Yorkton Council set the water rates for 2011 at its regular meeting Monday.
The rates will increase by 2.8 per cent, compared to a 3.9 per cent increase in 2010.
"Prior to 2006, rate increases had been less than 1.4 per cent per year. Since the onset of the water system expansion project, rate increases of over five per cent have occurred. Previous projections indicated that an increase of 10 per cent would be required in 2008 and 2009 followed by five per cent increases thereafter.
Additional industrial revenues have allowed the utility to remain self sufficient with normal inflation cost increases. Instead of the previous projected increase of five per cent the 2011 budget was approved with an increase less than three per cent. The utility can remain self sufficient with a 2.83 per cent increase," detailed a report presented by Lonnie Kaal, Director of Finance with the City.
"The proposed rates are required for normal operating cost increases. Previous rate increases were required to service the debt load and maintain the current watermain/sanitary sewer replacement program. At present the waterworks utility has borrowed $15,000,000 plus the five year interest free SIGI loan of $3,000,000. Payments of $1,700,000 are required annually."
Among cities in Saskatchewan, Yorkton is ranked fifth best on residential, improved from seventh in 2010, and 13th in terms of rates for commercial customers.
Councillor Richard Okrainec questioned why the City's commercial rates were so high among cities.
Kaal said Yorkton utilizes "a flat rate across the piece," while other cities have different rate structures. With the various rates used, a direct comparison is hard to correlate. "It skews things one to the other."
"With the proposed rates based on 5,500 gallons per month consumption for a typical household, the monthly bill will increase to $68.70/month from $66.80/month or $1.90/month increase," explained the report.
Kaal said the waterworks department has undergone substantial improvements in recent years noting, "$41,000,000 has been spent on the waterworks upgrade project and new water/sanitary sewer lines from 2005 to 2021. With completion expected in 2011/2012 the total cost will be $46,700,000."
"Less the 40 per cent of the total cost has been borrowed. Even when excluding the grants, almost 30 per cent cash was provided for the project. Going forward, the waterworks utility will continue to have the objective of placing funds in reserves for major future projects. The intent is to place any surplus industrial water sale revenue into reserves for other upgrades so 100 per cent financing is not required when the next major capital project unfolds. Overall, the utility has managed significant capital costs without reliance on general tax revenue or operations. The utility is required to be self sufficient and future expenditures will likely focus on replacing existing water/sewer line infrastructure. This will be analyzed in more detail once the water treatment project is completely finished and asset management results are formalized," detailed the report.
