Skip to content

Rural communities hope city will delay sewage rate hike

Central Alberta communities unhappy with wastewater bill increases are hoping to buy some more time to get the City of Red Deer to reconsider.

Central Alberta communities unhappy with wastewater bill increases are hoping to buy some more time to get the City of Red Deer to reconsider.

Penhold Mayor Dennis Cooper said they would like to see the city delay passing the parts of a utility bylaw that deal with regional sewage rates until a thorough review is done of the model used to determine costs.

Council has given first reading to a utility rate bylaw on Monday and second and third readings are set for Feb. 2.

Six communities on a regional sewer line that connects to Red Deer were shocked in December when the saw the rate increases proposed by the city.

“To say the least, the municipalities are very disappointed their models includes a profit margin and return on investment (that) we feel is high,” said Cooper, who chairs the South Red Deer Regional Wastewater Commission, which also includes Innisfail, Bowden, Olds, Mountain View County, and Red Deer County

The regional sewer line project was meant to share costs fairly among all communities.

However, communities are questioning whether that is happening and have hired consultants to review the city’s math and rate models to better understand where the numbers are coming from.

A meeting has already been requested to meet with the city to go over the utility plan.

“We need to understand that rate model, have the dialogue to make sure we’re working together as Central Alberta, (that) we’re not working as the City of Red Deer versus the rural communities.”

Tom Warder, the city’s environmental services manager, the city has said it did not allocate the costs of operating the plant correctly and the new rates better reflect how costs should be shared among all customers.

Warder said a variety of costs are allocated in setting rates, including operating, collection system, capital and amortization costs.

“There’s a whole bunch of parameters to allocate various costs to the various customers.”

On review, it was determined that additional costs should have been allocated to the treatment plant.

When that was corrected, it meant a greater share of costs were to be shared by regional customers.

“What that results in is a fairly steep increase for the region,” he said, adding the plan is to phase that in over three to five years.

Warder said it is incorrect to suggest the utility rate model is producing a profit. The cost of the plant upgrades is factored into rates, as well as borrowing and depreciation costs.

Currently, six regional communities pay 70 cents per cubic metre for treatment, and the city has proposed that increase to 80 cents this year as part of a phasing in plan that will add about 10 cents the following year as well.

Treatment is only a portion of wastewater bills, which must also recover collection among other costs.

Cooper said communities have already had to borrow millions to bankroll their share of the $139-million regional sewer line from Olds to Red Deer that is nearing completion.

Communities only want what’s fair to both parties, and do not expect the city to subsidize their sewage costs.

Cooper said communities have been told to expect rates in the $1.06 per cubic metre range within several years.

“This is huge sticker shock to communities.”

Warder said the city is continuing to talk with its regional customers.

Even if the utility bylaw is passed at the next meeting that does not stop the city from taking it back to council to change it later if a different rate plan is worked out with regional communities, he said.

pcowley@www.reddeeradvocate.com