File photo (Image Credit: CFJC Today)

By Michael Reeve

DOOR 1, 2 or 3

Kamloops council given three paths forward on water rate hikes

Nov 17, 2023 | 10:05 AM

KAMLOOPS — On October 31, Kamloops City Council approved a 25 per cent water rate increase for next year. The following week, council voted to reconsider that motion with staff directed to return with possible alternatives.

Next Tuesday (Nov. 21), council will have three options in front of it to consider.

Following the discussion to reconsider, CFJC News spoke with Kamloops Utilities Manager Greg Wightman who stated the increases are being necessitated by two large projects.

“What happened over the past year, though, is we had the $3.2 million decommissioning payments that nobody expected. Obviously, the erosion led to that,” said Wightman on Nov. 8. “And then we had council’s decision to support development and increase the assist factor on DCC (development cost charge) projects. The DCC decision was a 10 per cent rate increase. The Noble Creek decommissioning payments was about a 15 per cent rate increase.”

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With the money needed, staff are providing three options. The first is to once again approve the 25 per cent increase for 2024. While the price jump is the biggest in year one, Option #1 does end up being the cheapest for homeowners over a five-year span.

“This option would also provide an adequate level of funds to provide for ongoing and predictable changes to the water utility rates. The reserve funds would also provide an effective buffer against marketplace volatility brought on by inflation and product supply issues without the need to borrow, defer capital infrastructure replacement (asset management) projects, or continually change and adjust user rates,” reads the report.

(image credit – City of Kamloops)

Option #2 is called ‘Smooth rate and borrow’.

“The work related to the Kamloops Centre for Water Quality would be funded through debt and expected to be repaid in 2028. Use of debt would result in an overall increase in costs associated with interest incurred on the overall cost to borrow. The current Municipal Finance Authority short-term interest rate is 5.62 per cent (for the period of November 10 – 16, 2023). At this interest rate, the impact on borrowing to the Kamloops Centre for Water Quality intake work would be $550,000 annually and would be subject to change over the term of the loan,” highlights the report.

(image credit – City of Kamloops)

Option #3, which is not supported by staff due to aging infrastructure, is ‘Smooth rate and project deferral’.

“Administration does not recommend this option as it introduces an aspect of risk into the overall asset management and planning process that could result in infrastructure being functioning beyond its expected useful life and may not perform as needed and lead to failure,” reads the report from staff.

(image credit – City of Kamloops)

A decision on the matter is required at the Tuesday meeting as staff need time to bring forward the bylaws before the end of the year.