Water jumps as Bashaw preps to buy instead of sell

Town of Bashaw to be hooked up to regional water line by summer.

Water jumps as Bashaw preps to buy instead of sell

This is a re-published story from Dec. 15, 2016

“It’s going to be painful no matter what.”

That comment from Councillor Rosella Peterman not only sums up what is about to hit Bashaw residents and businesses, but also explains the sentiment from council about moving from a seller of water to a consumer.

In preparation for this summer, when the Highway 12/21 Regional Water Services Commission is scheduled to complete its pipeline extension from Mirror to Bashaw, the town has had to approve a significant jump in the price they charge for supplying water to the community. The new pricing system, along with the lose of revenue and the expenses that go with being hooked up to the regional line, were begrudgingly passed by council at its meeting on Dec. 15.

Beginning on Jan. 1, all customers will see their base charge rise $5 to $25 per month while the water consumption charge will increase to $2.64 per cubic metre, up from the current rate of 90 cents. There will be no change to the costs for sewer and garbage. What that means for the average customer, using about 23 cubic metres of water, is a jump of $25 per month on their bill.

The big reason for such a large hike in the cost of water is the difference between selling and buying, as Bashaw has been providing water to the commission for some communities to the north for several years.

Back in 2015, Bashaw sold $251,000 worth of its well water to the commission with expenses of just $179,000. This past year, as of the middle of December, that revenue was around $204,000 with expenses of close to $104,000.

“We have been making money on water with much of that extra revenue being used to offset property taxes in Bashaw,” chief executive officer Theresa Fuller explained to council.

“There also was no extra cushion built into the process in order to pay for any capital costs or upgrades.”

Low cost option

That has left the town with no wiggle room when it comes to passing along the higher costs associated with being connected to the regional water line.

Council was presented with three options, with the lowest cost choice being the least disagreeable.

Peterman and Councillors Darren Pearson and Lynn Schultz also felt the lowest price possible was the way to go, with a gradual increase possible in future years in order to put away funds for any potential capital expenditures.

“I say we keep it as low as possible this year so people start to get used to it,” Peterman said.

“It’s going to be a shock initially, and then we can reconsider any increases annually.”

Councillor Bryan was aghast at the extent of the increase, but later realized Bashaw isn’t that out of line with other places.

“When I initially saw what our options were, I thought they were high,” stated Gust as part of the discussion, before distributing statistics showing what a nearby community pays as part of the system.

“Then when I got to see what is being charged in Mirror, I found our options far more reasonable.”

While the price for consumption is in the same neighbourhood as what the town will pay the commission — $2.88/cubic metre — Mirror customers pay a base cost of $61.75 per month, which works out to be nearly 2.5 times more than Bashaw’s increased base rate.

Rate shell game

Fuller stated the setting of water rates is a bit of a misnomer, or shell game, as each municipality can determine how to calculate what rate to charge and what expenses it should cover. For Bashaw, they have chosen to ensure the rates will cover the utility’s usual expense and the cost of the water.

With the regional water line slated to begin delivery to Bashaw by July, its estimated the town will pay for a minimum of 40,000 cubic metres at a cost of $115,200 over the six months — an amount nearly equal to the $124,500 the new base charge will bring in and a huge additional expense combined with the loss in water sales revenue.

“What we’ve done is take our fixed costs, then taken off the revenue from our base charge and used that figure divided by the number of customers in order to determine the price per cubic metre,” Fuller said, further explaining other municipalities simply divide their fixed costs by the number of accounts to arrive at a base price.

As a suggestion to make bills more palatable for residents, Gust wondered if monthly billing could be done as then it might not be as big of a shock when the bills are opened.

However, Fuller stated, that estimating on one bill and using the actual for another would generate a lot more work for administrative staff who would need to spend more time on getting the bills done and sent out as well as the hassle it would cause to revamp the current slate of pre-authorized payments that customers have set up.

She added that, as they will only be on the system for six months this coming year, there will be a need to revisit the issue prior to 2018 when Bashaw will be looking at a full 12 months of water usage.

“(That year) will be different, since we will be taking water for a full year while we are still going to be selling water for the first six months of 2017,” she said.

One other item discussed, and eventually approved, was the installation of coin operated water dispensers at the two RV stations at the campground and the tourist booth.

For a cost of about $30,000, the hope is to provide access to water without giving it away for free as in the past. The money brought in will help defray any future capital costs for the utility.

water commission