406
4,884,223
$3,128,784
580,264 299,400 299,400
6,063,287
$3,884,081
3rd Block $0.3692
804,559
$297,003
1,305,605 1,200,000 1,200,000
4,510,164
$1,664,927
4th Block $0.1128
0
$0
35,000 136,364 4,587,922
4,759,286
$536,847
$7,131,611
Total Consumption
6,854,132
$4,469,393
1,922,069 1,636,364 6,087,922
16,500,487
Other
Little River Spillage
$124,805
Timing Accruals
$31,306
$156,111
Total Other
$7,287,722
Total By -law + Other
$8,212,691
Total Metered I
$7,847,674
$365,017
Lapsed Agreements
Irving P &P $0.01555
37,019,810
37,019,810
$575,658
Irving Refining 1 $0.08800
1,722,186
1,722,186
$151,552
$727,2101
Total Lapsed Agreements
38,741,996
$0
$727,210
$14,224,634
$13,179,026
$1,045,608
Total Water
6,854,132
$10,679,095
55,242,483
SEWAGE
Water revenues charged sewage
Gross=
10,679,095 Ca 90.70%
Net=
$9,685,939
Total Sewer @ Surcharge of
120%
$11,623,127
$13,460,976
- $1,837,849
$25,847,761
$26,640,002
- $792,241
Total Water + Sewer Revenue
NOTE: 1) This water data used in sewage revenue calculation -mostly customers with both water and sewage.
2007 Saint John Pate Calc Balanced Pate July 31 2008.xis Proj Act ✓s Budget 11- Aug -08
A combined 2007 water and sewage revenue deficit of $792,241 compared to budget
revenues is estimated based on actual consumption and customer data, based on:
Flat rate water revenue is marginally less than the budget amount of $5,331,352.
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Total metered water revenue includes service charges, consumption by metered
Page 58 of 198
customer at by -law rates (including "Specials" Coleson Cove, IPP and IOL) and spillage
sales to IOL. A surplus of $365,017 compared with budget water revenues is calculated.
IPP and IOL are supplied with water under agreements that have lapsed at the rate
existing at the end of the agreement periods. This adds an additional $727,210 in
revenue bringing the total water revenue surplus to $1,045,608.
Sewage charges are tied to the water charges for customers connected to sanitary
sewers. Total water revenues excluding large user accounts not billed for sewage were
$10,679,095. Of this, 90.7% is charged for sewage. At 120% sewage surcharge, sewage
revenues were $11,623,127.
Sewage revenues represented a shortfall of $1,837,849 compared to budget.
2.7.3 Fire Protection Charge
The water system includes capacity on standby for fire protection. This capacity
requirement particularly affects the sizing of storage reservoirs and distribution mains.
The recovery of costs related to capacity in the water system for fire protection is often
treated differently than other water system costs.
The New Brunswick Municipalities Act Regulation 81 -195 provides a formula approach
for determining the maximum amount of water system costs that can be attributed to fire
protection and raised from the General Revenue Fund — see Exhibit 32.
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Exhibit 32 Provincial Fire Protection Cost Calculation Regulation
Page 59 of 198
Option 1 — Calculation Based on Number of Hydrants
$120 x number of hydrants
Option 2 — Calculation Based on Water Costs & Municipality Population
Allowable Costs:
• water purchased;
• source of supply, including the operation and maintenance thereof;
• power and pumping, including the operation and maintenance thereof;
• transmission and distribution, including the operation and maintenance thereof;
• property taxes; and
. debt charges attributable to water costs, including interest on debenture principal
and long -term debt;
Excluded Costs:
. administration and general costs;
. billing and collecting;
. purification and treatment;
. depreciation;
. allowance for accounts receivable; or
. any portion of costs related to sanitary or storm sewers.
Maximum Percentage Based on Population:
0 to 2,999 population
65% of "water costs"
3,000 to 5,999 population
55% of "water costs"
6,000 to 15,999 population
50% of "water costs"
16,000 to 49,999 population
40% of "water costs"
50,000 & over population (e.g. Saint John)
35% of "water costs"
Municipalities can either charge $120 per hydrant or use the Provincial formula
approach based on population and eligible costs.
In the formula approach eligible costs are multiplied by a percentage based on
population to determine the maximum fire protection charge. The percentage decreases
from 65% for populations under 3,000 to 35% for populations over 50,000 (i.e. Saint
John). This decrease reflects the fact that as the size of a municipality increases the
percentage share of water system costs related to fire protection decreases.
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Page 60 of 198
A method of calculating fire protection costs based on engineering parameters,
consistent with the Base Extra Capacity method adopted for the user rates was set out
in detail in the 2002 Business Plan Report (pages 82 to 85 of the Consolidated Report),
as follows:
"Technical Basis of Calculating Fire Protection Costs" - Fire protection costs can
also be calculated on a technical basis using engineering and financial criteria. The
base extra capacity (BEC) method incorporates the capability of isolating fire protection
costs. The 1993 rate report did not utilise this feature since Provincial legislation
specified how the costs would be calculated when charging them to the General Fund.
The BEC method calculated water system fire protection costs as follows:
Supply — Water supply does not need to be sized for fire protection since the volume of
water used should be in storage, ready to use. It is supplied at off -peak periods. The
only charge is a percentage of costs related to the proportion of water that might be used
in a year compared to total supply. It is estimated that approximately 1 % of annual
production is used for fire fighting and training.
Distribution — Mains must be able to transmit the greater of fire demands on the
maximum day or maximum hour consumption demand. For local mains, normally 150
mm (6- inches) in diameter, size is normally dictated by fire needs. For large transmission
mains, it is more likely to be a small factor, sometimes actually related to replenishing
fire storage in reservoirs rather than fighting fires. For the system as a whole, the costs
are distributed between consumption and fire protection as follows:
fire demand
Fire cost share =
(fire demand + maximum hour)
Where:
Fire demand = representative fire flow, sometimes taken as 80% of the maximum local
level established by the Fire Underwriters. The Water Strategy Study cited a level of
4,500 Igpm (20,400 Lpm). The Fire Underwriters office in Halifax provided a list of
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Page 61 of 198
hydrant tests and indicated a maximum level requirement of 5,000 Igpm (22,700 Lpm).
For calculation purposes the representative level is taken as (80% x 5,000 =) 4,000 Igpm
(18,200, Lpm).
Average, maximum day and peaking factors are presented below in Exhibit 33.
Exhibit 33 Average & Maximum Day Supply Volumes - 2007
Total from Deduct Bulk/Raw Water Customers Net to
Source IPP Coleson Cove Total City
Gallons
Latimer Lake 9,969,444,287
Spruce Lake 7,854,001,461
Total 17, 823, 445, 749
Deduct Spillage 1,556,180,000
Net Annual 16,267,265,749 8,534,718,388 155 200 750 8,689,919,138 7 577 346 611
Average Day
44,567,851
23,382,790
425,208
23,807,998
20,759,854
Maximum Day
61,480,184
27,400,000
500,000
27,900,000
33,580,184
Max:Avg Day Ratio
1.38
1.17
1.18
1.17
1.62
Cubic Metres
Latimer Lake
45,315,656
Spruce Lake
35,700,007
Total
81,015,662
Deduct Spillage
7,073,545
Net Annual
73,942,117
38,794,174
705,458
39,499,632
34,442,485
Average Day 202,581 106,285 1,933 108,218 94,363
Maximum Day 279,455 124,545 2,273 126,818 152,637
Max:Avg Day Ratio 1.38 1.17 1.18 1.17 1.62
NOTE: 1) Data Source City - Coleson Cover Max day estimated.
SJ 2007 supply flow data summary.xls Summary 18- Jul -08
The total, average day and maximum day flow data in the left data column relate to the
system as a whole, including the water provided from the two lake sources to all
customers and a deduction for spillage at Latimer Lake. For the total supply (net of
spillage) the max day ratio calculated was 1.38. Water sold to Coleson Cove and to IPP
from Spruce Lake passes through bulk mains not part of the normal City transmission
and distribution system. The City flow (net of Coleson Cove and IPP) is shown in the
right column. The 2007 City max day ratio (or peaking factor) was determined to be
1.62.
The max day ratio for design recommended in the Water Strategy Table 6 -2 and in the
ACWWA design manual is 1.8 time average day. The ratio would vary to a degree year
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by year, so the design ratios of 1.5 times the maximum day demand will be used to
determine the maximum hour demand.
"Maximum hour = maximum hour demand on the maximum day of the year."
Page 62 of 198
The maximum day demand is given as 23,450 Igpm (106,500 Lpm). Thus maximum
hour would be (1.5 x 23,450 =) 35,175 Igpm (159,700 Lpm).
Fire cost share = 18,200 - (18,200 + 159,700) = 10%
A second method of determining fire protection costs based on industry standards has
been tested. This is based on allocating costs based on the water system inventory.
The proportion of residential mains related to fire protection is calculated as follows:
1. Fire demand is about 6,000 Lpm.
2. Normal demand based on 400 Lpcd and 2.5 persons per home and 25 homes
per street yields 25,000 Lpd or 17 Lpm.
3. Peak demand would normally due to lawn watering. Assume 50% watering at 15
Lpm yields 187 Lpm. (Please note, with the climate conditions in the City of Saint
John the peak demand due to lawn watering would be even less.)
4. Fire share of local mains is therefore (6,000 - (6,000 + 187 + 17 =) 97 %. This
illustrates that local 200 to 250 mm mains are primarily sized for fire protection.
Without fire demands, the local mains could be much smaller
The capacity of mains needed for fire protection is calculated in Appendix G.
95% is allocated to small mains to 225 mm diameter. Subsequent groupings are
allocated 50 %, 25% and finally 0% to fire. The large mains are not allocated a
fire protection component because they are primarily needed for maximum hour
and reservoir refilling. The fire protection share calculated in this manner is 13 %.
For rate calculation purposes, 12% is used.
Storage — Future water storage requirements for Saint John are set out in Table 6 -2 of
the Water Strategy Study. Exhibit 34 illustrates how the required volume is calculated:
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Exhibit 34 Water Storage Design Parameters
Page 63 of 198
Storage Component
Description
Volume
Equalization Storage
The volume of water needed
(55% of total)
on the maximum day of the
year to meet peak demands
while the water plant supplies
at a constant rate for the day
8,445,000
Volume = 25% of max. day
00 m 3Igal
(38,4 )
(38,4
Fire Storage
Based on local fire flow rates
(25% of total)
for durations set by the Fire
Underwriters13. Varies from
1,500 Igpm for 2 hours to
3,780,000 Igal
4,500 Igpm for 4 hours
3
(17,200 m )
Emergency Storage
25% of (equalization + fire
3,056,250 Igal
(20% of total)
storage)
(13,900 m)
Total Storage
15,281,000
(100 %)
(69,500 m)
Current Storage
4,390,000 Igal
(20,000 m)
Thus fire storage represents 25% of total storage.
Hydrants — This cost is allocated 100% to fire protection.
Fire protection costs are calculated using both the above engineering basis developed
in the 2002 Business Plan Report and compared with the legislated maximum value in
Exhibit 35.
13 Also see Water Supply for Public Fire Protection 1999 — Fire Underwriters Survey — page 16
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Exhibit 35 Fire Protection Cost Calculation (2007 Budget Data)
Description
Operations
Watersheds
Treatment
System
Pumping /Storage
Hydrants /Metering
Total
Fiscal
Longterm debt
Principal
Interest
Discounts
Capital contribution
Short -term financing
Other miscellaneous
Total
Prior surplus /deficit
Total
Fire vs Allowable Cos t
Fire vs Expenditure B
Page 64 of 198
Maximum Allowable
Engineering
Basis
Allowable
Allocation
Fire
Expenditure
Allocation
Fire
Cost Base ($)
( %)
Protection
Budget ($)
( %)
Protection
Costs ($)
Costs ($)
297,537
35%
104,138
297,537
1%
2,975
n/a
1,581,494
1%
15,815
2,875,865
35%
1,006,553
2,875,865
12%
345,104
1,075,778
35%
376,522
1,075,778
25%
268,945
937,886
35%
328,260
937,886
50%
468,943
5,187,066
1,815,473
6,768,560
1,101,782
3,279,811
35%
1,147,934
3,279,811
12%
393,577
1,358,771
35%
475,570
1,358,771
12%
163,053
112,200
35%
39,270
112,200
0%
0
1,889,218
35%
661,226
1,889,218
12%
226,706
150,000
35%
52,500
150,000
12%
18,000
n/a
n/a
n/a
250,475
0%
0
6,790,000
2,376,500
7,040,475
801,336
0
0
- 31,173
0%
0
$11,977,066
$4,191,973
$13,777,862
$1,903,118
Base
35.0%
15.9%
ud et
30.4%
13.8%
2007 Saint John Rate Option 1 Sept 3 2008 v2.xls 2C Fire Protection 09- Oct -08
Based on the final 2007 budget figures, the City could charge $4,191,973 to the
General Fund for water system fire protection costs based on 35% of the eligible cost
base of $11,977,066. The calculation based on engineering criteria arrives at a fire
protection cost of $1,903,118 or 15.9% of the cost base. The budgeted charges from
the Utility to the General Fund for 2007 after year end adjustments were $1,708,119 or
14.3% of allowable cost base (13.8% of water expenditure budget).
2.7.4 Storm Sewer Charge
According to the New Brunswick Municipalities Act (M -22), where a municipality
provides water or sanitary sewerage systems, they shall be constructed, operated and
maintained on a user - charge basis. As a result, in the case of combined sewers, the
storm component is determined and charged back to the General Fund.
Exhibit 36 presents the 2007 storm sewer charge calculation based on projected costs.
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Exhibit 36 Calculation of Storm Sewer Charge to the General Fund - 2007
Page 65 of 198
Category
Total
Allocated
Percentage
Cost
Administration @ 25%
2,260,703
25.0%
565,176
Cust Service @
54.5%
1,404,476
54.5%
765,439
Support @ 25%
-
25.0%
-
Engineering @ 54.5%
971,762
54.5%
529,610
Collection
1,956,250
100.0%
1,956,250
Pumping
1,157,483
100.0%
1,157,483
Debt Charges
Excluded
0%
0
Total
$7,750,674
$4,973,958
Combined Share
$4,973,958
46.4%
$2,307,917
Storm Share
(50% of Combined Share)
$2,307,917
50.0%
$1,153,958
The combined sewer share of the sewer system is calculated based on the length of
combined sewers relative to the total sewage system length. The calculation shown
above was based on work completed in the 2002 Business Plan Review. The
percentage of combined sewer to sanitary sewer was 46.4 %. This ratio has not been
updated.
Once the combined sewer share is determined, it is spit 50:50 between sanitary and
storm. This is a compromise value since in terms of sizing, storm is the biggest factor,
but in terms of utilization storm use is intermittent compared to the constant use by the
sanitary component.
The current ratio of combined sewers relative to the total sewage system length is
shown below in Exhibit 37.
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Exhibit 37 Combined Sewer Share of Sewage System - 2007
Page 66 of 198
Type of Sewer
meters
%
Combined
149,688
40.0%
Sanitary
223,795
60.0%
Total Sewage
373,483
100%
This new ratio of 40% will impact the 2009 Storm Sewer charge to the General Fund.
The budget allocation would decrease to $994,792, a difference of $159,166.
Using the actual 2007 allocation, with the current ratio (40 %), would see the Storm
Sewer charge allocation decrease by $132,261.
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3 AFFORDABILITY
3.1 Purpose
This section of the report will evaluate several options available to minimize loss of
access to service by low- income water customers as a result of increasing user rates.
Three phases were completed in consideration of this issue:
1. A general overview of affordability issues
2. Survey of practices in other Canadian municipalities.
3. Evaluation of options available, with a recommendation on an approach to assist low-
income customers in Saint John.
3.2 Definition of Affordability14
Affordability can mean different things to different people. The alternative meanings
attributed to affordability likely differ in one key respect: whether they refer to willingness
to pay or ability to pay. From a willingness to pay perspective, affordability really
concerns whether we are satisfied that the price of something is fair or commensurate
with the perceived value of the thing.15 This perspective underpins the popular
comparison made between the price of tap water and the price of other utility services
like cable TV or other liquids like bottled water or beer. While such comparisons are
14 In keeping with the study terms of reference, the focus here is affordability for the household. It
is also possible to consider affordability at the municipal level. This sort of assessment involves a
consideration of the overall operating and capital cost of the service compared to the municipal
capacity to incur that cost as measured by its tax base, its overall debt burden, and other fiscal
indicators. For a discussion of municipal affordability, see: Strategic Alternatives, M. Fortin, Enid
Slack Consulting Inc., and Mike Loudon, 2002. Financing Water Infrastructure, Commissioned
Paper 16, The Walkerton Inquiry, Toronto.
15 The interpretation of willingness to pay here is a lay interpretation perhaps better described as
'happy to pay'. This differs from the standard meaning in micro - economics which interprets
willingness to pay as the maximum amount a consumer will pay (whether happily or otherwise)
rather than do without something.
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important to elected officials and municipal staff who deal with the matter of constituents
who are `unwilling' to accept rate increases, they have no relevance when planning
municipal programs to help low income households. 16
The second perspective on affordability, focusing on ability to pay, is the appropriate
perspective to apply in the context of municipal programs for poverty alleviation. Policy
interventions on the basis of poverty alleviation are broadly accepted by the
public. However, such interventions are usually the responsibility of senior governments
rather than municipalities; municipal government involvement, where it occurs, is limited
to program administration. 17
Ability to pay can be differentiated based on the degree of poverty: absolute poverty and
relative poverty. A household experiences absolute poverty when it does not have
enough income to secure basic necessities: food, clothing, shelter, basic utility services,
health care, and education. A household experiences relative poverty when it does not
have enough income to engage in basic activities that serve to connect and integrate
that household into the life and culture of its community; for example: access to media,
ability to pay for a marriage or funeral, the ability to support children in basic
extracurricular activities, and so on. The discussion of affordability of water and
wastewater services in North America typically is concerned with relative and not
absolute poverty.
16 As water prices rise, consumers may demonstrate a reluctance (unwillingness) to pay, and so
reduce consumption, even if the price is economically justified (United States Environmental
Protection Agency, 2001).
17 The responsibility for poverty alleviation is normally assumed by senior governments rather
than local governments since poverty is not distributed uniformly across municipalities.
Municipalities with the greatest burden of poverty have the lowest capacity to finance poverty
alleviation programs.
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3.3 Overview of the Affordability Issue
3.3.1 Measuring Affordability
Affordability of water and wastewater services to poor households depends on
household income and the cost of living. Affordability will therefore vary from one
municipality to the next. The most common measure of household affordability
considers the proportion of household income spent on the service. A threshold value is
used to indicate whether affordability is a potential issue in a municipality. Exhibit 38
presents affordability threshold values for water and wastewater services. 18
Exhibit 38 Affordability Thresholds for Water and /or Wastewater
THRESHOLD VALUE
CALCULATION 19
REFERENCE
1.5% to 2.5% - questionable
annual user charge
median household
>2.5% - unaffordable
income
Water Utility Financing Study (1980).
100 to 200% -questionable
>200% - unaffordable
percentage rate increase
water and sewer bills
U.S. Department of Housing and
1.3% to 1.4%
household income
Urban Development.
water and sewer bills
U.S. National Consumer Law Center
>2.00%
household income
(1991)
18 Based largely on Strategic Alternatives and Mike Fortin, March 2006. Affordability of
Wastewater Treatment Services in Canada, Project # 384 -2006, Canadian Council of Ministers
of the Environment, Municipal Wastewater Effluent Development Committee
19 Information and indicators in this table were taken from U.S. EPA (1998), Information for
States on Developing Affordability Criteria for Drinking Water, EPA 816 -R -98 -002, Washington,
D.C. Note that for some of the indicators, the measure of income (e.g., median, average
household income) is not specified.
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THRESHOLD VALUE
CALCULATION 19
REFERENCE
<0.8% -no hardship
annual water bill
U.S. EPA Economic Guidance for
0.8% to 1.5% - mid -range
median household
Water Quality Standards Workbook
income
(draft).
>1.5% - unreasonable
costs as a percentage of
U.S. EPA Affordability of the 1986 Safe
>2.0%
household income
Drinking Water Act (1993).
annual water bill
>1.5% (or 3% for both water
median disposable
Raftelis (1993).
and sewage)
household income
>1% if median household
New York State Affordability Criteria
income is up to $24,725
annual water bill
for the Drinking Water State Revolving
>1.5% if median household
median household
Fund. Note that dollar amounts are in
income is greater than $39,558
income
$U.S.1998.
> 5% of disposable household
D. Dole and E. Balucan, January 2006.
income (This test is applied to
annual water bill
Setting User Charges for Urban Water
the representative income of a
disposable household
Supply: A Case Study of the
low income household, e.g. the
income
Metropolitan Cebu Water District
average income of the poorest
(draft) Economics Research
10% of households)
Department, Asian Development Bank
The threshold value indicates the point at which the cost of the water or wastewater
service becomes "unaffordable ". As shown in the table, there can be a range of
"unaffordable" conditions, such as "no hardship ", "questionable" affordability, and
"unreasonable" cost.
As the information in the table shows, there are several different ways in which
threshold values can be calculated. Some thresholds include water and wastewater
charges in the numerator, while others consider only water. Some measures use
average household income in the denominator while others use median income.20
Another variation across methods concerns the use of total versus disposable
20 Median income is the income level of the mid point of the income distribution in a community.
Fifty percent of households are above the median and 50% are below it. The median income is
usually below the average income because a small number of wealthy households will pull the
average up.
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household income. Disposable income is total income less property, income, and other
taxes. There is currently no universally accepted approach.
The only measure that specifically focuses on the income of low- income households is
that reported in the last row of Exhibit 38, a measure used in the evaluation of poverty
alleviation projects in developing countries. It is notable that this threshold value, at 5%
of income, is considerably higher than threshold values reported for the US. This
disparity is readily understood when one considers that the 5% threshold applies to a
measure of poverty income while the US thresholds apply to average or median
community incomes which are considerably higher than a poverty level income. In
Exhibit 39, two alternative estimates of the low income threshold are described. Using
the second approach, where 50% of the median income measures a poverty level
income, the threshold values of from 1.5% to 2.5% of median income imply thresholds
of 3% to 5% of a poverty level income.
Exhibit 39 Low - Income Measures For Canada
Income Measure
Description
Current Values*
Low - income cutoff
Income level at which a
From $23,260 for rural
household spends on 64% of its
households, up to $33,658
after tax income of food, shelter
for households in large
and clothing (this amount is 20%
cities (based on 1999
higher than the average
dollars).
expenditure for these items).
Low - income
50% of the median family income.
$27,172 (based on 1998
measure
dollars).
Source: Paquet, 2001.
* Before tax income for a four person household.
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3.3.2 Responsibility for Affordability
While water and wastewater services may not at times be affordable to low income
families, this does not automatically imply that the service provider is responsible for
assuring affordability. While it is widely accepted that poverty alleviation is a matter of
public responsibility, there are nevertheless two important issues to consider in
assigning responsibility and developing a poverty alleviation program related to the
affordability of water and wastewater services:
Should a poverty alleviation program focus on specific expenditure categories
such as a utility service rather than looking at the overall circumstances faced by
a household?
2. If a specific program for water and wastewater services is considered desirable,
should it be the responsibility of the water and wastewater provider or should the
responsibility be assigned to an office whose mandate is poverty alleviation?
Why have a poverty alleviation program focusing specifically on the water bill when
there are already general social security programs for both chronic and temporary
poverty? The principle rationale for a program targeting water and wastewater costs
rests on the argument that general social security programs do not provide adequate
protection either because their coverage is too narrow or because the support payments
are too low. Inadequate coverage might, for instance, justify assistance to elderly
customers living only on Old Age Security payments or to persons temporarily stressed
by unemployment or illness. The threshold test discussed in the preceding section
would be one indication that social security support payments are too low.
For example, a single mother with one child is eligible to receive a monthly social
assistance payment of $739.00.21 If that household is a flat rate customer in Saint John,
then the expenditure share for the water bill is 7.4 %.22 This is well above all of the
21 Government of NB web site:
http : / /app.infoaa.7700.gnb.ca /gnb/ Pub lEServicesIListServiceDetails .asp ?Servicel D1= 10295 &Re
portType 1 =AI I
22 Flat rate charge of $658 per year or $54.83 per month.
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thresholds in Exhibit 38 and might suggest consideration of a water bill subsidy
program.
If a program to help poor households with the cost of water and wastewater services is
justified, then who should finance and implement the program? There is no intrinsic
merit or logic to an arrangement that would have the service provider finance and
implement the program. From a financial perspective, paying for low- income relief for
water bills using cross subsidies from other water customers as opposed to general tax
revenues violates the equity or `beneficiary pay' principle of rate setting. Moreover,
housing the program in the service provider's office has little merit considering that the
service provider's area of expertise has nothing to do with the provision of social
services. Design and delivery of poverty relief programs are better left to poverty relief
agencies.
3.3.3 Options to Improve Affordability
Program measures to deal with the affordability of water and wastewater bills range in
nature from programs that provide some form of financial assistance through to
programs that strive to help the household manage payments for the bill. Exhibit 40
presents a list of the potential program measures.
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Exhibit 40 Measures to Address Household Affordability Problems
Measure
Description
Counseling and referral
Households that complain about their ability to pay the water bill are
referred to a community service that provides advice and guidance on
household budgeting and finance.
Shorter billing cycle
Billing every month or two rather than every 3 or 4 months reduces the
size of the bill and helps with household budgeting. But it does not
reduce the overall cost so it does not help households where cost is the
problem and not budgeting.
Debt forgiveness
Write off the arrears of poor customers and allow them to continue
receiving the service with a clean slate. Useful when poverty is a
temporary crisis.
Rebates
Poor customers receive a rebate to offset all or a portion of their bill.
Implementation of this approach requires a means test and an extensive
administrative structure.
Emergency assistance
Assistance in the form of emergency subsidies from the municipality or
from charitable organizations. These can be provided to cover a utility
bill or to cover general expenditures. They are helpful when poverty is a
temporary condition or when monthly expenditures are high, for example
at Christmas, but do not help in the case of chronic poverty.
Discounts
Poor customers pay a discounted charge or a geared -to- income bill. As
with the rebate, implementation of this approach requires a means test
and an extensive administrative structure.
Metering
Offer to meter the low income household so that it can control the size of
its water bill by using less water. This approach is only applicable in
communities where both flat rate and metered services are offered and
rates are structured appropriately. To be successful, the program would
likely have to offer metering at no up -front cost to the household.
Lifeline rates
A low initial charge in the rate structure that provides a minimum volume
of water at a low cost. A reasonable guideline for the lifeline charge is
that it recovers direct O &M costs net of capital charges. This is a means
of helping low income households but it also subsidizes all domestic
customers as it typically applies to all customers. For this reason, it is
not well targeted to the intended recipients.
The lifeline rate can be built into an inclining block rate schedule as the
first block rate.
Targeted conservation
Promote and subsidize the adoption of conservation measures by poor
households to help them reduce their water bill. This is only applicable in
metered communities.
Flow restrictions
An alternative to disconnection, flow restriction represents a degrading
of the service level and acts as an inducement to pay arrears. The
restricted flow provides water for drinking and basic sanitation needs
and acts to lower the water bill on a metered service.
Source: Adapted from Strategic Alternatives, M. Fortin, Enid Slack Consulting Inc. and Mike
Loudon, 2002; and Strategic Alternatives and Mike Fortin, March 2006.
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3.4 Scan of Canadian Municipalities
3.4.1 Purpose
The purpose of this task was to survey a number of Canadian municipalities to
determine current practice regarding affordability of water rates.
3.4.2 Methodoloav
Twenty Canadian municipalities, similar in population to Saint John, (2006 census
population 68,000), were chosen. The average population of the municipalities included
in the scan was almost 73,000, and ranged from a minimum of just over 51,000 to a
maximum of just under 104,000. Exhibit 41 lists the municipalities included in the scan,
along with the population of each (based on Statistics Canada Community Profile data).
Web addresses are also given.
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Exhibit 41 Municipalities Included in Scan
Municipality
Province
Population
Website
Barrie
Ontario
103,710
httpo
/ /www.city. barrie. on.ca/home.htm
Brantford
Ontario
86,417
httr)://www.citv.
brantf or .on.ca/
British
Chilliwack
Columbia
62,927
httr)://www.00v.chilliwack.bc.ca/
British
Kamloops
Columbia
77,281
httpo
/ /www.citv.kamloops. c.ca/
Kawartha
Lakes
Ontario
69,179
httr)://www.citv.
kawarth alakes. o n.ca/
Lethbridge
Alberta
67,374
httr):
/ /www.city.leth brida e.a .ca/
Medicine Hat
Alberta
51,246
httr)://www.citv.
me icine ®hat.a .ca/
British
Nanaimo
Columbia
73,000
httr)://www.citv.nanaimo.bc.ca/
Newmarket
Ontario
65,788
http
; / /www.town.newmarket.on.ca/
Niagara Falls
Ontario
78,815
httr)://www.citv.
n ia araf ails. on.ca/
Norfolk
Ontario
60,847
httr)://www.norfolkcountv.on.ca/
North Bay
Ontario
52,771
httr)://www.citv.north-bay.on.ca/
Peterborough
Ontario
71,446
httr)://www.citv.r)eterborouah.on.ca/
British
Port Coquitlam
Columbia
51,257
httr)://www.citv.r)ort-coauitiam.bc.ca/
British
Prince George
Columbia
72,406
httr)://www.citv.r)ci.bc.ca/
Red Deer
Alberta
67,707
httr)://www.citv.red-deer.ab.ca/
Sault Ste.
Marie
Ontario
74,566
httr)://www.sault-canada.com
St. John's
Newfoundland
99,182
httr)://www.citv.st-iohns.nf.ca/
Waterloo
Ontario
86,543
httpo
/ /www.citv.waterloo.on.ca/
Whitby
Ontario
87,413
httr)://www.town.whitbv.on.ca/
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For each of the municipalities listed in Exhibit 34, the study team:
• Reviewed the websites to identify potential contact persons and to compile data
posted on existing rates and affordability programs;
• Contacted municipal staff to collect information about affordability; and,
• Compiled and analyzed scan results.
Information collected during discussions with municipal staff was recorded using a
standard interview form and template (see Appendix A).
Data about water rates and affordability programs that was posted on each
municipality's website is contained in Appendix B.
3.4.3 Results of the Scan
Discussions with representatives from the municipalities listed in Exhibit 34 yielded the
following:
• Various arrangements were found for customer billing and collection. In many
instances, billing and collection are outsourced, usually to a local power utility. For
municipalities that rely on outsourcing, there is dialogue and cooperation between
the municipality and the contractor.
• Almost all of the municipalities review water rates on an annual basis.
• Many of the municipalities hold open houses to present new water rates to the public
and the media. While the public often complains about rising water rates, less than
one third of municipalities (30 %) indicated that affordability was identified as the
underlying issue by the public or the media.
• A quarter of the municipalities indicated that affordability is an issue raised by elected
officials.
• Municipalities often undertake a comparison of proposed water rates as part of their
rate studies. However, only one municipality indicated that an affordability analysis is
normally completed as part of rate studies. In this case, the methodology was left to
the contractor hired to conduct the rate study.
• All of the municipalities provide customer service, either formally (through an
identified department) or informally (through individuals in departments with
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knowledge about water issues). The majority of municipalities have formal customer
service departments, staffed by representatives either from the municipality or from
the utility responsible for water delivery or billing.
• Information on the proportion of customer service calls related to affordability or
customer inability to pay on time was only provided by half of the respondents. In two
cases, the reported proportion of calls dealing with these issues was high (50% in
one, `enough' in the second). In all other cases it was variously described as `zero',
`very low', less than 10% or 5 %, and so on. A few municipalities indicated that it was
difficult to identify calls as specifically related to water, since other issues such as
property taxes or electricity billing often comprise part of the call.
• Late payment of water bills affects most of the municipalities that were contacted.
While a very few municipalities indicated a high level of late payments, for most
municipalities, late payment does not seem to be an issue. This may be related to
municipal willingness to make alternative payment arrangements (see next bullet).
• In terms of programs or measures to address affordability, the majority of
municipalities contacted are willing to work with customers to assure payment. Most
municipalities will:
- defer payments for a short period of time (60 %);
- arrange for instalment payments (85 %); and,
- allow the customer to make small ongoing payments (75 %).
In the case of ongoing payments, this usually involved an automatic debit payment
program or an equalized payment program.
• For approximately half of the municipalities, residential customer defaulting on water
bills is not an issue. Many of these municipalities cited their ability to transfer the
outstanding balance to the property tax bill as a deterrent to non - payment. At the
same time, some municipalities stated that defaulting on payments was a problem
with residential tenants (as opposed to the property owners). Very few municipalities
indicated that they write -off water bill arrears.
• About a quarter of those contacted will make referrals to social assistance agencies.
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• In general subsidy programs are rarely used (i.e. life -line rates or water bill rebates).
Two respondents use inclining block residential rates that have the effect of providing
a basic quantity of water at a relatively low cost but these are introduced primarily to
promote water conservation rather than assure affordability. One of these
respondents considered their low first block rate in the inclining block rate schedule
as a guarantee of affordable water.
• In one case, a municipality provided limited funds to support a general income
support program provided by a local charity. The charity could choose to support a
family by providing help with the water bill.
• Existing water bill rebate programs typically apply to all customers and provide a
percentage reduction from the water bill for early payment.
• Three municipalities offer income -based payment relief programs to offset the cost of
the water bill. In two cases, the programs apply only to seniors who receive the
Guaranteed Income Supplement. In one case eligibility was based on proof of
qualification for:
- the Guaranteed Income Supplement under the Old Age Security Act
- support under the Ontario Disability Support Program
- Ontario Works Assistance
- a similar federal or provincial income support program
Currently, only 70 households (0.3 %) in that municipality receive the rebate and the
annual program budget is about $5,000.
• Promotion of conservation measures is done by several municipalities but the
programs are for demand management and are not specifically targeted at low -
income households. Examples of the types of conservation measures include
inclining block rates, water restrictions during the summer months and rebates for
toilet replacement. In one municipality, a conservation program for electricity and gas
was structured to improve affordability for poor households.
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3.4.4 Summary of Findings
Based on the scan of twenty municipalities undertaken for this study, it appears that
affordability of water is not an issue. This finding is based on the facts that, for the
majority of municipalities contacted:
• Typically, none of the public, media or elected officials raise affordability when water
rate adjustments are proposed;
• There is a strong willingness to work with customers to make arrangements to pay
for water; and,
• There are few complaints about affordability of water rates, and very few residential
water bill arrears are written -off.
3.5 Affordability in Saint John
3.5.1 Is Affordability a Problem?
The threshold affordability values reported in Section 4.3 are applied in this section to
evaluate whether affordability may be an issue for poor Households in Saint John.
Rates used in this calculation are provided in Exhibit 42. Based on information in
Section 3.2, a threshold value of 4% of the median household income is used to
indicate an affordability problem for a low income household. Low income is estimated
as 50% of the median income.23
Exhibit 42 Saint John Water and Wastewater Rates - 2007
23 This measure is used here since it is relatively easy to apply. An alternative market based measure of
low income levels that is currently under development, yields a low income level of $22,233 per year (P.
Giles, 2004. Low Income Measurement in Canada, Income research paper series Income Statistics
Division, Statistics Canada). This is higher than the measure estimated as 50% of median income.
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Water
Sewer
Total
Flat rate
$316.20
$379.44
$695.64
Metered - service charge / 2 months
$21.64
$25.97
$47.61
Metered - volumetric charge
$0.8955
$1.07
$1.97
23 This measure is used here since it is relatively easy to apply. An alternative market based measure of
low income levels that is currently under development, yields a low income level of $22,233 per year (P.
Giles, 2004. Low Income Measurement in Canada, Income research paper series Income Statistics
Division, Statistics Canada). This is higher than the measure estimated as 50% of median income.
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Median household incomes for Saint John for 2000 are reported in Exhibit 43 along with
estimated expenditure shares for both the median income and 50% of the median. The
results in Exhibit 43 suggest that affordability is likely to be a problem for certain
households in Saint John, including single - person households and single - parent
households. Examples of single - person households include single elders living on
pensions, unemployed or underemployed persons with no family and disabled persons.
There are 6,820 households in these 2 groups having incomes below the median level
for each group.
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Exhibit 43 Household Expenditure Shares for Water and Wastewater 24
24 Data for Saint John, 2006. Source of data: Statistics Canada:
wwwl 2.statcan.ca /eng lish /profHO1 /CPO1
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TYPE OF HOUSEHOLD
All households
Single- person
households
Single- parent
households
Number of households
29,315
9,175
4,715
Median household income -
annual
$33,997
$23,527
$27,944
Median household income -
monthly
$2,833
$1,961
$2,329
Flat rate customer expenditure share - % of Median income
2.0%
3.0%
2.5%
Flat rate customer expenditure share - % of one half of the Median income
4.1%
5.9%
5.0%
Metered customer expenditure share - % of Median income
10 m3 /month
1.5%
2.2%
1.9%
15 m3/ month
1.9%
2.7%
2.3%
20 m3/ month
2.2%
3.2%
2.7%
Metered customer expenditure share - % of one half of the Median income
10 m3/ month
3.1%
4.4%
3.7%
15 m3/ month
3.8%
5.4%
4.6%
20 m3/ month
4.5%
6.4%
5.4%
24 Data for Saint John, 2006. Source of data: Statistics Canada:
wwwl 2.statcan.ca /eng lish /profHO1 /CPO1
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3.5.2 Evaluation of Affordability Measures
The evaluation of affordability measures described in Exhibit 44 above uses a
qualitative screening approach based on a 1 (poor) to 3 (good) scoring scheme. The
following criteria are used to evaluate the affordability measures:
• Is the measure targeted to poor households? Measures that are not targeted result in
a waste of resources or a diminishment of resources available to those who need
help.
• Does the measure offer direct relief to households who have difficulty paying their
bills due to insufficient income?
• Does the measure help households improve household financial management and
budgeting?
• Does the measure impose a low administrative burden?
These criteria do not account for local issues. The evaluation is based on the
consultant's judgment and is not intended as a detailed assessment. Rather it is meant
primarily to identify those measures which are least likely to be suitable. These are
emergency assistance, lifeline rates, targeted conservation, and flow restrictions
(Exhibit 44).
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Exhibit 44 Evaluation of Affordability Measures
Measure
Targeted
Direct
Relief
Household
Budgeting
Administrative
Burden
Average
Score
Metering
3
3
1
2
2.3
Shorter billing cycle
2
1
3
3
2.3
Counseling and
referral
3
1
3
1
2.0
Debt forgiveness
3
3
1
1
2.0
Discounts
3
3
1
1
2.0
Rebates
3
3
1
1
2.0
Emergency
assistance
3
2
1
1
1.8
Lifeline rates
1
3
1
2
1.8
Flow restrictions
2
1
1
1
1.3
Targeted
conservation
2
1
1
1
1.3
A shorter billing cycle and metering have the highest scores in Exhibit 44. Both of these
measures contribute to affordability and they can be implemented by the water and
wastewater authority. Moreover they are compatible with the objectives of improved
cash flow and improved demand management. A shorter billing cycle does not provide
direct relief to poor households. Metering on the other hand can provide direct relief
especially for single - person and single - parent households since these households are
likely to consume less water than the average household. For example, a single person
household might consume 10 cubic meters of water a month or less provided plumbing
leaks are not a problem. At 10 cubic meters, the annual water and sewer bill is
approximately $522. This represents a savings over the flat rate bill of $173.
Other preferred measures for direct relief include debt forgiveness, rebates, and
discounts. All of these measures require some form of means test to provide assurance
of the poverty status of the household. Debt forgiveness and bill discounts require the
direct involvement of either the billing department or the finance department of the water
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and wastewater authority. These departments usually have little or no experience
working with poor households and administering means tests. Debt forgiveness is a
temporary measure ill- suited to the needs of households experiencing chronic poverty.
A direct rebate program administered by the agency responsible for social security is
the preferred measure to provide direct relief. This agency is best suited to the task of
screening poor households and will have established relationships with households that
already receive assistance. The direct rebate program can be structured as an ongoing
program tied into eligibility for other income support programs with rebates set at fixed
levels or linked to water and wastewater bills.
Housing a direct rebate program in the offices of the agency responsible for social
security does not mean that this agency should finance this program out of its existing
budget. The program budget could be a new allocation from general revenues or water
and wastewater revenues. General revenues are the preferred source of funds since
poverty alleviation does not fall within the mandate of the water and wastewater
authority. In fact, it runs counter to the user pay system set out in the New Brunswick
Municipalities Act. However, the cost of the program is likely to be relatively small so
funding from water and wastewater revenues may be an alternative if this proves legal
to implement or if it is a more reliable funding source for the program.
3.5.3 Poverty Alleviation Measures Currently Used in Saint John
Saint John currently has an active policy for customers who can't pay. Under the Water
and Sewage By -law, Section 48, Council may set up an Appeals Committee which "can
relieve the owner of any property either in whole or in part, from the payment of any
water or sewer service rate ... if it is established that such owner is in indigent
circumstances" (Section 48(4)).
As a first option, Saint John Water staff will make payment arrangements with
customers who cannot afford to pay their bills. The trigger for action under this program
is the occurrence of a water and sewer bill arrears. Staff will go through a set of bill
collection options including, ultimately, the threat of service shut -off. If it is apparent that
a customer has insufficient income to pay the arrears, then staff will enter into
negotiations with the customer to arrange partial payment.
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For customers who are on credit counselling, they will set up a payment plan suggested
by the agency that customers are working with. A small number of customers are sent
to the Appeal Committee — Water & Sewerage Rates, which reviews their status and
financial information and advises customers to pay a certain amount. Proposed
payments are noted in the billing system, and the accounts are then excluded from the
active delinquency process so that they are not at risk of water shut off.
It is estimated that 1,000 to 1,200 customers can be in arrears in a typical year.
Currently there are only 17 customers registered for relief under Appeal Committee
proceedings (personal communication, Finance Department Staff, City Hall, Saint John,
January 18, 2006).
Any allowance on the water and sewer bill made through these efforts is not written off.
Rather the outstanding balance constitutes a lien against the property and will be
collected if and when the property is sold. There is currently about $300,000 in payables
now converted to liens.
A new provision of the 2006 Water and Sewer Bylaw provides another option that may
benefit poor households in multiple unit homes. These households were previously
billed based on the number of units as determined by the number of kitchen sinks, so
that a family with a separate unit for a grandparent would pay the equivalent of 2 flat
rate bills ($1,316 /annum). The new bylaw allows use of the Provincial count of units as
a basis for billing. This count considers there to be only one unit when a parent or an
adult son or daughter lives in a separate unit within the same household. Using the
provincial count of units in the example above would cut the bill in half for the
household.
3.5.4 Conclusions
Alternative interpretations of affordability have been considered. The appropriate
meaning is one which is concerned with planning for poverty alleviation. Existing
programs that consider the affordability of water and wastewater services are based
primarily on a poverty threshold as the indicator of affordability. The poverty threshold is
measured as the proportion of household income used to pay for water and wastewater
services.
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A review of documented poverty thresholds suggests that expenditures exceeding 5%
of household income indicates an unacceptable cost burden for a poor household.
There is clear evidence that this threshold is exceeded in some Saint John households.
A single mother receiving social security payments may spend more than 7% on the
water and wastewater bill. Single- person and single - parent households appear to be
vulnerable groups. Using one half of the median income as a measure of low income, a
large proportion of these two groups are paying more than 4% of their income on water
and sewer services.
The most effective measure to provide direct financial relief from water and sewage
charges is a rebate program based on ability to pay. Such a program already exists in
Saint John. Eligible customers can have their charges deferred. Any relief provided on
the water and sewer bill becomes a lien against the property and will be eventually
recovered by the City when the property comes up for sale. This is an equitable
arrangement since the program is available to customers who fall into arrears. To
forgive the debt of those customers outright would not be fair to poor households who
manage to pay their water and sewer bills despite their poverty.
An evaluation of affordability measures indicates that metering and more frequent billing
is effective ways that fall within the purview of Saint John Water. Metering in particular
should be considered as a poverty alleviation measure since poor households will often
use less water and end up paying less when metered. Effective implementation of
metering for this purpose may require subsidized assistance to the household to repair
leaking plumbing.
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4 USER SURVEY
Surveys were made available to the public and water interest groups or major
customers in the City of Saint John. Two (2) separate surveys were available dependant
on the customer. A Domestic Customer Survey and a Water Interest Group survey —
see Appendix D and E respectively for these. Surveys were provided in both official
languages.
Electronic versions of the Domestic Survey were available on the City of Saint John web
page. Hard copy surveys were made available at several locations. Those being City
Hall, the Municipal Operations building on Rothesay Avenue, and at all of the City of
Saint John fire stations. A phone number was provided which allowed customers to
leave a voice message regarding water and sewer rates and rate structures.
Information packages on the project and copies of the Water Interest Group Survey
were forwarded to advocacy groups, industry and members of government (local and
provincial), and they were invited to submit any concerns their organization had with
respect to water and sewer rates and rate structure. A copy of the survey form is
attached as Appendix D.
Exhibit 45 indicates those people who were notified directly:
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Exhibit 45 Group Notification
Province of NB
Andre Chenard
Dr. Scott Giffin
George Haines
Tony Whalen
Environment
Claude Fortin
Canada
John Clark
Irving Oil Refinery
George Cunningham
Gary Bischof
Irving Oil
Dale Cooper
Irving Pulp & Paper
Jim Brewster
Al Hubbard
Irving Tissue
Brian Stackhouse
Irving Forest
Mark Mosher
Wayne Wolfe
Baxter Foods
Frank Taylor
ACAP Saint John
Tim Vickers
Atl. Health Sci. Corp.
Robert Vey
SJ Port Authority
Alan Somerville
Ralph Seely
Moosehead
Paul Fitzgerald
Breweries
Joel Levesque
Peter Henneberry
Crosby Molasses
Jim Kerr
UNBSJ
Donald O'Regan
Saputo
Dave Evans
Unfortunately the number of responses to the customer surveys was very small as
indicted below in Exhibit 46. With approximately 70 respondents out of approximately
17,000 customers and 68,000 people (Census 2006) it is very difficult to carryout any
type of analysis which would reflect the feelings and attitudes and be representative of
all the customers in the City with respect to water and sewer. With less than 1% of the
people of Saint John responding or commenting during the survey period, one may take
from this that in general the customers of Saint John Water are satisfied about the water
and sewer rates that they pay.
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Exhibit 46 Survey Response Summary
File Name
Water Interest Groups
Electronic Survey
Hard copy submissions
Voice Messages
Number of Customer Submissions
7
50
6
3
Discussions with one customer indicated that the billing format and layout was very
confusing. Upon review of the bill and the concerns the customer had, we would
recommend that the format and layout be reviewed for content and visual simplicity.
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5 STRATEGY ISSUES
5.1 Purpose
The factors influencing historical, current and future water and wastewater rates in Saint
John are numerous and complex. In most municipal water and sewage systems the
issues are fewer and simpler. Factors in Saint John include the types of service from
raw water to treated water, the presence of some very large industrial users, the
construction of new treatment facilities, special agreements for cost recovery, the fact
that some customers are metered while most are not and a relatively complex water
rate structure. The proposed rates will be highly scrutinized by the City's water customer
base, as well as by large customers with special agreements. Elected representatives
will expect an appropriate rate structure and a sound basis upon which to establish user
rates for water and wastewater services.
The proposed rates must be suitable for existing conditions as well as anticipate and be
compatible with future system configurations.
The purpose of this section is to review and discuss current practice, future water
supply plans and propose a workable and supportable user rates plan.
5.2 Historical Perspective
A number of factors make the Saint John water system somewhat unusual when
compared to other municipal systems. These realities impact the structure and
complexity of water system planning and financing.
Water System One of Canada's Oldest - The Saint John municipal water system
has a long history. It was first developed in 1837 by the Saint John Water Company.
The City took over the system in 1855 and combined the responsibility of water with
the sewage services under the Commissioner of Water and Sewerage. The system
has been expanded since that time and currently water is supplied to the City from
the Loch Lomond watersheds to the east and the Spruce Lake Watershed
(augmented as needed from the Musquash Watershed) to the west. The relative age
of the many system components means replacement investments are a very high
priority, essential to maintaining the integrity and reliability of the overall system.
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• Raw versus Treated Water — The City provides basic treatment at the Latimer Lake
Water Treatment Plant (WTP) to the east and the Spruce lake WTP to the west. This
water is distributed to all customers (except Coleson Cove, some Irving Pulp and
Paper use, and Harbourview Subdivision) by the potable water system. Treatment
includes coarse screening and chlorination, with fluoridation. Untreated (raw) water is
supplied through separate systems to Coleson Cove (NB Power), Irving Pulp and
Paper, Irving Tissue and occasionally to the private Irving Paper (Little River)
system.
• Some Customers are Very Large Water Users — One customer alone, Irving Pulp
and Paper, uses an estimated 62% of all consumption, much of which is raw water
directly from Spruce Lake. Irving Oil draws about 12 %. As a group of consumers,
customers together use about 91 % of water produced. This leaves the bulk of the
customers, mostly residential, using only about 9% of the total.
• Special Agreements —The key issues related to special agreement customers
include their need for raw or treated water and the development of user rates that
appropriately recover the related costs.
- Coleson Cove - Coleson Cove receives raw water only, via a transmission main owned
by the City, but pays full By -law water rates
- Irving Pulp and Paper - IPP receives a combination of raw (from City 60 -inch Spruce
Lake raw water main) and treated water (from City potable system supplied from Loch
Lomond) and pays a combination of By -law rates up to 30 million gallons monthly and
lower agreement rates for volumes exceeding that. The rates do not differentiate whether
the water is raw or treated. The agreement expired in 2005. The special agreement rates
which applied in 2004 continue to be charged.
- Irving Oil Limited - IOL receives treated water (from City potable system supplied from
Loch Lomond) through two connections. One connection is billed at By -law rates and the
other at much lower special agreement rates. The agreement expired in 2000 and since
then special agreement rates which applied in 1999 continue to be charged.
- Irving Paper Spillage — The City provides raw water from the Loch Lomond catchment to
the Little River system (see Exhibit 17) by a combination of mains and overland flow. A
special agreement which runs to 2010 sets out flow parameters and cost recovery.
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• Most Customers Not Metered — Saint John does not meter residential customers.
Those accounts represent about 85% of all customers and they are billed at a flat
rate. The remaining 15% of customers are metered and use about 78% of the total
water production.
• Water Treatment — The only treatment at both supply sources is screening,
chlorination and fluoridation.
• Wastewater Treatment - Although wastewater (sewage) is a separate utility service,
it is billed in conjunction with water. It also is faced with cost pressures due primarily
to a much expanded level of treatment.
5.3 Future Needs — A Multi- Barrier Approach to Water Supply
"Multi- barrier" approach is the fundamentally, industry- required important strategy for
protection to potable water supplies. This philosophy entails the adoption of policies and
action plans that maximize the security of drinking water at every possible step of the
system from "source to tap ". Effectively implemented, this minimizes the possibility of
threats to potable water at any stage in the treatment and delivery process. The Saint
John Water 2006 Annual Water Report lists the following barriers:
• Source Water Protection: Raw water quality, source details, surrounding land usage,
local geology, watershed management, yield management;
• Water Treatment: Unit operational details and performance, disinfection
performance, filtration, capacity, flow rates;
• Operation & Maintenance: Staffing levels, operator education and certification,
communications, management structure, maintenance;
• Monitoring & Alarms: Sampling plan, alarms, lab testing, record keeping and
reporting;
• Distribution System: Residual chlorine, total coliform, E. coli, THMs, age of
infrastructure, storage reservoirs, flushing, backflow prevention and cross connection
control; and
• Emergency Response: Plans for natural disasters, boil order plan, safety training,
back -up power.
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Investments are and must continue to be made in each of these stages if the multiple
barriers are to achieve full and necessary protection for drinking water consumers. This
affects budgeting, financial planning and cost recovery, including the format and
quantum of user rates.
5.4 Future Direction - Vision 2015
The City's Vision 201525 service refinement delineates three primary public services
provided by Saint John Water: drinking water, industrial water and wastewater. Each is
defined, with service quality objectives described26.
• The Drinking Water Service provides safe, good quality potable water to residential,
institutional, municipal, commercial and industrial customers of the utility. Currently,
drinking water receives limited treatment only; disinfected (with chlorine) in
accordance with health Canada Guidelines for Canadian Drinking Water Quality and
fluoridated for dental health reasons. The service is regulated under the Clean
Environment Act— Water Quality Regulation — and delivered under an Approval to
Operate issued by the Minister of Environment to the City of Saint John.
• The Industrial Water Service provides some industries with sufficient quantities of
raw (untreated) water to support operating processes. This service should be
expanded to deliver treated wastewater effluent (grey water) to industries which
could utilize this resource.
• The Wastewater Service provides collection, treatment and disposal of municipal
wastewater; collected and transported to treatment facilities through a system of
sanitary sewers and wastewater pumping stations. Wastewater schemes, treatment
facilities and associated collection mains are operated in compliance with the Clean
Environment Act— Water Quality Regulation — under Approvals to Operate issued by
the Minister of Environment to the City of Saint John. The service is also regulated
25 Vision 2015 Service Profile Project, November 2006
26 Material in this section taken from "Saint John Water (Utility Find) Proposed 2007 Operating
and Capital Budgets — January 24, 2007"
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under the Federal Fisheries Act and the Canadian Environmental protection Act,
1999.
From a practical perspective, the City has laid out a number of initiatives toward
achieving its goals for water and wastewater. These include increased watershed
management including works improvements and improved policing against illegal
dumping; service refinement and program management to improve management quality
and reduce costs; increased preventative maintenance to cost - effectively extend facility
life and improved engineering /infrastructure /operational records — an important element
in improving system operations, planning and management.
5.5 Source Protection
5.5.1 Watershed Protection Areas
The Province has enacted legislation which designates and protects watersheds for
municipal drinking water supply. The program was introduced in two phases, 1990 and
2001. Thirty (30) different watersheds that have been designated, covering about 4% of
the province and servicing 21 communities with about 300,000 residents.
The Province of New Brunswick developed the Watershed Protection Area Designation
as a pro- active approach to watershed protection. Experience has shown that it is far
more cost effective and safer to protect a water source than to attempt to clean
contaminated water later. Sometimes even the most sophisticated system cannot
control or remove certain viruses or chemical contaminants and mechanical failures can
disrupt water supplies'.
The watersheds are designated from Al to A30. Each is allocated to a specific
municipality. Saint John has three, Loch Lomond Watershed (A25), East and West
Musquash Watershed (A26), and Spruce Lake Watershed (A27).
27 Information taken from "Understanding the Law — A Guide to New Brunswick's Watershed
Protected Area Designation Order
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Watersheds are divided into three zones, with separate regulations for each zone,
including Protected Area A - Watercourses, Protected Area B - Setback Zones and
Protected Area C - Remainder of the Watershed. The rules are extensive. For example,
limits are placed on swimming and motorized watercraft, agriculture, private homes, and
forestry.
5.5.2 Watershed Ownership
The City of Saint John has long recognized land ownership as an effective means of
optimizing control over a watershed. The majority of the Saint John watersheds are
either owned by the municipality or the Province of New Brunswick. Ownership of these
lands is indicated on the map below, Exhibit 47.
Exhibit 47 Map Showing Saint John Watershed Ownership
v Cryr ",
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r"
�a r
°ail � �. ti ✓. ! �'.�..'� l.� ,If � r •
.n
A
IL
nr a ,
a
Map Source: City of Saint John
�;a a
4 �
City owned land
Province of N. B
Private ownership
The majority of land in the Musquash and Spruce Lake Watersheds rests in public
hands and the City has pursued increasing its ownership around Loch Lomond. An
annual capital budget allotment is made for purchase of lands in the Loch Lomond
Watershed as they become available.
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5.5.3 Watershed Protection
A study of both the Loch Lomond and Spruce Lake watersheds was completed in 2005
to analyze various hazards to the watersheds and the facilities required to protect the
lakes and water courses. Funding has been allocated to the construction of facilities to
protect the Loch Lomond watershed from runoff associated with highway hazards.
5.6 Water Treatment
The City plans to construct water treatment plants on the supply mains from the Spruce
Lake and Loch Lomond / Latimer Lake suppliers. Preliminary design of these facilities is
currently underway.
Concurrently, discussions are taking place to determine how existing and planned large
water users can best be served by City treated water, raw water or possibly even
treated wastewater effluent.
5.7 Transmission & Distribution
The need for major investment in infrastructure renewal is recognized. This need is
particularly present with respect to the existing transmission and distribution mains.
Those represent the bulk of the current assets and are at or reaching the end of their
economically useful lives. Investment is needed at a sustainable level over the long
term to provide for this essential infrastructure. Allowance for this investment must be
accounted for in user rates. As stated in the proposed 2007 utility budget text, "Incurring
debt for renewal -type capital (re)construction is quite simply not sustainable. Definite
dollar amounts, based on the inventory of utility assets, need to be invested annually in
renewal. It is the utility's goal to achieve an adequate level of renewal investment within
the period of the current strategic direction and Vision 2015."
The strategy for user rates should clearly spell out the level of investment required for a
sustained program at infrastructure replacement and /or renewal.
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5.8 User Pay Billing — Flat Rate Customers
Estimates of how much water an average flat rate customer in Saint John uses annually
compared with how much volume is built into the flat rate is discussed in detail in
Section 2.5.2. Basically the current flat rates include a consumption allowance of 283
m3 /year compared with an estimated average residential usage level of 318 m3 /year.
One of the basic objectives of user rates is equity and user pay. Currently, practically all
residential customers pay the same, no matter how much they use. As costs rise to
achieve the strategic objectives of sustainable renewal funding and meeting quality
standards, so will user rates. The flat rates charged to unmetered customers will need
to rise.
Flat rate customers have no way of controlling their costs by moderating usage levels.
Metering not only has the advantage of fairness, it also allows customers to control
usage and manage their water and sewage bills. Full metering has the added
advantage of providing complete information on all usage which in turn allows for far
more effective water use management generally, more effective water -loss reduction
measures and improved operations overall.
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6 FINANCIAL PLAN
6.1 Overview
The financial plan projects operations and fiscal services costs and revenue sources for
five years to the year 2012. The format used is based on the current budget layout —
which in turn is based on Provincial reporting requirements.
The projections include:
• Operations split between water and sewage, with costs categorized as Watersheds
(water only). Treatment, Pumping /storage, Mains, Hydrants (water only) and
Metering (water only).
• Shared Services include Billing and Collection, Administration and General,
Programs and Services, and Engineering. These are subsequently shared 50:50
between water and sewage.
• Fiscal Services split between water and sewage including existing and projected
long -term debt (principal, interest), capital contribution, short -term financing costs,
debt discount, other miscellaneous and deficit (surplus) from second previous year.
• Note that for modelling purposes, the capital contribution is entered as a deposit to a
reserve fund from which capital expenditures are subsequently withdrawn.
• Other Revenues include fire protection, storm sewer and several other non -user rate
sources. These revenues are deducted from expenditures to determine user rate
revenue requirements.
The financial plan is projected for five years to 2012. The starting point is the 2007
budget.
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6.2 Capital Stabilization Reserve Fund, Rate Increases & Debenturing
Three methods have been used in combination in the financial plan below to manage
the financing of the proposed annual capital plan plus projected OM &A costs:
• Capital Stabilization Reserve Fund - A CSRF is used to buffer the inflow and
outflow of funds for capital projects. Funds are contributed to the CSRF for
capital expenditures and capital payments are made out of it. A positive balance
of at least $100,000 is maintained in the CSRF. The CSRF is used to manage
debt financing and smooth out annual rate increases.
• Debenturing — Borrowing is used to spread out the time when revenues need to
be generated to pay for major capital costs. Debenturing has only been used for
significant surges in capital spending such as for treatment facilities. Linear
replacement should not be debentured and should be fully funded each year
from current revenues. The rates should be set to provide the needed capital
funds. With debenturing the need to repay interest costs would decrease the
funding available for the capital investment.
User Rate Increases — The CSRF and debenturing are used to smooth out
annual rate increases. Although they can provide funds as needed annually,
they are essentially planning tools which allow planned user rate increases.
They ultimately must be funded from a revenue source. This is primarily from
user rates, although grants can be a significant factor. The projected user rate
increases have been limited to 8% annually each for water and sewage with
debenturing used to accomplish this.
Once the operating and capital costs are projected, the annual user rate increases and
debenturing are manipulated to maintain positive CSRF balances to achieve an orderly
financing plan.
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6.3 Operating Costs
Operating, maintenance and administration (OM &A) costs have been projected to 2012
from 2007 budget levels.
Provision has been made in the budget projections to allow cost escalations in several
ways:
• Growth Factors - Some costs (such as power) would be affected by changes in
water sales, others, such as billing, would be affected by changes in number of
customers. A provision has been made in the financial model to allow projections to
be adjusted for either of these factors. For the base case on growth is assumed in
either number of customers or in consumption.
• Service Level — This feature allows annual percentage increases due to increased
service level investment. For example an emphasis on Watershed investment is
achieved by a 5% annual increase in that budget category.
• Service Increment — This allows for individual cost increments in given years.
Provision is made in 2012 for a $2.8 million increase for the start -up of the new
Water Treatment Plant.
Projected water and sewage operating costs are provided in Exhibit 48 below and
shared costs in Exhibit 49.
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Exhibit 48 OM &A Costs 2007 to 2012
Cost
Escalation Factors
Service Level Growth
Budget Projected
2007 2008 2009 2010 2011 2012
Water System
Collection
Watersheds
Base
2.0% Flow
297,537
303,488
319,757
399,593
448,384
457,352
Service Increment
0
100,000
10,000
72,000
40,000
0
0
1,578,404
Total
1,710,130
297,537
313,488
391,757
439,593
448,384
457,352
Water Treatment
Base
2.0% Flow
1,581,494
1,613,124
1,645,386
1,724,194
1,823,958
1,919,597
300,000
Service Increment
0
0
45,000
64,000
58,000
2,820,000
1,646,285
Total
Treatment & disposal
1,581,494
1,613,124
1,690,386
1,788,194
1,881,958
4,739,597
Water System
Base
2.0% Cust
2,875,865
2,933,382
2,992,050
3,128,391
3,211,359
3,295,986
Service Increment
2,096,339
2,159,229
0
75,000
20,000
20,000
0
Base
Total
4,861,312
2,875,865
2,933,382
3,067,050
3,148,391
3,231,359
3,295,986
Hydrants
Base
1.0% Cust
476,351
481,115
485,926
490,785
500,743
505,750
4,861,312
Service Increment
6,827,386
7,057,601
0
0
5,000
0
0
Total
476,351
481,115
485,926
495,785
500,743
505,750
Metering
Base
2.0% Cust
461,535
470,766
480,181
591,785
613,820
626,097
Service Increment
0
100,000
10,000
0
0
Total
461,535
470,766
580,181
601,785
613,820
626,097
Pumping & Storage
Base
1.0% Flow
1,075,778
1,086,536
1,097,401
1,133,625
1,245,961
1,258,421
Service Increment
0
25,000
100,000
0
0
Total
1,075,778
1,086,536
1,122,401
1,233,625
1,245,961
1,258,421
Total
Base
6,768,560
6,888,410
7,020,702
7,468,372
7,844,226
8,063,203
Service Increment
0
10,000
317,000
239,000
78,000
2,820,000
Total
6,768,560
6,898,410
7,337,702
7,707,372
7,922,226 10,883,203
Wastewater System
Collection
Base 1.0%
Cust 1,562,776
1,578,404
1,594,188
1,610,130
1,727,231
1,744,503
Service Increment
0
0
100,000
0
0
Total
1,562,776
1,578,404
1,594,188
1,710,130
1,727,231
1,744,503
Pumping
Base 2.0%
Flow 1,101,646
1,123,679
1,146,152
1,240,476
1,571,285
1,679,211
Service Increment
0
70,000
300,000
75,000
0
Total
1,101,646
1,123,679
1,216,152
1,540,476
1,646,285
1,679,211
Treatment & disposal
Base 3.0%
Flow 2,096,339
2,159,229
2,224,006
2,567,281
3,684,085
3,794,607
Service Increment
0
268,500
1,009,500
0
0
Total
2,096,339
2,159,229
2,492,506
3,576,781
3,684,085
3,794,607
Total
Base
4,760,761
4,861,312
4,964,346
5,417,886
6,982,601
7,218,321
Service Increment
0
0
338,500
1,409,500
75,000
0
Total
4,760,761
4,861,312
5,302,846
6,827,386
7,057,601
7,218,321
Saint John financial plan January 26 2008.xls "OM &A -1 " 3- Oct -08
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Exhibit 49 Shared Costs - 2007 to 2012
Cost Escalation Factors Budget Projected
Service Level Growth 2007 2008 2009 2010 2011 2012
Shared Services (Water growth factors used)
Billing & Collecting Base
Service Increment
Total
Administration Base
Service Increment
Total
Infrastructure Mgmnt Base
Service Increment
Total
I WN 395,630 395,630 395,630 395,630 395,630
0 0 0 0 0
395,630
395,630
395,630
395,630
395,630
395,630
1 WN MC, 0,,''i
3,340,763
3,340,763
3,670,763
3,840,763
3,840,763
0
330,000
170,000
0
0
3,340,763
3,340,763
3,670,763
3,840,763
3,840,763
3,840,763
1 WN 6 WO
740,727
755,542
770,652
786,065
878,287
0
0
0
75,000
0
726,203
740,727
755,542
770,652
861,065
878,287
Engineering
Base I (D%a
I WN I )6'(
913,310
922,443
931,667 940,984 950,394
Service Increment
0
0
0 0 0
Total
904,267
913,310
922,443
931,667 940,984 950,394
Total Shared
Base
5,366,863
5,390,430
5,414,377
5,768,713 5,963,442 6,065,073
Service Increment
0
0
330,000
170,000 75,000 0
Total
5,366,863
5,390,430
5,744,377
5,938,713 6,038,442 6,065,073
Total
Water - including
Shared at 50.0%
Base
9,451,992
9,583,625
9,727,890
10,352,729 10,825,947 11,095,740
Service Increment
0
10,000
482,000
324,000 115,500 2,820,000
Total
9,451,992
9,593,625 10,209,890 10,676,729 10,941,447 13,915,740
Wastewater- including Shared at 50.0%
Base
7,444,193
7,556,527
7,671,535
8,302,243 9,964,322 10,250,858
Service Increment
0
0
503,500
1,494,500 112,500 0
Total
7,444,193
7,556,527
8,175,035
9,796,743 10,076,822 10,250,858
Total
Base
16,896,184
17,140,151
17,399,425
18,654,971 20,790,269 21,346,598
Service Increment
0
10,000
985,500
1,818,500 228,000 2,820,000
Total
16,896,184
17,150,151
18,384,925
20,473,471 21,018,269 24,166,598
Saint John financial plan January 26 2008.xis
"OM &A -2"
8- Oct -08
6.4 Fiscal Services
Exhibit 50 below summarizes the fiscal services charges including existing long term
debt obligations (principal and interest) as well as a projection of other items such as
short term financing and debt discount. Note that any projects debentured starting 2008
are in addition to the existing debt repayment schedule shown.
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Exhibit 50 Fiscal Services - 2007 to 2012
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Budget
Projected
2007
2008
2009
2010
2011
2012
Water
Capital Financing
Existing Long -term debt
Principal
3,279,811
3,016,411
2,827,000
2,452,200
2,352,000
2,048,000
Interest
1,358,771
1,169,044
1,029,099
895,115
778,882
666,008
Total Long -term Debt
4,638,582
4,185,455
3,856,099
3,347,315
3,130,882
2,714,008
Capital Contribution
1,889,218
Future determined as part of financial plan
Other
Short -term Financing Costs
150,000
150,000
150,000
150,000
150,000
150,000
Debt Discount
112,200
100,000
100,000
100,000
100,000
100,000
Other Miscellaneous
250,475
250,000
250,000
250,000
250,000
250,000
Previous Years (Surplus) /Deficit
- 31,173
0
0
0
0
0
Total
481,502
500,000
500,000
500,000
500,000
500,000
Total Water
7,009,302
4,685,455
4,356,099
3,847,315
3,630,882
3,214,008
Wastewater System
Capital Financing
Existing Long -term debt
Principal
2,682,189
2,436,589
2,248,000
2,019,800
1,807,000
1,687,000
Interest
797,686
660,309
540,600
427,767
324,517
232,504
Total Long -term Debt
3,479,875
3,096,898
2,788,600
2,447,567
2,131,517
1,919,504
Capital Contribution
1,889,218
Future determined as part of financial plan
Other
Short -term Financing Costs
150,000
150,000
150,000
150,000
150,000
150,000
Debt Discount
65,700
65,700
65,700
65,700
65,700
65,700
Other Miscellaneous
267,975
267,975
267,975
267,975
267,975
267,975
Previous Years (Surplus) /Deficit
- 31,173
0
0
0
0
0
Total
452,502
483,675
483,675
483,675
483,675
483,675
Total Wastewater
5,821,595
3,580,573
3,272,275
2,931,242
2,615,192
2,403,179
Total Current Water & Sewerage
12,830,897
8,266,028
7,628,374
6,778,557
6,246,074
5,617,187
Saint John financial plan November 28
2007.xis
Fiscal
28- Nov -07
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6.5 Capital Program
When considering how much to spend on capital investment it is very useful to break
the costs out into three categories:
• Upgrading — These are works needed to rectify current deficiencies and to meet
legislative standard or improve service levels. Upgrades usually have a high priority
since they are generally related to service quality and required levels of service.
Saint John is in the process of investing significant funds in the upgrading of water
and sewage treatment.
• Replacement — These are ongoing investments needed every year to replace worn-
out capital facilities. The timing of replacement projects may have some flexibility
year to year depending on other priorities. The identification of replacement needs
and the planning of a replacement program in terms of timing and the provision of
needed financing is the key focus of asset management.
• Growth — These are facilities built to serve new growth. They could be extensions
such as new mains or capacity built in to works, such as oversized treatment works,
where the capacity supports new development.
It is important to differentiate between the types of works. The different categories may
have different priority levels. The three categories are discussed in more detail below.
6.5.1 Upgrading
Upgrading investments are those needed to bring the existing systems up to current
standards. The focus is on treatment but often involves other system works to connect
the treatment works to the customer.
For the future water system, treated water is to be supplied from two water treatment
plant. The proposed east side plant is located on Phinney Hill adjacent to the pipeline
road, while the proposed western plant is located adjacent to the existing Spruce Lake
Intake and works. Untreated industrial water is to be supplied from Spruce Lake to the
west. The City is currently undertaking a review of a raw water supply on the east side.
Three Wastewater Treatment Facilities (WWTF) will provide future wastewater treatment
as follows:
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• The existing Milledgeville WWTF has been expanded to 10,000 m3 /day capacity.
• The existing 6,820 M3 /day Hazen Creek WWTF and 6,820 M3 /day Marsh Creek
WWTF will be demolished and replaced by the Eastern WWTF with 35,000 M3 /day
capacity. Design of this project has been completed. Construction has not yet
started.
The Monte Cristo WWTF is to be decommissioned.
6.5.2 Replacement
These are ongoing investments to replace existing facilities as they reach the end of
their life.
A study of the expected level of investment needed to replace existing water and
sewerage infrastructure as it ages and reaches the end of its serviceable life was
carried out as part of the 2002 Business Plan Review. It was titled the Sustainable
Infrastructure Asset Management Study ( SIAMS) and was included as Appendix "C" of
the 2002 Business Plan. This report was updated in December 2007 to reflect changes
in the system since 2002. The SIAMS looked at each asset by category, when they
were constructed, capacity or size, and for mains the construction material and
applicable service life was determined. The replacement value (2007) and time of
replacement of the assets were then estimated. A future time horizon of 100 years was
used so that all existing facility replacement costs could be captured.
The average annual replacement cost was estimated at $3.5 million for water and $3.4
million for wastewater.
The data used in the study to calculate the average investment levels is shown below in
Exhibit 51.
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Exhibit 51 Average Annual Replacement Costs - 2006
Replacement Cost Service Life Average Annual
(million$) (years) Investment
(million $)
Wastewater Svstem
Wastewater
Treatment
Plant
Structural (70 %)
$21.6
80
$0.3
M &E (30 %)
$9.3
20
$0.5
Sewage PS's
Structural (70 %)
$9.4
80
$0.12
M &E (30 %)
$4.0
20
$0.20
Sanitary
Sewers
$68.3
80
$0.9
Sanitary
Manholes
$19.5
80
$0.2
Sanitary
Services
$34.9
80
$0.4
Combined
Sewers
$46.4
80
$0.6
Combined
Sewer MH's
$14.8
80
$0.2
CSO Tanks
Structural (70 %)
$0.0
80
$0.0
M &E (30 %)
$0.0
20
$0.0
Total Wastewater
$228.3
68
$3.4
Water
System
Water
Treatment
Plants
Structural (70 %)
$1.6
80
$0.0
M &E (30 %)
$0.7
20
$0.0
Water PS's
Structural (70 %)
$4.7
80
$0.1
M &E (30 %)
$2.0
20
$0.1
Reservoirs
$4.3
80
$0.1
Stand Pipes
$5.6
80
$0.1
Water Mains
$207.2
80
$2.59
Hydrants
$5.0
80
$0.1
Valves
$10.7
80
$0.1
Water
Services
$27.9
80
$0.3
Water Meters
$0.7
20
$0.0
Total Water
$270.4
77
$3.5
Total Water +
Wastewater
$498.7
72
$6.9
Final Report
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141
City of Saint John Page 108 of 198
Note: Average annual replacement cost is based on 2006 dollars and covers only works
constructed to date and listed in inventory provided by Utility
The 100 -year projection period has been broken down into 10 -year segments and the
average replacement level in each decade was calculated and illustrated for the water
system and for the wastewater system.
Exhibit 52 Replacement Cost of Water Systems - 2000 to 2099
PROJECTED REPLACEMENT COST OF WATER SYSTEM
$125.0
$100.0
0
SPENDING
E DEFICIT
w
a
LOU $75.0 oz
Required Average
a Annual Capital Renewal
N Investment - $3.5 million /yea
O
�0 $50.0
Z
w
w.. .................... ..............................
U
J
a
2 $25.0
$0.0
2000 -2009 2010 -2019 2020 -2029 2030 -2039 2040 -2049 2050 -2059 2060 -2069 2070 -2079 2080 -2089 2090 -2099
DECADE
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c
0
E
w
a
U
w
2
w
a
O
U
H
Z
w
2
w
U
a
J
a
w
2
City of Saint John Page 109 of 198
Exhibit 53 Replacement Cost of Wastewater Systems - 2000 to 2099
REPLACEMENT COST OF WASTEWATER SYSTEM
$125.0
$100.0
$75.0
SPENDING Required Average
DEFICIT Annual Capital Renewal
Investment - $3.4 million /year
$50.0
.. ... ...... ............. .... ..... .... ............. ..........
$25.0
$0.0
2000 -2009 2010 -2019 2020 -2029 2030 -2039 2040 -2049 2050 -2059 2060 -2069 2070 -2079 2080 -2089 2090 -2099
DECADE
The average annual replacement investment levels for the period 2000 to 2010, are
approximately $3.5 million /year for water (Exhibit 52) and $3.4 million /year for
wastewater (Exhibit 53).
Note that the Asset Management analysis does not include the future construction of
upgrades or growth related facilities. Once added to the system inventory they would be
included in the asset base and would eventually increase the level of investment
needed for system replacement (i.e. increase the height of the bars on the right side of
the graphs).
There is an explanation for the water replacement costs calculated for the first decade
being much higher than the level calculated for wastewater. As the piping materials
used in the past for the construction of wastewater distribution system deteriorated
more quickly than the water distribution system, replacement of the wastewater system
was an ongoing process, while the water system remained functional and renewal was
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not a priority. The Utility can now benefit from prior replacement investments in the
wastewater system.
Exhibit 54 demonstrates that with the current backlog of replacement to be completed,
overall water and sewer system deteriorating and insufficient funding to carry out this
replacement of infrastructure, the long -term implications to Saint John Water reflect a
$468 million dollar funding deficit in the next 100 years.
Exhibit 54 Cumulative Costs and Revenue
6.5.3 Growth
The approach used to recover the cost of the works needed to serve new customers
would vary depending on whether the Utility or a developer is building the facilities.
• Utility Provides Local Servicing - One option for the recovery of the cost of
providing water and wastewater facilities by the Utility is for the work to be carried out
as a local improvement. The rules for this are set out in the Municipalities Act starting
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at section 117. A local improvement can be initiated by petition of effected customers
or by Council resolution, subject to certain restrictions related to the amount of
support for the project by affected customers and in Council. The work for water
systems can include "all facilities for storing, pumping, treating and distributing water
for domestic, commercial, industrial and fire protective purposes." For sewerage
systems it includes "all facilities for collecting, pumping, treating and disposing of
sewage." The cost is recovered from customers by special frontage assessment.
Thus both local and major facilities costs could be recovered by this method. The
Utility does not currently use this approach.
• Subdivider Constructs Local Servicing — In the case of subdivision development,
the City can require the works to be provided by the developer. The City normally
requires that local works be constructed by the developer. However, the City makes
a contribution and will pay the developer for the cost of watermain material. The City
charges this cost to the General Fund. The annual budget for this contribution is
$250,000 and is shown as "Other Miscellaneous" in Exhibit 50 above.
6.5.4 Breakdown of 2007 Investments by Category
The 2007 water and sewage capital program has been broken into the above
expenditure categories by purpose in Exhibit 55 below.
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Exhibit 55 Capital Program by Purpose - 2007
Budget Category
Purpose of Investment
Upgrade
Replacement
Growth
Total
Budget Breakdown
Linear System Renewal -
Sanitary
1,255,000
1,100,000
0
2,355,000
Linear System Renewal -
Water
1,160,000
4,755,000
200,000
6,115,000
Wastewater Treatment
13,530,000
0
0
13,530,000
Water Treatment
3,015,000
0
0
3,015,000
Watershed Protection
400,000
100,000
0
500,000
Total
$19,360,000
$5,955,000
$200,000
$25,515,000
Breakdown by Water vs. Sewage
Water
Saint John Share
4,575,000
4,855,000
200,000
9,630,000
Sewage
Saint John Share
4,905,000
1,100,000
0
6,005,000
Other Share
9,880,000
0
0
9,880,000
Total
19,360,000
5,955,000
200,000
25,515,000
Data Source: Budget data City of Saint John.
This table shows that there is little investment related to growth. The majority is related
to upgrades. Most upgrade investment is directly or indirectly related to treatment which
is driven by government requirements.
Investments for replacement totaled $4.9 million for water and $1.1 million for
wastewater. Water investment levels are above the long -term the level required as
calculated above of $3.5 million per year for water but below the current decade 2000 to
2010 target of 7.5 million /year. For wastewater the investment level is below the short
and long -term investment target of $3.4 million annually.
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For comparison purposes, the Capital Works amount budgeted for renewal between the
years 1995 to 2000 averaged $3.0 million /year for water and $1.3 million /year for
wastewater.
6.5.5 Capital Budget 2007 to 2012
Capital costs have been projected to 2012 below in Exhibit 56.
Exhibit 56 Capital Budget Projected — 2007 to 2012
Category
(Note 1)
Total
Budget
2007
2008
2009
Projected
2010
2011
2012
Water
Budget
Watershed Protection U
3,900,000
500,000
550,000
500,000
750,000
800,000
800,000
Service Needs - System U
18,364,900
2,180,000
320,000
1,145,000
9,139,900
2,315,000
3,265,000
Service Needs - WTP U, G
37,685,000
835,000
450,000
3,500,000
3,500,000
14,700,000
14,700,000
Infrastructure Renewal R
36,025,000
6,115,000
5,675,000
5,665,000
9,320,000
5,955,000
3,295,000
Service Extensions G
0
0
0
0
0
0
0
Total Water
95,974,900
9,630,000
6,995,000
10,810,000
22,709,900
23,770,000
22,060,000
By Category
Upgrade
59,950,000
3,515,000
1,320,000
5,145,000
13,390,000
17,815,000
18,765,000
Replacement
36,025,000
6,115,000
5,675,000
5,665,000
9,320,000
5,955,000
3,295,000
Growth
0
0
0
0
0
0
0
Total Water
95,975,000
9,630,000
6,995,000
10,810,000
22,710,000
23,770,000
22,060,000
Sewerage
Budget
Wastewater Treatment U
97,590,000
13,530,000
36,150,000
27,780,000
13,620,000
6,510,000
0
Infrastructure Renewal R
14,030,000
2,355,000
1,990,000
1,630,000
1,840,000
2,880,000
3,335,000
Service Extensions G
0
0
0
0
0
0
0
Total Sewerage
111,620,000
15,885,000
38,140,000
29,410,000
15,460,000
9,390,000
3,335,000
By Category
Upgrade
97,590,000
13,530,000
36,150,000
27,780,000
13,620,000
6,510,000
0
Replacement
14,030,000
2,355,000
1,990,000
1,630,000
1,840,000
2,880,000
3,335,000
Growth
0
0
0
0
0
0
0
Total Sewerage
111,620,000
15,885,000
38,140,000
29,410,000
15,460,000
9,390,000
3,335,000
Total
207,595,000
25,515,000
45,135,000
40,220,000
38,170,000
33,160,000
25,395,000
NOTE: (1) U = Upgrade, R = Replcement,
G = Growth
Saint John financial plan January 26 2008.xls
Capital
26- Jan -08
Note the increase in capital investment over the period 2010 to 2012. This relates to the
construction of the planned water treatment plant. The opposite situation exists for
wastewater where plant construction is high in 2007 and 2008 and decreases
thereafter.
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City of Saint John Page 114 of 198
6.6 Other Revenues
Other, non -user rate revenues, are projected to 2012 below in Exhibit 57.
Exhibit 57 Other Revenues - 2007 to 2012
6.7 2007 to 2012 Financing Strategy
6.7.1 Water System
The analysis of a strategy for paying projected operating and capital costs is
summarized below in Exhibit 58. Debenturing and user rate increases are used to
manage the funding of the projected investments. Expenditures and revenues as shown
in previous exhibits are summarized.
Annual debenture amounts show up in subsequent years as "Debt Repayment - New ".
Rate increases have been "smoothed" by adjusting the amount borrowed each year.
A Capital Reserve Fund (CRF) is also used to assist in smoothing the funding. Capital
contributions from user rates are contributed to the CRF and draws from the CRF are
used to pay the current amount of the capital program paid from user rates. A balance is
kept positive and maintained at a modest level in order to smooth out the year -to -year
financing.
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Escalation
Budget
Projected
Basis
2007
2008
2009
2010
2011
2012
Shared
Interest
0.0%
150,000
150,000
150,000
150,000
150,000
150,000
Miscellaneous
0.0%
33,000
33,000
33,000
33,000
33,000
33,000
Total Shared
183,000
183,000
183,000
183,000
183,000
183,000
Water
Fire Protection
0.0%
1,708,119
1,708,119
1,708,119
1,708,119
1,708,119
1,708,119
Special Contracts - Non By -law
5.0%
0
0
0
0
0
0
Permits
0.0%
20,000
20,000
20,000
20,000
20,000
20,000
Hydrant Water Sales
0.0%
1,100
1,100
1,100
1,100
1,100
1,100
Lumber Sales
0.0%
0
0
0
0
0
0
Shared revenues @
50%
91,500
91,500
91,500
91,500
91,500
91,500
Total Other Revenues
1,820,719
1,820,719
1,820,719
1,820,719
1,820,719
1,820,719
Sewerage
Storm Sewer
-1.0%
1,153,960
1,142,420
1,130,996
1,119,686
1,108,489
1,097,404
Permits
0.0%
6,000
6,000
6,000
6,000
6,000
6,000
Septage Fees
0.0%
15,000
15,000
15,000
15,000
15,000
15,000
Shared Services @
50%
91,500
91,500
91,500
91,500
91,500
91,500
Total Other Revenues
1,266,460
1,254,920
1,243,496
1,232,186
1,220,989
1,209,904
Saint John financial plan January 26 2008.xis
Other Revenues
26- Jan -08
6.7 2007 to 2012 Financing Strategy
6.7.1 Water System
The analysis of a strategy for paying projected operating and capital costs is
summarized below in Exhibit 58. Debenturing and user rate increases are used to
manage the funding of the projected investments. Expenditures and revenues as shown
in previous exhibits are summarized.
Annual debenture amounts show up in subsequent years as "Debt Repayment - New ".
Rate increases have been "smoothed" by adjusting the amount borrowed each year.
A Capital Reserve Fund (CRF) is also used to assist in smoothing the funding. Capital
contributions from user rates are contributed to the CRF and draws from the CRF are
used to pay the current amount of the capital program paid from user rates. A balance is
kept positive and maintained at a modest level in order to smooth out the year -to -year
financing.
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Exhibit 58 Water System Financing Strategy - 2007 to 2012
Budget Projected
2007 2008 2009 2010 2011 2012
Expenditures
OM&A
9,451,992
9,593,625
10,209,890
10,676,729
10,941,447
13,915,740
Capital Program
9,630,000
6,995,000
10,810,000
22,710,000
23,770,000
22,060,000
Debt Repayment Existing
4,638,582
4,185,455
3,856,099
3,347,315
3,130,882
2,714,008
Debt Repayment New
0
894,502
1,646,979
2,778,455
4,874,532
6,357,409
Short -term Financing Costs
U,000
0 000
0 000
0 000
0 000
0 000
Debt Discount
) „)00
00 000
00 000
00 000
00 000
00 000
Other Miscellaneous
ILM 1 L'
ILM 000
ILM 000
ILM 000
ILM 000
ILM 000
Previous Years (Surplus) /Deficit
” I hll
0
0
0
0
0
Net Total
24,202,076
22,168,581
27,022,968
40,012,499
43,216,861
45,547,157
Rate Increase - Water (%)
U %a
00/11
00
Financing
UR Revenues Water
13,179,026
14,639,853
16,281,062
17,660,524
19,157,333
20,781,511
Transfer from Sewage
1,461,549
Other Revenues
1,820,719
1,820,719
1,820,719
1,820,719
1,820,719
1,820,719
Debenture
RRO '
;J100 000
100 000
1(; R00 000
1 J!7O 000
I( 900 000
Grant
860,000
0
0
3,920,000
9,800,000
9,800,000
Total
24,202,076
22,460,572
27,201,781
40,201,243
43,378,052
45,802,230
Debentures at P OIJK, Interest rate
Term (years)
Capital Stabilization Reserve Fund
UR Contribution
1,889,218
1,286,991
1,888,813
2,178,744
1,531,191
- 884,927
Draw
- 1,889,218
- 995,000
- 1,710,000
- 1,990,000
- 1,370,000
1,140,000
Interest on Prior Balance
0
0
14,600
9,671
9,921
8,556
Balance
0
291,991
193,412
198,415
171,111
263,628
CRF Interest at U %a Interest rate
Saint John financial plan January 26 2008.xis
Scenarios
8- 0ct -08
UR = User Rate
Under the scenario shown, there are user rate increases of 8.0% annually over the
period 2009 to 2012.
6.7.2 Sewage System
The wastewater financing strategies shown in Exhibit 59 follow the same approach as
that for water shown above.
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Exhibit 59 Sewage System Financing Strategy - 2007 to 2012
Wastewater
Budget Projected
2007 2008 2009 2010 2011 2012
Expenditures
1,266,460
1,254,920
1,243,496
1,232,186
1,220,989
1,209,904
OM&A
7,444,193
7,556,527
8,175,035
9,796,743
10,076,822
10,250,858
Capital Program
15,885,000
38,140,000
29,410,000
15,460,000
9,390,000
3,335,000
Debt Repayment Existing
3,479,875
3,096,898
2,788,600
2,447,567
2,131,517
1,919,504
Debt Repayment New
0
506,754
1,504,905
2,166,945
2,472,501
2,543,798
Short -term Financing Costs
1 (7,000
1 0 000
1 0 000
1 0 000
1 0 000
1 0 000
Debt Discount
1,889,617
4,358,792
4,467,197
3,571,064
4,417,811
4,836,958
Other Miscellaneous
- 1,889,617
- 4,240,000
- 4,390,000
- 3,380,000
- 4,350,000
- 3,335,000
Previous Years (Surplus) /Deficit
I l!
0
5,940
4,157
9,761
3,879
Net Total
27,261,570
49,783,853
42,362,215
30,354,930
24,554,515
18,532,835
Rate Increase - Wastewater (%)
%a
00/11
00/11
00/11
00/11
Financing
Scenarios
8- 0ct -08
UR Revenues Sewage
13,461,276
14,747,725
16,175,917
17,233,807
18,361,337
18,824,889
Transfer to Water
- 1,461,549
Other Revenues
1,266,460
1,254,920
1,243,496
1,232,186
1,220,989
1,209,904
Debenture
I 'R �
�!a,'00 000
F '.0k7 000
1 000
00 000
0
Grant
9,020,000
24,100,000
18,520,000
9,080,000
4,340,000
0
Total
27,261,570
49,902,645
42,439,413
30,545,993
24,622,326
20,034,793
Debentures at Interest rate = P 011K,
Term (years)
Capital Stabilization Reserve Fund
UR Contribution
1,889,617
4,358,792
4,467,197
3,571,064
4,417,811
4,836,958
Draw
- 1,889,617
- 4,240,000
- 4,390,000
- 3,380,000
- 4,350,000
- 3,335,000
Interest on Prior Balance
0
0
5,940
4,157
9,761
3,879
Balance
0
118,792
83,137
195,221
77,572
1,505,837
CRF Interest at U %a Interest rate
Saint John financial plan January 26 2008.xis
Scenarios
8- 0ct -08
The projected financial plan includes debentures starting at $3.0 million in 2008
decreasing annually to zero in 2011. Annual user rate increases of 6% are needed to
provide the additional revenues to meet the projected expenditures and additional
debenture repayments. A Capital Reserve Fund is used to help smooth the financing.
6.7.3 Projected Debt Charges
Projected debt charges for water are provided below in Exhibit 60 and for wastewater in
Exhibit 61. Also shown is a debt coverage ratio, which is calculated by dividing annual
user rate revenues by outstanding debt. The ratio should be higher than 25 %. Water
approaches that level in 2012, but wastewater remains above. Thus debt levels do not
exceed the threshold during this period. Note that while Provincial regulations require
the City to limit borrowing so that a regulated level of debt coverage is not exceeded,
water and sewage is not included in the limits and do not have this restriction.
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Exhibit 60 Water System Debt Charges - 2007 to 2012
Payment
Description Start
New Debt Parameters
Amount
Borrowed Term
Rate
2008
2009 2010
2011
2012
New Debt
($)
(years)
( %)
20 8.0%
20 8.0%
Principal 2008
6,880,782
20
8.0%
344,039
344,039 344,039
344,039
344,039
2009
6,000,000
20
8.0%
300,000 300,000
300,000
300,000
2010
9,100,000
20
8.0%
455,000
455,000
455,000
2011
16,800,000
20
8.0%
840,000
840,000
2012
12,600,000
20
8.0%
630,000
2013
13,400,000
20
8.0%
2014
0
20
8.0%
2015
0
20
8.0%
2016
0
20
8.0%
2017
0
20
8.0%
2018
0
20
8.0%
2019
0
20
8.0%
Total 64, 780, 782
Interest 2008 6,880,782
2009 6,000,000
2010 9,100,000
2011 16,800,000
2012 12,600,000
2013 13,400,000
2014 0
2015 0
2016 0
2017 0
2018 0
2019 0
Total New Debt Interest
Total New Debt
Existing Debt
Principal
Interest
Total Existing Debt
Debt Coverage
Principal Outstanding at Start of Year
Added During Year
Total Debt Outstanding
User Rate Revenues
Operations funds _ total debt
Saint John financial plan January 26 200
344,039 644,039 1,099,039 1,939,039 2,569,039
20 8.0%
550,463 522,939
20 8.0%
480,000
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
20 8.0%
495,416 467,893 440,370
456,000 432,000 408,000
728,000 691,600 655,200
1,344,000 1,276,800
1,008,000
550,463 1,002,939 1,679,416 2,935,493 3,788,370
894,502 1,646,979 2,778,455 4,874,532 6,357,409
2007
:::1 79,8 °9 °9 ",0r 6, 4 °9 '9 2 "d'; 7,fr00 2 452 ::100 2 ",2;"00 2 G48,000
I.'5,is.r'r I.IIr I G1 °7 fr 1,1 8!15. 11,,:7 7 78,88 �'r 666,008
4,638,582 4,185,455 3,856,099 3,347,315 3,130,882 2,714,008
33,400 O 00 37,000,971 39,984,560 46,257,560 60,605,360 70,853,360
6,880,782 6,000,000 9,100,000 16,800,000 12,600,000 13,400,000
40,280,782 43,000,971 49,084,560 63,057,560 73,205,360 84,253,360
14,640,575 14,639,853 16,281,062 17,660,524 19,157,333 20,781,511
36.3% 34.0% 33.2% 28.0% 26.2% 24.7%
"LTD Water" 8- Oct -08
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City of Saint John Page 118 of 198
Exhibit 61 Sewage System Debt Charges - 2007 to 2012
Payment
Description Start
New Debt Parameters
Amount
Borrowed Term Rate
2008
2009
2010
2011
2012
New Debt
($)
(years)
(%)
Principal 2008
4,975,383
20
8.0%
108,723
117,421
126,815
136,960
147,917
2009
9,800,000
20
8.0%
214,152
231,284
249,786
269,769
2010
6,500,000
20
8.0%
142,039
153,403
165,675
2011
3,000,000
20
8.0%
65,557
70,801
2012
700,000
20
8.0%
15,297
2013
0
20
8.0%
2014
0
20
8.0%
2015
0
20
8.0%
2016
0
20
8.0%
2017
0
20
8.0%
2018
0
20
8.0%
2019
0
20
8.0%
Total
108,723
331,573
500,138
605,705
669,458
Interest 2008
4,975,383
20
8.0%
398,031
389,333
379,939
369,794
358,837
2009
9,800,000
20
8.0%
784,000
766,868
748,365
728,382
2010
6,500,000
20
8.0%
520,000
508,637
496,365
2011
3,000,000
20
8.0%
240,000
234,755
2012
700,000
20
8.0%
56,000
Total New Debt Interest
398,031
1,173,333
1,666,807
1,866,796
1,874,340
Total New Debt
506,754
1,504,905
2,166,945
2,472,501
2,543,798
Existing Debt
2007
Principal
2,682,189
2,436,589
2,248,000
2,019,800
1,807,000
1,687,000
Interest
797,686
660,309
540,600
427,767
324,517
232,504
Total Existing Debt
3,479,875
3,096,898
2,788,600
2,447,567
2,131,517
1,919,504
Other
Short -term Financing Costs
150,000
150,000
150,000
150,000
150,000
150,000
Debt Discount
65,700
65,700
65,700
65,700
65,700
65,700
Other Miscellaneous
267,975
267,975
267,975
267,975
267,975
267,975
Total
417,975
417,975
417,975
417,975
417,975
417,975
Debt Coverage
Principal Outstanding at
Start of Year
27,300,000
29,593,194
36,956,605
41,208,605
42,188,805
41,081,805
Added During Year
4,975,383
9,800,000
6,500,000
3,000,000
700,000
0
Total Debt Outstanding
32,275,383
39,393,194
43,456,605
44,208,605
42,888,805
41,081,805
User Rate Revenues
11,999,727
14,747,725
16,175,917
17,233,807
18,361,337
18,824,889
Operations funds _ total
debt
37.2%
37.4%
37.2%
39.0%
42.8%
45.8%
Saint John financial plan
January 26 2008.xls
LTD Sewage
26- Jan -08
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October 14, 2008
City of Saint John Page 119 of 198
6.8 Summary
A summary of the user rate increases, debenturing levels and CSRF balances for 2008
to 2012 is provided below in Exhibit 62:
Exhibit 62 Summary of Water & Sewage Financing Scenarios
2008 2009 2010 2011 2012
Water
8.0%
User Rate Increase
8.0%
Debenture
6,000,000
CSRF Balance
291,991
Debt Coverage
34%
Sewaae
263,628
User Rate Increase
6.0%
Debenture
9,800,000
CSRF Balance
118,792
Debt Coverage
37%
Saint John financial plan January
26 2008.xls
8.0%
8.0%
8.0%
8.0%
9,100,000
16,800,000
12,600,000
13,400,000
193,412
198,415
171,111
263,628
33%
28%
26%
25%
6.0%
6.0%
6.0%
2.0%
6,500,000
3,000,000
700,000
0
83,137
195,221
77,572
1,505,837
37%
39%
43%
46%
Scenarios
8- Oct -08
The following is a summary of the findings of the financial analysis:
• The proposed plan is manageable with water and sewage rate increases each
limited to 8% per year and averaging about 7% per year combined.
• Debenturing is required each year to fund major capital construction projects within
maximum annual user rate increase limits.
• The debt limits do not exceed Provincial target of debt coverage (revenues versus
outstanding debt) falling below 25 %. Thus the level of debt is within municipal
guidelines (which do not strictly apply to water and wastewater).
• The CSRF is used to allow the smoothing of user rate increases and annual
debentures. The CSRF is useful in smoothing out financing.
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7 PROPOSED WATER AND SEWER RATE STRATEGY
7.1 Principles and Objectives
As discussed in Section 1.0 - Introduction, Saint John Water believes a solid set of
principles upon which to base the system of charges are fundamental to achieving
equitable cost allocation and fair and equitable user -rates for services.
The purpose of this section is to set out the basic principles to be used or considered in
the recovery of water and wastewater system costs, and in particular those used to
guide the formulation of the user rates.
It is important to establish principles that suit the City of Saint John since they are used
to formulate the policies and approach to user rates as well as support the approach
used to customers.
There are a number of principles and objectives for determining user rates and charges.
Some are basic objectives that do not conflict with others. Others may conflict with the
result that choices may have to be made. But in any case it is useful to consider and
decide what principles will be used before deciding cost recovery methods and
developing the format of the charges.
The following principles are adopted from the 2002 Business Plan Review28 as well as
principles set out by the City in the Terms of Reference for the current study.
7.1.1 Equity - Fairness & User Pay
The introduction to the AWWA M1 manual states that:
"The AWWA Rates and Charges Subcommittee believes that water rates and
charges should recover costs from classes of customers in proportion to the cost
of serving those customers. However, the Subcommittee also recognizes that
other considerations may be equally or more important in determining rates and
28 City of Saint John Water and Sewerage Business Plan Review Consolidated Report
November 25, 2002 Touchie Engineering & RM Loudon Ltd.
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City of Saint John Page 121 of 198
charges and may better reflect emerging objectives of the utility of the community
it serves."
Basically they state that the fundamental principle to be considered is fairness and user
pay. Fairness is when charges are as close as feasible to the actual cost of providing
the service to each customer.
This principle is probably the one most important if customers are to believe they are
being treated fairly. Charges based on user pay are the easiest to defend.
The New Brunswick Municipalities Act Chapter M -22 provides support for user pay.
Section 189 states:
"189(1) Where under this Act a municipality provides
(a) water, or
(b) a sanitary sewerage system,
the municipality shall construct, operate and maintain such service or utility on a
user - charge basis, which may be established on an amortized or any other basis
as to the municipality shall seem fit, and may establish a separate or joint rate
therefore.
189(1.1) Notwithstanding sections 127 and 144 and notwithstanding that the
provision of a water or sewerage service has been undertaken, has been
deemed to have been undertaken or is purported to have been undertaken as a
local improvement under this Act, a municipality may recover the cost of the
work, or any portion thereof, on a user - charge basis under this section and the
user - charge may be established on an amortized or any other basis as to the
municipality shall seem fit.
189(1.2) A municipality may establish, with respect to a user - charge under
subsection (1. 1), one or more classes of users depending on prior payments by
the user in relation to the cost of the work and the user - charge may vary within
each class.
Thus user pay is a basic principle that should be followed for both legal and fairness
reasons and is used as the guiding principle in this report.
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It is noted that the current Saint John approach to billing residential customers by
applying a common flat rate, while treating them equally, is not user pay. The
implementation of fully accountable billing system based on usage would enhance
equity and fairness, not only to residential customers, but to customer who are currently
metered.
The AWWA does leave the door open for other priorities to be considered when it also
states that "that other considerations may be equally or more important in determining
rates and charges and may better reflect emerging objectives of the utility of the
community it serves ". The other principles are discussed further below.
7.1.2 Revenue Adeauacv
There must be a level of assurance that the utility will avoid or reduce the financial risk
associated with revenue variability and revenue loss. Revenues must be adequate to
meet financing needs. This principle is underscored in the New Brunswick Municipalities
Act, which states:
"189(4) When operating a service or utility under this section, a municipality or
commission shall make such charges to the user of the service or utility as to
produce
(a) an annually balanced budget, or
(b) a quadrennially balanced budget.
189(4.1) A municipality providing a service or a utility under this section shall
annually, on or before the date fixed pursuant to subsection 87(2), submit to the
Minister the budget with respect to that service or utility for that year.
189(5) When in the operation of a service or utility under this section, a
municipality or commission has a deficit at the end of a budget period referred to
in subsection (4),
(a) it shall cause such deficit to be debited against the budget for that service or
utility for the second next ensuing year, or
(b) it shall spread the deficit over a four year period commencing with the second
next ensuing year.
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189(6) When in the operation of a service or utility under this section, the
municipality or commission has a surplus at the end of its fiscal year,
(a) it shall cause such surplus to be credited to the budget for that service or
utility for the second next ensuing year, or
(b) it shall spread the surplus over a four year period commencing with the
second next ensuring year.
The principle of revenue adequacy is a basic legislated requirement.
Over and above the legal requirements to achieve a balanced budget, is a utility's
responsibility to its customers to adopt a sound financial management plan to ensure
that sufficient revenue is available to fund the full cost of providing, maintaining,
operating and administering the water and sewage works to meet regulatory standards
and potential conditions in a sustainable manner including system replacement and
security of supply and treatment. The sustainable concept is central to the financial
planning, ensuring that sufficient finding is available to fund needed investment on an
ongoing basis.
7.1.3 Legality
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. All charges must be defensible from a legal standpoint. Again this would be
a basic requirement.
7.1.4 Source Sustainabilitv
With the forecasted effects of climate change, it is important to consider the adequacy
of the water resources available to Saint John Water. Patterns of consumption must be
reviewed and forecasted for residential and commercial customers. This will provide
supply and demand information to assist in understanding and planning the future water
needs of the City. Source water protection, raw water reserve capacities, enforcement
of water restrictions during drought conditions, and the implementation of alternative
programs available in reducing overall per capita consumption assist in assuring a
sustainable source.
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7.1.5 Technical & Administrative Feasibility
The rates must be practical to apply without an inordinate administrative burden. They
should be simple enough to apply without undue complication. Issues that affect user
rates include water meter technology and capabilities of recording using over different
time periods, meter location and meter reading capability. Water meters and meter
reading capabilities have limitations that affect the format of user rates. For example,
electricity charges can be made based on peak usage rates. There are electric meters
available that can provide this information. For most water customers, since charges are
relatively low, a peak use charge would not be practical. The charges would have to be
formulated based on what is practical.
7.1.6 Affordability
The ability of customers to pay for essential services such as water supply and
wastewater treatment is an important issue. The planned service upgrades and ongoing
replacement needs will place upward pressure on the user rates. Increased rates will be
needed to meet quality standards and ensure that the system will continue to function in
the future. One way to address affordability is with programs specifically designed for
this purpose.
Customers billed on the actual volume of water used would have the opportunity to
exercise some control over their water and sewage bills. Customers can reduce
charges by careful water usage. With a proper priced rate structure, customers with
affordability issues can exercise control over their costs since their water and sewage
bills are based on user -pay pricing.
The issue of affordability on customers within the City of Saint John is reviewed in
greater detail in Section 5.
7.1.7 Public Acceptance
It is important that there is general public acceptance of the pricing policy, with
customers understanding why, how and what they are being charged for water and
sewage.
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7.1.8 E ualit
Customers with the same service level should be treated equally within the water
system. Within the serviced area the location of customer is not a factor. The
advantages of a common municipal system are shared. For example, a customer by the
water source does not pay a lower rate than one more distant.
7.1.9 Water Use Efficiencv
Water use efficiency relates to water demand management. By targeting water users
who create peak usage and thereby decreasing this type of usage, water is used more
cost - effectively.
The degree to which user rates can be structured to increase water use efficiency
depends on local water supply circumstances. Where total water availability is limited,
all usage may be targeted. Where supply is constructed to meet peak summer usage,
residential use is then targeted. But fairness might be sacrificed if specific customer
classes or usage patterns are targeted with punitive charges. Fair and equitable pricing
will encourage the efficient use of water.
The biggest efficiency issue is normally related to water treatment capacity. With the
planned construction of water treatment in Saint John, water use efficiency may be an
issue related to needed treatment plant capacity.
Pricing can be used as a water efficiency tool only where customers are billed on actual
volume of water used. In Saint John that would allow equitable pricing to be
implemented and water use efficiency to be achieved.
7.1.10 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 has been done in the past in Saint John. However, it has
been the position of Council since the 1980's to not have special water rates for specific
customers and to bring all customers into a common By -law rate structure.
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Saint John's declining block rates are favorable to large industry and may give the
appearance of being adopted to encourage industry. If they are deliberately biased
toward industry, then the principle of fairness is compromised. Encouragement of
industry and development through pricing decisions should only be done within the
limits of fairness to all customers.
7.1.11 Summary
The financing and cost recovery methods must be consistent with existing legislative
authority. Thus user pay is a basic principle that should be followed for both legal and
fairness reasons. The principle of revenue adequacy is also basic legislated
requirement. The rates must be practical to apply. Charges should be simple enough to
apply without undue complication. In Saint John, billing on the actual volume of water
used to each customer would be required to allow equitable pricing to be implemented
and water use efficiency to be achieved. Encouragement of industry and development
through pricing decisions should only be done within the limits of fairness to all
customers. A summary of the recommended Principles and Objectives for the Saint
John water and wastewater user rates is provided in Exhibit 63.
Exhibit 63 Summary of Principles & Objectives for Saint John User Rates
Principle & Objectives
Equity - Fairness & User Pay
Revenue adequacy
Legality
Source Sustainability
Technical & Administrative Feasibility
Affordability
Public Acceptance
Equality
Water use efficiency
Encourage development
These alternative principles will be used in the discussion of revenue sources in the
following section.
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7.2 Rate Structure Alternatives
7.2.1 Special Factors Affecting Future Water Rate Format
There are a number of water rate formats in use in Canada. Water utilities are normally
free to choose which format is most suitable. A variety of factors influence the choice of
a water rate format. Issues that are particularly relevant in Saint John are as follows:
Residential Flat Rate vs. Metered Rate — Residential customers are currently billed a
common flat rate. Large users and low- volume users pay the same. The volume built
into the flat rate is lower than it should be based on estimated average flat rate customer
usage. Future rates should adjust this imbalance. If flat rate customers are moved to a
measured usage bases, the potential unfairness of the flat rate approach will be
removed.
Very Large Water Users — Typically residential water usage is in the range of 40% to
70% in municipalities. In Saint John, it is estimated that only 9% of water usage is by
residential customers. Two customers, IPP and IOL combined use 76% of all customer
consumption. This concentration of usage provides a strong case for wholesale rates for
large volume usage.
Special Agreements — Approximately 62% of consumption is billed non By -law rates as
a result of special agreements. Historically special agreement rates have been lower that
the lowest By -law rate. From a special agreement customer perspective, agreements
provide them with assurance of predictable (and probably low) costs over the period of
the agreement. From a utility point of view, the rates charged appear to be preferential
compared to other customers. The special agreement customers are more likely to
agree to By -law rates if they feel the formulation is technically based and incorporates
principles that they accept are valid.
Interest in Calculation Method — The rate calculation method used could have a
significant impact on the rate differential for different customer classes. As a result there
is a higher- than - normal degree of interest in the rate calculation approach.
New Treatment Facilities — Currently Saint John potable water is provided minimal
treatment including screening, disinfection and for most customers, fluoridation. Water
treatment facilities are in the pre- design stage and will provide an added element of
protection to water quality. The majority of industrial usage does not require this added
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treatment level. This usage does, however, benefit from consistent and clean water
quality. It is anticipated that this industrial water use will not be provided full treatment. In
any case, Saint John Water would prefer to continue to be the service provider, whether
raw water or treated water is required. The rates should be formulated to accommodate
either scenario.
Watershed Protection — With little fanfare, the City has made great strides in assuming
ownership of and managing of the two watersheds used as water sources by Saint John
Water. It is important that the City continue to manage and control these watersheds.
The annual budgets and the water rates should clearly support this strategy.
Sustainable Investment — Municipal water and sewage systems are aging. The cost of
replacing facilities is increasing year -by -year. Saint John has one of the oldest water
systems in Canada. The user rates must include allowances for the needed investment
at sustainable levels.
The proposed rates are formulated to reflect these priorities.
As discussed in Section 2.3, there are basically two types of charges that can be used
to make up the user rates, Fixed Charges and Volumetric Charges to form what is
called "two- part" rates.
7.2.2 Fixed Charge Options
Minimum Bills - The fixed charge may or may not include a minimum consumption
allowance. Where other municipalities do this, 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 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.
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• Demand Charge — This is a fixed charge per billing period that is based on a
customer's peak demand. Different approaches may be used to measure peak
demand, but for a retail rate, maximum month demand in the previous year is
appropriate. The measure of peak demand for a customer remains constant for the
billing year. The demand charge can replace the meter charge as a fixed charge.
This charge is common for electricity sales but not usual for water.
• Unmetered Fire Line Charge — This is a fixed monthly charge to customers with fire
lines. A fire line would serve private fire protection facilities such as private fire
hydrants, sprinklers or standpipe connections. Public water systems include capacity
on standby for fire protection. Water used for fire fighting is not sold based on volume
used. Costs are normally recovered from all customers by means of water user
rates. An unmetered fire line charge could form part of this.
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7.2.3 Single Block Rate (SBR)
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.
A graphical representation of the single block rate structure is presented in Exhibit 64
Exhibit 64 Single Block Rate Structure
Price /m3
W
Water use /month.
Water
bill /mo.
W
Water use /month
Structure of the Volumetric Rate Monthly Water Bill
Sample calculation of a customer bill with the SBR structure:
Volumetric rate = $1.50/m3
Customer water use in one month = 24 m3
4 Monthly water bill = 1.50/m3 x 24 m3 = $36.00
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7.2.4 Declining Block Rate (DBR)
A declining block rate decreases in steps as usage increases. Traditionally the
consumption limits for the first block were set to encompass the largest amount that a
customer in a single - family dwelling might use. The upper consumption limits for the
2nd block would encompass the consumption of most 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
conservation since the price of water 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 of water
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 favor industry in order to promote economic
development. A graphical representation of the declining block rate structure is
presented in Exhibit 65.
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Exhibit 65 Declining block rate
Price /m3
mie
Water use /month.
Water
bill /mo.
M
Water use /month.
Structure of the Volumetric Rate Monthly Water Bill
Sample calculation of a customer bill with the DBR structure:
Volumetric rates:
0 to 24 m3 /month = $1.207/m3,
24.1 to 200 m3 /month = $1.000/m3,
200.1 to m3 /month = $0.700/m3
Customer water use in one month = 28 m3
4 Monthly water bill = ($1.207/m3 x 24 m3) + ($1.000/m3 x 4 m3) _ $32.97
7.2.5 Increasing Block Rates (IBR)
The block rate increases with increasing use. This structure is designed to encourage
water conservation. The first block for a customer class would be designed to cover the
normal use of an average customer in that class. For subsequent blocks, the differential
in the charge level should be designed to give a clear and strong economic incentive to
the customer to conserve water. However, rate differentials between the blocks of 5 %,
10% or even 25% may not be enough to change water use by some domestic
customers because total water charges are still relatively low compared to other utilities.
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This type of charge is normally appropriate for residential customers since they are the
ones most likely to be causing peak seasonal demands (usually the hardest and most
expensive to supply). This type of block rate structure would be suitable for industrial
customers where water availability limitations outweigh the disadvantages of shifting the
cost burden to the largest users. A graphical representation of the increasing block rate
structure is presented in Exhibit 66.
Exhibit 66 Increasing Block Rate
Price /m3
M
Water use /month.
Water
bill /mo.
M
Water use /month.
Structure of the Volumetric Rate Monthly Water Bill
Sample calculation of a customer bill with the IBR structure:
Volumetric rate:
0 to 10 m3 /month at $0.350/m3,
10 to 25 m3 /month at $0.700/m3,
25.1 + m3 /month at $1.400/m3;
Customer water use in one month = 35 m3
4 Monthly water bill = ($0.350/m3 x 10 m3) + ($0.700/m3 x (25 m3 - 10 m3)) +
($1.400/m3 x (35 m3 - 25 m3)) _ $28.00
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7.2.6 Humpback Rate (HBR)
This looks like an 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
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. A
graphical representation of the hump- backed rate structure is presented in Exhibit 67.
Exhibit 67 Hump- backed rate
Price /m3
Nl
Water use /month.
Water
bill /mo.
MR
Water use /month.
Structure of the Volumetric Rate Monthly Water Bill
Sample calculation of a customer bill with the HBR structure:
Volumetric charge:
0 to 25 m3 /month at $0.600/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 = 35 m3
4 Monthly water bill = ($0.600/m3 x 25 m) + ($1.400/m3 x 10 m3 ) _ $36.40
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7.2.7 Lifeline Rate (LR)
This format features a subsidized 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.
Calculation of a customer bill with the LR structure:
Volumetric charge:
0 to 5 m3 /month - $0.750/m3
5+ m3 /month - $1.350/m3
Monthly meter charge:
Customer water use in one month = 28 m3,
4 Monthly water bill = $0.750/m3 x 5 m3 + $1.350/m3 x (23 m) _ $34.80
7.2.8 Seasonal Excess Use Rate (EUR)
This is a high volumetric charge that applies to all demand during the peak water
demand season in excess of a threshold. The threshold is set equal to a customer's
average off -peak season consumption or a modest multiple of this amount, for example
1.3 times winter demand. A base rate is used for all usage during the off -peak season
and to consumption during the peak season that lies below the threshold. A graphical
representation of the excess use rate structure is presented in Exhibit 68.
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Exhibit 68 Excess Use Rate
Price /m3
m l
Water use /month.
Water
bill /mo.
Nl
Water use /month.
Structure of the Volumetric Rate Monthly Water Bill
Sample calculation of a customer bill with the EUR structure:
Volumetric charge:
Base charge: $1.000/m3,
Excess use charge: $3.145/m3
Excess use applied to demand above 120% of winter consumption
Customer water use in one month = 16 m3 in the winter & 28 m3 in the summer
4 Winter bill
In winter = $1.000/m3 x 16 m3 = $22.00
In Summer = $1.000 /m3 x (1.2x16 m3) + $3.145/m3 x (28 m'— 1.2x16 m3) _ $46.88
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7.2.9 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 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. A graphical representation of seasonal rate structure
is presented in Exhibit 69.
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Exhibit 69 Seasonal Rates
Price /m3
M
summer rate
winter rate
Water use /month.
Structure of the Volumetric Rate
Water
bill /mo.
M
Sample calculation of a customer bill with the SR structure:
Volumetric charge:
Off -peak season rate : $1.000/m3,
Peak season rate: $1.462/m3
Water use /month.
Monthly Water Bill
Customer water use in one month = 28 m3 in the summer and 16 m3 in the winter
4 Monthly water bill
In winter = $1.000/m3 x 16 m3 = $16.00
In summer = $1.462/m3 x 28 m3 = $40.94
7.2.10 Multiple or Combined Rate Formats
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 for ICI customers. Another applied by Toronto is a humpback
rate up to large customers and a declining block after the upper hunchback rate
threshold is exceeded.
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7.3 Rate Formats Past & Future
7.3.1 Block Rate Formats Proposed in 2002
The format of user rates was examined in detail in the 2002 Business Plan Review 29,
including a review of user rate principles and practices as well as alternative rate
formats. The user rate principles are again covered in Section 7 of this report, with the
objective of equity- fairness and user pay being paramount.
In regard to metered rate format, the 2002 Business Plan Review evaluated the then 5-
block declining rate structure with service charges varied by meter size and a flat rate
for unmetered customers. As there are now, there were also two other sets of charges
governed by special agreements. The combination of a service meter charge by size
plus volumetric charges is referred to as a two -part rate, an approach supported in the
2002 Business Plan Review. There was consideration given to what rate blocks would
be appropriate.
Possible alternatives to the declining block structure could be increasing blocks, a single
block, humpback rates (increases followed by decreased rates as consumption
increases) and seasonal rates. Factors often affecting the choice of rate format include
seasonal usage, affordability and incentives for industry. It was found that seasonality
was not a factor. This eliminated several of the alternatives from consideration.
The 2002 Business Plan Review observed the following:
• There is little or no seasonal differentiation of use between the 2nd to 5t" rate blocks.
• Fewer rate blocks would be consistent with actual usage patterns.
• A 5 -block rate system is not required for cost allocation purposes.
• Technically there is no need for 5 rate blocks at this time and unlikely to be needed
after the water system is reorganized (with treatment).
29 City of Saint John Water and Sewerage Business Plan Review — Consolidated Report —
November 25, 2002 — Touchie Engineering and R. M. Loudon Limited
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• A volumetric rate similar to the current 5th block will be needed for raw water, when
full water treatment and raw water transmission is available on the east side system
• It is recommended that the number of volumetric rate blocks be reduced from 5 to 4
in 2003 and to 3 blocks in 2004.
The 2002 Business Plan went on as follows:
"The recommended number and limits of the rate blocks for 2003 and 2004 are
provided in Exhibit 70.
Exhibit 70 Recommended Blocks & Ranges - 2003 to 2005
Current (1�
2003
2004 and 2005
Future
Block
3Volume
(m /bimonthly)
Block
3Volume
(m /bimonthly)
Block
Limits
Block
Limits
1St
0 to 91
1St
0 to 100
1St
0 to 100
Number and
2nd
92 to 2,273
2nd
101 to 50,000
101 to
range of blocks
dependent on
3rd
to
454 54
45,4
,
2 nd
250,000
supply
arrangements
4th
45,455 to
3rd
50,001 to
272,764
250,000
and usage by
large customers.
5th
over 272,764
4th
over 250,000
3rd
250,000
NOTE: 1) Block volume limits currently based on gallonage units. Conversion to metric results in
odd appearing numbers. Future block limits based on metric approach.
"The following comments are made:
• 1 St block — The first rate block is intended to encompass the volume of water that a
large residential consumer might use. This is the most expensive to supply and is the
target of the first rate block. The current block limit of 91 m3 bimonthly could be
adjusted to 100 m3 bimonthly to simplify the rate schedule in metric units.
• Final block — This block would take care of the very large industrial water usage. This
is the usage that is supplied by large mains directly to the customer. It should not
require very much treatment and would not be treated by the new plant. It is
equivalent to the current 5th rate block, which currently starts at 272,764 m3
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bimonthly. It is recommended that this threshold be decreased to 250,000 m3
bimonthly. Once again, a simple number to use in metric units.
• Middle block(s) —These blocks would encompass all usage between the 1st and last
blocks, that is usage between 100 and 250,000 m3 bimonthly. They would decrease
from 3 blocks now to two blocks in 2003 and one block in 2004. The consumption in
the range covered by these blocks all appears to exhibit no seasonal fluctuations and
thus a single rate block should be used for all of this range.
"Due to the impending changes, any change now should be moving towards the format
that will be adopted later. The recommended reduction in rate blocks should be
consistent with a future combination of a simple treated water rate format plus a raw
water rate for untreated bulk water supply."
In the event, the City implemented the 2003 recommendation, but has maintained four
blocks instead of the recommended three blocks starting 2004.
7.3.2 Block Rate Formats Adopted Since 2002
Exhibit 71 presents the water rates adapted by the City of Saint John:
Exhibit 71 Actual Volumetric Rates — 2003 to 2005
Source: Exhibit 6 -17 of City of Saint John Water and Sewerage Business Plan Review
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2002
2003
2004
2005
Block
Usage m3
Rate
Usage m3
Rate
Usage m3
Rate
Usage m3
Rate
bimonthly
($/m3)
bimonthly
($/m3)
bimonthly
($/m3)
bimonthly
($/m3)
1 St
0 to 91
0.51428
0 to 100
0.60592
0 to 100
0.69752
0 to 100
0.78267
2nd
92 to
0.41143
101 to
0.42479
101 to
0.49895
101 to
0.55986
2,273
50,000
50,000
50,000
d
3
2,274 t0
0'28978
50,001 t0
0.30452
50,001 t0
0. 36915
50,001 t0
0.36915
45,454
250,000
250,000
250,000
4th
45,455 to
0.23934
over
0.03014
over
0.04291
over
0.07300
272,764
250,000
250,000
250,000
5th
over
0.01737
272,764
Source: Exhibit 6 -17 of City of Saint John Water and Sewerage Business Plan Review
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The block rate changes actually implemented compared to the 2002 Report
recommendations are as follows:
1. The budget increases were reduced, and thus the rate increases were less than
envisioned.
2. The 2002 third block was absorbed into the second block, as recommended in
the 2002 Report.
3. The 2002 fourth block has been retained and established as the target for the
final block. The result of this is that the final block will be more expensive and
have a lower volumetric threshold of 50,000 cubic meters bimonthly than the
2002 Report recommended final block which recommended a threshold of
250,000 cubic meters bimonthly for the final block. More customers will be
eligible for the final block under the adopted scenario.
The current phase -in approach of bringing the fourth block up to third block levels may
work over an extended period, but it does not appear to be in keeping with the original
recommendation. The intent was to keep the final block at a relatively low level, in
keeping with raw water costs. The target third block rate is currently about 44% of the
first block rate. This would represent a fairly significant discount for fully treated water in
a system with high seasonality (the component which drives up the first block rate and
keeps the third block rate relatively low). But it is unlikely to be an insufficient discount
reflecting raw water costs relative to treated water costs — the long -term target of the
final block rate.
7.3.3 Recommended Water Rates Format
Historically Saint John has used two -part rates (i.e. fixed plus volumetric) metered rates.
This approach is recommended by the CWWA30. It ensures that bills include a fixed
charge related to customer costs which are not affected by volume plus a variable
component based on consumption to recover system costs. The fixed component
30 Canadian Water Works Association — Municipal Water & Wastewater Rates Manual 1993
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provides some revenue stability while the volumetric component is based on use — a
user pay principle. It is recommended that two -part rates continue to be used.
The current Saint John volumetric format is declining block rates (DBR). It is
recommended that this approach continue to be used, but with further refinements. This
approach is based on an analysis of costs which concludes that the Saint John large
volume users are less costly to serve than smaller customers.
The M1 manual text on the declining block rate as follows:
"Many customers unfamiliar with the rate design process consider the declining
block rates structure to be a quantity discount or "anticonservation" and favorable
to large- volume users of water. In actuality, when properly designed, the
declining block rates structure reflects the manner in which costs are incurred by
the utility. It assesses costs associated with the usage patterns in demand
requirements of the various classes of customers served. The declining block
rate is often used to develop a single rate structure that takes into account the
different costs in usage characterizations of all customers, yet is equitable to all
customers.
Utilities may consider using a declining block rate structure when:
o a single rate structure is used for all customer classes of service.
o In a class of service has an array of customers with their in usage into main
requirements (e.g., a class of service containing both small and large
commercial customers).
o System costs declined with increasing water usage (I. E., economies of
scale).
o Economic circumstances dictate their price incentives be provided to incurred
specific large- volume customers to remain on the system (e.g., a large
volume customer that can develop its own source of supply by drilling a well).
This consideration may be a characterized as an economic incentive rate. A
declining block rate structure is generally not difficult to administer, depending
a number and size of the blocks. In designing declining block rates, it is
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important to make you wait and maintain sampling data to accurately predict
the amount of water used to be built in each block."
The following briefly summarizes reasons for them not being found suitable for Saint
John.
Increasing Block Rates (IBR) — IBR are normally used for residential customers where
conservation is an objective. Since residential customers are unmetered in Saint John
there is currently no suitable application. If residential customers are metered and
conservation is an objective, IBR could be reconsidered. Humpback rates are a variation
of IBR and also do not currently have an application in Saint John.
Seasonal Rates — Seasonal usage by residential customers is considered to be
minimal. Climate conditions normally provide sufficient precipitation that the need for
supplementary lawn irrigation from the water system is minimal. There appears to be
some industrial seasonality, but addressing any related costs can be accomplished
without using seasonal rates.
Single -Block Rates — The differential between the lower -cost large and more expensive
(on a volumetric basis) small users is not addressed using single block rates.
A description of the target customers in each of the proposed DBR is provided in Exhibit
72.
Exhibit 72 Breakdown of Proposed Declining Block Rate
Recommended Target
for Current Potable
Rates (m3 /month)
1 st block (0 to 50)
2nd block
(51 to 125,000)
3rd block
(over 125,000)
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Format After Water Treatment Plant Built
Potable Water
Raw Water
?
- Resource charge
- Piped water charge
To be
determined
Final Report
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The rate blocks are targeted at the customer classes shown. The costs are allocated
and the block volumetric limits established on the basis of the usage characteristics of
these groups. Larger users must first pass through each block. This approach is fair as
it shows that the large users have to pay the same rates for equivalent use as the small
users. It also avoids the disputes as to customer classification that can arise if different
customer classes are billed according to different rate schedules. Water rates
differentiated by customer class exist, but are not common in Canada.
Coleson Cove, IPP and IOL are similar in terms of their water quality needs. Coleson
Cove receives raw water from a separate system. IPP receives raw water via a
dedicated main. IOL receives water from the potable system, but does not require the
minimal level of treatment now provided. It is supplied through transmission mains also
used for City supply. None would require water treatment plant quality water for their
process needs. Coleson Cove and IPP can be supplied with raw water using existing
transmission mains. A method of providing IOL with raw water needs would need to be
established. It is assumed that this will be resolved and that all three customers will be
supplied with raw water following the construction of the new water treatment facilities.
The proposed EIDER Rock refinery will need water for cooling. Two alternative sources
potentially involving the City are raw water and treated sewage plant effluent. Either
method will require a cost analysis to ensure a fair and equitable cost recovery
approach.
7.3.4 Future Rate Format Post Water Treatment Plant
Exhibit 73 illustrates the target water rates format as envisioned in the 2002 Business
Plan Review:
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Exhibit 73 Target Water Rate Block Format (2002 Business Plan Review)
Target 2004 Format
(all usage)
1 St block
2nd block
3rd block
Format After Water Treatment Plant Built
Potable Water
Raw Water
1St block
All Raw Water
Usage
2nd block
There are several factors which may influence the appropriateness of the rather simple
format into the future that is once water treatment plants have been established.
• The City's ownership and management of the water sources, Loch Lomond and
Spruce Lake, are a factor that has not been separately emphasized in the past.
Previous agreements such as the 60 -inch IPP transmission main, the supply to
Coleson Cove and the Spillage rate to Irving Paper recognize the City's mandate in
regard to supplying water from the municipal water supply watersheds of Spruce
Lake and Loch Lomond. The City source protection management program should
have a higher profile and emphasis so that it is a recognized component of both the
potable water rates and a raw water rate.
• Coleson Cove currently receives raw water for which it pays By -law rates. They
would likely be eligible for raw water rates when those are adopted. This may result
in some loss in revenues.
• IPP currently receives raw water from Spruce Lake and treated water from Loch
Lomond. They pay By -law rates up to 30 MGD and agreement rates thereafter. The
majority of water is supplied from Loch Lomond (treated) due to the fact that Spruce
Lake can become depleted and must be refilled from Musquash, thereby incurring
added pumping and royalty costs. Once water treatment is added, water from the
east will become more expensive and there is no capability of supplying raw water
from that source under the existing distribution system configuration. It is expected
that raw water, of the quality currently available, is sufficient for IPP process
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purposes. If IPP raw water needs are supplied entirely from Spruce Lake, Musquash
pumping costs will increase.
• Irving Oil Limited currently receives treated water from the Loch Lomond source for
process needs. They have two potable water connections, one charged By -law rates
and one special agreement (now expired) rates. They will need consistent water
quality in the future as well, but not necessarily filtered water. IOL is located
downstream of the proposed filtration plant. The current transmission system would
deliver filtered water. Perhaps there is a raw water configuration that is possible,
saving plant capacity and reducing costs to IOL. Or perhaps a combination of raw
and treated water. Note that they also use their private Little River system for water,
supplemented by spillage water from Latimer Lake, supplied by the City.
• Irving Paper has a contract with the City for raw water from Latimer Lake (Loch
Lomond source) supplied via the Little River system — the so- called "spillage" water.
This is similar in some ways to other raw water.
• The proposed new IOL refinery will need added process water, which the City
intends to supply.
• The proposed Irving LNG terminal needs water of some sort. One possibility is
treated wastewater effluent. Treating and managing wastewater effluent suitable for
LNG purposes will have some cost implications. A wastewater rate of some sort
should be at least considered.
• Capital contributions versus including costs in rates are options. Usually customers
are required to pay for major facilities constructed for them.
• Rate format will be influenced by whether residential customers have "volume
monitoring and recording devices" installed.
The City is currently moving to three potable rate blocks from the existing four blocks
format. Once water treatment is brought to modern day standards the water rate formats
should be restructured further.
This concept is illustrated below in Exhibit 74.
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Exhibit 74 Target Water Rate Block Format (Updated)
Recommended Target for
Current Rates
(m3 /month)
1 st block (0 to 50)
2nd block (51 to 125,000)
3rd block (over 125,000)
Format After Water Treatment Plant Built
Potable Water
Raw Water
To be determined
- Resource charge
- Piped water charge
Currently the 4t" block rate is being phased up to the 3rd block rate level which would
leave the final block at a relatively high level once the 3rd block rate is reached by the 4t"
block. It is recommended that the 3rd block be blended into the 2nd block and the 3rd
block rate maintains its wholesale level based on the cost analysis.
7.3.5 Recommendation Regarding Flat Rate Equivalent Volume
The flat rate is made up of a fixed charge allowance and a volumetric allowance,
combined into a single flat rate. The "built -in" volume in the flat rate can be determined
by deducting a portion of the service charge31 from the flat rate, then dividing the
volumetric rate into the remainder. This will yield the built -in volume. This was done in
the 1993 user rates report, in the 2002 Business Plan Report and previously in this
report in Section A. In all three cases recommendations have been made as to the
volume which would be appropriate. The results are summarized below in Exhibit 75.
31 The standard service charge is reduced to account for the fact that meters do not have to be
read for flat rate customers.
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Exhibit 75 Consumption Volume Built Into Flat Rate Charge (annual)
Report & Year
Actual
Recommended
1993 Rates Report32
50,000 gallons
70,000 gallons
(1992)
(227 m3)
(318 m3)
2002 Report
56,100 gallons
70,000 gallons
(2002)
(255 m3)
(318 m3)
Current Report
62,260 gallons
70,000 gallons
(2006)
(283 m3)
(318 m3)
Although the built -in consumption in the flat rate has increased from 227 m3 /year in
1992, to 255 m3 /year in 2002, and now 283 m3 /year, it has not yet reached 318 m3 /year.
It is recommended that the consumption allowance implicit in the flat rate is increased in
two steps from the current level of 283 m3 /customer /year to 300 m3 /customer /year in
2009 and 318 m3 /customer /year in 2010. The implementation of universal metering
could remove the need to adjust the flat rate level.
The 2002 Report also recommended that residential customers move from a standard
charge for all to one that reflects actual usage. This would require the installation of
meters to determine how much each customer uses. This policy was adopted, but has
not been implemented.
32 City of Saint John — Study and Update of Water and Sewage Rates — Coopers & Lybrand —
January 1993
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7.4 Water Rates Calculation Basis
7.4.1 AWWA Recommends Sound Funding Using Defendable User Rates
Adopted by the Board of Directors Jan. 25, 1965, revised Jan. 31, 1982, reaffirmed Jan.
25, 1987, revised Jan. 26, 1992, and June 21, 1998, revised January 16, 2005.
"The American Water Works Association (AWWA) believes that the public
can best be provided water service by self- sustained enterprises
adequately financed with rates and charges based on sound accounting,
engineering, financial, and economic principles."
To this end, AWWA recognizes the following principles that water utilities should
establish. Implementation of these principles can be balanced against other policy
objectives; however, no policies should be adopted that compromise the long -term
financial integrity of water utilities or their ability to provide service to customers. Basic
financing and rate principles include:
1. Water utilities' revenues from water service charges, user rates, and capital
charges (e.g., impact fees and system development charges) should be sufficient
to enable utilities to provide for:
• annual operation and maintenance expenses;
• capital costs (e.g., debt service and other capital outlays); and
• adequate working capital and required reserves.
2. Water utilities should account for and maintain their funds in separate accounts
from other governmental or owning entity operations. Water utility funds should
not be diverted to uses unrelated to water utility services. Reasonable taxes,
payments in lieu of taxes, and /or payments for services rendered to the water
utility by a local government or other divisions of the owning entity may be
included in the water utility's revenue requirements after taking into account the
contribution for fire protection and other services furnished by the utility to the
local government or to other divisions of the owning entity.
3. Water utilities should adopt a uniform system of accounts based on generally
accepted accounting principles. Utility practices should generally follow the
accounting procedures outlined in the water utility accounting textbook published
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by AWWA. Modifications may be made to satisfy the financial and management
control reporting needs of the utility and to meet the requirements of legislative,
judicial, or regulatory bodies.
4. Water rate schedules should be designed to distribute the cost of water service
equitably among each type and class of service. Non -cost of service rate - setting
practices may be appropriate in some situations, subject to legal review and
approval, provided they reflect market conditions, the benefits received by the
users of the service, and an appropriate balance of the goals and objectives
essential to the public good. Any non -cost of service rate - setting practice
implemented by a utility should be fully disclosed to its customers, regulators,
and the financial community. Such disclosure should identify each non -cost of
service rate - setting practice, its expected benefit, and its impact on the utility's
customers.
5. Water utilities should maintain asset records that detail sufficient information to
provide for the monitoring and management of the physical condition of
infrastructure. These asset records should also support planned and preventive
maintenance programs and budgets adequate to maintain the utility's assets at a
level of service consistent with good utility practice. Utilities should annually
provide comparative information to customers, the financial community, and the
general public about the utility's sustained capability to provide water service and
generate revenue levels necessary to protect the financial investment of others in
the utility. Such information could include historical expenditures for renewal and
replacement during each of the past several years, as well as the revenues that
would be generated under planned and adopted rates to support renewal and
replacement during each of the next several years.
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7.4.2 Rate Calculation Methodology
The AWWA M1 manual discusses the different types of customer classes and the
inherent differences between each class. Some of these differences can be illustrated
by recognizing that customers using treated water require facilities that raw water
customers do not need. Similarly large- volume industrial customers, wholesale
customers, and other large users tend to be served directly from major treated water
transmission mains, whereas smaller users are served by both large and small mains.
The demand patterns of various customers differ, depending on their peak day and
peak hour rates of demand relative to average demands.
As discussed in the introduction, most water utilities typically have three principal
customer classes the first being residential, the second being commercial, and the third
being industrial.
The water usage characteristics of various customer classes are often used as a
starting point for establishing water volumetric rate blocks.
The approach used in previous reports to calculate water rates is known as the Base
Extra Capacity (BEC) method. This is a method described in detail in the AWWA Rate
Manual M1. The following description of the BEC methodology was provided in the
2002 Report and still applies:
"The current rates were calculated using the BEC method. This is a procedure
developed by the American Waterworks Association (AWWA) for calculating
rates utilizing local system engineering and financial data. The main objective of
the BEC methodology is to achieve user pay. Once costs are identified by
category, they are allocated to volumetric and fixed rate components that are
selected to suit local conditions. System costs are normally covered by the
volumetric charge and the service charges normally cover metering, billing,
customer service and service connection costs. "
Another method described in the AWWA Rate Manual M1 is known as the commodity
demand method. Both are considered to be valid approaches. The BEC method results
in a block structure where large customers must go through the blocks that apply to
small customers. Although not stated in the final rates, there are generally three blocks
which essentially has a first block oriented to residential customers, a second block
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which most relates to commercial and small industrial and a third block that relates to
large industry. The commodity demand method essentially develops separate rates for
each customer class. The method used in this report develops three rate blocks based
on the BEC approach.
The water rate calculation methodology is based on principles established by the
AWWA and the CWWA. It draws on the methodology used previously in the 1992 and
2002 rates reports. The methodology has been tailored to the Saint John water system
circumstances, including such matters as a large number of flat rate customers, a few
very large water users, watershed management, water treatment levels and the planned
construction of water treatment facilities.
The calculation of water rates using the BEC methodology requires detailed system and
cost information. The process is carried out in a series of steps in following subsections.
A description of the steps follows along with references to the equivalent Exhibits where
the financial analysis is carried out:
Development of System Criteria (Exhibit 76 — This involves identifying water usage
and demand information related to average day, maximum day and maximum hour
demand as well a fire protection needs.
Allocation of Costs to Functional Categories (Exhibit 85 & Exhibit 86) — Budgets
normally provide information by object code such as labour, materials, equipment etc.
However, the cost allocations are done by water system function such as supply,
pumping, storage etc. Therefore budget costs must be organized under functional
headings.
7.4.3 Water System Criteria & Allocation Factors
The rate calculation uses a combination of engineering design /performance parameters
and budget costs by function. The allocation of costs utilizes percentage factors that are
based on system design data. The design data are used to establish the size of different
system components and this relationship is then used to allocate costs for each of the
system components. For example, water supply is designed to meet maximum day
demands, but also has to supply demand day -to -day. Costs related to supply are then
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translated into percentages which separate costs related to meeting maximum day
demands from those needed to supply day -to -day demands.
The system parameters used in the calculation of the volumetric user rates are set out
below in Exhibit 76.
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Exhibit 76 Water System Criteria & Cost Allocation Factors
Parameter
Calculation
Allocation Factor
System Design Data (City System — Excludes Coleson Cove & IPP west — see also Exhibit 33)
Average Day
34,442,000 m3 in 2007
94,400 m3 /day
Maximum Day
Estimated at 1.8 times average
169,900 m3 /day
Maximum Hour
Estimated at 1.5 times max day
254,900 m3 /day
Water Supply — Designed to meet maximum day — Fire flow limited to annual volume
used since fire flow is supplied from storage
Base Demand
94,400 - 169,900 = 56%
56%
- Primary
All supply costs except fluoridation
53%
- Secondary
Fluoridation — needed only for domestic use
3%
Max Day Extra Capacity
100% - 56% =44%
44%
Storage — Designed for total of Equalization + Fire + Emergency requirements
Equalization
38,400 m3 (8.4 million gallons)
55%
Fire Protection
17,200 m3 (3.8 million gallons)
25%
Emergency
13,900 m3 (3.1 million gallons)
20%
Total Storage
69,500 m3 (15.3 million gallons)
100%
Mains — Designed for greater of Max Hour or Fire + Maximum Day
Base Demand
96,400 - 254,900 = 37%
37%
- Primary (over 300 -mm)
Transmission (based on main length x dia)
22%
- Secondary (up to 300-
Distribution mains
15%
Max Hour Extra Capacity
100% - 37% = 63%
63%
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The percentages are derived as follows:
System Design Criteria - Improved daily supply meter and IPP readings resulted in
complete daily supply flow record availability for 2007. This information has been
analyzed below in Exhibit 77 so that actual 2007 max day ratios can be determined and
compared with the design parameters shown above.
Exhibit 77 Average & Maximum Day Supply Volumes - 2007
Total from Deduct Bulk/Raw Water Customers Net to
Source IPP Coleson Cove Total City
Gallons
Latimer Lake 9,969,444,287
Spruce Lake 7,854,001,461
Total 17, 823, 445, 749
Deduct Spillage 1,556,180,000
Net Annual 16,267,265,749 8,534,718,388 155,200,750 8,689,919,138 7,577,346,611
Average Day 44,567,851 23,382,790 425,208 23,807,998 20,759,854
Maximum Day 61,480,184 27,400,000 500,000 27,900,000 33,580,184
Max:Avg Day Ratio 1.38 1.17 1.18 1.17 1.62
Cubic Metres
Latimer Lake
45,315,656
Spruce Lake
35,700,007
Total
81,015,662
Deduct Spillage
7,073,545
Net Annual
73,942,117
38,794,174
705,458
39,499,632
34,442,485
Average Day
202,581
106,285
1,933
108,218
94,363
Maximum Day
279,455
124,545
2,273
126,818
152,637
Max:Avg Day Ratio
1.38
1.17
1.18
1.17
1.62
NOTE: 1) Data Source City
- Coleson Cover Max day estimated.
SJ 2007 supply flow data summary.xls
Summary
18- Jul -08
The total, average day and maximum day flow data in the left data column relate to the
system as a whole, including the water provided from the two lake sources to all
customers and a deduction for spillage at Latimer Lake to IPP. For the total supply (net
of spillage) the max day ratio was 1.38. Water sold to Coleson Cove and to IPP from
Spruce Lake passes through bulk mains not part of the normal City transmission and
distribution system. The City flow (net of Coleson Cove and IPP) is shown in the right
column. The 2007 City max day ratio was 1.62.
The max day ratio for design recommended in the Water Strategy Table 6 -2 and in the
ACWWA design manual is 1.8 time average day. The ratio would vary to a degree year
by year, so the design ratios are used for analysis. Note that the IPP max day ratio was
1. 17, much lower than the City as a whole.
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Storage — Future water storage requirements for Saint John are set out in Table 6 -2 of
the Water Strategy Study. Exhibit 78 illustrates how the required volumes were
calculated:
Exhibit 78 Water Storage Factors
Storage Component
Description
Volume
Equalization Storage
The volume of water needed
8,445,000 Igal
(55% of total)
on the maximum day of the
(38,400 m3)
year to meet peak demands
while the water plant supplies
at a constant rate for the day
Volume = 25% of max. day
Fire Storage
Based on local fire flow rates
3,780,000 Igal
(25% of total)
for durations set by the Fire
(17,200 m3)
Underwriters33. Varies from
1,500 Igpm for 2 hours to
4,500 Igpm for 4 hours
Emergency Storage
25% of (equalization + fire
3,056,250 Igal
(20% of total)
storage)
(13,900 m3)
Total Storage
15,281,000
(100 %)
(69,500 m3)
Current Storage
4,390,000 Igal
(20,000 m3)
Data Source — Water Strategy Table 6 -2.
Mains — Mains must be able to transmit the greater of fire demands on the maximum
day or maximum hour consumption demand. The fire share is allocated to the fire
protection chargeback to property taxes. For rate calculation purposes with fire
protection costs recovered elsewhere, the base cost share is calculated at 37% by
dividing max day by max hour. The extra capacity cost is the differential between the
base costs and the max hour costs and is 63 %.
The base costs have been further split to reflect transmission mains (primary system)
versus distribution mains (secondary system) costs. The distribution system is
considered to be mains sized up to 300 -mm diameter. Mains of these sizes are used for
local needs with service connections to customers. Mains larger than 300 -mm are
33 Also see Water Supply for Public Fire Protection 1999 — Fire Underwriters Survey — page 16
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considered to be transmission mains and generally used to transmit water over longer
distances. The costs are allocated based on a combination of length times diameter,
which is a parameter closely related to cost. A water system main inventory including
the cost times diameter information for distribution mains (up to 300 -mm diameter) and
transmission mains (larger than 300 -mm) is provided below in Exhibit 79.
Exhibit 79 Watermain Inventory Data for Cost Allocation Purposes
Thus base cost split for the secondary (distribution) system represents 15% of costs
and for the primary system (transmission) represents 22% (total base cost share 37 %).
7.4.4 Rate Formulation Features
The recommended 3 -block rate format is summarized in Exhibit 72. In the rate
calculation following this is referred to as the Base Case scenario. The proposed 2009
By -law rates are developed in 3 steps using this Base Case format.
The rates calculations include several new features:
• Watershed Costs Isolated & Emphasized —Watershed protection is essential
in order to preserve this precious resource. The City recognizes this and has
been buying land and investing in improved security. Watershed costs have been
segregated below in the rates calculations in order to raise the profile of this
issue and to isolate costs for allocation not only to the potable water rate but for
possible future raw water rates as well as the spillage rate. In addition a token
$0.005 /m3 has been added to all rates as a watershed reserve in order to
highlight the importance of investment in watershed protection as well as recover
funds from all watershed withdrawals for future investment.
• Service Charge Beefed Up — An allocation of 20% of system (mains) costs is
made to the service charge based on the following:
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By Length
By Length x Diameter I
By Capacity x Diameter
Length
Total
Base
Length
Total
Base
Length
Total
Base
(m)
%
%
(m)
%
%
(m)
%
%
Up to 300 -mm
317,580
72%
27%
65,554
42%
15%
11,392
15%
6%
350 to 1050 -mm
107,868
24%
9%
69,781
44%
17%
39,455
52%
19%
1200 -mm & Over
16,289
4%
1%
22,424
14%
5%
24,558
33%
12%
Total
441,737
100%
37%
157,759
100%
37%
75,405
100%
37%
SJ main inventory 2007.xls
12- Aug -08
Thus base cost split for the secondary (distribution) system represents 15% of costs
and for the primary system (transmission) represents 22% (total base cost share 37 %).
7.4.4 Rate Formulation Features
The recommended 3 -block rate format is summarized in Exhibit 72. In the rate
calculation following this is referred to as the Base Case scenario. The proposed 2009
By -law rates are developed in 3 steps using this Base Case format.
The rates calculations include several new features:
• Watershed Costs Isolated & Emphasized —Watershed protection is essential
in order to preserve this precious resource. The City recognizes this and has
been buying land and investing in improved security. Watershed costs have been
segregated below in the rates calculations in order to raise the profile of this
issue and to isolate costs for allocation not only to the potable water rate but for
possible future raw water rates as well as the spillage rate. In addition a token
$0.005 /m3 has been added to all rates as a watershed reserve in order to
highlight the importance of investment in watershed protection as well as recover
funds from all watershed withdrawals for future investment.
• Service Charge Beefed Up — An allocation of 20% of system (mains) costs is
made to the service charge based on the following:
Review of Rates and Rate Structure Options
INTIMIT-Iff e
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Final Report
October 14, 2008
City of Saint John Page 159 of 198
- Increasing emphasis is being placed on system replacement. By including
some costs in the service charge ensures that all customers pay at least
some charges in relation to the size of their service, independent of how
much is used month -to- month.
- This allocation increases fixed charge revenues to 17% of water rate
revenues to provide better revenue stability. It is recognized that at this
time the flat rate is a fixed charge revenue, but it is anticipated that
universal metering will likely be implemented and the increase in the
service charge will better position the metered rates and provide better
revenue security post - implementation of universal metering.
• Spillage Rate —A calculation is done for a spillage rate, which according to the
agreement with Irving Paper is to be based on an analysis of actual costs in
2008.
A By -law For All scenario is calculated based on the 2007 rates following the
recommended By -law rates calculations. This scenario incorporates the Lapsed
Agreement customers into the By -law rates.
7.4.5 Consumption Data for Rate Calculations
The following adjustments are made to the consumption profile used to calculate the
water and sewage rates are calculated for two scenarios, a Base Case which applies to
billings currently billed at By -law rates and a By -law For All scenario where the Lapsed
Agreement customer are included in the By -law rates calculation. The impact on the
consumption profile included in the rate calculation is provided following in Exhibit 80.
The Base Case incorporates a total consumption level of 21,553,687 m3. The By -law
For All scenario add 38,741,996 m3 consumption currently at Lapsed Agreement rates
for a total volume incorporated in the By -law rate scenario of 60,295,683 m3.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
193
Final Report
October 14, 2008
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City of Saint John
7.5 Step 1 — Adjust 2007 Rates to Meet Actual Revenue Requirements
7.5.1 Budget Update
Page 161 of 198
Budget water and sewage systems net expenditures (from user rates) and revenues as
well as projected actual revenues are summarized below in Exhibit 81.
Exhibit 81 Budget Expenditures & Revenues Compared to Projected Actual
Revenues —2007
System
Budget
Projected Actual
Revenues
Net Expenditures
Revenues
Water
14,640,674
13,179,026
14,224,634
Sewage
11,999,327
13,460,026
11,623,127
Total
$26,640,002
$26,640,002
$25,847,761
According to the figures stated in the 2007 budget, water charge revenues would result
in a shortfall of about $1.5 million compared to water system expenditures supported by
rates which is offset by about $1.5 million in sewage revenue surplus compared to
sewage expenditures. The analysis of actual revenues indicates that water /sewage
revenues are much closer to the respective expenditure budgets. For example, water
rates revenues are projected at $14,224,634 compared to expenditures of $14,640,674
for a shortfall of $416,040, much less than the shortfall budgeted. Sewage has similar
results with revenues projected at $11,623,128 compared with sewage expenditures of
$11,999,327 for a shortfall of $376,201 - see Exhibit 82.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
195
Final Report
October 14, 2008
City of Saint John
Exhibit 82 2007 Rates Adjusted to Recover Budget Expenditures
Page 162 of 198
Sewage 11,623,127 11,999,328 376,201 3.1%
Total Water + Sewage 25,847,761 26,640,002 792,241 3.1%
Sewage Surcharge Calculation
Estimated Actual Revenue
Gross Sewage Chargeable Water Revenues - Before Water Rate Increase
Rate Increase to Balance Ex enditures
Water Rate Increase ( %)
Sewage Chargeable
Gross Sewage Chargeable Water Revenues - After Water Rate Increase
Revenue
Increase
90.70%
Yes
No
Total
Required
$ %
Water
By -law
Flat Rate
5,284,733
0
5,284,733
Metered
5,394,362
0
5,394,362
Specials
2,662,217
2,662,217
Total By -law
10,679,095
2,662,217
13,341,312
13,757,352
416,040 3.1%
Other
Spillage
0
124,805
124,805
124,805
0
Misc
0
31,306
31,306
31,306
0
Lapsed Agreements
0
727,210
727,210
727,210
0
Total Other
0
883,322
883,322
883,322
0
Total
10,679,095
3,545,539
14,224,634
14,640,674
416,040
Sewage 11,623,127 11,999,328 376,201 3.1%
Total Water + Sewage 25,847,761 26,640,002 792,241 3.1%
Sewage Surcharge Calculation
Gross Sewage Chargeable Water Revenues - Before Water Rate Increase
10,679,095
Water Rate Increase ( %)
3.1%
Gross Sewage Chargeable Water Revenues - After Water Rate Increase
11,012,115
Sewage Chargeable ( %)
90.70%
Net Sewage Chargeable Water Revenues - After Water Rate Increase
9,987,989
Sewage Budget Expenditure - Revenues Required
11,999,327
Sewage Surcharge ($)
120%
2007 Saint John Rate Calc Balanced Rate July 31 2008.xls Rates Impact 21- Jul -08
7.5.2 Full Cost Recovery Rates - Current Rate Format
The adjustment required to the current water and sewage rates in order to achieve full
cost recovery with expenditures in the two systems allocated to the equivalent rates is
calculated in Exhibit 83.
In order to fully recover 2007 budget water costs from the water rate and sewage costs
from the sewage rate, water rates need to increase by 3.1%. The sewage surcharge
would remain unchanged at 120 %, calculated as follows:
Revenues required from rates and other charges for water were $14,640,674 and for
sewage were $11,999,328 for a total of $26,640,002.
For water, $883,322 revenues are unrelated to rates, leaving $13,757,352 revenues
required from By -law rates. Existing rates generate $13,341,312. The revenue increase
required of $416,040 required a water rate increase of 3.1 %.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
im
Final Report
October 14, 2008
City of Saint John
Page 163 of 198
For sewage, the 3.1% water rate increase increases gross water revenues chargeable
for sewage to $11,012,115. At 90.7% net water revenues chargeable for sewage are
$9,987,989. A surcharge of 120% will generate the required revenues of $11,999,327.
A summary of the current rates and rates adjusted for full cost recovery is provided
below in Exhibit 83.
Exhibit 83 2007 User Rates Adjusted for Full Cost Recovery
Water Rates (bimonthiv)
Increase= 3.1%
Volume
Existing Rates
New Rates
From
To
Rate
From
To
Rate
1 st
0
100
$ 0.8955
0
100
$ 0.923
2nd
101
50,000
$ 0.6406
101
50,000
$ 0.660
3rd
50,001
250,000
$ 0.3692
50,001
250,000
$ 0.381
4th
250,001
99,000,000
$ 0.1128
250,001
99,000,000
$ 0.116
5th
Service
Size mm
Monthly
Bimonthly
Size mm
Monthly
Bimonthly
Charge
16
$10.82
$21.64
16
$11.16
$ 22.311
19
$15.82
$31.64
19
$16.31
$ 32.621
25
$23.31
$46.62
25
$24.03
$ 48.065
38
$40.70
$81.40
38
$41.96
$ 83.923
50
$60.81
$121.62
50
$62.70
$ 125.390
75
$109.74
$219.48
75
$113.14
$ 226.284
100
$200.77
$401.54
100
$206.99
$ 413.988
150
$350.75
$701.50
150
$361.62
$ 723.247
200
$500.72
$1,001.44
200
$516.24
$ 1,032.485
250
$700.82
$1,401.64
250
$722.55
$ 1,445.091
Sewer Surcharge
120%
120%
2007 Saint John Rate Calc Balanced Rate July 31 2008.xls Impact 11- Aug -08
The impact of these rate changes is uniform to all customers at 3.1% increase in
charges. Examples of the impact are provided below in Exhibit 84.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
197
Final Report
October 14, 2008
City of Saint John Page 164 of 198
Exhibit 84 Impact of Full Cost Recovery - 2007 Rates
2007 Saint John Rafe Calc Balanced Rafe July 312008.xls Impact 11- Aug -08
7.6 Step 2 - Convert 2007 Water Rates to Recommended Format
7.6.1 Features of New Format
The New Format rate calculation incorporates the following:
• Emphasis on Watershed Cost Identification -The rate calculation isolates
watershed costs so they are clearly identifiable in the rate. In addition a modest
allowance for a "Watershed Reserve" of $0.005 /m3 is introduced to emphasize
the importance of watershed funding. to promote additional investment and to
generate dedicated funding for this valued resource.
• Administration Rate -A 10% share of water administration costs is isolated
and built into all volumetric rates to ensure that all categories contribute to
administration costs - particularly in regard to the spillage rate.
• Increase Flat Rate Consumption Allowance -As discussed previously in
Section 2.5.2, it is recommended that the consumption allowance intrinsic in the
flat rate be increased in two steps from the current level of 283 m3 /customer /year
to 300 m3 /customer /year in 2009 and 318 m3 /customer /year in 2010.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
im
Final Report
October 14, 2008
Billing Bimonthly
Existing Rates
New Rates
Annual Impact
Consumption m3 Meter
Description
Annual
Bimonthly
Size mm
Water
Sewer
Total
Water
Sewer
Total
$
%
Charges for Different
Customers • Flat rate annual
& Metered
customers bimonthly
Flat Rate Customer
283
16
53
63
116
54
65
120
4
3.1%
Small Commercial
2,000
333
25
286
343
628
294
353
648
19
3.1%
Small Industrial
5,000
833
25
606
727
1,333
625
750
1,374
41
3.1%
Apartments
10,000
1,667
50
1,215
1,458
2,672
1,252
1,503
2,755
83
3.1%
University
30,000
5,000
100
3,630
4,356
7,986
3,743
4,491
8,234
248
3.1%
Industry
70,000
11,667
100
7,901
9,481
17,381
8,146
9,775
17,920
539
3.1%
Hospital
250,000
41,667
150
27,418
32,902
60,320
28,268
33,922
62,190
1,870
3.1%
Brewer
500,000
83,333
200
45,361
54,433
99,794
46,767
56,120
102,887
3,094
3.1%
Heavy Industry
1,000,000
166,667
200
76,123
91,348
167,471
78,483
94,180
172,663
5,192
3.1%
Heavy Industry
1,600,000
266,667
250
109,166
0
109,166
112,550
0
112,550
3,384
3.1%
Heavy Industry
5,000,000
833,333
250
173,086
0
173,086
178,451
0
178,451
5,366
3.1%
2007 Saint John Rafe Calc Balanced Rafe July 312008.xls Impact 11- Aug -08
7.6 Step 2 - Convert 2007 Water Rates to Recommended Format
7.6.1 Features of New Format
The New Format rate calculation incorporates the following:
• Emphasis on Watershed Cost Identification -The rate calculation isolates
watershed costs so they are clearly identifiable in the rate. In addition a modest
allowance for a "Watershed Reserve" of $0.005 /m3 is introduced to emphasize
the importance of watershed funding. to promote additional investment and to
generate dedicated funding for this valued resource.
• Administration Rate -A 10% share of water administration costs is isolated
and built into all volumetric rates to ensure that all categories contribute to
administration costs - particularly in regard to the spillage rate.
• Increase Flat Rate Consumption Allowance -As discussed previously in
Section 2.5.2, it is recommended that the consumption allowance intrinsic in the
flat rate be increased in two steps from the current level of 283 m3 /customer /year
to 300 m3 /customer /year in 2009 and 318 m3 /customer /year in 2010.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
im
Final Report
October 14, 2008
City of Saint John Page 165 of 198
• Three Rate Blocks — The 2002 plan adopted by Council was to move in steps
from five (5) to three (3) rate blocks in two steps. The four (4) rate block step has
been implemented. The proposed rate format takes moves to three (3) blocks.
• Block Volumetric Limits — The proposed rate moves to a three (3) block format
by collapsing the 3rd block into the 2nd block.
• Final Block Level — The City has been moving to three blocks by increasing the
final block to eventually merge with the much higher 3rd block level. The 2002
report recommended that the final block be at lower wholesale levels. The
following rate review recalculates all blocks based on a detailed cost analysis.
• Lapsed Agreements - The two lapsed agreement customer (IOL & IPP)
revenues are included at the level currently being paid. It is not recommended
that this situation continue; their billings should be brought to an agreed level.
However, the current level is assumed in Scenario 1 to reflect the realities of the
current situation and until the lapsed agreements have been renegotiated.
• Coleson Cove - The exception relates to Coleson Cove. Currently their
consumption is split between two meters and each billing steps through the
block rates meaning the billings go through the initial blocks two times. This is a
standard approach used by utilities — one bill per service connection — and is
applied to all accounts. However, Coleson Cove represents a single supply
through a single pipe, split only at the terminus of the pipe. It is recommended
that it be billed as a single account, which would lower the bill amount since it
would only go through the higher cost initial rate blocks a single time. It is
recommended that their billings be combined, which is allowable under the City's
By -law # M -1634. The rate is calculated assuming Coleson Cove is issued a
combined billing.
34 Reference is in "A By -law Respecting Water and Sewerage" section 43(5) (b) which states
"The Commissioner, if he deems it expedient for the purposes of this by -law, may, with respect to
a property on which more than one water meter is being used, cause a singe invoice to be
issued which shows a service charge for each meter and one combined consumption charge for
the water that was supplied to the property."
Review of Rates and Rate Structure Options
INTIMIT-Iff e
..
Final Report
October 14, 2008
City of Saint John Page 166 of 198
Note that the current 2008 rates are unchanged from 2007.
7.6.2 Revenue Requirements by Function
Water costs are broken down by functional category so they can be allocated to
different rate blocks based on system design criteria. Functional categories relate to
different parts of the system such as supply, distribution, customer service etc. Budget
costs are allocated to functional categories in order to allow them to be assigned to
appropriate rate components. The functional categories are selected based on what are
most appropriate for the rate format selected. In this way the different rate components
are related to the appropriate cost categories.
Sewer costs need not be allocated by function since costs are recovered by a flat
percentage surcharge on the total water bill to customers with sewage service.
2007 water operating and fiscal costs and non -user rate revenues are based on:
• OM &A Costs - Water operating budget costs are allocated to functional
categories in Exhibit 85. Shared costs are split 50:50 between water and
sewage. Water shared costs are allocated using the % share of water operating
costs by function. Adjustments are made to the budget costs as follows:
- Musquash power costs are budgeted under "Pumping" and are moved to
the "Watershed" category.
- Musquash royalty costs are also budgeted under "Pumping" and are
moved to the "Watershed" category.
- 20% of System costs are considered related to service connections and
are reallocated to the Customer cost category under "Services" in order to
move them from the volumetric rate to the service charge calculation
(explained above in Section 7.4.4).
- Hydrant and meter costs are budgeted as one item. Based on City advice
30% of these costs are reallocated to the Customer Meters cost category
in order for them to be included in the service charge calculation.
• Fiscal Costs - Fiscal costs are assumed to be system costs as shown in Exhibit
86. This will change with the construction of water treatment.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
200
Final Report
October 14, 2008
City of Saint John Page 167 of 198
• Other Revenues - Other revenues are allocated to functional categories in
Exhibit 86. The net amount is the revenue required from user rates. For this
analysis the current level of Lapsed Agreement revenues from IPP and IOL are
deducted in order to arrive at the revenue requirements from By -law user rates.
Also the current level of fire protection revenues charged to the general levy
($1,708,119) is also deducted. The City should consider moving to the
engineering basis level which for 2007 is calculated at $1,903,118 — see Exhibit
35.
• Water Rate Revenue Requirements — Other revenues are deducted from total
expenditures (OM &A plus fiscal services) in Exhibit 86. The residual is the
amount to be recovered from the user rates.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
201
Final Report
October 14, 2008
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City of Saint John Page 170 of 198
7.6.3 Functional Costs Allocated to Rates Components
Allocation factors provided in Exhibit 76 are applied against the functionalized costs
below in Exhibit 87 in order to allocate the functionalized costs to rate setting
components. The allocations are as follows:
Costs for service pipes, customer meters and billing /collection are customer - related and
directly assigned to the service charge. This is standard practice.
Residual fire protection costs are also allocated to the service charge on the basis that
they are unrelated to actual usage. This also is common practice.
A share of water administration costs (10 %) is isolated for later allocation across all
metered rates on a uniform basis. This is to ensure that all users contribute to
administration on an equal footing.
Some system costs (5 %) are also allocated to the service charge. These costs could be
recovered either from the volumetric rate or the service charge. It is appropriate to
recover a portion of the capital share of system costs from the service charge so that
customers can contribute to main replacement whether or not they consume water.
Assigning some system costs to the service charge also increases the share of
revenues from the fixed charge portion of the rate calculation to 17% which helps
stabilize revenues.
The allocation factors are applied to the costs allocated to the volumetric rates. For
example, using the percentages from Exhibit 76, treatment costs are allocated 53% to
"Base Primary" costs ($1,266,382), 3% to "Secondary Primary" ($71,682) and 44% to
"Maximum Day" ($1,051,336).
The various rates components amounts are totalled and transferred to the service
charge and volumetric charge calculation schedules.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
204
Final Report
October 14, 2008
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City of Saint John Page 172 of 198
7.6.4 Service Charges
The 2007 customer data used in the proposed rate calculations is provided below in
Exhibit 88.
Exhibit 88 Water Customer Data — Actual 2007
Meter Size (mm)
Number
16
1,276
19
640
25
391
38
253
50
225
75
59
100
21
150
11
200
4
250
5
Total
2,885
Flat Rate Units
16,844
Total
19,729
There were 19,729 water customers, including 2,885 metered and 16,844 flat rate.
When calculating the service charges for each meter size, costs are allocated to each
meter size using service charge cost allocation ratios. Each meter size has a ratio which
reflects the relative cost related to the meter size. There are different ratios depending
on the nature of the cost. For example, it costs the same to mail a bill no matter what the
meter size. In that case each meter size would have a uniform ration of 1.0, which is
then used to allocate the costs uniformly to each meter size. The cost to supply and
repair larger meters is more than that for small meters. In this case costs related to
higher ratios are used for larger meters than for smaller meters.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
206
Final Report
October 14, 2008
City of Saint John Page 173 of 198
There are four sets of cost allocation ratios used, depending on the type of cost, as
follows:
Uniform Ratio — Billing and collection costs are allocated on a uniform basis
independent of meter size. Since flat rate customers are sent two bills a year, and
metered customers 6 bills a year, they attract 1/3 of the annual bill cost allocated to
metered customers.
Cost Ratio — This ratio is used to allocate service connection costs. It is calculated
based on the relative cost of investing in service connections and meters, by size.
Modified Cost Ratio —This ratio is used to allocate meter costs. Flat rate customers
have been allocated a smaller share, 10 %, of meter costs. This is to reflect the whole
system benefiting from the fact that large customers are metered. This is consistent with
past practice.
Capacity Ratio — This is used to allocate fire protection costs. It is tied to the
relationship between size and capacity. The relative flow potential for various pipe sizes
is dependent of the diameter raised to a power of 2. It is used for fire protection because
fire protection is capacity- oriented.
Note that the base ratio of 1.0 relates to a 19 -mm (3/4 -inch) meter. All other ratios are in
relation to this base.
Cost allocation ratios by meter sized are based on AWWA M1 rate manual. The ratios
are shown below in Exhibit 89.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
207
Final Report
October 14, 2008
City of Saint John Page 174 of 198
Exhibit 89 Service Charge Cost Allocation Ratios
Category
Uniform
Cost
Modified Cost
Capacity
Flat Rate
0.33
0.8
0.1
0.6
16 -mm
1
0.8
0.8
0.6
19 -mm
1
1.0
1.0
1.0
25 -mm
1
1.4
1.4
1.8
38 -mm
1
1.8
1.8
4.0
50 -mm
1
3.8
3.8
7.1
75 -mm
1
8.0
8.0
16.0
100 -mm
1
14
14
28
150 -mm
1
21
21
64
200 -mm
1
29
29
114
250 -mm
1
38
38
178
Source: AWWA manual M1
The service charges are calculated in Exhibit 90 based on the allocated costs and
number of customer by meter size or flat rate.
Each cost category is allocated using the appropriate cost allocation ratios to each
meter size or flat rate and the values are totaled and converted to monthly charges. The
monthly charges are rounded up to the nearest penny. Annual charges are 12 times
monthly. Revenues are then calculated based on the service charges and number of
meters in order to cross check against revenue requirements.
This service charge calculation is a little more elaborate than the 2002 study and uses
allocation factors updated to the latest AWWA M1 manual. Previously the cost and
capacity ratios were combined. The result is not dramatic, but there are higher charges
for flat rate and large meters, lower for mid -sized meters.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
208
Final Report
October 14, 2008
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City of Saint John Page 176 of 198
7.6.5 Volumetric Rates
The largest users have part or all of their consumption billed under By -law rates and
include Coleson Cove (all usage By -law rates — 2 accounts), IPP (one account By -law,
second account agreement rate) and IOL (initial usage By -law, usage above threshold
agreement rates). These customers have signed special supply agreements and have
been termed "Specials ". The remaining metered customers are referred as "Normal"
customers (not served by agreement). The combined Specials and Normal water
volume billed to the two categories at By -law rates in 2007 totaled 16,500,487 m3.
Flat rate customers are estimated to actually use about 318 m3 /cust /year on average.
The consumption level implicit in the current rates is 283 m3 /cust/year. For the 2007 rate
calculation purposes, a level of 300 m3 /cust /year or 25 m3 /cust/month is used as the
penultimate step in their phase -in to 318 m3 /cust/year. On this basis flat rate
consumption is estimated at 5,053,200 m3.
A breakdown of usage is provided in Exhibit 88.
Exhibit 91 Customer Water Consumption — 2007 — Base Case
Range m3 bimonthly)
Metered
Flat
By -law
Blocks From To
Normal
Specials
Total
Rate (1)
Total
1st 0 100
1,165,350
1,800
1,167,150
5,053,200
6,220,350
2nd 101 250,000
5,688,782
4,498,200
10,186,982
10,186,982
3rd 250,001 over
0
5,146,355
5,146,355
5,146,355
Raw
0
0
Total By -law
6,854,132
9,646,355
16,500,487
5,053,200
21,553,687
Lapsed Agreement Customers
IPP
37 019 810
IOL
Total Lapsed Agreement
Total Consumption
NOTE: (1) Flat Rate Calculation
Customers 16,844
m3 /cust. 300
Volume (m) 5,053,200
2007 Saint John Rate Option 1 Oct 3 2008 v2.xls 1 Customer Data
Review of Rates and Rate Structure Options
11MVITTIT-Iff e
210
09- Oct -O8
I f
1,722,186
38,741,996
60,295,683
Final Report
October 14, 2008
City of Saint John Page 177 of 198
Total 2007 By -law consumption for rate setting purposes by metered and by flat rate
customers is estimated at 21,553,687 m3.
The two Lapsed Agreement accounts with consumption not billed at By -law rates are
IPP and IOL and used a total of 38,741,996 m3.
Total 2007 billable consumption by metered By -law, flat rate and Lapsed Agreement
Customers was 60,295,683 m3.
Costs are allocated to the water rate blocks in Exhibit 92, as follows:
Musquash pumping costs are allocated to the 3rd block and raw water based on the need
to refill Spruce Lake being driven by the need to supply the high demands caused by the
largest water users.
A 50% higher allocation of watershed costs is allocated to the spillage rate due to the
fact that these customers, at a very low cost, are able to take advantage of a resource
that is managed for the benefit of City water system users.
A nominal rate of $0.005 /m3 has been included to be contributed to a watershed reserve
as an added levy for watershed usage, much like the Provincial royalty charge. It is to be
used to upgrade and protect the watershed.
The maximum day and maximum hour "extra capacity" factors are based on the
estimated peak usage ratios provided at the bottom of Exhibit 92.
Note that a sample calculation is done for a spillage rate, which according to the
agreement with Irving Paper is to be based on an analysis of actual costs in 2008. The
calculated rate of $0.101/m3 is about 5 times as high as the 2007 rate of $0.01925/m3.
The calculation indicates that the spillage rate is too low - watershed costs alone
represent $0.0382 /m3. A final rate calculation would require the removal of the spillage
revenues in Exhibit 86 and the addition of estimated spillage volumes in Exhibit 92.
Review of Rates and Rate Structure Options
INTIMIT-Iff e
211
Final Report
October 14, 2008
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City of Saint John Page 179 of 198
7.6.6 Flat Rate
The water flat rate is calculated below in Exhibit 93 based on the flat rate service charge
component in Exhibit 89 and a consumption allowance of 300 m3 per year (25 m3 per
month).
Exhibit 93 Flat Rate Calculation — 2007 — Base Case
Component
Calculation
Charge
Service Charge
$6.47 /month
Commodity Charge
300 m3 - 12 x $0.824/m3
$20.60 /month
Total
$27.07 /month
Annual
$324.84
7.6.7 Sewage Surcharge
The sewage surcharge is calculated below in Exhibit 94. The actual proportion of
"normal" water revenues (excluding large water -only "special" customers Coleson Cove,
IPP and IOL) was 90.7 %. This is applied to the equivalent water rate revenues from flat
rate, service charge and normal metered customers. The wastewater surcharge is
calculated at 127 %.
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Exhibit 94 Sewage Surcharge Calculation — 2007 — Base Case
Description Total
Sewage Billing Factor Calculation
Total 2007 projected actual sewage revenues 11,631,921
Surcharge 120%
$ Water revenues charged for sewer 9,693,268
Total water user revenues 10,687,175
% Water revenues charged for sewer 90.7%
Sewer Surcharge Calculation
User rate water revenues
Flat Rate
5,471,605
Service Charge
1,073,205
Metered - Normal
3,946,859
Total
10,491,669
Water Revenues with Sewer Charge ( %)
90.7%
Water Revenues with Sewer Charge ($)
9,515,943
Wastewater revenue required
11,999,327
Sewer Surcharge
127%
2007 Saint John Rate Base Case Oct 11 2008.xls 11- Oct -08
6 Sewage Surcharge
7.6.8 Rates Summary
The existing rate format full cost rates and the new format rates are compared below in
Exhibit 95 for 2007/2008 rates.
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October 14, 2008
City of Saint John Page 181 of 198
Exhibit 95 Existing Rates vs. New Format Rates - 2007 Base Case
Charge
Volume
2007 - Existing
Format
2007
- New Format
$ /m3
From
To
Exist
103.1%
From
To Rate
1 st
0
100
0.89553
$0.9233
0
100 $0.824
2nd
101
50,000
0.64059
$0.6604
101
250,000 $0.525
3rd
50,001
250,000
0.36915
$0.3806
250,001
99,000,000 $0.185
4th
250,001
99,000,000
0.11280
$0.1163
Spillage
$0.094
5th
Service
Meter Size
Meter Size
Charge
16
$
21.64
$22.31
16
$30.92
19
$
31.64
$32.62
19
$37.84
25
$
46.62
$48.07
25
$51.68
38
$
81.40
$83.92
38
$67.96
50
$
121.62
$125.39
50
$135.56
75
$
219.48
$226.28
75
$281.70
100
$
401.54
$413.99
100
$489.90
150
$
701.50
$723.25
150
$769.92
200
$
1,001.44
$1,032.48
200
$1,106.30
250
$
1,401.64
$1,445.09
250
$1,498.34
Flat Rate
Annual
$316.36
$ 326.17
$324.84
Sewer Surcharge
120%
127%
2007 Saint John Rate Base Case Oct 11 2008.xls 8 Impact 11- Oct -08
7.6.9 Impact
The impact on a range of customers of the conversion to the new rate format using
2007 budget data is provided below in Exhibit 96.
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Exhibit 96 Impact of Recalculated Water & Sewage Rates - 2007 Base Case
2007 Saint John Rate Base Case Oct 112008.xls 8 Impact 11- Oct -08
7.6.10 Observations
The following observations are made about the 2007 Base Case rates:
• 3.1 % Underlying Water Rate Increase - There is an underlying water rate
increase of 3.1 % to reach full cost recovery for the 2007 budget. This increases
costs across the board since it applies to all and the sewer surcharge remains at
the existing level of 120 %.
• Coleson Cove - The impact of the new format rates with two bills would have
been a bimonthly bill increase of about $16,500. Instead by combining bills there
is a decrease of about $6,400 bimonthly. Thus the total impact of one bill versus
two bills under the new format is about $140, 000 annual savings for Coleson
Cove. The single new bill compared to existing rates is about 4% less. Since this
is spread across all customers, there is very little impact on individual customers.
• Flat Rate Customers - The conversion to the proposed rate format using 2007
budget expenditures results in flat rate customers paying a little more ( +3 %) due
to the increase in their implicit consumption level from 283 m3 /year to
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October 14, 2008
Consumption m3
Meter
Size mm
2007 -
Existing Format
2007
- New Format
Change
Description
I Annual Bimonthly
Water Sewer Total
Water Sewer Total
$
%
Flat Rate Customers Annually
Flat Rate Customer
300
16
326
391
718
325
413
737
20
3%
Metered Customers
Bimonthly
Small Commercial
2,000
333
25
294
353
648
257
326
582
(65)
-10%
Small Industrial
5,000
833
25
625
750
1,374
519
659
1,178
(196)
-14%
Apartments
10,000
1,667
50
1,252
1,503
2,755
1,040
1,321
2,362
(393)
-14%
University
30,000
5,000
100
3,743
4,491
8,234
3,145
3,994
7,139
(1,095)
-13%
Industry
70,000
11,667
100
8,146
9,775
17,920
6,645
8,439
15,084
(2,836)
-16%
Hospital
250,000
41,667
150
28,268
33,922
62,190
22,675
28,797
51,472
(10,718)
-17%
Brewer
500,000
83,333
1 2001
46,767
56,120
102,887
44,886
57,005
101,892
996
-1%
Coleson Cove 1
1,500,000
250,000
250
110,612
0
110,612
0
0
0%
Coleson Cove 2
422,068
70,345
250
42,236
0
42,236
0
0
0%
1,922,068
320,345
250
152,848
0
152,848
145,791
0
145,791
Coleson Cove Total
7,057
-5%
IOL By -law
6,087,922
1,014,654
250
199,538
0
199,538
274,239
0
274,239
74,700
37%
IOL Lapsed Ag.
1,722,186
287,031
25,259
0
25,259
25,259
0
25,259
0
0%
IOL Total
74,700
33%
7,810,108 1,301,685
224,797 0 224,797
299,497 0 299,497
IPP By -law
1,636,364
272,727
200
112,842
0
112,842
136,590
0
136,590
23,748
21%
IPP Lapsed Ag
37,019,810
6,169,968
95,943
0
95,943
95,943
0
95,943
0
0%
IPP Total
23,748
11%
38,656,174 6,442,696
208,785 0 208,785
232,533 0 232,533
2007 Saint John Rate Base Case Oct 112008.xls 8 Impact 11- Oct -08
7.6.10 Observations
The following observations are made about the 2007 Base Case rates:
• 3.1 % Underlying Water Rate Increase - There is an underlying water rate
increase of 3.1 % to reach full cost recovery for the 2007 budget. This increases
costs across the board since it applies to all and the sewer surcharge remains at
the existing level of 120 %.
• Coleson Cove - The impact of the new format rates with two bills would have
been a bimonthly bill increase of about $16,500. Instead by combining bills there
is a decrease of about $6,400 bimonthly. Thus the total impact of one bill versus
two bills under the new format is about $140, 000 annual savings for Coleson
Cove. The single new bill compared to existing rates is about 4% less. Since this
is spread across all customers, there is very little impact on individual customers.
• Flat Rate Customers - The conversion to the proposed rate format using 2007
budget expenditures results in flat rate customers paying a little more ( +3 %) due
to the increase in their implicit consumption level from 283 m3 /year to
Review of Rates and Rate Structure Options
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October 14, 2008
City of Saint John Page 183 of 198
300m' /year. Other changes including reduced metered rate are offset by the
increased service charge imbedded in the flat rate.
• Most Metered Customers - Most metered customers receiving reduced bills
(about 15% in those sampled) due to lower rates in the 1 st and 2nd blocks. This
reflects a move towards rectifying the historic imbalance between flat rate and
metered rates with flat rate customers paying for less than they consume.
• Largest Customers - As consumption increases, the benefit diminishes. Two
customers see increases, IOL ( +33 %) and IPP (11 %). This occurs with
customers reaching the current 4t" block rate, which is much lower at $0.1163/m3
than the final block in the new format rates at $0.195/m3. Note that this impact
would occur in any case and in fact would be even more under the current City
plan to collapse the final block the current 3rd block level of $0.3806/m3. IOL has
a higher increase than IPP because their current By -law rate consumption is
much larger.
7.7 Step 3 — Increase Rates to Meet 2009 Financial Plan Requirements
7.7.1 Features of 2009 Rates
Water - The user rate requirements for water increase from $13.2 million in the 2007
budget to $16.3 million in 2009 as the cost water treatment plant investment starts to
impact (see Exhibit 58). Looking forward to 2012, this would have required rate
increases of 8% annually over the five -year period. The projected 2009 rates include the
projected 8% increases projected to be needed for 2008 and again for 2009. This is
equivalent to a single increase of 16.6% from 2007 to 2009. Since in the event the 2008
rates were not increased, the combined impact is felt in 2009.
Sewage — Sewage is similar to water, but with lower rate increases due to the falling off
of major capital investment in sewage treatment as the program winds down. The user
rate requirements for sewage increase from $13.5 million in the 2007 budget to $16.2
million in 2009 (see Exhibit 59). Looking forward to 2012, this would have required rate
increases of 6% annually over the five -year period. The projected 2009 rates include the
projected 6% increases projected to be needed for 2008 and again for 2009. This is
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Final Report
October 14, 2008
City of Saint John Page 184 of 198
equivalent to a single increase of 12.4% from 2007 to 2009. Since in the event the 2008
rates were not increased, the combined impact is felt in 2009.
7.7.2 Rates (Proposed for 2009)
The proposed base rates for 2009 are provided below in Exhibit 97.
Exhibit 97 Proposed Rates — 2009 Base Case
Water Rates (bimonthiv)
Volume
2007 - New Format
2009
- New Format
$ /m3
From To
Rate
From
To Rate
1 st
0 100
$0.8240
0
100 $0.961
2nd
101 250,000
$0.5250
101
250,000 $0.612
3rd
250,001 99,000,000
$0.1850
250,001
99,000,000 $0.216
4th
Spillage
$0.0940
Spillage
$0.110
5th
Service
Meter Size
Meter Size
Charge
16
$30.92
16
$36.065
19
$37.84
19
$44.137
25
$51.68
25
$60.280
38
$67.96
38
$79.269
50
$135.56
50
$158.117
75
$281.70
75
$328.575
100
$489.90
100
$571.419
150
$769.92
150
$898.035
200
$1,106.30
200
$1,290.388
250
$1,498.34
250
$1,747.664
Flat Rate
Annual
$ 324.84
$378.893
Sewer Surcharge
127%
122%
2007 Saint John Rate Base Case Oct 11 2008.xls 8 Impact 12- Oct -08
The proposed 2009 rates represent a 16.6% water rate increase on all components of
the 2007 water rates (8% 2008 and 8% 2009 compounded) and the 12.4% sewage rate
increase on all components of the 2007 sewage rates (6% 2008 and 6% 2009
compounded).
7.7.3 Impact
The impact of the proposed 2009 user rates needed to fund the financial plan compared
to the revised 2007 water and sewage rates is provided following in Exhibit 98.
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Exhibit 98 Impact of Proposed Rates - 2009 Base Case
2007 Saint John Rate Base Case Oct 112008.xis 8Impact 11- Oct -08
7.7.4 Observations
The impact of the proposed 16.6% water rate increase and 12.4% sewage rate increase
is a 14.2% increase for all customers with both water and sewage bills. The water -only
By -law customers increase 16.6 %. IOL and IPP increase less since they are still paying
part of consumption under Lapsed Agreements rates which have been unchanged for a
number of years.
At this point the three largest accounts, all water only, pay an average rate of $0.53 /m3
for Coleson Cove, $0.27 for IOL and $0.04 for IPP (By -law and Lapsed Agreement
accounts combined). Note that the declining block structure by its formulation would
result in the largest users paying progressively less per unit since more of their usage is
billed at the lowest rate. However, at this point the IOL and IPP average rates are
reduced since they still have usage billed at their much lower Lapsed Agreement rates.
The gap narrows if IOL and IPP rates are updated to current cost levels - illustrated in
the following section.
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Final Report
October 14, 2008
Consumption m3
Meter
Size mm
2007
- New Format
2009
- New Format
Change
Description
I Annual Bimonthly
Water Sewer Total
Water Sewer Total
$
%
Flat Rate Customers Annually
Flat Rate Customer
300
16
325
413
737
379
464
842
105
14.2%
Metered Customers
Bimonthly
Small Commercial
2,000
333
25
257
326
582
299
366
665
83
14.2%
Small Industrial
5,000
833
25
519
659
1,178
605
741
1,346
168
14.2%
Apartments
10,000
1,667
50
1,040
1,321
2,362
1,214
1,485
2,698
336
14.2%
University
30,000
5,000
100
3,145
3,994
7,139
3,668
4,488
8,156
1,017
14.2%
Industry
70,000
11,667
100
6,645
8,439
15,084
7,750
9,482
17,232
2,149
14.2%
Hospital
250,000
41,667
150
22,675
28,797
51,472
26,448
32,356
58,804
7,332
14.2%
Brewer
500,000
83,333
1 200
44,886
57,005
101,892
52,355
64,051
116,407
14,515
14.2%
Coleson Cove 1
1,500,000
250,000
250
0
0
0
0
0
Coleson Cove 2
422,068
70,345
250
0
0
0
0
0
Coleson Cove Total
24,260
16.6%
1,922,068 320,345
2501
145,791 0 145,791
170,051 0 170,051
IOL By -law
6,087,922
1,014,654
250
274,239
0
274,239
319,872
0
319,872
45,633
16.6%
IOL Lapsed Ag.
1,722,186
287,031
25,259
0
25,259
25,259
0
25,259
0
0.0%
IOL Total
45,633
15.2%
7,810,108 1,301,685
299,497 0 299,497
345,131 0 345,131
IPP By -law
1,636,364
272,727
200
136,590
0
136,590
159,319
0
159,319
22,729
16.6%
IPP Lapsed Ag
37,019,810
6,169,968
95,943
0
95,943
95,943
0
95,943
0
0.0%
IPP Total
22,729
9.8%
38,656,174 6,442,696
232,533 0 232,533
255,262 0 255,262
2007 Saint John Rate Base Case Oct 112008.xis 8Impact 11- Oct -08
7.7.4 Observations
The impact of the proposed 16.6% water rate increase and 12.4% sewage rate increase
is a 14.2% increase for all customers with both water and sewage bills. The water -only
By -law customers increase 16.6 %. IOL and IPP increase less since they are still paying
part of consumption under Lapsed Agreements rates which have been unchanged for a
number of years.
At this point the three largest accounts, all water only, pay an average rate of $0.53 /m3
for Coleson Cove, $0.27 for IOL and $0.04 for IPP (By -law and Lapsed Agreement
accounts combined). Note that the declining block structure by its formulation would
result in the largest users paying progressively less per unit since more of their usage is
billed at the lowest rate. However, at this point the IOL and IPP average rates are
reduced since they still have usage billed at their much lower Lapsed Agreement rates.
The gap narrows if IOL and IPP rates are updated to current cost levels - illustrated in
the following section.
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City of Saint John Page 186 of 198
7.8 Impact of Moving from Existing 2007/2008 Rates to Recommended 2009
Rates
The existing 2007/2008 rates compared with the recommended 2009 rates are as
shown in Exhibit 99 following:
Exhibit 99 Existing 2007/2008 Rates vs. Recommended 2009 Rates
Water Rates (bimonthly)
Volume
2007 - Existing Rates
2009 - New Format
From
To
Rate
From
To Rate
$ /m3
1 st
0
100
$0.8955
0
100 $0.961
2nd
101
50,000
$0.6406
101
250,000 $0.612
3rd
50,001
250,000
$0.3692
250,001
99,000,000 $0.216
4th
250,001
99,000,000
$0.1128
Spillage
$0.110
5th
Service
Meter Size
Meter Size
Charge
16
$21.64
16
$36.065
19
$31.64
19
$44.137
25
$46.62
25
$60.280
38
$81.40
38
$79.269
50
$121.62
50
$158.117
75
$219.48
75
$328.575
100
$401.54
100
$571.419
150
$701.50
150
$898.035
200
$1,001.44
200
$1,290.388
250
$1,401.64
250
$1,747.664
Flat Rate
Annual
$ 316.36
$378.893
Sewer Surcharge
120%
122%
2007 Saint John Rate Base Case Oct 11 2008.xls 8 Impact 13- Oct -08
The impact on customers is provided in Exhibit 100 following:
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City of Saint John Page 187 of 198
Exhibit 100 Customer Impact - Existing 2007/2008 Rate vs. Recommended 2009
Rates
2007 Saint John Rate Base Case Oct 112008.xis 8lmpact 13- Oct -08
Comments:
Basic Increase is 17.7% - The rates for all (excluding Lapsed Agreements) have been
increased by 3.1% to bring rates to actual cost level in 2007 plus a further 14.2% to fund
the proposed 2009 financial plan.
Flat Rate Customers - Flat rate customers face a further increase due to the
consumption allowance implicit in the flat rate being increased from 283 m3 /year to 300
m3 /year. Adjustments to the volumetric rate offset this increase to some extent.
Metered Customer in 1St & 2nd Block - The bulk of metered customers benefit from the
rate reformulation as flat rate customers are moved to better reflect their usage.
Coleson Cove - The basic billing increase is offset somewhat by combining the two
accounts into one billing.
IOL & IPP By -law Charges - These billings increase more than the others due to the
increase level of the final block. However, is should be noted that if the City intention to
collapse the final block into the current 3rd block level had been completed, the increase
would have been more dramatic. In any case, the bill increase is driven by the increased
investment in the watershed - a factor that would impact under any cost recovery
scenario.
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October 14, 2008
Consumption a
Meter
Size mm
2007
- Existing Rates
2009
- New Format
Change
Description
I Annual Bimonthly
Water Sewer Total
Water Sewer Total
$
%
Flat Rate Customers Annually
Flat Rate Customer
300
16
316
380
696
379
464
842
146
21.0%
Metered Customers Bimonthly
Small Commercial
2,000
333
25
286
343
628
299
366
665
37
5.9%
Small Industrial
5,000
833
25
606
727
1,333
605
741
1,346
13
1.0%
Apartments
10,000
1,667
50
1,215
1,458
2,672
1,214
1,485
2,698
26
1.0%
University
30,000
5,000
100
3,630
4,356
7,986
3,668
4,488
8,156
170
2.1%
Industry
70,000
11,667
100
7,901
9,481
17,381
7,750
9,482
17,232
(149)
-0.9%
Hospital
250,000
41,667
150
27,418
32,902
60,320
26,448
32,356
58,804
(1,516)
-2.5%
Brewer
500,000
83,333
1 200
45,361
54,433
99,794
52,355
64,051
116,407
16,613
16.6%
Coleson Cove 1
1,500,000
250,000
250
107,286
0
107,286
0
0
Coleson Cove 2
422,068
70,345
250
40,966
0
40,966
0
0
1,922,068
320,345
1 2501
148,252
0
148,252
170,051
0
170,051
Coleson Cove Total
21,799
14.7%
IOL By -law
6,087,922
1,014,654
250
193,539
0
193,539
319,872
0
319,872
126,333
65.3%
IOL Lapsed Ag.
1,722,186
287,031
25,259
0
25,259
25,259
0
25,259
0
0.0%
IOL Total
7,810,108
1,301,685
1
1 218,797
0
218,7971
345,131
0
345,131
1 126,333
57.7%
IPP By -law
1,636,364
272,727
200
109,449
0
109,449
159,319
0
159,319
49,870
45.6%
IPP Lapsed Ag
37,019,810
6,169,968
95,943
0
95,943
95,943
0
95,943
0
0.0%
IPP Total
38,656,174
6,442,696
1
1 205,392
0
205,3921
255,262
0
255,262
1 49,870
24.3%
2007 Saint John Rate Base Case Oct 112008.xis 8lmpact 13- Oct -08
Comments:
Basic Increase is 17.7% - The rates for all (excluding Lapsed Agreements) have been
increased by 3.1% to bring rates to actual cost level in 2007 plus a further 14.2% to fund
the proposed 2009 financial plan.
Flat Rate Customers - Flat rate customers face a further increase due to the
consumption allowance implicit in the flat rate being increased from 283 m3 /year to 300
m3 /year. Adjustments to the volumetric rate offset this increase to some extent.
Metered Customer in 1St & 2nd Block - The bulk of metered customers benefit from the
rate reformulation as flat rate customers are moved to better reflect their usage.
Coleson Cove - The basic billing increase is offset somewhat by combining the two
accounts into one billing.
IOL & IPP By -law Charges - These billings increase more than the others due to the
increase level of the final block. However, is should be noted that if the City intention to
collapse the final block into the current 3rd block level had been completed, the increase
would have been more dramatic. In any case, the bill increase is driven by the increased
investment in the watershed - a factor that would impact under any cost recovery
scenario.
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October 14, 2008
City of Saint John Page 188 of 198
7.9 Spillage Rate
The City, at the request of Irving Paper, diverts raw water from the City treatment facility
at Latimer Lake, through a main which then discharges into Little River. This is used to
augment the Little River natural flow during low flow periods. The Irving Paper Spillage
Rate Agreement covers 1995 to 2010 with the volume rate defined up to 2007 and to be
based on an analysis of actual costs for 2008 to 2010. The rate has been escalated
year based on a formula and in 2007 was $0.01925/m3.
Provision has been made in the proposed rate calculation method for a determination of
a spillage rate. The rate includes a small allowance for administration costs, the
watershed costs and a small share of treatment costs (the diversion is located at the
treatment plant and there is piping to manage and maintain).
Under the base case scenario — see calculation in Exhibit 92 - the spillage rate would
increase to $0.094/m3 (2007 costs). However, if Lapsed Agreement consumption is
added to the calculation, the rate drops to $0.034/m3 — see Exhibit 101.
The spillage rate based on actual costs is higher than current rate primarily due to the
identification of and increased emphasis on watershed investment.
7.10 Negotiations Pending - IPP & IOL Lapsed Agreements Moved to By -law
Rates - 2007
7.10.1 Basis of Calculation
The By -law rates would change if the Lapsed Agreement customers were included in
the calculation of the By -law rates as full participants. recommended following are the
main differences between the Base Case and moving the Lapsed
Agreement billings to By -law rates:
Consumption — Changes in consumption volumes incorporated in the By -law rate
calculation are spelled out in Section 7.4.5. Basically, By -law consumption would
increase by 38.7 million m3 annually from 21.6 million m3 to 60.3 million m3 annually.
Revenue Requirements — Revenue requirements from water rates in Exhibit 86 are
increased by the $727,210 revenue now recovered from the lapsed agreements. This
increases the revenues required from user rates from $25,787,987 to $26,515,197.
Review of Rates and Rate Structure Options
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October 14, 2008
City of Saint John Page 189 of 198
7.10.2 Rates
The various Exhibits representing cost allocates are very similar to those used for the
base case and are not repeated here. Of most interest is the calculation of the
volumetric rates, which is provided in Exhibit 101 following.
Review of Rates and Rate Structure Options
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Final Report
October 14, 2008
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City of Saint John
Page 191 of 198
The 2007 By -law For All rates are provided below in Exhibit 102 and compared to the
2007 Base Case rates.
Exhibit 102 Base Case Rates vs. By -law For All Rates - 2007
Water Rates (bimonthly)
Volume
2007 - Existing Format
2007 - By -law For All
From
To
Exist
103.1%
From
To Rate
$ /m3
1 st
0
100
0.89553
$0.9233
0
100 $0.770
2nd
101
50,000
0.64059
$0.6604
101
250,000 $0.455
3rd
50,001
250,000
0.36915
$0.3806
250,001
99,000,000 $0.068
4th
250,001
99,000,000
0.11280
$0.1163
Spillage
$0.034
5th
Service
Meter Size
Meter Size
Charge
16
$
21.64
$22.31
16
$32.58
19
$
31.64
$32.62
19
$39.80
25
$
46.62
$48.07
25
$54.26
38
$
81.40
$83.92
38
$70.96
50
$
121.62
$125.39
50
$141.84
75
$
219.48
$226.28
75
$294.50
100
$
401.54
$413.99
100
$512.08
150
$
701.50
$723.25
150
$799.66
200
$
1,001.44
$1,032.48
200
$1,143.18
250
$
1,401.64
$1,445.09
250
$1,542.02
Flat Rate
jAnnual
$316.36
$ 326.17
$311.88
Sewer Surcharge
120%
135%
2007 Saint John Rate All Bylaw Oct 11 2008.xls 8 Impact 13- Oct -08
7.10.3 Impact
The impact of the 2007 By -law For All on a range of customers is provided below in
Fxhihit 103_
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City of Saint John
Page 192 of 198
Exhibit 103 Impact of Recalculated Water & Sewage Rates - 2007 - By -law for All
2007 Saint John Rate All Bylaw Oct 112008.xis 8 Impact 13- Oct -08
7.10.4 Observations
There are a number of changes resulting from moving the Lapsed Agreement
customers to By -law rates:
All volumetric rates have decreased compared to the 2007 Base Case scenario.
The percentage decreases in the block rates gets progressively larger for the 2nd 3rd and
spillage rates. This is because adding the Lapsed Agreement volumes to the calculation
has a much larger impact on the wholesale rates.
There is a modest increase in service charges due to the removal of the existing lapsed
agreement revenues and resulting increase in the user rate revenue requirements. The
benefit to all is reflected in the volumetric rates.
The biggest beneficiary is IOL since the addition of IPP volumes greatly decreases the
3rd block. This benefits IOL because the bulk of their usage is already at By -law rates
and much of that is billed at 3rd block.
Review of Rates and Rate Structure Options
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Final Report
October 14, 2008
Consumption m3
Meter
Size mm
2007 -
Existing Format
2007
- By-law For
All
Change
Description
I Annual Bimonthly
Water Sewer Total
Water Sewer Total
$
%
Flat Rate Customers Annually
Flat Rate Customer
1 300
16
326
391
718
312
421
733
15
2%
Metered Customers
Bimonthly
Small Commercial
2,000
333
25
294
353
648
237
321
558
(90)
-14%
Small Industrial
5,000
833
25
625
750
1,374
465
628
1,093
(282)
-21%
Apartments
10,000
1,667
50
1,252
1,503
2,755
932
1,258
2,189
(566)
-21%
University
30,000
5,000
100
3,743
4,491
8,234
2,819
3,805
6,624
(1,610)
-20%
Industry
70,000
11,667
100
8,146
9,775
17,920
5,852
7,900
13,752
(4,168)
-23%
Hospital
250,000
41,667
150
28,268
33,922
62,190
19,789
26,716
46,505
(15,685)
-25%
Brewer
500,000
83,333
200
46,767
56,120
102,887
39,091
52,773
91,865
(11,023)
-11%
Coleson Cove 1
1,500,000
250,000
250
110,612
0
110,612
0
Coleson Cove 2
422,068
70,345
250
42,236
0
42,236
0
Coleson Cove Total
250
250
(32,742)
-21%
1,922,068 320,345
152,848 0 152,848
120,107 0 120,107
IOL By -law
6,087,922 1,014,654
199,538 0 199,538
0
IOL Lapsed Ag.
1,722,186
287,031
250
25,259
0
25,259
0
IOL Total
(36,417)
-16%
7,810,108 1,301,685
1 2501
224,797 0 224,797
188,380 0 188,380
IPP By -law
1,636,364
272,727
200
112,842
0
112,842
0
0
IPP Lapsed Ag
37,019,810
6,169,968
95,943
0
95,943
0
0
38,656,174
6,442,696
2001
208,785
0
208,785
537,171
0
537,171
IPP Total
328,386
157%
2007 Saint John Rate All Bylaw Oct 112008.xis 8 Impact 13- Oct -08
7.10.4 Observations
There are a number of changes resulting from moving the Lapsed Agreement
customers to By -law rates:
All volumetric rates have decreased compared to the 2007 Base Case scenario.
The percentage decreases in the block rates gets progressively larger for the 2nd 3rd and
spillage rates. This is because adding the Lapsed Agreement volumes to the calculation
has a much larger impact on the wholesale rates.
There is a modest increase in service charges due to the removal of the existing lapsed
agreement revenues and resulting increase in the user rate revenue requirements. The
benefit to all is reflected in the volumetric rates.
The biggest beneficiary is IOL since the addition of IPP volumes greatly decreases the
3rd block. This benefits IOL because the bulk of their usage is already at By -law rates
and much of that is billed at 3rd block.
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October 14, 2008
City of Saint John
Page 193 of 198
Note that the Lapsed Agreement charges for IOL and IPP are based on agreements that
expired in 2000 and 2005 respectively.
The New Format rates result in lower 3rd block rates that the existing 4t" block rates (they
are equivalent as far as volume thresholds). The cost components included in the rate
block are now clearly defined and emphasize watershed costs as well as including an
administration allowance, treatment and transmission main costs.
The following recommended actions are made to bring the two Lapsed Agreement
customers, IOL and IPP, under By -law rates as well as altering the billing approach for
IOL and Coleson Cove to treat them like single customers.
Irving Oil - that negotiations are carried out with Irving Oil with the objective of billing
their Commerce Drive account at By -law rates rather than the Lapsed Agreement rates
now being applied. Their larger Champlain Heights account is already billed at By -law
rates. It is also recommended that the two accounts be combined for billing purposes
into one which is an option currently available under City By -laws.
IPP — That negotiations be carried out to convert the billing of water supplied from the
west to a By -law raw water rate. Water supplied from the east would be at potable water
By -law rates.
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City of Saint John
8 RECOMMENDED STRATEGY & IMPACT
8.1 Strategy
This is referred as Scenario 2.
Page 194 of 198
Consideration should also be given to converting Coleson Cove to a raw water rate
once the treatment plans are in operation since at that time the water cost for Coleson
Cove water (essentially raw water) will be considerably lower than the treated water. It
is not suggested that this be done now since there is not currently the same differential
in water quality compared to after filtration is built.
9 FINDINGS AND RECOMMENDATIONS
The following is a list of findings and recommendations:
1. User Rates — it is important to ensure year by year that water and sewer rates are
obtaining full cost recovery. The 2007 User rates should have been increased by
3.1 % in 2007.
2. 2009 User Rates — To establish the required water and sewer rates for 2009, it is
recommended that Saint John Water follow a three (3) step approach to ensure the
Utility has the required revenue to operate the Utility as follows:
Step 1 — Adjust 2007 Rates to Meet Actual Revenue Requirements
Step 2 — Convert 2007 Water Rates to Recommended Format
Step 3 — Increase Rates to Meet 2009 Financial Plan Requirements
3. Accounting Software — The software currently used to record and issue bills to
customers, should have access to all the customer data. Currently the data from the
negotiated agreement customers are not within the same software component.
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City of Saint John
Page 195 of 198
4. Principles - it is important that the user rates be based on sound principles. It is
recommended that the following principles be adopted:
Principle & Objectives
Equity - Fairness & User Pay
Revenue adequacy
Legality
Source Sustainability
Technical & Administrative Feasibility
Affordability
Public Acceptance
Equality
Water use efficiency
Encourage development
5. Fixed Charges by Meter Size Recommended — It is recommended that the current
approach of service charges by meter size be continued but updated to reflect full
cost recovery.
6. Rate Structure - Historically Saint John has used two -part rates (i.e. fixed plus
volumetric) metered rates. It is recommended that two -part rates continue to be
used for all customers.
7. Declining Block Rates (DBR) Recommended - Seasonally oriented rates (IBR,
HBR, EUR and SR) not considered necessary in Saint John where summer
seasonal peaks are not an issue. Lifeline rates are not the best approach to
affordability (see above). SBR has the advantage of simplicity and a neutral
treatment of all customers. However, declining block rates, the current approach, is
considered the most appropriate for Saint John as they are cost -based and fairly
pass in the savings due to economies of scale to high volume users. DBR are
recommended.
8. Recommended Block Transition — It is recommended that the transition to three
rate blocks from four be continued. Once water treatment is brought to modern day
standards the water rate formats should be restructured further. Currently the 4t"
block rate is being phased up to the 3rd block rate level which would leave the final
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City of Saint John
Page 196 of 198
block at a relatively high level once the 3rd block rate is reached by the 4t" block. It is
recommended that the 3rd block be blended into the 2 d block and the 3rd block rate
maintains its wholesale level based on the cost analysis.
Recommended Target for
Current Rates
(m3 /month)
1 st block (0 to 50)
2"d block (51 to 125,000)
3rd block (over 125,000)
Format After Water Treatment Plant Built
Potable Water
Raw Water
- Resource charge
To be determined
- Piped water charge
9. Watershed Costs — The City has been steadily enhancing watershed ownership
and management. These efforts should continue, but with more public emphasis.
The costs should be identified separately so that they can be recognized in both
potable and raw water rates.
10. Raw Water Rate — It is recommended that a raw water rate be established which
would apply in a manner similar to the Irving Paper Spillage Rate. This rate would
cover watershed costs plus other costs related to providing the service. If piped raw
water is provided, a rate reflecting the added costs would be needed.
11. Flat Rate Consumption Component — It is recommended that the consumption
allowance implicit in the flat rate is increased in two steps from the current level of
283 m3 /customer /year to 300 m3 /customer /year in 2009 and 318 m3 /customer /year
in 2010
12. Sewer Surcharge — It is recommended that the straight sewer surcharge approach
be continued but the actual surcharge percentages change to more accurately
reflect the true cost of the sanitary system.
13. All Rates By -law Compatible - The policy of moving all customers to By -law rates
or rates set in accordance with By -law rates is supported and recommended.
14. User Pay Billing for All — Adoption of a full user -pay billing method is
recommended. This would require the installation of meters on all services. The
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City of Saint John
Page 197 of 198
recommendation is made for several reasons. First in the interest of fairness and
user pay. Secondly, it is an important management tool in assessing the condition of
the water system and identifying measures to improve. Another important advantage
relates to affordability. The option of metering would offer a mechanism for individual
control of water and sewage charges that could benefit customers in need who are
careful with water usage.
15. Customer Billing — It is recommended that the format and layout of customer billing
be reviewed for content and visual simplicity.
16. Unmetered Customer Flow Monitoring — Pending the implementation of universal
metering, it is recommended that the City carry out a statistical survey and install
meters at these locations for the consumption value of the flat rate.
17. New Customer Should be Meter -Ready - Spool sections should be installed in
new homes for the installation of meters in the future.
18. District Meter Areas (DMA) - It is recommended that the Utility continue to install
system bulk water metering so that a better understanding of area water supply
characteristics is available. DMA's along with retail meters are a useful tool in
managing system water losses.
19. Non — Revenue Water (NRW) Review — It is recommended that the City of Saint
John carryout a review of the NRW. This review should determine the active leak
detection in the distribution system using enhanced district area metering.
20. Capital Reserve Funds are recommended each for water and for wastewater. The
amount that can be accumulated in an operating reserve fund is limited to 5% of the
total expenditure that were budgeted for the service for the previous fiscal year.
This fund would be used to smooth out year -to -year fluctuations in capital
requirements.
21. Sustainability — Increased capital investment is needed to fund replacement of
aging water and sewage facilities. This is a situation faced by many utilities and
other capital- intensive services such as roads. Saint John has an old system and
has not kept pace with replacement needs. As a result rate increases will be
necessary if sustainable levels are to be achieved. Since the need for funds is will
ongoing it is strongly recommended that the projects be planned on an ongoing
Review of Rates and Rate Structure Options
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October 14, 2008
City of Saint John
basis and the needed funds be generated from current revenues and not
debentured.
Page 198 of 198
22. Large Customer Water User Group - It is recommended that Saint John Water
recommence the large customer water user group constituted to discuss water
issues to the benefit of both the customers and the Utility.
23. Communications - In order to ensure public understanding and awareness of the
recommendations and their potential effects on property owners, we recommend
that the City develop a strategy to deal with the expected public interest to result
from the changes to the water and sewerage rates.
24. Miscellaneous Charges - The City review the costs to provide the services covered
under Miscellaneous Charges to ensure costs recovery.
25. Benefiting Customers - It is recommended that all costs for water and wastewater
facilities to meet local needs be paid by those benefiting. This includes any
proposed Grey water sources. The costs should be recovered from the user of the
infrastructure
26. Vision 2015 — The City's Vision 2015 is strongly supported as a framework for
supporting water and sewage system needs.
Review of Rates and Rate Structure Options
INTITTIT-Iff e
232
Final Report
October 14, 2008
Engineering
Consulling Engineer* & technok)qy Managers
Ea division of RI.V. Anderson Assmwjle" Limited
"on=
233
TTouchie Engineering
Consulting Engineers and Technology Managers
a division of R.V. Anderson Associates Limited
October 30, 2008
City of Saint John
175 Rothesay Avenue
Saint John, NB E2J 2134
Attention: Mr. Paul Groody, P.Eng.
Commissioner
Municipal Operations and Engineering
Re: Saint John Water
Review of Rates and Rate Structure Options
860 Main St., Suite 801
Moncton, New Brunswick, Canada E1 C 1 G2
Telephone: (506) 857 -8525
Fax: (506) 858 -5972
E -mail: moncton@touchieengineering.nb.ca
Web Site: www. touch ieengineering.nb.ca
File: 061105
In accordance with our Proposal and Terms of Reference, we are pleased to submit this
Executive Summary of the Water and Sewer Rate Report to the City of Saint John.
This report has developed from an initial review of rates to a complete Business Plan
review of the Utility, similar to the report that was completed in 2002. An extensive
review of the current practice carried out by the City in setting water and sewer rates
was carried out, the public was asked for their input, and an entire section of the report
reviewed affordability to the customers of Saint John Water.
The "Final Report" and "Appendixes" have been included under separate cover to the
main report.
We wish to express our appreciation for the cooperation and assistance of Staff during
the course of this review and appreciate the opportunity to be of service on this very
important project.
Respectively submitted,
TOUCHIE ENGIN
Jo". W. Gallant, P. E
234
Review of Rates and Rate Structure Options
EXECUTIVE SUMMARY
Prepared for:
The City of Saint John, NB
This executive summary is protected by copyright and was prepared by Touchie Engineering, a
division of R. V. Anderson Associates Limited in association with R.M. Loudon Limited, for the
account of the City of Saint John. It shall not be copied without permission. The material in it
reflects our best judgment in light of the information available to Touchie Engineering at the time
of preparation. Any use which a third party makes of this report, or any reliance on or decisions
to be made based on it, are the responsibility of such third parties. Touchie Engineering accepts
no responsibility for damages, if any, suffered by any third party as a result of decisions made or
actions based on this report.
Touchie Engineering
Consulting Engineers and Technology Managers
a division of R.V. Anderson Associates Limited
860 Main Street, Suite 801
Moncton, NB E1 C 1 G2 Canada
Tel: (506) 857 -8525
Fax: (506) 858 -5972
Email: monctonLatouchieenclineerincl.nb.ca
RVA 061105
October 30, 2008
235
City of Saint John
1 EXECUTIVE SUMMARY & FINDINGS
Page 1 of 13
The City of Saint John with a population of about 69,000 owns and operates water and
sewage systems serving over 16,000 residential and non - residential customers.
Canada' oldest incorporated municipality also has some of the oldest water facilities.
There are several major challenges facing the City in relation to the water and sewage
systems, including:
• The aforementioned age of many of the facilities means investment pressures to
replace aging infrastructure.
• Water treatment plants are in the pre- design phase which will ultimately provide
more secure potable water to customers. Sewage treatment plants are being
constructed which will reduce pollution discharge.
• Unusually large industrial water users with the potential for further industrial
water needs.
• The need to formulate a sound financial plan including cost recovery in order to
plan and provide the needed water and sewage system funding.
Underlying the need to provide funding to meet these challenges are issues related to
willingness to pay and affordability.
This report has been prepared in response to a request by the City for a proposal to
review water and sewage rates and rate structure options. Specific required
components of the study include:
• Review current rate structure format.
• Request and review input from Saint John Water Customers
• Evaluate other rate structure options
• Identify low- income water customers options
• Update water and sewage rates
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Executive Summary
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City of Saint John
Page 2 of 13
To some extent this current report is an update and follow -on from the Business Plan
Review submitted in 20021. However, the affordability and public input elements are
new.
The following is a list of findings and recommendations.
User Survey
1. Surveys - Two surveys were carried out, one targeted at domestic customers
and the other at non - domestic customers. Copies were made available in a
number of ways in order to maximize the opportunity for customers to respond,
including electronically and paper copies available at a number of localities as
well as copies forwarded to a number of specific groups. Copies of the two
survey forms are appended.
2. Interest Group Response - Responses were received from 7 of the 15 water
interest groups contacted. The discussions with the Interest groups was a
willingness to pay their fair share for water, but realizing that trying to be
competitive in global markets the cost of water is a great concern.
3. Public Survey Response - The public survey elicited 59 responses. When
questions of water safety, service level and cost were compared the highest
priority was water safety followed by quality and reliability. Low cost had a lower
ranking as did water pressure (Question 11). Stopping pollution due to
inadequately treated sewage also scored highly. A significant majority (81 %)
supported paying for water based on amount used versus the current flat rate
method of a single charge for water regardless of consumption (Question 14). A
majority (81 %) indicated there were circumstances where customers should
receive subsidized water or sewage services, with low income most often
mentioned.
City of Saint John Water and Sewerage Business Plan Review — Touchie Engineering & RM
Loudon Ltd - 2002
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Executive Summary
October 30, 2008
City of Saint John
Affordability
Page 3 of 13
4. Affordability Measure - Although there is no exact method of measuring
affordability, a common measure is a comparison of water charges with annual
income. A threshold value of 4% of the median household income is used to
indicate an affordability problem for a low income household.
5. Not Affordable for Some - Based on the 2007 water and sewage flat rates it
was concluded that affordability is not an issue for most, but is likely an issue for
certain households such as single elders living on pensions, unemployed or
underemployed persons with no family and disabled persons.
6. Most Effective Methods - Effective methods of poverty alleviation available to
the water department include metering to allow customers to reduce their billing
and more frequent billing so that each bill is more manageable.
7. Financial Relief - Direct financial relief is best done using some sort of means
test. Such a program already exists in Saint John. Billings to customers who
cannot pay are deferred and become a lien against the property and will
eventually be recovered by the City when the property is sold.
8. Measures Not Suitable - Measures least likely to be suitable include
emergency assistance, lifeline water rates (below cost volumetric rates for
essential usage), targeted conservation, and flow restrictions.
Review of Current Rate Structure:
9. By -law Rates - The City has By -law rates which apply to most customers. The
majority of customers (primarily residential), are unmetered and pay a uniform
flat rate which is made up of a service charge and volumetric charge amount.
Metered customers, primarily non - residential pay two -part water rates including
a fixed component tied to meter size and a volumetric component based on
usage. Sewage charges are a percentage of water charges.
10. Prior Format Change Recommendations - The 2002 Report recommended
changes to the user rates and some progress has been made. It was
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Executive Summary
October 30, 2008
City of Saint John
Page 4 of 13
recommended that the number of rate blocks be consolidated over time from 5
to 3. There are currently four blocks. The flat rate charge includes a
consumption allowance which was found to be low and has been increasing in
steps but has not yet reached the target level.
11. Two Non Bylaw Agreement Rates - The City has two customers not on By -law
rates, with agreements that have expired and include Irving Oil Limited
(agreement expired 2000) and Irving Pulp and Paper (agreement expired 2005).
Both are billed based on rates which applied at the time of agreement expiration.
12. Customer Profile - There are 2,924 metered customer accounts, split between
the Commercial and Industrial customer classes, and 5 accounts which have
been negotiated. Although 85% of customers are flat rate, unmetered customers
represented only about 7% of consumption in 2007. Special Agreement
customers used 60% of water supplied in 2007 as shown in Exhibit 1.
Exhibit 1 2007 City Water Customers and Water Production Breakdown
2007 Customer Profile 2007 Water Production
Negoti�
5
Flat Rate,
16,844
Metered,
2924
Non Bylaw
Rates
12.0%
Negotiated
48.0%
NRW
25.0%
at Rate,
7.0%
ed
8.0%
A more detailed review of the water consumption and usage by customer is presented
in Exhibit 2 below.
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Executive Summary
October 30, 2008
City of Saint John
Page 5 of 13
Exhibit 2 2007 City Water Customers and Water Production Breakdown
Share of
Volume (m) Consumption Supply
Metered
37,019,810
61%
46%
By -law
1,722,186
3%
2%
I PP
1,636,364
3%
2%
IOL
6,087,922
10%
8%
Coleson Cove
1,922,070
3%
2%
Other metered
6,854,132
11%
8%
Total By -law
16,500,488
27%
20%
Non Bylaw
IPP
37,019,810
61%
46%
IOL
1,722,186
3%
2%
Total Non Bylaw
38,741,996
64%
48%
Total Metered
55,242,484
91%
68%
Flat Rate
Units billed
16,884
Estimated Usage (M3 /unit)
cubic meters per year
318
Total Flat Rate
5,372,182 9% 7%
Total Consumption
60,614,666 100% 75%
Supply
cubic meters per year
81,015,663 100%
Non Revenue Water
cubic meters per year
20,400,997
Percent of Supply
25%
13. Actual Consumption & Revenue Analysis - While completing the rate
calculation analysis it was noted that there was a variance in the 2007 data
where the consumption data did not correlate with budget projections. This
variance came from how revenues from the two expired agreements were dealt
with. A combined 2007 water and sewage revenue deficit of $792,241
compared to budget revenues is estimated based on actual consumption and
customer data.
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Executive Summary
October 30, 2008
City of Saint John
Other Metered Rate Structure Options
Page 6 of 13
14. Alternative Formats - A number of metered rate structure formats are used to a
greater or lesser extent, including:
• Fixed charge options include a single charge and charges variable by meter
size
• Single Block Rate (SBR) — One block for all usage. Simple.
• Declining Block Rate (DBR) — High first block encourages residential
conservation. Declining blocks based on economies of scale. Large
industry friendly.
• Increasing Block Rates (IBR) — Increased rates as consumption rises.
Aimed at encouraging conservation by larger residential users, but
sometimes also applied to non - residential customers.
• Humpback Rates (HBR) — Rates increase with increasing usage then
decrease back to 1 s' block levels. Attempt to combine IBR with reduced
rates for large industrial users.
• Lifeline Rate (LR) — Low first block covering basic needs set below cost. No
examples found of use in Canada.
• Seasonal Excess Use Rate (EUR) — Higher rate for usage exceeding a
customer's winter usage level. Meant to decrease summer peaks.
• Seasonal Rate (SR) — Higher rates in summer to decrease summer peaks.
Recommended User Rate Approach
15. Fixed Charges by Meter Size Recommended — It is recommended that the
current approach of service charges by meter size be continued.
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Executive Summary
October 30, 2008
City of Saint John
Page 7 of 13
16. Principles - it is important that the user rates be based on sound principles. It is
recommended that the following principles be adopted:
Principle & Objectives
Equity - Fairness & User Pay
Revenue adequacy
Legality
Source Sustainability
Technical & Administrative Feasibility
Affordability
Public Acceptance
Equality
Water use efficiency
Encourage development
17. DBR Recommended - Seasonally oriented rates (IBR, HBR, EUR and SR) not
considered necessary in Saint John where summer seasonal peaks are not an
issue. Lifeline rates are not the best approach to affordability (see above). SBR
has the advantage of simplicity and a neutral treatment of all customers.
However, declining block rates, the current approach, is considered the most
appropriate for Saint John as they are cost -based and fairly pass in the savings
due to economies of scale to high volume users. DBR are recommended.
18. Recommended Block Transition — It is recommended that the transition to
three rate blocks from four be continued. Once water treatment is brought to
modern day standards the water rate formats should be restructured further.
Currently the 4t" block rate is being phased up to the 3rd block rate level which
would leave the final block at a relatively high level once the 3rd block rate is
reached by the 4t" block. It is recommended that the 3rd block be blended into
the 2 d block and the 3rd block rate maintains its wholesale level based on the
cost analysis.
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Executive Summary
October 30, 2008
City of Saint John
Recommended Target for
Current Rates
(m3 /month)
1 st block (0 to 50)
2nd block (51 to 125,000)
3rd block (over 125,000)
Page 8 of 13
Format After Water Treatment Plant Built
Potable Water
Raw Water
To be determined
- Resource charge
- Piped water charge
19. Watershed Costs — The City has been steadily enhancing watershed ownership
and management. These efforts should continue, but with more public
emphasis. The costs should be identified separately so that they can be
recognized in both potable and raw water rates.
20. Raw Water Rate — It is recommended that a raw water rate be established
which would apply in a manner similar to the Irving Paper Spillage Rate. This
rate would cover watershed costs plus other costs related to providing the
service. If piped raw water is provided, a rate reflecting the added costs would
be needed.
21. Flat Rate Consumption Component — It is recommended that the consumption
allowance implicit in the flat rate is increased in two steps from the current level
of 283 m3 /customer /year to 300 m3 /customer /year in 2009 and 318
m3 /customer /year in 2010.
22. All Rates By -law Compatible - The policy of moving all customers to By -law
rates or rates set in accordance with By -law rates is supported and
recommended.
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Executive Summary
October 30, 2008
City of Saint John
Universal Metering
23. User Pay Billing for All — Adoption of a full user -pay billing method is
Page 9 of 13
recommended. This would require the installation of meters on all services. The
recommendation is made for several reasons. First in the interest of fairness and
user pay. Secondly, it is an important management tool in assessing the
condition of the water system and identifying measures to improve. Another
important advantage relates to affordability. The option of metering would offer a
mechanism for individual control of water and sewage charges that could benefit
customers in need who are careful with water usage.
24. Unmetered Customer Flow Monitoring — Pending the implementation of
universal metering, it is recommended that the City carry out a statistical survey
and install meters at these locations for the consumption value of the flat rate.
25. New Customer Should be Meter -Ready - Spool sections should be installed in
new homes for the installation of meters in the future.
26. District Meter Areas (DMA) - It is recommended that the Utility continue to
install system bulk water metering so that a better understanding of area water
supply characteristics is available. DMA's along with retail meters are a useful
tool in managing system water losses.
Financing Strategy
27. Capital Reserve Funds are recommended each for water and for wastewater.
The amount that can be accumulated in an operating reserve fund is limited to
5% of the total expenditure that were budgeted for the service for the previous
fiscal year.
This fund would be used to smooth out year -to -year fluctuations in capital
requirements.
28. Sustainability — Increased capital investment is needed to fund replacement of
aging water and sewage facilities. This is a situation faced by many utilities and
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Executive Summary
October 30, 2008
City of Saint John
Page 10 of 13
other capital- intensive services such as roads. Saint John has an old system
and has not kept pace with replacement needs. As a result rate increases will be
necessary if sustainable levels are to be achieved. Since the need for funds is
will ongoing it is strongly recommended that the projects be planned on an
ongoing basis and the needed funds be generated from current revenues and
not debentured.
29. 2009 User Rates — To establish the required water and sewer rates for 2009, it
is recommended that Saint John Water follow a three (3) step approach to
ensure the Utility has the required revenue to operate the Utility as follows:
Step 1 — Adjust 2007 Rates to Meet Actual Revenue Requirements. The 2007
User rates should have been increased by 3.1% in 2007.
Step 2 — Convert 2007 Water Rates to Recommended Format
Step 3 — Increase Rates to Meet 2009 Financial Plan Requirements Looking
forward to 2012, this would have required water rate increases of 8%
annually over the five -year period and sewer increases of 6% annually
over the same time period.
30. Raw Water Rate — It is recommended that a raw water rate be established
which would apply in a manner similar to the Irving Paper Spillage Rate. This
rate would cover watershed costs plus other costs related to providing the
service. If piped raw water is provided, a rate reflecting the added costs would
be needed.
31. Rates (Proposed for 2009) - The existing 2007/2008 rates compared with the
recommended 2009 rates are as shown below in Exhibit 3.
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Executive Summary
October 30, 2008
City of Saint John
Exhibit 3 Proposed Rates — 2009 Base Case
Water Rates (bimonthly)
Page 11 of 13
Volume
2007 - Existing Rates
2009 - New Format
From
To
Rate
From
To Rate
$ /m3
1 st
0
100
$0.8955
0
100 $0.961
2nd
101
50,000
$0.6406
101
250,000 $0.612
3rd
50,001
250,000
$0.3692
250,001
99,000,000 $0.216
4th
250,001
99,000,000
$0.1128
Spillage
$0.110
5th
Service
Meter Size
Meter Size
Charge
16
$21.64
16
$36.065
19
$31.64
19
$44.137
25
$46.62
25
$60.280
38
$81.40
38
$79.269
50
$121.62
50
$158.117
75
$219.48
75
$328.575
100
$401.54
100
$571.419
150
$701.50
150
$898.035
200
$1,001.44
200
$1,290.388
250
$1,401.64
250
$1,747.664
Flat Rate
Annual
$ 316.36
$378.893
Sewer Surcharge
120%
122%
2007 Saint John Rate Base Case Oct 11 2008.xls 8 Impact
13- Oct -O8
32. Impact - The impact of the proposed 2009 user rates needed to fund the
financial plan compared to the revised 2007 water and sewage rates is provided
following in Exhibit 4.
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Executive Summary
October 30, 2008
City of Saint John
Exhibit 4 Existing 2007/2008 Rate vs. Recommended 2009 Rates
Page 12 of 13
2007 Saint John Rate Base Case Oct 112008.xis 8Impact 13- Oct -08
Other Recommendations
33. Non - Revenue Water (NRW) Review - It is recommended that the City of Saint
John carryout a review of the NRW. This review should utilize active leak
detection methods in the distribution system using enhanced district area
metering.
34. Accounting Software - The software currently used to record and issue bills to
customers, should have access to all the customer data. Currently the data from
the negotiated agreement customers are not within the same software
component.
35. Watershed Costs - The City has been steadily enhancing watershed ownership
and management. These efforts should continue, but with more public
emphasis. The costs should be identified separately so that they can be
recognized in both potable and raw water rates.
Review of Rates and Rate Structure Options
RVA 061105
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Executive Summary
October 30, 2008
Consumption m3
Meter
Size mm
2007
- Existing Rates
2009
- New Format
Change
Description
I Annual Bimonthly
Water Sewer Total
Water Sewer Total
$
%
Flat Rate Customers Annually
Flat Rate Customer
300
16
316
380
696
379
464
842
146
21.0%
Metered Customers Bimonthly
Small Commercial
2,000
333
25
286
343
628
299
366
665
37
5.9%
Small Industrial
5,000
833
25
606
727
1,333
605
741
1,346
13
1.0%
Apartments
10,000
1,667
50
1,215
1,458
2,672
1,214
1,485
2,698
26
1.0%
University
30,000
5,000
100
3,630
4,356
7,986
3,668
4,488
8,156
170
2.1%
Industry
70,000
11,667
100
7,901
9,481
17,381
7,750
9,482
17,232
(149)
-0.9%
Hospital
250,000
41,667
150
27,418
32,902
60,320
26,448
32,356
58,804
(1,516)
-2.5%
Brewer
500,000
83,333
1 200
45,361
54,433
99,794
52,355
64,051
116,407
16,613
16.6%
Coleson Cove 1
1,500,000
250,000
250
107,286
0
107,286
0
0
Coleson Cove 2
422,068
70,345
250
40,966
0
40,966
0
0
1,922,068
320,345
2501
148,252
0
148,252
170,051
0
170,051
Coleson Cove Total
21,799
14.7%
IOL By -law
6,087,922
1,014,654
250
193,539
0
193,539
319,872
0
319,872
126,333
65.3%
IOL Lapsed Ag.
1,722,186
287,031
25,259
0
25,259
25,259
0
25,259
0
0.0%
IOL Total
126,333
57.7%
7,810,108 1,301,685
218,797 0 218,797
345,131 0 345,131
IPP By -law
1,636,364
272,727
200
109,449
0
109,449
159,319
0
159,319
49,870
45.6%
IPP Lapsed Ag
37,019,810
6,169,968
95,943
0
95,943
95,943
0
95,943
0
0.0%
IPP Total
49,870
24.3%
38,656,174 6,442,696
205,392 0 205,392
255,262 0 255,262
2007 Saint John Rate Base Case Oct 112008.xis 8Impact 13- Oct -08
Other Recommendations
33. Non - Revenue Water (NRW) Review - It is recommended that the City of Saint
John carryout a review of the NRW. This review should utilize active leak
detection methods in the distribution system using enhanced district area
metering.
34. Accounting Software - The software currently used to record and issue bills to
customers, should have access to all the customer data. Currently the data from
the negotiated agreement customers are not within the same software
component.
35. Watershed Costs - The City has been steadily enhancing watershed ownership
and management. These efforts should continue, but with more public
emphasis. The costs should be identified separately so that they can be
recognized in both potable and raw water rates.
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Executive Summary
October 30, 2008
City of Saint John
Page 13 of 13
36. Large Customer Water User Group - It is recommended that Saint John Water
recommence the large customer water user group constituted to discuss water
issues to the benefit of both the customers and the Utility.
37. Communications - In order to ensure public understanding and awareness of
the recommendations and their potential effects on property owners, we
recommend that the City develop a strategy to deal with the expected public
interest to result from the changes to the water and sewerage rates.
38. Miscellaneous Charges - The City review the costs to provide the services
covered under Miscellaneous Charges to ensure costs recovery.
39. Benefiting Customers - It is recommended that all costs for water and
wastewater facilities to meet local needs be paid by those benefiting. This
includes any proposed Grey water sources. The costs should be recovered from
the user of the infrastructure
40. Vision 2015 — The City's Vision 2015 is strongly supported as a framework for
supporting water and sewage system needs.
Review of Rates and Rate Structure Options
RVA 061105
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Executive Summary
October 30, 2008
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295
In September 2008, Saint John Mayor and Common Council identified a list of priorities and
objectives guided by the following principles:
• We are a City that draws people — they want to live here.
• We are in the top five of places to live in Canada.
• We have revitalized neighbourhoods that are safe, vibrant and attractive.
• We have clean, safe drinking water.
• We have strategic /coordinated planning, development and maintenance of municipal
facilities and infrastructure.
• We have City services that are delivered efficiently and effectively at an equitable tax rate.
• Our citizens /ratepayers consistently recognize municipal services as being effective at a
supportable cost.
Enterprise Saint John can play a significant role in achieving these objectives in their efforts to attract
People, Ideas and Investment to Saint John.
Council's Priority # 10 is listed as:
"Establish an economic development function within the City's administration."
In response to this priority, Common council met with Enterprise Saint John to discuss the current
model of economic development. It was agreed that a second meeting would take place where a
series of 14 questions posed by council would be answered, and ways to enhance the current model
of economic development will be discussed.
Following are the fourteen questions posed by council:
1. What are the quantitative benefits from ESJ to the City of Saint John?
2. What are the Line Items for the city's $408,000 investment?
3. Could you provide case files specific to Saint John, outlining hours spent, how the
priorities are set?
4. Could you provide benchmarking data focusing on Saint John as compared to other
cities?
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
5. Where specifically are the investments made by the City of Saint John spent ?
6. What impact on ESJ would a reduction of $200,000 funding have?
7. How would a newly appointed Economic Development Officer work in conjunction
with ESJ ?
8. What suggestions would you make regarding the City's internal staff more effectively
in terms of economic development?
9. Do you review the CEO's position at ESJ ?
10. What improvements would you suggest to ESJ?
11. Can ESJ produce a document showing value for money?
12. Could there be more communication between ESJ and Council? A minimum of three
times be year?
13. What percentage of their revenue do other cities provide to their economic
development agencies?
14. How is the municipal funding component arrived at?
The questions generally follow three themes and have been categorized as follows:
SECTION 1: STRUCTURE (Questions # 2,3,6,9,14)
SECTION 2e RETURN ON INVESTMENT (Questions #1,4,5,11,13)
SECTION 3e SUGGESTIONS TO ENHANCE THE CURRENT MODEL
(Questions # 7,3,10,12)
ECONOMIC DEVELOPMENT
Economic development is the development of economic wealth of regions for the well -being of their
inhabitants. From a policy perspective, economic development can be defined as efforts that seek to
improve the economic well -being and quality of life for a community by creating and /or retaining
jobs and supporting or growing incomes and the tax base.
The term "economic development" is often used in a regional sense as well. In this sense, economic
development focuses on the recruitment of business operations to a region, assisting in the expansion
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
Fori,retention of business operations within a region or assisting in the start -up of new businesses
a region.'
106.0
14.0
105.0
12.0
104.0
103.0
10.0
1 02.0
8.0 0
cli
101.0
s 100.0
6.0 Lu
99.0
4.0 a
98.0
2.0
97.0
96.0
0.0
Labour Force Indicators 1996 -2008
population
Unemployment ent rate
Source: Statistics Canada
For decades Saint John had
Commercial Real Estate Vacancy Rates
been perceived as a "blue
2002 -2007
collar" town —with much of the
economy based in industry,
14
12
11.7
shipbuilding and
10
9.2
2 10.8
manufacturing. Unemployment
8
8.5 6.8
rates were very high;
6
4
population was declining and
2
marked by a definitive out -
0
migration of our youth.
Commercial vacancy rates
were high, and generally
Source: Turner Drake Office Market Survey December 2007
http://en.wikipedia.org/wiki/Economic—development
Grand Ray - Westfield • QUisparn sis Rothesay St. Martins a Saint john
speaking, this economic climate resulted in an excellent value proposition for the attraction of
business and investment to Saint John. There was lots of available labour and real estate, as well
as incentives for relocation available from Provincial and Federal governments. In the past, cost -
based factors (labour cost, taxation levels, real estate vacancy etc.) were the primary driver of
site selection decision making.
In 2001 -2002, the Community identified and prioritized four growth sectors (ICT, Health Sciences,
Energy and Advanced Manufacturing and Tourism). The implementation and strategic focus on these
sectors has delivered results. Labour availability has decreased, real estate has been absorbed, and
it was recognized that the focus had to shift from the attraction of BUSINESS to the attraction of
PEOPLE, in order to sustain this growth and diversification.
Strategic priorities were aligned with our efforts as a community to attract a skilled labour force
through retention, attraction, repatriation and immigration. As the population grew and the
unemployment rate reaches unprecedented lows, decisions are now increasingly being made on
labour -based factors.
The economy in Saint John has significantly diversified in the past decade as a result of carefully
planned and executed economic development strategies.
Change in Employment — Selected Occupations (1996 -2006)
Total
Total
#
%
1996
2006
Change
Change
Total labour force
61,410
64,175
2,765
+5%
Increasing:
Customer service, information and related clerks
585
2,450
1,865
+319%
Computer and information systems occupations
615
2,130
1,515
+246%
Auditors, accountants and investment professionals
780
1,225
445
+57%
Other technical occupations in health care (except
dental)
245
590
345
+141%
Human resources and business service professionals
185
510
325
+176%
Decreasing:
Electrical trades and telecommunications occupations
11015
655
-360
-35%
Labourers in processing, manufacturing and utilities
725
450
-275
-38%
Industrial electricians
420
175
-245
-58%
Longshore workers
315
80
-235
-75%
Janitors, caretakers and building superintendents
1,365
1,120
-245
-18%
For the CMA. Source: 1996, 2006 Census using Standard Occupational Classifications.
Grand Ray - Westfield • QUisparn sis * Rotliesay St. Martins a Saint john
UNZ
1976 — The Fundy Region Development Corporation was established as a part of a provincial
network of economic development agencies. FRDC was responsible for the regional economic
development between Sussex and St. Stephen, including Saint John.
1994 - Enterprise Saint John was established as a commission of the City of Saint John, with a
primary focus on investment attraction.
1998 - Enterprise Saint John was established in its current structure as the Greater Saint John
Economic Development Commission, Inc.. The newly formed Commission was incorporated to
assume the responsibilities of the former Enterprise Saint John and the Fundy Region
Development Commission for Greater Saint John. It retained the name Enterprise Saint John.
Funding was provided from the municipalities (City of Saint John, Grand Bay - Westfield,
Quispamsis and Rothesay), the Province of New Brunswick and ACOA. The mandate of the
Commission was:
a. Develop and Implement the Community's Economic Development Strategies
b. Investment Attraction
c. Business Development
d. Entrepreneur Development
2002 - The Province of New Brunswick changed the model of economic development agencies
in the Province, using Enterprise Saint John as a model for the 15 community economic
development agencies (CEDA's) in the Province.
THE DEVELOPMENT OF THE REGIONAL STRATEGIC ECONOMIC DEVELOPMENT STRATEGY
• 1998 - "Imagine the Possibilities" session where hundreds of community stakeholders were
invited to share their dreams and ideas of a Saint John in the future.
• 1999 - "Imagine the Possibilities — For Youth ". By beginning with identifying our community
goals and visions, we had the foundation on which our strategy for growth was established.
• 2001 -2002 — Four key Growth Sectors identified.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint john
• 2004, the Mayors of the regional municipalities embraced and endorsed the philosophy of
True Growth.
• 2006 - "Life on Your Terms" as the key method of communicating our community's assets to
the rest of the world was developed.
• 2007 — Benefits Blueprint was produced as a roadmap to maximizing the social, economic,
cultural and environmental benefits to the citizens of Saint John.
• 2008 -2010 — Enterprise Saint John three year Strategic Plan developed and initiated.
Enterprise Saint John has been recognized as a leader in the engagement of stakeholders, the
business community, and the community at large when it comes to the identification and pursuit of
regional strategic priorities. In 2007 , the organization was recognized by Site Selection Magazine
as one of the top economic development groups in the country.
THE GREATER SAINT JOHN ECONOMIC DEVELOPMENT AGENCY INC.
(ENTERPRISE SAINT JOHN)
The Greater Saint John Economic Development Agency, Inc. (Enterprise Saint John) is a not - for - profit
agency, funded by the City of Saint John and the municipalities of Grand Bay - Westfield,
Quispamsis, Rothesay, and St. Martins, the Province of New Brunswick and the Atlantic Canada
Opportunities Agency (ACOA). The Agency's mandate and core services are:
• Develop and Implement the Community's Economic Development Strategies
• Investment Attraction
• Business Development
• Entrepreneur Development
• Workforce Expansion
LEADERSHIP
Board of Directors
The volunteer Board of Directors of Enterprise Saint John is comprised of sixteen individuals
representing a broad spectrum of industry and community interests, ensuring there is representation
from key sectors of interest. Nominations are received from the City of Saint John (5), Province of
New Brunswick (4), ACOA (4), Quispamsis (1), Rothesay (1) and Grand Bay - Westfield (1). The
Board is currently chaired by City of Saint John appointee Mr. Bob Manning.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint john
Board Members
Robert Manning — Chair
Darren Bishop — Vice Chair
Tony Gogan — Treasurer
Stephen Sherlock - Secretary
Don Bonnell
Rick Brown
Arthur T. Doyle
Gerry Pond
Nathalie Godbout
Jeff Landry
Dr. Laurel Reid
Dr. Robert MacKinnon
Dora Nicinski
Darryl Wilson
Mary Keith
Anita Punamiya
Ex- Officio
Mayor Ivan Court
Mayor Bill Bishop
Mayor Murray Driscoll
Mayor Grace Losier
Mayor James Huttges
Owens McFadyen Group
Bishop's Windows and Doors
Grant Thornton
CIBC Wood Gundy
Aliant
Master Mechanical Contractors Inc
Patterson Palmer
Mariner Partners
Lawson Creamer
Irving Oil Ltd.
Tourism Synergy Inc.
UNB Saint John
Former CEO, AHSC
Alternatives
J.D. Irving Ltd.
Comprecultures
Appointed /Nominated By
City of Saint John
Town of Quispamsis
Province of New Brunswick
Town of Grand Bay - Westfield
City of Saint John
Province of New Brunswick
ACOA
Town of Rothesay
City of Saint John
Province of New Brunswick
ACOA
City of Saint John
Province of New Brunswick
ACOA
Province of New Brunswick
City of Saint John
City of Saint John
Town of Rothesay
Town of Quispamsis
Town of Grand Bay - Westfield
Village of St. Martins
The organization is led by the CEO. The CEO is directed by the organization's By Laws & Strategic
Directions, CEO job description and annual objectives. The CEO is to ensure that any practice,
activity, decision, or organizational circumstance undertaken is lawful and aligned with commonly
accepted business and ethical practices.
Grand Bay - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
Accordingly, the CEO is guided by leading practices in the areas of:
• Service to clients
• Communication to the public
• Communication and support to the Board
• Human Resources Management
• Financial planning, monitoring and reporting
• Risk management
• Protection of information
• Emergency CEO succession
• Emergency Issues that may have impact on Organization's strategy
• Regular engagement with community stakeholders
An effective relationship between the Board and the CEO is facilitated by open discussion, clear
process and direction. The CEO's performance is evaluated annually. Led by the Chair, the Board
formally assesses CEO performance by soliciting feedback from all Board members and selected
staff and partners. The assessment is based on the Board policies, as well as the CEO job
description and annually agreed to objectives.2
(APPENDIX A — CEO PERFORMANCE EVALUATION TEMPLATE)
FUNDING
Enterprise Saint John receives core funding from the 5 regional municipalities, the Province of New
Brunswick and ACOA. The 2007 core operating budget was $919,349. In addition, a total of
$50,000 is received from each of the municipalities, based on tax base figures, for the
implementation of the Workforce Expansion Initiative. This core funding enables ESJ to leverage
significant additional funding from other sources to implement priorities.
2 Enterprise Saint John Governance Policy Manual
Grand Ray - Westfield • QUisparn sis * Rotliesay St. Martins a Saint John
Enterprise Saint John
Core Operational Funding (2007)
($919,349)
PNB
$104,205 Saint John
11% $408,420
® Saint John
ACOA 45%
®Rothesay
$243,145
27%
❑ Quispamsis
St. Martins
El Grand Bay
$1,399
Westfield
0
❑ St. Martins
Grand Bay Westfield Quispamsis
$20,756 Rothesay
$73,821
i® ACOA
$67,603
2%
8%
7%
E PNB
Enterprise Saint John
Core and Strategic Projects Funding 2007
PNB - PSTL
CISP $41,197
$103,877 2%
5%
PNB - Local Gov.
$34,405
2%
Core Funding
PNB- DoE
®CISP
$919,349
$250,000
M PNB - PSTL
49%
13%
❑ PNB - Local Gov.
❑PNB -DoE
■ ACOA
ACOA
❑ Industry Partners
$205,222
MMunicipalities
11%
Core Funding
Industry Partners
Municipalities
$293,032
$52,000
15%
3%
Grtrci Bay-Westfield QUispamsis tC1j15y fit. Martins stll1'r JraiTrh AA
The municipal contributions to both the operating budget and workforce expansion initiative are
calculated based on the tax base figures of the preceding year. The figures shown below represent
the 2008 fiscal year. These numbers are subject to annual changes in the tax base.
118,0112109_'n"11 H--3-141011Z "RZ 0,
MUNICIPALITIES — WORKFORCE EXPANSION INITIATIVE
Tax Base 2007
Tax Base 2007
Saint John
Saint John
$5,048,713,797
70.30%
$ 402,116
Rothesay
$856,957,879
11.90%
$ 68,068
Quispamsis
$1,003,627,400
14%
$ 80,080
Grand Bay — Westfield
$254,544,128
3.60%
$ 20,592
St. Martins
$16,784,827
0.20%
$ 1,144
Total
$7,180,628,031
100%
$ 572,000
Source: Enterprise Saint John 2008 Budget — APPENDIX C
MUNICIPALITIES — WORKFORCE EXPANSION INITIATIVE
$ 35,150
Tax Base 2007
Saint John
$5,048,713,797
Rothesay
$856,957,879
Quispamsis
$1,003,627,400
Grand Bay —Westfield
$254,544,128
St. Martins
$16,784,827
Tota l
MEM009M
70.30%
$ 35,150
11.90%
$
5,950
14.0%
$
7,000
3.60%
$
1,800
0.20%
$
100
100% $ 50,000
Grand Bay - Westfield • Quisparn sis o Rothesay * St. Martins a Saint, John
Line Item
2007 Expense
% City
$ City Funding
Description
Funding
Allocated (est.)
Allocated
Salaries and Benefits
$468,393
45%
$211,000
Includes the CEO,
Manager, Business
Development EDO's and
admin staff, as well as co-
op students
Client Services
$96,502
70%
$68,000
Client proposals and
meetings, travel, consulting
support and studies,
hosting prospects, and
follow-up
Communications
$74,603
70%
$52,500
Community promotion,
advertising, website, public
relations, proposals,
printed materials etc.
Office and Admin
$169,377
45%
$76,500
Rent, office overhead,
computers and MIS,
general operating
expenses, printed materials
etc.
TOTAL
$408,000
Grand Bay - Westfield • QUisparn sis * Rotliesay St. Martins a Saint john
Funding Partner
Current Contribution
to Operational Funds
$200K Reduction
(49 %)
City of Saint John
$ 408,420
$200,126
Other Municia lities
$163,580
$80,154
ACOA /Province
$347,350
$347,350
TOTAL
$919,349
$627,630
NET DECREASE
$291,719
Additional funding leveraged in
2007
$927,733
Reduced by a potential 75%
$- 695,799
Net Potential Leveraged Funds
$ 231,934
NET POTENTIAL REDUCED
E.D. BUDGET
$ 859,564
• A decrease of $291,719 in operational funding would require the reduction of management,
staff, communications and client service activities.
• This reduction would also seriously impact the organization's ability to leverage and manage
additional funding by an estimated 75 %.
• Thus reducing the Economic Development budget from $2,368,722 (2007) to $ 859,564.
STRATEGIC PLANNING
Enterprise Saint John Board, Management and staff completed a three -year strategic planning
exercise in 2007 and identified the following six strategic priorities:
1. Workforce Expansion
2. Core Service Delivery
3. Energy Hub
4. True Growth and True Growth Initiatives
5. Partner Networks
6. Governance and Administration
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint john
Workforce development was identified as the organization's most important priority and has become
a core client service function. The traditional core program areas of entrepreneurship, small and
medium -sized enterprise and investment attraction services remain a fundamental strategic priority
for Enterprise Saint John. Moving forward there will be a particularly strong focus on
entrepreneurship and targeted niche investment attraction services.
Enterprise Saint John will continue its proactive support of the four emerging growth sectors, with a
particular emphasis in 2008 -10 on the development of a diverse and sustainable local energy hub.
As the regional economy continues to evolve, Enterprise Saint John will be responsive to emerging
business and investment opportunities.
Every case file is different. There is no set procedure for response to inquiries as each company has
different needs and requires varied levels of assistance.
Every lead is considered to be a priority until it is determined that the value proposition is not a fit
with the project, or the project comes to fruition.
Examples of recent investment files :
NY Thermal Inc.
(Partner referral)
Kevin Dennison of NY Thermal Inc. was referred to Enterprise Saint John. The owners wanted to
expand as a result of development of the "Matrix ", an all in one heating, cooling, and ventilation
appliance. The owners couldn't find a suitable location near their existing facility in Sussex and
required access to natural gas so were considering new options.
Facilitated meetings with:
• Mayor of Saint John
• City Manager
• Planning Commissioner for the City of Saint John
• Minister of Business New Brunswick
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
• BNB staff
• Minister of Energy / DoE Staff
• Director of Efficiency NB
• Enbridge Gas
• Assisted the company with a government loan application which resulted in a $1.5
million forgivable loan for training for 209 new and incremental jobs created; also a
$1.5 million term loan to finance capital costs.
• The Company originally established in the McAllister Industrial Park but is currently
constructing a new, $3 million, 67,000 square foot building in Drury Cove that will
house production, training and research.
• In March 2008 the company was awarded the eK-OMFORTAward by Natural Resources
Canada for not only meeting but exceeding the CSA standard codes in energy efficiency.
The company has also been nominated for a New Brunswick Innovation Award which
will be awarded in October.
• Ongoing assistance is provided.
Approximate total hours spent: 120 HOURS AND ONGOING
SHAWMUT Equipment of Canada Inc.
(Proactive contact)
As a part of the Top 25 Initiative, Shawmut was identified as an American company looking for a
presence in Atlantic Canada. Shawmut Equipment of Canada Inc. is a distributor for the Manitowoc
Crane Group, including Crawler cranes, mobile hydraulic cranes, boom trucks and self- erecting
tower cranes.
• Contact referral by Irving Oil (part of the proactive Top 25 initiative)
• Shawmut was proactively contacted to discuss Saint John as an option. They had other areas
under consideration.
• Provided extensive community information in response to detailed questionnaire from the
company.
• Invited company representatives to Saint John — provided community orientation and tour.
• After their other site selection visits in Atlantic Canada, the Company chose Saint John based
on the value proposition offered by the community.
• Shawmut secured a location in the Spruce Lake Industrial Park
• Enterprise Saint John worked very closely with them during their start -up process on a number
of issues (Human resources, legal issues)
• Continuing support in the areas of human resources, labour, and provision of information
Approximate total hours spent: 50 HOURS AND ONGOING
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
AECON Fabco
(Partner referral)
• First had contact with the company in October 2007 — referred by a provincial Minister
• Company was considering two locations, Saint John and Pictou, NS
• Had numerous meetings with officials of the company including the VP; Comptroller;
Marketing Manager and Business Unit Manager
• Provided ongoing assistance including information on Labour Force; Economic Indicators;
Major Projects
• Facilitated and attended meetings with the Mayor
• Scheduled and attended several meetings with each of the following organizations —ACOA;
BNB; PETL; Minister of Energy and Minister of RDC
• Identified potential real estate options
• Facilitated meeting with local developer
• Facilitated meetings with the Saint John Port Authority
• Provided contacts for local realtors as well as real estate information from internal sources
• Provided contacts and referrals for labour unions /construction association
• Ongoing resource for the company; numerous meetings over the period of 8 months (at least
on a monthly basis)
• After much deliberation the company decided to go with the Pictou optiondue to significantly
lower start -up costs.
• Ongoing contact continues with the company on other potential projects.
Approximate total hours spent: 200 HOURS AND ONGOING
Counsel Corporation
(Direct Contact)
• Initial telephone discussion with Counsel Corp re: potential in Saint John and welcome to the
community.
• Met with representatives from Counsel Corporation and provided community economic
overview; answered specific questions about the economy and potential opportunities in
particular in Saint John West
• Followed -up with ideas as to opportunities for further development of their property
• Set up a meeting with the Mayor and company representatives
• Participated in meetings in Toronto with company officials, Mayor and other representatives
from Saint John
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
• Ongoing resource for Counsel Corporation with respect to opportunities and community
information specific to their needs (i.e., schools in area, demographic snapshot of west side,
etc.)
• Verification of market intelligence they had gathered
• Assistance with event to introduce planned re- design of Lancaster Mall to community.
• Ongoing resource for the company as they consider other developments in the region.
Approximate total hours spent: 75 HOURS AND ONGOING
Enterprise Saint John works with a number of partners and stakeholders on both proactive and
reactive business development opportunities for the City. Leads are generated from MLA's, MP's,
Mayors and Councillors, partners and the business community.
New investment opportunities are categorized as:
• Reactive Contacts — Leads received from partners, direct response to client- initiated contact
• Proactive Contacts — Identified through the Top 25 Investment Prospects List generated by
Enterprise Saint John.
The Top 25 Initiative was developed in order to :
• Create a list of business and community leaders to approach re: business attraction
opportunities.
• Develop a list of clients to proactively approach re: opportunities in Greater Saint John
• Develop a list of the "Top 25" investment attraction opportunities for the Saint John region.
• Develop and implement a business attraction strategy focused on the "Top 25" list.
Efforts are prioritized by targeting:
• Identified Priority Sectors (ICT, Energy, Tourism, Manufacturing, Health Sciences)
• Emerging Sectors (i.e., Mining)
• Other (i.e., Anchor retail, public sector)
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint john
The Top 25 List is established by maintaining excellent ongoing relationships with the business and
community leaders and will focus on generating leads through:
• Other divisions,
• Customers,
• Suppliers,
• Partners,
• A company that would move them /industry forward
• Other (friends, contacts)
Economic development in the City involves multiple stakeholders. Enterprise Saint John is the lead
agency in the Saint John region but Business New Brunswick and even federal departments /agencies
such as ACOA and Industry Canada have impact. The private sector also gets involved in direct
economic development funding through projects with Enterprise Saint John.
In addition to Enterprise Saint John's investment attraction activities, Business New Brunswick also
provides leadership for national and international business investment attraction activities. It has a
team of over a dozen professionals out selling New Brunswick as a location for business. It is
imperative for Saint John to have a strong and clearly articulated value proposition for businesses
considering New Brunswick.
Quantitative benefits from economic development include:
• Job Creation
• Labour Force & Population Growth
• Decline in unemployment rate
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
• Housing Starts
• Commercial Real Estate Activity
• Increased tax base
• Between 2003 and 2007, the Saint John region saw a net increase of 7100 new jobs.
• In 2007, 47% of the Province's total net new employment growth occurred in Saint John.
Source: Statistics Canada
Enterprise Saint John has been involved in most of the significant projects that have contributed to
this growth.
It should be noted that there are numerous organizations that have a role in the attraction of new
business investment to the City that work closely as a team.
Enterprise Saint John enlisted the consultative services of Jupia Consultants Inc. for the following
economic impact analysis of job creation in the region. Jupia Consultants' senior consultant David
Campbell has extensive experience working with over 30 local economic development agencies in
the Maritimes, Ontario and the State of Maine. He has conducted economic development
benchmarking exercises for a number of economic development organizations including ACOA,
Nova Scotia Business Inc. and Enterprise Greater Moncton.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
A conservative estimate indicates that Enterprise Saint John has been involved directly or indirectly in
some capacity in approximately 1/3 of this job growth, or almost 2400 new jobs and :
• $3.5 million per year directly to City Hall in the form of residential and non - residential
property taxes paid
• $11.6 million per year in personal income tax and HST paid to the provincial government
• $67 million per year in new economic activity in the Saint John CMA (not including taxes
paid)
Direct Tax Revenue from ESJ Influenced Job Creation
Note:
Jobs created directly from projects Influenced) by ESJ (2003 -2007) 2,400 1
Local Tax Impacts:
Estimated annual residential property taxes supported from new jobs
$
3,721,026 2
City of Saint John (est. 50% of total)
Household furnishings & equipment
1,860,513 3
Estimated annual non - residential property taxes supported from new jobs
$
1,782,289 4
City of Saint John (est. 90% of total)
Health & personal care
1,604,060 5
Estimated annual revenue to City Hall from ESJ influenced job creation
$
3,464,573 6
Provincial Income /HST Tax Impacts:
Other (not including taxes)
5,257,566
Estimated total income taxes supported from new jobs (provincial portion)
$
5,673,024 7
Estimated HST revenue from new jobs (provincial portion)
5,952,225 8
Estimated annual provincial income and HST tax revenue supported from ESJ influenced job creation
$
11,625,249
Est. annual consumer spending in Saint John CMA (not including taxes) from ESJ influenced job creation
Food
$ 9,447,813
Housing & household operation
18,586,499
Household furnishings & equipment
2,508,750
Clothing
3,406,619
Transportation
13,314,240
Health & personal care
4,183,321
Recreation
4,787,596
Personal insurance /pensions
5,419,832
Other (not including taxes)
5,257,566
Total est. consumer spending from ESJ influenced job creation
$ 66,912,237
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
E
Notes:
1. Enterprise Saint John influenced job creation estimate based on companies that
established in Saint John during the five year period 2003 -2007. ESJ worked directly on
these files to ensure the firms set up in Saint John.
2. Estimated annual residential property taxes paid estimate calculated using the following
methodology:
Total Warrant - 2007 (revenue from property taxes) City of Saint John $ 84,246,996
Total Municipal Tax Base $ 4,667,998,750
Non - Residential Tax Base $ 1,301,083,100
Residential Tax Base $ 2,716,374,100
Tax Rate 1.795
Tax Rate (BIA) 0.16
Residential Taxes Paid $ 49,024,511.40
Non - Residential Taxes Paid $ 23,481,656.40
Population - 2006 68,043
Total Employment - 2006 (City of Saint John only) 31,620
Estimated residential property taxes per employed person $ 1,550.43
Estimated non - residential property taxes collected per employed person $ 742.62
3. It is impossible to know exactly where the workers in the new jobs live. However, given
population and residential construction trends, 50% of the total within the city limits is a
conservative estimate.
4. Non - residential property tax uses the same methodology as in 2 above
5. The bulk of the commercial and industrial activity in the Saint John CMA is in the city proper.
6. This is the annual estimated revenue to City Hall directly from ESJ influenced job creation
projects. This is not a one time impact as it recurs in perpetuity until the company ceases or
downsizes operations.
7. Basd on the 2007 estimated median income for full time, full year workers in Saint John. The
tax calculation uses the Ernst & Young 2007 income tax calculator. This figure is the estimate for
provincial income taxes only.
Est. Average annual income from new jobs $ 35,017
Est. Annual new provincial income taxes paid per job $ 2,364
Est. Annual new income taxes paid per job (federal and provincial) $ 5,253
8. Based on the average amount of HST collected per employed person from the 2008 provincial budget
HST paid per employed person (provincial portion) $ 2,480
9. Derived using Statistics Canada Table 203 -0001 - Survey of household spending (SHS) for
2007. Spending levels were adjusted to the median income level for a full time, full year worker in
the Saint John CMA.
Grand Bay - Westfield • QUisparn sis * Rotliesay St. Martins a Saint John
to far in 2008, there have been four companies based outside of New Brunswick that have received
support from the Provincial government and have announced new business investments in the
province. Three of the four have been in Saint John. Since January 2007, there have been 10
companies that are headquartered outside New Brunswick announce new investments in New
Brunswick (with Business New Brunswick support). 40% of these firms chose Saint John for their
expansions representing 38% of the total jobs created.
Source: Communications New Brunswick
Examples of Companies that ESJ
has worked with in the past 12
months
..I. Insurance
Fluor
Floating P'ipel'ine Co,.
Shawmut Equipment
Prudential Con.sulN'ing Inc,.
Sucor
Teletech
Centerbeam
ANlantica Centre for the Arts
Olivier Soap Company
NY Thermal Inc.
Saxby Foods
T4G
Brovada Technologies
Wyndham Worldwide
Sitel
Salesbridge
Sunwing Airlines
Westjet Airlines
Indigo /Chapters
LABOUR FORCE AND POPULATION GROWTH
106.0
105.0
104.0
103.0
102.0
co
101.0
L 100.0
99.0
98.0
97.0
96.0
b � � � O \ � � � h b A�eQ Z
Labour Force Indicators 1996 - 2008 Population (
�UnemploymE
Source: Statistics Canada
Grand Bay - Westfield • QUispan sis * Rothesay e St. Martins a Saint, John
Residential Property
Occupied by Owner
Location #1 Location #2
$ 985,400 $ 560,300
0.01795 0.01795
0.00020 0.00020
0.01815 0.01815
7,588 0,057
197 112
$ 17,885 $ 10,169
Commercial Property
Location #1 Location #2
$ 985,400 $ 560,300
0.02250 0.02250
0.02693 0.02693
0.00020 0.00020
0.04963 0.04963
$ 22,172 $ 12,607
2�15, 532 5,0&1)
197 112
$ 48,901 $ 27,805
• 2007 non - residential assessments in Saint John totalled $1.32 Billion.
• Estimated municipal property taxes on non - residential properties was $35.5 million, which
was approximately 42% of property taxes collected by the City of Saint John as part of its
Warrant funding.
As such, the City of Saint John has seen significant growth in the tax base in the last decade.
$4,800,000,000
$4,600,000,000
$4,400,000,000
y
CO $4,200,000,000
a $4,000,000,000
~ $3,800,000,000
c $3,600,000,000
~ $3,400,000,000
$3,200,000,000
$3,000,000,000
Growth in Saint John Municipal Tax Base
1998 -2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Source: PNB — Department of Local Government
Grand Bay - Westfield • QUispan sis * Rothesay St. Martins a Saint john
IIU�JJICIRAL ECOVIGUIC DEVELORIEUT SPEVIMIG
Grand Bay-Westfield • QUispamsis * Rothesay * St. Martins a Saint John
21
The Moncton Model
The City of Saint John spends well below the Greater Moncton region Moncton on total economic
development spending per capita ( 0.3% of municipal budget compared with almost I%) .
Enterprise Greater Moncton
$ 996,320
City of Moncton
$ 481,000
Town of Dieppe
$ 1,000,000
Town of Riverview
$ 260,000
TOTAL $ 2,737,320
Enterprise Saint John $ 969,350
TOTAL $ 969,350
Enterprise Saint John would be most willing and interested to be subject of a Value for Money
Audit (Performance Audit) to assess the value of the organization. Enterprise Saint John has done
some preliminary research and has proactively contacted Rafuse Consulting, whose principal has
extensive Performance Audit experience with various levels of government and economic
development agencies. (APPENDIX C)
A performance audit is a systematic and objective examination and assessment of the
performance of an organization's activities against established criteria. Its scope includes the
examination of examination of organizational performance and comparison to benchmarking
data on:
• economy, efficiency, and effectiveness;
• protection of assets;
• accountability relationships; and
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
• compliance with authorities.
A performance audit will provides the City with objective information about the organization's
performance, as well as recommendations that can lead to improvement in its operations.
Enterprise Saint John is regularly the subject of Value Audits by our stakeholders. Most recent
include:
In 2007, Enterprise Saint John was subject of an audit by Deloitte and Touche for the Internal
Audit Department of the Department of International Affairs and Trade (DFAIT). The audit
objectives were to determine that the Project was administered in accordance with the terms
and conditions of the agreement; that due diligence was executed with regards to the
expenditure of public funds; and that financial reports demonstrated that the funds were used
as intended, were used prudently, and that value was received. No exceptions, observations
or recommendations were noted.
In 2006, the Report of the Auditor General for New Brunswick looked at Enterprise Agency
funding in New Brunswick as a part of an audit on Business New Brunswick. It was reported
that Enterprise Saint John was the most proficient at leveraging core funding into other
funding for related projects. In 2005, ESJ raised almost $1.4 million in other funding over
double the level of either Fredericton or Moncton.
Annual Budget Review — 2005 (New Brunswick Enterprise Agencies)
CE;FD "A
{:ore Fimcili:i -.
cp'dII+2'Il'
Faii:irb'u:a.g
Tot nl Agency
R. tae
Fuiyn.miein.d
EP4�PR 'd'41��1 "'fYS,'L ®1C.RfA.d
FimcFing A. reementl
g
'4111v;c:alaia.l
Are OA
B.NB
Enw rinse South Euast,
$ 173,700
S 74,443
1 34_,�- "ti;�
$ 1.:30 09114
'S 417,747
Enb_ r.u„e' Gixai-rci 17n14s'
16Q,Q2.0'
72.,82.4
27.376
2,61435
552,1055,
Enterprise 'Greater Moncton
252,53 -8
93,1.104
558 6'65
.5901 34-;1.
17499.,668
Enw �r.ace' Carleton
169,8.2.9
72.,78.4
5.31014
12_3.85
2.60,302,
Enw �r :nse C'entr :aal
169,7c)6
1 82,571
9_082
901013
351,462,
Erma r i¢ sC:lmi1—.
178,740"
76,610=3
53S26
4o5 56'!3'
779,738
Enw �r.ace' Charlotte
138.462,
72.883
11S51
195_'343
468,540
Enw �r.ace'Fred–erictoin
2:00,319
86,I09'7
1P8 143
b07_924
17092,433
Enw �r :nseFundy
133,5P7
79,584
1623P
28.182 .
307,402,
Enw �r :nse Lent
174,360'
74,7 2.6
23.,5'1.5
2,57_573
560,174
Enr r :¢,e
169,748
72.,766
IQ 6 11011
70,b227
17044,342,
Enter pr :ise'Mirainicli
153,161
76,437
54.5'1010
44202.1!3
72.45,12.7
Enterprise Peninsula
142,22_5v
82.,382..
44.31010
3'00 51101
1.712.8,417
Enter pr :iseRestn..ouche-
173,340'
74, 233
27541
783.01101
17058,130
Enterprise 3iaint. John
2_33,7GnCv
1100, 185
5510.0u1u
1..378 11bb
2.2.62,:3145
T�. -r.1
$2,.783_500
$1 1196..677
$1.716.510
15- .812.96,5.
$12,..4709.653
Source: Report of the Auditor General - Province of New Brunswick 2006.
Grand Bay - Westfield • QUisparn sis * Rotliesay St. Martins a Saint John
Currently, investors, developers, new immigrants, and Enterprise Saint John (on behalf of clients)
pursuing development opportunities in Saint John have multiple points of entry to City Hall (Mayor's
Office, City Manager's Office, Saint John Industrial Parks, Planning Department, Tourism Saint John,
etc.) . There is no one clear path for economic development projects. This has the potential to lead to
confusion, and to create a perception that developing in Saint John is difficult.
Economic Development Function - We suggest that establishing an Economic Development
Function within the City Manager's Office that could act as a facilitator or advocate for
investors, developers and clients across all City departments. This role would alleviate
multiple contacts, creating an efficient and effective process.
This new Economic Development Function would:
• Reinforce the City's commitment to economic development.
• Act as a conduit of information between the City, Enterprise Saint John and other
departments.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
• Participate actively in hosting investment prospects, streamlining and expediting the
process by which developers and investors communicate with the City and move
projects forward.
• Respond to leads generated by Mayor, Council and other City departments and work
with Enterprise Saint John to pursue them. Enterprise Saint John could provide the
resources to develop strategies, conduct research, implement plans and pursue
opportunties.
• Participate in Enterprise Saint John Board meetings (in addition to the Mayor).
2. Industrial Parks - In October 2007, Common Council accepted a report entitled
"Recommendations for Enhancing the Viability, Competitiveness and Growth of Our Business
and Industrial Parks". We encourage the City to implement the sixteen recommendations,
including the establishment of a full time management role.
3. Communications — We believe that Enterprise Saint John must enhance communications to
Mayor and Council, City staff, partners, and the Community by :
• Becoming an active partner in the proposed Economic Development Committee of
Council
• Meeting more regularly with Council
• If established, the new Economic Development Facilitator would participate in
Enterprise Saint John Board meetings (in addition to the Mayor)
• Enhance communication capacity to stakeholders and external audiences using tools
such as website, customer relationship management reporting, and a more
accessible Annual General Meeting.
4. Enterprise Saint John and the City should host regular workshops for developers (both
commercial and residential) and stakeholders to explore ways to encourage more
development within the City, including priority neighbourhoods.
5. The City, together with other partners, should continue to work together to develop a
Welcome Centre for new immigrants and residents.
6. The City of Saint John, Enterprise Saint John, Venue Saint John, Saint John Industrial Parks,
and other agencies and organizations promoting Saint John should increase efforts to
coordinate messaging and combine resources where possible to send a consistent message to
external audiences.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint John
7. The City should consider increasing its investment in economic development to the Provincial
benchmark as set by Fredericton and Moncton. (Currently, Fredericton and Moncton invest
approximately 0.9% of their total budgets, or $14.48 and $14.62 per capita respectively,
whereas Saint John invests 0.3% or $6.00 per capita).
APPENDICES
APPENDIX A — Enterprise Saint John CEO Performance Evaluation Form
APPENDIX B — Enterprise Saint John 2008 Budget
APPENDIX C— Performance Audit Proposal — Rafuse Consulting Inc.
Grand Ray - Westfield • QUisparn sis * Rothesay St. Martins a Saint john
PERFORMANCE REVIEW
CEO ENTERPRISE SAINT JOHN
2006
Key Elements
Exceeds
Meets
Does Not
Meet
Work Environment: (evaluation based on staff
feedback)
➢ Achieves support and commitment from
management and staff
➢ Sets the tone for an ethical, results driven
organization
➢ Demonstrates desired values and behaviors
of the organization
➢ Assists others in developing their skills
Financial Management:
➢ Works within available resources
➢ Identifies and pursues opportunities for
new funding sources
Professional Development:
➢ Pursues learning opportunities
Strategic Directions:
➢ Supports the Board in regular Strategic
Planning
➢ Develops a plan for achieving strategic
directions
➢ Monitors and reports progress in meeting
strategic directions
➢ Aligns actions with strategic directions
Strategic Relationships:
➢ Develops and maintains productive
working relationships with strategic
partners. (Evaluation based on strategic
partner satisfaction feedback)
Support to the Board:
➢ Provides Board with accurate, timely
information to support informed board
decision making
➢ Works collaboratively with Board
members and committees
➢ Provides sound advice to the Board
Communication:
➢ Articulates the vision of the organization
➢ Shares information in an honest, open way
327
BOARD COMMENTS:
CEO COMMENTS:
Signature Board Chair /Date Signature CEO /Date
328
Annual CEO/Board Agreed Upon Objectives:
BOARD COMMENTS:
CEO COMMENTS:
Signature Board Chair /Date Signature CEO /Date
328
Assumptions in the process to be used are:
➢ All Board members will have an opportunity to use the format to provide
feedback on the CEOs performance
➢ Staff will all have an opportunity to provide feedback on the CEO performance
for the Work Environment section.
➢ Representative Strategic Partners will be asked to participate in providing
feedback on the CEO's performance for the Strategic Relationships component
➢ The results of the Board, Staff and Strategic Partnership process will be compiled
by the Executive Committee and documented
➢ In a private session of a Board meeting, the Board Chair will report to the Board
the results of the finalized performance process. During this meeting, new annual
objectives for the CEO from the perspective of the Board will be identified
➢ The Board Chair will meet with the CEO and provide a written and verbal
summary of the performance review.
➢ An outcome of the meeting for performance review will be the agreed to
objectives for the CEO for the coming year.
➢ There will be a process developed to align contract and compensation matters
with the performance review outcomes
329
Greater Saint John Community Economic Development Agency, Incorporated
2008 Budget
Page 1 Budget 2008 for Board.xls
330
2008
200"
REVENUE
ACOA /Province of New Brunswick- Base Funding
$
347,350
027,000
Municipalities - Base Funding
$
572,000
072,000
SEED Connexion
$
66,000
00,000
True Growth - Workforce Expansion Initiative
$ 580,000
True Growth - Other Projects
$ 340,000
$
920,000
080,070
Emerging Entrepreneurs
$
125,000
120,000
Labour Force Development (moved to Workforce Expansion)
$
-
00,000
Miscellaneous Fees and Sponsorships
$
18,000
0,000
Total Revenue
$
2,048,350
.1,763,726
EXPENSES
Salaries & Benefits
$
510,000
29 t x022
Communications
$
65,000
00,000
Business Development /Client Services
$
85,000
81,000
True Growth - Workforce Expansion Initiative
$ 630,000
True Growth - Other projects
$ 310,000
$
940,000
022,070
Emerging Entrepreneurs
$
125,000
120,000
Labour Force Development (moved to Workforce Expansion)
$
-
00,000
Partnership Activities:
Waterfront Development
$
15,000
t 0,000
Propelsj
$
15,000
t 0,000
SEED Connexion
$
66,000
00,000
Professional Development
$
12,000
t 0,000
Depreciation
$
15,000
20,000
Vehicle Expenses
$
25,350
20,000
Office and Administration
$
175,000
100,078
Total Expenses
$
2,048,350
.1,763,726
REVENUE OVER EXPENSES
0
Page 1 Budget 2008 for Board.xls
330
Greater Saint John Community Economic Development Agency, Incorporated
2008 Budget
Page 2 Budget 2008 for Board.xls
331
REVENUE
Total
III ctal
ACOA / PROVINCE OF NEW BRUNSI
Population
Per Capita
Subtotal
2008
2007
Core Funding
$ 210,000
Population Per Capita
107,783
$ 1.15
$ 123,950
$ 333,950
4% increase added 2006
$ 13,400
$ 347,350
$ 347,350
ACOA-70%
Province of NB - 30%
MUNICIPALITIES - BASE FUNDING
Tax Base 2007
Saint John
$5,048,713,797
70.30%
$ 402,116
Rothesay
$856,957,879
11.90%
$ 68,068
Quispamsis
$1,003,627,400
14%
$ 80,080
Grand Bay - Westfiled
$254,544,128
3.60%
$ 20,592
St. Martins
$16,784,827
0.20%
$ 1,144
$572,000
$2(2JJJ
Total
$7,180,628,031
100%
$ 572,000
SEED CONNEXION PROGRAM
Administration Fees
$ 60,000
TEA Software
$ -
Training Allowance
$ 6,000
$ 66,000
$ 66,000
TRUE GROWTH
(Appendix A)
Workforce Expansion Initiative
$ 580,000
$480,000
Other projects
$ 340,000
$920,000
$ 1093 76
EMERGING ENTREPRENEURS
(Appendix C)
ACOA
$ 65,000
Post - Secondary Education Training & Labour
$ 25,000
Private Sector Sponsors
$ 10,000
CED Fund
$ 25,000
$125,000
$ 125,000
LABOUR FORCE DEVELOPMENT (incorporated into Workforce
Expansion
Initiative
for 2008)
PSETL
$ -
$ 55,000
MISC. FEES AND SPONSORSHIPS
HRSDC / SEED - Summer Student Grant
$ 1,000
CYBF program
$ 1,000
Seminars
$ 1,000
Bank Interest
$ 9,000
Enterprise Network funding from ACOA
$ 6,000
$ 18,000
$ cp 222
Page 2 Budget 2008 for Board.xls
331
Greater Saint John Community Economic Development Agency, Incorporated
2008 Budget
Page 3 Budget 2008 for Board.xls
332
EXPENSES
SALARIES & BENEFITS
2008
200"
Staff: CEO, COO, Manager, Business Development, Economic
Development Officers and Administration & Communication Officer and
UNB Saint John Co -op students. Benefits include Group Insurance
Plan, RRSP, & mandatory CPP, El & WHSCC. Project staff salaries
$ 510,000
$ d91,922
COMMUNICATIONS
Costs associated with advertising, public relations, special events,
website, printed material & Government relations.
$ 65,000
$ 65,000
CLIENT SERVICES
Costs associated with client activities, including proposal and information
packages, committee meetings, travel costs, real estate tours, car
rentals, room and equipment rentals, catering for client meetings &
receptions.
$ 85,000
$ 81,000
TRUE GROWTH
Workforce Expansion Project
$ 630,000
Other True Growth Projects
$ 310,000
Includes expenses for Workforce Expansion, Community Benefits
Blueprint and continued implementation of True Growth initiatives.
$ 940,000
$ 62d,376
Emerging Entrepreneurs
Costs associated with salaries & benefits for two part -time youth
coordinators, administrative overhead costs, website, promotions such
as Entrepreneur markets, business plan competitions
$ 125,000
$ 125,000
PARTNERSHIP ACTIVITIES:
Waterfront Development Partnership
$ 15,000
$ 15,000
Propelsj
$ 15,000
$ 15,000
SEED CONNEXION
SEED Administrator, includes cost of Salary & Training
$ 66,000
$ 66,000
PROFESSIONAL DEVELOPMENT
EDAC Conferences/Workshops, inclusive of travel, seminars and
workshops
$ 12,000
$ 10,500
DEPRECIATION
Depreciation of capital assets, including computer, furniture and
leasehold improvements
$ 15,000
$ 20,550
VEHICLE EXPENSES
Includes mileage for staff, parking & car allowance
$ 25,350
$ 25,000
OFFICE & ADMINISTRATION
$ 175,000
$ 169,378
Page 3 Budget 2008 for Board.xls
332
Greater Saint John Community Economic Development Agency, Incorporated
2008 Budget
Page 4 Budget 2008 for Board.xls
333
APPENDIX A
TRUE GROWTH -WORKFORCE EXPANSION INITIATIVE
REVENUE
Province of New Brunswick (incl LFDO)
150,000
ACOA
30,000
Municipalities
50,000
CED Funding- Jan -March
50,000
CED Funding- Apr -Dec
50,000
Other / Private sector funding
250,000
subtotal
580,000
ESJ Core funding
50,000
630,000
EXPENSES
Project manager, LOYT coordinator, LFDO, Business Outreach
225,000
Overhead and administration
30,000
Office and Computer
15,000
Program Delivery / Sector Workshops
40,000
Plan Development, Analysis, Marketing & Communications
320,000
TOTAL - WORKFORCE EXPANSION INITIATIVE
630,000
TRUE GROWTH PROJECTS - OTHER
Revenue
160,000
(CED Fund, ACOA, CISP, other)
Expenses
160,000
(Access Atlantica, ICT, Health Science, Energy,
Tourism, Mining and other True Growth Initiatives)
TRUE GROWTH - BENEFITS BLUEPRINT
Revenue
180,000
(RDC, ACOA, Irving Oil)
Expenses
180,000
(Consultant, Project Coordination and Translation)
Reflects the portion of project Revenue & Expenses for 2008
TOTAL - TRUE GROWTH OTHER PROJECTS
340,000
Page 4 Budget 2008 for Board.xls
333
I
VIII uur P� � VIII ° ° uur a VIII e-° ° uur- IIII uu e d liiii °il of
Background
Rafuse Consulting is pleased to submit this proposal in response to Enterprise Saint
John's request for consulting support in conducting a performance audit.
A performance audit is a systematic and objective examination and assessment of the
performance of an organization's activities against established criteria. Its scope includes
the examination of:
• economy, efficiency, and effectiveness;
• protection of assets;
• accountability relationships; and
• compliance with authorities.
A performance audit provides the Board of Directors and management with objective
information about the organization's performance, as well as recommendations that can
lead to improvement in its operations.
Our Understanding of the Work
Enterprise Saint John is a not - for - profit agency, funded by the City of Saint John and the
municipalities of Grand Bay - Westfield, Quispamsis, Rothesay, and St. Martins, the
Province of New Brunswick and the Atlantic Canada Opportunities Agency (ACOA). Its
mandate is to promote business and entrepreneur development, and to develop and
implement an economic development strategy for the region.
Enterprise Saint John was established in its current stricture in 1998 as the Greater Saint
John Economic Development Commission, Inc. This was as a result of combining the
mandates of the existing Enterprise Saint John (established in 1994) and the Fundy
Region Development Corporation (established in 1976). Prior to 1998, the two
organizations worked independently.
Enterprise Saint John is responsible for planning and implementing the regional
economic development strategy. It also acts as a key liaison between public and private
sectors and the community to maximize the benefits associated with innovative ideas and
emerging opportunities for economic growth. Enterprise Saint John also works with
partner organizations to support the growth of small and medium -sized businesses in the
region.
ESJQ pmmnthormmma nm:m° km�fit Proposal
334
I
The Saint John City Council recently posed some questions to Enterprise Saint John.
Among these is the question of whether ESJ can demonstrate value for money in its
operations. In response, Enterprise Saint John has suggested that it be the subject of the
City of Saint John's first value- for -money audit.
About Rafuse Consulting
Bill Rafuse is the President of Rafuse Consulting. Bill worked for the Canadian
government for 32 years, most of which was spent with the Office of the Auditor General
(OAG) of Canada. Before returning to Nova Scotia in 2003, Bill worked for the OAG in
Ottawa where his assignments included Principal, Strategic Planning and Principal,
Human Resources. Prior to these corporate appointments he was responsible for various
audit portfolios.
Until January 2006, Bill managed the OAG's regional operations in Halifax, Nova
Scotia. The Halifax office is responsible for financial and performance audits of federal
departments, agencies and Crown corporations headquartered in the Atlantic provinces,
as well as Fisheries and Oceans Canada, headquartered in Ottawa.
Bill has recent experience in auditing economic development programs. While with the
OAG's Halifax office, Bill led a performance audit of Enterprise Cape Breton
Corporation in 2004 and of the Cape Breton Growth Fund in 2005. These audit reports
are available on the organizations' web sites. Bill has also carried out audit work at the
Atlantic Canada Opportunities Agency.
Since 2006, Bill has been a consultant to various organizations, including the Canada
Revenue Agency, Canadian Food Inspection Agency, Office of the Auditor General of
Nova Scotia, CCAF (formerly the Canadian Comprehensive Audit Foundation), Inter -
American Development Bank, and International Monetary Fund (Caribbean region).
Bill is a business graduate of Acadia University and also holds a Master of Arts degree in
public administration from Carleton University. He is a Certified Management
Accountant (CMA) and a Certified Human Resources Professional (CHRP).
Audit Approach
Rafuse Consulting has an excellent understanding of Enterprise Saint John's context and
requirements. The audit approach will build on this understanding taking advantage of
Bill's expertise in conducting performance audits, including performance audits of
economic development programs. Bill will maintain open communication with
management and the Board throughout the audit and translate performance information
into audit results that will be of value to Enterprise Saint John and its stakeholders.
ESJQ pmmnthormmma nm:m° km�iit Proposal
335
p.m0ymn 2 of
I
Audit Costing and Resources
The proposed level of effort to complete the performance audit of Enterprise Saint John is
30 days as outlined in the workplan on page 3. This would require that ESJ staff is readily
available to facilitate the collection of necessary documents and information, and to assist
in arranging meetings with staff, Directors, and stakeholders.
Bill Rafuse will be the principal auditor and will complete and present the audit plan. Bill
will work with associates as necessary in carrying out the examination phase of the audit
and in preparing the audit report. The key steps in the performance audit process are also
shown in the workplan that follows.
Audit Workplan
Project initiation, familiarization and review
2
Audit planning
• Conduct risk assessment
• Identify lines of audit enquiry
• Develop audit objectives and criteria
• Design audit programs (nature, extent of testing)
• Prepare and present audit plan
4
Audit examination
• Collect audit evidence
• Conclude against criteria
• Determine cause and consequence
11
Audit reporting
• Present preliminary audit findings
• Prepare draft report, obtain management comments
• Complete and present final report
5
Coordination and travel
3
Total
25
The daily fee is $1,425 for a total audit cost of $35,625 excluding HST. Travel costs will
be billed in addition to professional fees at actual costs or at rates used by Enterprise
Saint John. Any additional services requested by ESJ will be charged at the daily rate.
Audit Timing
The timing for this audit will be discussed with Enterprise Saint John during the project
initiation phase. We are pleased to submit this proposal for your consideration.
ESJ pmmnthormmma nm:m° km�iit Proposal
336
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M &C2008 -326
October 30`h, 2008
His Worship Mayor Ivan Court
And Members of Common Council
Your Worship and Members of Council,
SUBJECT: UPDATE ON SAINT JOHN HARBOUR CLEAN -UP
INTRODUCTION
r�
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a �o
o
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4r,, M
The Cater of Sahu john
Saint John Harbour Clean -Up is about good health, clean waterways and quality of life.
Wastewater collection and treatment systems are put in place to protect people and the
natural environment, and to sustain societal well -being and economic activity.
Nature has an amazing ability to cope with water wastes and pollution, but it is
overwhelmed by the millions of litres of untreated sewage released daily into our water
environment. Restoring rivers, streams, wetlands and waterfront to good health has
been a priority of the City of Saint ,John for almost two decades. A comprehensive plan
of improvement was first documented in the 1993 Wastewater Strategy.
Municipal wastewater effluents are among the largest sources of water pollution, by
volume, in Canada. From both sanitary sewage and storm water, these flows can contain
grit, debris, suspended solids, disease - causing pathogens, decaying organic wastes,
nutrients, and about 200 identified chemicals.' In 1993, this community was discharging
23.5 million litres of untreated wastewater effluent daily into the environment through
about 55 raw sewage outfalls.
Purpose of the Report This report presents an update on the Harbour Clean -Up
initiative as requested by Council.
i The State of-1Iurucipal iT astewater Effluents in Canada, Environment Canada, 2001, p xi
SAFE, CLEAN DRINKING WATER
367
¢(n lrU
UPDATE ON SAINT JOHN HARBOUR CLEAN -UP OCTOBER 30TH, 2008
REPORT TO COMMON COUNCIL, M &C 2008-326 PAGE 2
BACKGROUND
Urban communities generate enormous quantities of human and other wastes, much of
which can pose serious risk to human, animal and environmental health. Modern
wastewater systems collect, clean and return used waters back to nature - to be used
again and again. At sewage treatment plants, wastewater flows are conditioned in a way
that mimics natural biodegradation processes; removing a wide variety of wastes,
debris, food scraps, oils, grease, soaps and chemicals. Where combined sewers are
involved, the process must also deal with potentially harmful substances that wash off
roads and properties. Treated wastewater should be discharged to receiving waters with
minimal impact on those ecosystems and life therein.
The overall Wastewater Plan for Saint ,John calls for three area wastewater schemes,
each supported by a modern, secondary -level treatment facility:
■ West Scheme - Lancaster WWTP
The Lancaster Lagoon system was upgraded in 1991 to handle 23,000 m3 /day.
Extensive maintenance work has been undertaken in recent years to restore full
operating capacity.
■ North Scheme - Millidgeville WWTP
The Millidgeville activated bio- filter plant was expanded in 2003 to 10,000 m3 /day.
■ East /South Central Scheme - Eastern WWTF
The new Eastern Wastewater Treatment Facility will replace two existing plants (to
be decommissioned) and provide substantially greater treatment capacity of
35,000 m3 /day for the East and South - Central areas of the city.
The three -plant configuration with conventional collection was determined to best utilize
existing infrastructure and the most economical to construct and operate.
Saint ,John Water currently operates 39 sanitary lift (pump) stations to move wastewater
to treatment facilities. A major lift station ( #4) will be added along Marsh Creek near the
Marco Polo Bridge under the MRIF Program ($8.3 million) and a further 21 are part of
the overall system upgrade being carried out under the core Harbour Clean -Up Program
($79.8 million).
FOR HEALTH, PROSPERITY AND QUALITY OF LIFE
368
¢(n lrU
UPDATE ON SAINT JOHN HARBOUR CLEAN -UP OCTOBER 30TH, 2008
REPORT TO COMMON COUNCIL, M &C 2008-326 PAGE 3
Wastewater Progress Since 1993
Progress has been made, with raw sewage pollution down by over 30% from its 1993
peak. In addition to an ongoing commitment to infrastructure renewal of sanitary
systems and storm water separation, over $27 million has already been invested in
upgrading wastewater collection and treatment, often without assistance from others,
including the following major projects:
• Western Beaches Design and Construction $6,000,000 (Shared)
• Churchill Boulevard Sewage Lift Station $3,770,000 (Shared)
• Kennebecasis Drive Lift Stations / Forcemain $1,170,000 (100% City)
• Millidgeville WWTP - Sludge Dewatering $2,040,000 (100% City)
• Churchill Boulevard Sanitary Collector Sewer $2,780,000 (Shared)
• Millidgeville WW Treatment Plant Expansion $7,045,000 (Partially Shared)
• Spar Cove /Millidge /Lime Kiln Area Sanitary $1,130,000 (100% City)
• Taylor /MCLaren /Sandy Point Sanitary $1,490,000 (100% City)
• Eastern WWT Plant Design $1,950,000 (100% City)
MRIF Program - Lift Station #4 (Marsh Creek)
Work on the most critical transition point in the collection system (Lift Station #4 on
Marsh Creek at the Marco Polo Bridge), with associated forcemain and gravity sewers, is
well underway. Funding for most of this work is covered by a Municipal Rural
Infrastructure Fund (MRIF) agreement; $8,300,000 cost - shared three ways. This funding
is separate and apart from the larger $79.8 million Strategic Infrastructure investment.
The first phase of forcemain construction has been completed under Red Head Road,
between Bayside Drive and the entrance to the future Eastern WWTF site. Phase II along
Bayside Drive will be tendered soon for installation in 2009.
The main challenges associated with this project relate to land and easement acquisition
for the lift station and forcemain routing. Council has authorized that expropriation
measures be initiated should those be required.
FOR HEALTH, PROSPERITY AND QUALITY OF LIFE
369
¢(n lrU
UPDATE ON SAINT JOHN HARBOUR CLEAN -UP OCTOBER 30TH, 2008
REPORT TO COMMON COUNCIL, M &C 2008-326 PAGE 4
Major Harbour Clean -Up Program
About 44% of municipal wastewater customers still have their sewage (16,300m3 /day or
about 6 billion litres annually) flow without treatment directly into waterways. Only 43%
of the serviced population East /South is treated, and that by aging and overwhelmed
facilities. Both of the existing East treatment plants (Marsh Creek WWTP and Hazen
Creek WWTP) must be replaced. A new facility will treat 100% of the current loading of
those plants, along with all the presently untreated collected wastewater from East and
South Central parts of the city.
A listing of the $79.8 million Harbour Clean -Up Program projects is attached. Their
completion will translate into 100% treatment of collected municipal wastewater in
across all areas of the city.
The bi- lateral Strategic Infrastructure Fund Contribution Agreement with the Federal
Government was signed in September 2008. The Province of New Brunswick put its
funding in place in October 2006.
The City of Saint ,John and Saint ,John Water have worked with environmental partners
through the planning and design processes, and will continue to do so - Environment
Canada, the Department of Fisheries & Oceans, and the NB Department of Environment.
Eastern Wastewater Treatment Facility (EWWTF)
The pivotal project for Harbour Clean -Up is the new secondary level treatment facility to
service East Saint ,John, the South Central Peninsula and the Chesley Drive area.
Engineering plans and specifications have long been ready and final environmental
approval was received in April. Cost of the new facility, including an extended outfall, is
estimated at over $47.5 million.
A comprehensive assessment of alternatives in 2003 proposed an optimal treatment
configuration for the East and South Central areas - a conventional activated sludge
process on the existing Hazen Creek site. The activated sludge system (secondary level
treatment) will meet current and emerging effluent treatment requirements and can be
adjusted to improve performance if treatment conditions change. In addition, utilization
of an existing site will cause minimum disturbance to the neighbouring community.
FOR HEALTH, PROSPERITY AND QUALITY OF LIFE
370
¢(n lrU
UPDATE ON SAINT JOHN HARBOUR CLEAN -UP OCTOBER 30TH, 2008
REPORT TO COMMON COUNCIL, M &C 2008-326 PAGE 5
The new EWW-FF will be a conventional activated sludge plant capable of treating an
ultimate average daily design flow of 35,000 cubic metres per day (m3 /d) and peak daily
flows of 80,000 m3 /d. Effluent from the plant will be discharged into Saint ,John Harbour
through an extended outfall with diffusers, located approximately 1,100 metres from
shore, with a flow capacity of 120,000 m3 /d. The possibility of recycling treated
wastewater effluents to industrial uses is being explored.
Wastewater Collection System
Collection and pumping improvements also remain to be undertaken in all three
wastewater drainage basins to bring the city to 100% treatment of collected municipal
sewage. The attached Harbour Clean -Up Program list outlines remaining projects with
estimates and gives the general sequence of implementation. The Wastewater Collection
System map shows the tentative configuration of 21 new lift stations, with associated
forcemains and gravity sewers.
A major engineering initiative underway is preparation of an overall conceptual design
for the collection system. The design team of CBCL Limited and Crandall Engineering
will precisely define flows and determine exactly how those flows can best be
intercepted and redirected to treatment.
Progress on Lift Station #22 at Spar Cove (estimated at $3 million) is well advanced and
currently in environmental assessment. It is anticipated this project will be tendered
early in 2009 for construction to commence later in the year.
FOR HEALTH, PROSPERITY AND QUALITY OF LIFE
371
¢(n lrU
UPDATE ON SAINT JOHN HARBOUR CLEAN -UP OCTOBER 30TH, 2008
REPORT TO COMMON COUNCIL, M &C 2008-326 PAGE 6
PARTNERS IN THIS ENDEAVOUR
Harbour Clean -Up is happening because the people of Saint ,John were no longer
prepared to accept anything but a clean, ecologically progressive and sustainable
community. Partners in the long quest to full treatment have included the Medical
Officer of Health, the Atlantic Coastal Action Program (Saint ,John), the Saint ,John Board
of Trade, local media outlets, CUPE Local 18 and the district labour movement, the New
Brunswick Community College Saint ,John, the Saint ,John Construction Association, the
Province of New Brunswick and the Government of Canada.
Citizens and utility ratepayers have been supported unrelentingly by their Member of
Parliament and area Members of the New Brunswick Legislative Assembly.
FINANCIAL IMPLICATIONS
Utility funding is based on a system of user pay. Those charges have increased
substantially in recent years and will continue to rise into the foreseeable future to
support progress. Beyond projects to enhance levels of treatment, Saint ,John continues
to invest in the elimination of combined sewers and the renewal of aging infrastructure.
A particular challenge before us, as previously mentioned, is that of land and easement
acquisition. Funding (Saint ,John Water operating budget) for additional legal resources
will be required to support timely progress. Other concerns that could impact cost and
scheduling are environmental approvals for the numerous projects involved, as well as
the capacity of the construction industry to meet the demands being placed on it.
RECOMMENDATION
It is recommended that Common Council receive and file this report.
Respectfully submitted,
J.M. Paul Groody, P.Eng. Terrence L. Totten, FCA
Commissioner, City Manager
For Saint,John Water
FOR HEALTH, PROSPERITY AND QUALITY OF LIFE
372
Harbour Clean -Up Program
dear
, ' Project
' Location
Ns'chpti n'
btherShare'l
City hare ]
Tot� -I Cast '
Bayside Drive
Bayside Drive area
Construction of sanitary forcemain, easement / land
$2,320,000
$1,160,000
$3,480,000
acquisition, including construction management services -
o
Phase II
a°a
Eastern Wastewater
At Hazen Creek
Construction of new upgraded sewage treatment plant,
$15,840,000
$7,920,000
$23,760,000
M
Treatment Facility
outfall extension, including construction management
`m
services 50% funding (Subphase A)
M
Spar Cove Road
At Bridge Street
Design and construction of Lift Station #22, including design
$2,000,000
$1,000,000
$3,000,000
2
00
and construction management services
$
.. ..
Wastewater Treatment
... . _.. .....
Various locations
.. _. ... .. . _. ..
Design of Sanitary Lift Stations and Forcemain /Collector
....
$1,100,000
.. _.
$550,000
_.
$1,650,000
N
System Design
systems to be installed in future Capital Programs to
implement Harbour Cleanup in accordance with the
CL
Wastewater Strategy, gy, including design services
2008 - 2009 Total:
$21,260,000
$10,630,000
$31,890,000
Bayside Drive
Bayside Drive Area
Construction of Lift Stations #1, #2, & #3 and
$1,100,000
$550,000
$1,650,000
Forcemain /Collector System, including construction
management services
Eastern Wastewater
At Hazen Creek
Construction of new upgraded sewage treatment plant,
$15,840,000
$7,920,000
$23,760,000
N
Treatment Facility
outfall extension, including construction management
services - 50% funding (Subphase B)
Gilbert Street
Allison Grounds Area
Construction of Lift Station #6 and Forcemain /Collector
$200,000
$100,000
$300,00
System, including construction management services
a)
Red Head Road
Red Head Road area
Construction of Lift Station #50, including construction
$120,000
$60,000
$180,00
o
0
management services
N
Rothesay Avenue
Rothesay Avenue (Canada Post
Construction of Lift Station #5 and Forcemain /Collector
$300,000
$150,000
$450,000
Station area)
System including construction management services
Q
Thorne Avenue / Haymarket
Egbert Street /Kimball Street/
Construction of Collector system, easement / land
$960,000
$480,000
$1,440,000
Square
Seaton Street /Frederick Street
acquisition, including construction management services
area
2009 - 2010 Total:
$18,520,000
$9,260,000
$27,780,000
Crown Street
Crown Street
Construction of Lift Station #7 and Forcemain /Collector
$200,000
$100,000
$300,00
system, including construction management services
Crown Street
Near Britain Street
Construction of Lift Station #8 and Forcemain /Collector
$2,380,000
$1,190,000
$3,570,000
system, including construction management services
o
Dominion Park / Pleasant
Dominion Park/Pleasant Point
Construction of Lift Stations #32 at Pleasant Point & #33 at
$940,000
$470,000
$1,410,00
N
Point
area
Dominion Park, and Forcemain /Collector Systems, including
M
construction management services
`m
Long Wharf
Long Wharf Area
Construction of Lift Station #10 and Forcemain /Collector
$2,980,000
$1,490,000
$4,470,000
System, including construction management services
o
MacLaren Boulevard /
North of Flemming Court,
Install approx. 810m of new 200mm, 300mm, and 375mm
$360,000
$180,000
$540,00
N
Sandy Point Road
MacLaren Boulevard to Sandy
sanitary sewer, easement acquisition, including design and
Point Road through easement
construction management services
Q-
behind Hazen White School
Water Street
Water Street area
Construction of Lift Station #9 and Forcemain /Collector
$2,220,000
$1,110,000
$3,330,000
System, including construction management services
2010 - 2011 Total:
$9,080,000
$4,540,000
$13,620,000
Gault Road
Gault Road area
Construction of Lift Station #34 at Monte Cristo Park and
$540,000
$270,000
$810,00
Forcemain /Collector System, including construction
i°.i
management services
M
Indiantown
Highland Road, Robertson
Construction of Lift Stations #21 at Highland Road, #23 at
$980,000
$490,000
$1,470,000
Square, Rowan Place
Robertson Square, & #24 at Rowan Place, and
Forcemain /Collector Systems, including construction
management services
o
Riverview Drive / Mill Street
Riverview Drive /Mill Street area
Construction of Lift Stations #28 and #29 at Riverview Drive,
$2,820,000
$1,410,000
$4,230,000
#30 at Riverview Avenue West, & #31 at Mill Street, and
Forcemain /Collector Systems, including construction
Q-
management services
2011 -2012 Total:
$4,340,000
$2,170,000
$6,510,000
Harbour Clean -Up Program Totals: $53,200,000 $26,600,000 $79,800,000
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