STRUCTURE REVIEW PUBLIC CONSULTATION SESSION · 7 Ti rtif t i Jr i AJ jA I il li t l J C t l i f Ai...

NiagaraFclfl

WATER SEWAGERATE STRUCTURE REVIEW

PUBLIC CONSULTATION SESSION

Ken BurdenExecutive Director of Corporate Services

Ed Dujlovic P EngExecutive Director ofCommunity Services

City ofNiagara Falls Fmal Report

Water Sewage Rate Structure Review Page Iof78

City of Niagara Falls

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R M Loudon Ltd

April 2 2008

NF User Rale Repol1 Apt I 2 2008 Final doc I R M I olldon Lid

City afNiagara Falls Final Report

Water Sewage Rate Structure Review Page 2 of78

Table of Contents

Executi ve Summary 6

2 Background 9

3 Public Farum 5

4 Existing Water Sewage Information18

4 1 Water Sewage RateStructures

18

4 11 Cit Retail Rates 18j

4 1 2 Regional Wholesale Rates 0k

221 liri

4 2 Customers f 231 i

4 3 ConsumptIon 23i

4 3 1 Regional Water Supply Sewage Treated Volumes yf c

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4 f f J f t4 3 2 Annual Consumption 5 i 1 24

if A44 3 3 C P fil 1 i 3 t 25onsumptlon ro I C

Pq4 3 4 Largest Users

i27

44 Budget i t 1 29

4 5 Conservation IWater EfficieBt 0 e Progr Ws 301

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5 Alternative 2007 User Rates f 33v i r i

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335 nnc p est i l fJt it

5 1 1 Revenue AdequacyRevenue Secunty 33

l l r5 1 2 Legality 4 33

r 1P 1 t r il 345 1 3i ractlca Ity

ii5 1 1 J l P alrness Usel

Pay34

qf 4r5 1 5 Afforaablllty 35

wji5 1 6 S iinplicity 35

i 7 l5 1 7

COnSeryatlOHWater Use

EfficIency3S

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5 1 8 EncouragelDeve opment 35

5 1 9 Principles Summary 36

5 2 Rate Fonnat 37

5 3 Residential Sewage Bills and Seasonal Usage 39

5 4 Alternative Rate Calculation 42

5 4 1 Fire Protection Cost 42

542 Cost Allocations to Service Charge Volumetric Charge 44

54 3 Service Charge Calculation46

5 4 4 Volumetric Rate 48

NFUsel Rate Report Apll 22008 Fmal doc 2 R M Loudon lAd

City ofNlGgarQ Falls FlI1al Report

Water Sewage Rate Slntcture Review Page 3 of78

54 5 Current vs A Itemative Rates 49

6 Impact 25 in Service Charge 50

6 I Cross Section ofCustomers 50

6 2 Impact on Large Customers 52

6 3 Rates Comparison With OtherMunicipalities

54

7 Other Issues 57

7 Volume Only Rates No Service Charge 57

x7 2 Revenue

Securityt 60

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1 17 3 Metermg ofCondominIUm Townhouse Development 61

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8 APPENDIX A Rate Structure Alternatives 7 63t

8 Basic Components 63l f 1

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8 2 Volumetric Rate FormatAlternatlves

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8 2 1 Single Block Rate SBR L 64HJ

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8 2 2 Declining Block Rate DBR if 65

8 2 3 Increasing Block Rates IBR Pt 67i

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t t t8 24 Humpback Rate HBR 68

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8 2 5 Llfelme Rate LRhh 69

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82 6 Seasonal Excess Use Rate EUR 70ltf 1 11

8 2 7 Seasonal Rate SR sf 71e t 1

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8 2 8 MultIple or Coml5meaJRate Fonnats 73i I

9 Attachniellt I City ofNiagaH FaUs Study ofWater Sewer Rates FollowingM Fering Final eport Noverri6W iOOO Loudon

Fortin74

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10 AttW 1 smt 2 Clty ofNiagara FiUs Report F 2000 74 Utility Rate Structure 759f 1

11 AttachM f3 Material Presented by Mr Ed Bielawski to the Corporate ServicesCommitt t2 e City ofNiagara Falls on July 23 2007 76

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12 Attachment 4 1 i gara Falls Terms ofReference for Review ofWater Sewer1io f

Rate Structure N9yember 92007

77Al

13 Attachment 5 City ofNiagara Falls Review of Water Sewer Rate Structure

Proposal RM Loudon Ltd 78

NF User RareReporr Api I 22008 Flnoldoc 3 R M Lolldon Ltd

Czty ofNiagara Falls Final Report

Water Sewage Rare Structure Revzew Page 4of 78

Exhibits

Exhibit 1 Regional vs Local Cost Share 2001 to 2007 10

Exhibit 2 DataRequests

1 3

Exhibit 3 November 2000 Report Proposed 200 I Water Sewer Rates monthlyRecommended in Bold

Italics18

Exhibit 4 Proposed vs Final 2001 Water SewageRates

9

Exhibit 5 Retail Water Sewage Rate Summary monthly i OOI to2007

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Exhibit 6 Retail Water Sewage User Rates monthly 2007jD 211

Exhibit 7 Calculation 0 2007 Retail Volumetric Water SewagR1tes

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i iExhibit 8 Niagara Region Wholesale Water Sewage Rates 2000 to 2001 22

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Exhibit 9 Water Sewage Customer by Meter Size 00f7l J2008 231

Exhibit 0 Water Sewage Volumes Purchased fitm Re ighj 2005 to 2007 24

r ittf tExhibit 11 Consumption vs Supply 000 m3 r 200 to 200 1 25

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Exhibit 12 Water Consumption Profile fl 200TIt pL 26I iijl t1 a fr t t

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I Exhibit 13 1 0 Largest Customer Cons inptiori t lJ 2007Jf2 28I

J tfiExhibit 14 Water s wage Utility udgets 2007 S2008 29

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Exhibit 15 SummaryJofPr ciples fof f4 ecial JJser Rate Policy 36

Exhibit 16 Niagara Falls W er Sewag jIillsConverted to Volumetric Only fortF vifr

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Standard Meted ustomer 1 39rl

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Exhibit 1 f Water stem Fire PrO li rCosts 2007 Budget 44I I h

Exhi 1 li 1AII r tiQ s to Servic ii harge Volumetric Rate 25 SC 2007 45

Exhibit 19 ri rilce Charge Calculation 25 SC2007

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Exhibit 20i

illu etric Rate Calculation 25 SC 2007 487it

Exhibit 2I cJf1 sJi Hernative Rates 25 SC 200749

t 1Exhibit 22 1mpact 9n Cross Section of Customers 25 SC 2007

51J

Exhibit 23 Impact on Large Customers 25 SC2007

53

Exhibit 24 Water Rate Formats in 16 Municipalities 200754

Exhibit 25 Water Sewage Charges in 15 Municipalities 240 m3jyear 200755

Exhibit 26 Water Sewage Charges in 15 Municipalities 227 000 m3jyear 2007 56

Exhibit 27 Volume Only Rate Calculation 2007 57

Exhibit 28 linpact of2007 Volume Only Rates 58

Exhibit 29 Single B lock RateStructure

65

NFUse RareReport April 2 2008 Filial doc 4 R M LOldon Ud

City of Niagara Falls Final Report

Water Sewage RateStructure Revif11 Page 5of 78

Exhibit 30 Declining block rate 66

Exhibit 31 Increasing Block Rate 68

Exhibit 32 Hump backed rate 69

Exhibit 33 Excess userate

71

Exhibit 34 Seasonal Rates 72

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NF Usel Rate Repolf ApJlI 22008 Fmal doc5 R M Loudon Ltd

City ofNiagara Falls Final Report



Water Sewage Rate Structure Review

1 Executive Summary

This report is intended as a resource and reference for Council related to discussions on

future water and sewage rates for the City ofNiagara Falls r I

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The following is a summary ofthe findings of this reportvft

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Comment 4 Report Location

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The current City volumetric rates recover RegionaIJolum etfJ9 Section 2

charges and the fixed service charges recover Cityqsts lIiii 1t

Iapproach was Option 1 in the November 2000 repbrqty of 1i

Niagara Falls Study of Water Sewer Ra e Following eteritig ILoudon Fortin i i f iiJ I I

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At back ofreportAttachments to this report provide background maIerial related toI l

the steps from the NQ 7mber 200Wt 9mmended riH prior to

Iimplementation to tti jpreparation ottm Iate review

Since 200 I City costs hav lilcreased r t tiy t9 Regional charges Exhibit I

with the res thl the ry f lce chari Jave also increased I

relative to tne vo1umetnc charge fta flo

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Section 3A PURlic forum wa held January 24 W008 at City hall to obtainCU 8m input

Tig P most men oned issues were that the

sefvif we too high and from gardene s that t le inclusion

Section 4 3 3 Iof seas6n 1 1 ge In summer sewage charges IS unfair

A water c lhption analysis indicates that residential users are

likely not exc i bJusers on average with 50 of customers Exhibit J

Jusing about 18J tfi l th or less The City has a few very large

users with 1 otd stomers using 45 of consumptionThe user rates should be based on an agreed set of principles A Section 5 1 Ilist ofoptional principles is provided for Council consideration I

and adoption Some such as legality are required Foremost in Jterms of public perception is Fairness User Pay

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An in depth discussion is carried out in regard to the issue raised Section 5 3

by some customers regarding the use ofwater consumption to bill

for sewage The issue relates to seasonal usage It is noted thatwater meter readings are actually used as the basis for billing Isewage because they allocate costs between customers based 011

II

NFUser Rate Rcpor Api1122008 Fmal doc 6 R M Loudon Lcd

City ofNtagara Falls Final Report

Waler Sewage Rate Structure Review Page 7 of 78r

IIrelative system usage Other methods are generally more for

optics since sewer rates would have to be increased to raise the

I required revenues It is concluded that combining water and1

sewage into a common rate will promote conservation and Ieliminate or greatly reduce the perception of unfairness related to

seasonal usage IIIn accordance with the proposal for this study an Alternative rate Section 54

structure is developed with a lower service charge and higher Ivolumetric charge Rates are calculated based on 2007 data for

discussion and comparison with existing Ir

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The Alternative rate structure service charges are fixed cliaf Section 54 3

based on a customer s metersize and are calculated to recovej Exhibit 925 ofbudget costs compared with 43 recovered from the 1 p

current service charges The costs are distributed by meter sizeI0 1dt

using cost allocation factors developed by the Americ l aterh

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Works Association AWWA Three differenttypes

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allocated including uniform cost based and capacifY base q 6t

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The Alternative rate structure single block volumetric r t is J Exhibit 20 I7t t t lio Yl I

calculated to recover 75 of budget CO 1 0t lJI

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IThe Alternative Rates are compared wlth the eiisting rates below Exhibit 2Jt I l

I i Existing R at s t Alternative Rates

I Water Sewage z CQmblned Water Sewage CombinedService Char es month i I

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18 20 07 18 58 38 65 1026 12 89 23 15t i Jt A

25 1 O 07 18 58 38 65 15 24 18 04 33 28

37 l i1Y24f60 21 55 115 95 28 88 23 20 52 08

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50 f Of2k 120A2 11148 23190 51 19 37 37 88 56r l 155 88 141 74 297 6275 it 1

240 83 222 96 463 79100 4 t 441 52 40876 850 28 270 30 180 39 450 69150 6 1 42 91 780 37 1 623 28 656 08 270 58 926 66200 8 O P 9 1 393 50 2 898 69 1 297 06 373 66 1 670 72

250 10 2f107 27 1 950 91 4 058 18 2 24348 489 62 2 733 101

Volumetric Rates 1m 1

All Consumptio 0 6024 o 8544 1457 0858 1 037 1 895I

INOTE Test Year 2007 Costs in SC 25 1

Niagara Falls User Rates 20GB xis Rate Summary 3G Mar OBI

The impact ofthe Alternative Rates would be to decrease Exhibit 22

charges to small to average customers mostly residential Exhibit 23 i

ranging from 15 reduction to about 6 for the average iI

customer Larger customer would pay progressively more with iithe largest customers paying increases from 20 to 29

Exhibit 25 JNia ara Falls charg s are the currently higb 813 per 2 ar

NFUser Raie Reporl Apl 22008 Final doc 7 R M LOlldon LId

Cily ofNiagara Falls Final Report


for a fairly typi I ustomer using 20 m3 month ompared with 1Exhibit 26

15 other medium to large sized Ontario municipalities The IAlternative rates would reduce charges to 732 per year behind IIKingston and Windsor For a large customer using 227 000

Im3 year a customer would be 6th lowest and with the

Alternative rates 5th highest out of 15 municipalitiesVolume only rates are calculated for comparison purposes Section 7 1 I

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This is a radical change from existing and results in smallcustomers saving 37 average customers saving about 15

and increases soaring for larger users up to a 71 increase Qrthe largest user Ir 7

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S 7 2It is suggested that a Rate Stabilization Reserve Fund be i 4 ectJonI

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considered to provide revenue security against revenueI

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tfluctuations resulting from a higher volumetric ratenil

The issue of individual metering ofcondominium un t i h SesSijn 7 3

Idiscussed It is concluded that bulk meters are pref5lired t iM

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NFUser ROle Report Ap d 22008 Fmol doc 8 R M Loudon Ud

Cay ofNiagm a Falls Final Report

Water SI lrage Rate Structure Review Page 9 of 78

2 Background

The City completed a universal metering program in 2000

In late 2000 a report by Fortin Loudon1

provided two Alternative rate structures

Option 1 calculated avolumetric rate which covered Regional charges and service

charges by meter size which covered local costs This resulted in a rate which stressed

revenue security an important consideration with a larg JJ1 tOfneWly metered

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Option 2 was based on a volumetric rate which covered 80 ofcosts1rt servicelf f t 1

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charges by meter size which recovered remaining cpstS T o IlJ on had strongeri r f

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Option 1 waspreferred due to its revenue s ur leaturc 9 J fJ i

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Staff recommended Opti l 1 in Repot1 t2000 742 w h Yas considered at the

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December I I 2000 Corporate Services COQ1 p ttee me ting The minutes ofthe meeting4

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state 4i no 1 d

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aJ il iI g siructure be adopted for determiningb 1J J

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water sewer utility rates and that the proposed use based billing structure belJi

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app 12000 Budget expenditures to sel rates for the new Water By law

Council ater in gave unanimous approval to this resolution

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ICopy attached see Attachment 1 City ofNiagara Falls Study of Water Sewer Rates Following

Metenng Final Report November 2000 Loudon Fortin

2Copy attached see

Attachment 2 City ofNiagara Falls Report F 2000 74 Utility Rate Structure

NFUser Rate RepotApll 2 2008 Fmal doc 9 R M Loudon lid

City ofNwgara Faffs Final Report

Water Sewage RateStructure Review Page 10 of 78

The approved rates recover Regional costs from the volumetric charge with the local

costs in the service charge The current rates are calculated on the same basis The

resulting structure has a high fixed charge component Exhibit I below provides share of

Regional versus City costs in the user rates as well as the impact on a customer using 20

m3 month of including these costs in the volumetric and service charges respectively

Exhibit 1 Regional vs Local Cost Share 2001 to 2007

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2001 2002 2003 2004 j 2005 2006 2007

Annual Bud et 000

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Regional 5 300 5 955 6 399 6 892 7 040 i 177 8424

City Other 5 649 5 875 6431 7 262 8 007 1 578 8 004Total 10 949 11 830 12 830 14 153 S15 047 15 754r 16428

Sewage of t ltf k

Regional 9 900 10 382 11 188 t 415 1 Ot

11 620 11 166

CityfOther 3 310 3 724 3 536 It4 427 1 4 91 2 5 697 7 061

Total 13 210 14 106 14 724 15 842 15 393 17 317 18 227Combined Water Sewage t 1J W iiRegional 15 200 16 337 jJi1f 587 i 18 3064f 17 521 19 797 19 590

City other 8 959 9 599 Jf 9 96 1t1 689 h 919 13 275 15 066J r

Total 24 159 25 936 27 555 t29 995 30 440 33 071 34 655

Combined Share l f l fitRegional 63 63 ii lt 64 61 58 60 57

CltyfOther 37 l 37 f36 f 39 42 40 431 i W

NF Regional vs CIty Sewer ald Waler Cosls q1l0 7 xl i

Over the 11e1 200 1 2007 th jin the budget has increased from 37 tor f

43 ptarltC glnbin g5 fur and sewaglbudget and the Regional share has decreased an

equivalenZ l e Since the user rate service charge is tied to the City budget and thef I ff

user rate volu i 9h rge i tied to the Regional volumetric the service charge hasJHr

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trended upwards since4ne metered rates were introduced in 2001fJ

frThe awareness of the relatively high fixed service charges came to the fore in 2007

Council actively considered alternatives for updating the water and sewage rate

structures particularly in relation to the relative magnitude ofthe volumetric and service

charge levels

There was a strong sentiment expressed by one customer that the current rate structure

was inappropriate On July 23 2007 the Corporate Services Committee of the City of

NFUser ROle Repoll April 2 2008 Fmal doc 10 R M Lolldon Lid

CIty ofNiagara Falls Final Report


Niagara Falls received a deputation from Mr Ed Bielawski The materia presented by

Mr Bielawski is appended see Section 11 Mr Bielawski provided examples to back up

his contention that the service charge is much too high and in fact would best be

eliminated entirely with avolume only charge applied

At a meeting on 29 October 2007 Council authorized staff to engage consulting services

to review the City s water and sewer rates and that Loudon and F0l1in be invited to

provide a proposal on the water and sewer rate review As a equest for proposalwas issued see Section 12 with the following objectives for1he ciIlXl e

fiiI To study the financial impacts from changing the existing wat t 9 seer

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rate structure ekYfjlhr

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T h I r Thd jiii2 0 examme t e opttona rate structures lor water an sewerfservtces ll1

f 1ft Gteaccordance with all legislation and regulation go mingvater and sewer

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lstn utlOn systems t o r J t11in Q ptillA G

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7 e it c cl if i3 To compare th advantages nd disadvantag es7M appropriate rate structures

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in relation to the public conce f0r the cost ofwater and sewer servicesj 1

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4 T2 r6commend awater ewer rate structure s for water and sewer

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i services tli L omplies witT1 tefevant legislation and regulation and bestiW

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On Decemb QD07 Council considered proposals for the Review including atl

proposal from RM oua m Ltd dated December 4 2007 see appended Section 13o il

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The following order was passed at that meeting

That Council approve the engagement ofLoudon Fortin to conduct a Water

and Sewer Rate Structure Review

The target completion of the study was end ofJanuary 2008 With the mid December

award date and Christmas holidays impending time was of the essence

Nf User Rale RepoJl Apnl 22008Fmal doc 11 R M Loudon LId

Oty ofNiagara Falls Fmal Report

Water Sewage RateStnicture Review Page 12 of 78

The study was initiated immediately Because the generation of needed customer and

financial data is usually the task that takes more time than expected a list of data needs

from the City was included in the Loudon Fortin Proposal so that the City could have

an early start on gathering As soon as the consultant selection was known discussion

papers on Principles and on Rate Options were forwarded to the City A meeting was

arranged with staff for December 14 2007 to refine the initial data request obtain

available data discuss data gaps and obtain initial feedback ontpe issues raised in therj

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Discussion Papers itJr

A list ofthe agreed data requests with date information received by tn cpnsultant is

provided below in Exhibit 2 Some ofthe data proved more til11e consu r to producef7 I

than expected with the result that some key infoJmationr s jved ul1 it her the

original target completing date 0

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NF UuRale Report Api tI 22008 Flnaldoc 2 R M LOldon LId

City ofNiagara Faffs Final Report

IFater Sewage RateStructure Review Page 13 of78

Exhibit 2 Data Req uests

O r P 4 j i b gfi liateg iyi ata1DescflRtionii11 H 7f l i i1 1 EinaURecei iiR 1Il1 l l l A1i k H NAMt wU ttt 5P t I r l rQP A J

Usage Monthly volumes billed by class X

Largest 10 users Ian I5 Fcb 22

Information on residential customer billing profile Feb 22

Individual customer examples for impact analysisList will include a cross section ofcustomers in terms Feb 7ofvolume used and category

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Regional water sewage volumes 50

Jan 22tXCCustomers Number annually since 2000 X

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Number by class X LWf

Number by meter sizes

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Operating Initially provi e b oken down by major c fegori11

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Budget degree ofdetail will depend on the rate format selecfe foZ ft t 1

Capitalt f 1Il XBudget documents provldmg lIst f proJccts l JBudget Debt prmclpal Interest @ttjf

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Identification of capital prog ams telaf qt to meding X

legislative upgrade requirements suchf thtbFeoeral P2u f

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reqUlreme

Revenue Broken down by cltegoryA 31

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BudgetJx Cjl

Dee 3 IProviae actuals for42006 jJJ ot

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Jan 5Regional rates and bil1ings monthly 200 I to 2007i tf 1

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at City wateh nd sewage rai sf200 to 2007 Ian 6

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Note that thos nt arke X were not supplied but were not crucial to the

completion of the trdy 1I6rexample the customer data by class wasnot availableifr

because the billing r pjits did not produce this information in this manner Thus specificresidential versus non residential analysis could not be carried out Similarly

consumption information could not be provided broken down by month so consumptioncould not be discussed in terms ofseasonality Detailed budget data related to projects or

legislative upgrade requirements was not needed and that request was eliminated

NFUser Rate Reporl Apill 2 2008 Fmal doc 13 R M Loudon Lid

CityofNiagarQ Falls Final Report


Supplementary information provided by the City not covered in the initial list included a

summary ofthe public meeting February 19 a report on Regional rates Feb 19 and

information on conservation programs Feb 29

The interested customer Mr Bielawski has gathered considerable Niagara Falls water

and sewage related background and made it available to the Study He had carried out

research on usage by meter size as well as associated number ofunits such as in hotels

as well as user rate practices elsewhere and freely made his d t J ilable In additionl

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relevant information has been shared with Mr Bielawski wht h ept abreast of

the Report progress Numerous emails and telephone calls were exc l in order totii 1

share data and informationyr c

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The target schedule for the study was provided in Schequle 1 of tlte proposarseef t

lSection 13 According to the schedule data would bc provid d by tne ity in December

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the public forum would be held on January Alhhe report 9 pleted by February 1

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2008 As can be seen from the data request in ExHiiJfv l some 2i ticial information was

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not available untLl Febr tV 22 f

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fl rJj tA first draft repo ti s then Ieted and stiJ J d to Staff and copied to Mr

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J To lBielawski Marcli3 followed by adaitionaJ draft updates March 5 and March 17 Everyl 1

efforthasbt made ti1provide oP ltjes for comments so they can be considered

bif fi ffiand illcofp Qt ed w re agreed The fiJlal report was finally scheduled to be issued April

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NF User Rale RepolAprrl 2 2008 Finaldoc 14 R M Loudon LId


Water Sewage Rate Structure Review Page 15 of 78

3 Public Forum

A public information session was planned for January 16 or 17 2008 Due to notice

restrictions the City delayed the public forum by one week to January 24

Afternoon and evening sessions were organized Notice of the public forums was posled

in the Niagara Falls Review

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Direct contact was also made via emails regarding the publicl6rup with the following1w

stakeholdersf5

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Chamber of Commerce t i

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Lundy sLane BIA l l i tf

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Maw Ferry BIA C r

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VIctona Centre BIA i 1 1

Fallsvicw Tourist Area BrA I i tf t i

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Niagara Falls Tourism trhl J

Interest in this water and sewa rate study W g high A coffee table approach was usedV f r

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Round table Veie sefup with statff tt nsultarit resource personnel present and

attendee ere cncour ged to ask ques1r and express opinions Written comments1 lL i t

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Approximateiy@ endcd including Mr Bielawski with a high degree of interest andJ

contribution j G J

1lThe following is a summary of the results ofthe two sessions

Concerns Issues Feedback

1 Paying sewer consumption charges that are calculated by the amount ofwater

they consume which is measured by their water meter

2 Large lawn gardens that are very expensive to water in the summer months

NF Usel Rate IIeporl Apl 2 2008 Final doc 15 R M Loudon LId



3 Matching ofsewer costs based on water use why should there be sewer chargeson water that never enters the sewage treatment centre

4 When meters were installed there wasn t anything to measure what goes downthe sewer a concern especially in the spring summer months

5 High monthly charges low consumption makes the total cost seem very high

6 Service charges should be based on consumption rather than fixed rates

7 Oversized meters should not be penalized when consuIJip ion should bed d i1conSl ere i iti

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8 Being charged sewage treatment rates for water that neve b to the sewagel

plants E g watering lawns gardens carwashing swimming pooHfilling etcrVlt

Customers offered a number of suggestions to deal with eif fRn ems LiilI

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S d I b Cu22este so utlOns y ustomers s eJfct tI v

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I Normaliz the offpeak months an1rW RW t valu q lftlate the sewer

consumptIon charge for the peak l1onths IiJ

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2 Measure exactIYii hat goes dp n tl sewer iIi ijP t

3 Decrease sewer harges for sprin t arsumme19 ijo idotfi1 l 1 f

4 Redu d fixeQ charge ifcQP rnPtion is below a conservation thresholdt

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6 Tliedewer rate should be a uniform fixed cost for each household4t

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7 Revi J fa e structure for large meters in proportion to smaller meters

l

8 Water run 5f 6isaiiitary sewer instead of storm sewerJT

9 Establish a ba e consumption amount i e the average usage January throughApril May any increase in the summer months above this base is lawn wateringand is therefore not going to the sewage treatment plant

10 Use grey water for external use

I Seasonal rates for specific residential areas

Basically the major concerns fell in to two categories

NF User Rate Report Apill 2 2008 Final doc 16 R M Loudon LId

I

City ofNiagam Falls Final Report

Water Sewage RateStructure Review Page 17of 78

I Service charges too high

2 Using water consumption in the summer to bill for residential sewage charges isnot fair since seasonal usage does not enter the sanitary sewer

The presentation in this report ofan alternative rate structure with a reduced service

charge and increased volumetric rate addresses the first major concerns expressed at the

public forum It is also consistent with the study proposal which stated that an option

would be provided with a higher consumption charge and lovv r fixed chargesf 1p

1I

t

i t

Methods for addressing concerns about charging for sewage in th 1 lrer based on

water usage are provided in Section 5 3 These methods include thosi g sted durings

t

the public input sessions as well as howthis issue is dealt Yf j other tT i B Jjtiesi l br Y t f tli Y

including0 rtl1 1

IS rr J Ik1li f0

on

l r l

Method 1 A maximum sewage bill for resjdenti l t

I 2 1 f

l fhI lil

f

Method 2 ResidentIal dIscount iI1 rf It Ij F

fr I 1

rfj lMethod 3 Using a y tomer s wiJj average cbn flption for summer sewage

billing 10 l ri iiiu

Method 4 ppJying a d dia ed sewat i inthe summerN dd

TJllo I tn1

Method iEliminating separat wagercn rge by combining water and sewage rates4

tf rf t

ii tl f lf i

tV

r

fs

l t

NF Usel Rate Report Apll 2 2008 Fmal doc 17 R M Loudon Lid



4 Existing Water Sewage Information

41 Water Sewage Rate Structures

41 1 City Retail Rates

Exhibit 3

n

it

Service Charges monthL1

a f Jfij

y iII

1f1 ll

A Single Uniform Charge 26 2 35 6 182Vd

B Charge Variable bh eteJ Siz ii t j I

j

ie

15 mm i iStf 22 4 3 90r1 51 bff t i 22 54ISPmm h 13 90b

ili i5 mm rtF l 22 54 13 90M 1

fj

r

37 mni f t 5635 34 751hn t s tJ iifj 50 mm r 135 23 8341

Wil7w

Z5t1TIm 270 46 66 82I

O 305 8310 mOl 495 84f riJ

15 Oll ITl 946 61 583 85mfll k200 m 1 69037 04259

NFUsel Rate Report Aprrl 2 20Q8 Fmal doc 18 R M Loudon LId

City fNiagara Falls FInal Report


As noted previously in Section 2 Staff recommended Option 1 in Report F 2000 743

The minutes of the meeting state

That the proposed lise based billing structure be adopted for determining

water sewer utility rates and that the proposed use based billing structure be

applied to the 2000 Budget expenditures to set rates for the new Water By law

Exhibit 4 Proposed vs Final 2001 Water Sewage Rates

2137

di ii C i iiilL ie m Jtfi 1J

l

friThe final rates are a little different thap 11 8se prop rsea d e to changes in the combined

il1Irf

f

water and sewage budget For example t1e tolal budgctqecreased from a projectedlr r

24 861 000 usedl the Nov itf 2000 reliJCi itq Jinal budget level of 24 158 700

h i i Jr f

YilThe

adopteqater and sewage reUiint ts s fr9m12001 to 2007 are summarized below in

b t

Exhibit 5 JffI lll

ftj oJJ o bJii i f f 4

ry

I tt 7Jf ir

filp

jPll et1

F

n

3Copy attached see

Attachment 2 City of Niagara falls Report F 200Q 74 Uti itv Rate Structure

NF UseRare Report Apill 22008 Finaldoc 19 R M Loudon Ltd



Exhibit 5 Retail Water Sewage Rate Summary monthly 2001 to 2007

1w

1 lt l 1j t Af 3 4 ri tA i f l t 1r47 r l I t r ri l

lIl iIJ Y2JumetndRates rn aSerYlce enargel Stahdar Fmeter rfi j A l fy I M I l II I t f Vl l MI r 1

Ileal1 r C

1 lJ IIII if ii 1 n 1iim mn IjlV1Walefi I

l ffiSewa e Tota11 1 Iiir NVa en Ii S wa e ifi ffiotahJt

Vw h gt t st r It l Ve 5IlMtU t ooNhg O 1t

2001 041 0 81 1 22 13 92 745 2137

2002 044 0 81 1 25 5 30 9 09 24 39

2003 048 0 89 1 38 16 61 9 62 26 23

2004 0 51 0 89 141 18 67 11 16 29 83

0 56 0 88 144f

2005 2044 5 i 11 96 3240

2006 0 58 0 88 146 19 56 fli

33381i J3 82p 10

2007 0 60 0 85 146 20 07 18 8 38 65t A I

it Zff fiIl 1 Il

Yr if j

Over the period 2001 to 2007 the volumetric rates increased aboutr20 whereas thei J I t

J1 tr I pservice charges increased about 81 reflecting highehGity Ijudget h reases compared to

I l

Regional cost increases This meant that thel1lp c ofan a n ftLli rage percentage ratel

y ffIls

increase would vary depending 011 how mqch a cust0rB r usea lJid the meter size Small1 l lt

users would have higheqercentage increases than lafge vo1ume users This could lead torl 7 i

4

confusion since a customer may be expe tihltbe average increase and may in fact bet t1 t

faced with one thaius more orfl S depending 6ii 6lume used and meter size Fixing the1Jt t ttl l

percentage pota budget costs recQ d fr m the service charge e g the Alternate10 lo 11

rate ealcu1 ted later would eliminate thf confusing situation All customers wouldl 4

receiVflIe e perefnta rate incre ecj

y ibfli

The full 2007 t L d sewage rate schedule is provided below in Exhibit 6fir 5ill fo

Ip

Lfi1

NFUser Rate Report ApI 22008 Fmal doc 20 R M Loudon LId

City ojNwgara falls Final Report

Water Sewage Rate Structure Review Page 21 of78Exhibit 6 Retail Water Sewage User Rates monthly 2007

t rt l ii K W7t lJf l l J t

J

b t31

tRate Gompoii nt r ateli n Sewage 1 i Ti TotalJih y l t h Ifi 1l t t 1 f 1 rf r rW

Volumetric Rates cubic metre 0 6024 0 8544 14568

Service Charges month

5 to 25 mm 20 07 1858 38 65

37mm 60 21 55 74 115 95l

50mm 12042 iili Y48 231 90l

eI

7Smm 240 83 222 96 ft 463 79

1

Tl 850 28100 mm 441 52 408 76i

OJ fOr r i J

150 mm 842 91 i 80 37 1 623 28J f ii lo

t 7 c

200 mm 1 505 19 t393Pi i 2 898 69Ir

t

2S0 mm 2 7 P 1 950 9 4 058 18i7 1t

kj tf c

1rrN i 1

iIl

1

Tn 1t

The City water and seW Volumetrf t lre linke e Region s wholesale rates as

ttf Pshown below In E hlblt 7 j

f t tAtf l

f7

Exhibit 7 CaJculation of2007 letail Vohimctric Water Sewage Rates71 fj t lJtf1

1

eo1hJit s Wi1gJi 1 oIti

f 11316452 757 18 214 832Regional V lj1J1 in

Wholesale Rlg jJate m3 0 5120 0 6130

Regional Charge ir 8 423 812 1 165 692

City Billed Consumjt12j m3 13 984 843 3 068 836

City Volumetric Ratc C lm3 0 6024 0 8544

City vs Regional Volume 85 65

Note that the City retail rates must be higher than the Regional rates because retail

billed volumes are less than the Regional volumes This is due in the case ofwater to

unaccounted fOf losses such as main leakage and fire fighting between supply and City

NF Use Rate Report Aprrl 2 2008 Fmal doc 21 RM I olldon Ltd

Oty ofNiagara Falls Final Report


customer of about 15 of the volume purchased and in the case of sewage there is about

35 flow added into sewersbetween customer and treatment due to inflow surface

water and infiltration groundwater

4 1 2 Regional Wholesale Rates

The Region s wholesale rates and rate increases from 2000 to 2008 are as shown in

Exhibit 8

Exhibit 8

2000 0 300 0489 3

2001 0 318 0489 3ii 2

4wa if

2002 0 340 0 503l iF l r

7 4 3h

2003 0364 0 521 7ocl ix

j IfOfJ l ft tJ

2004 0400 0 547 1 O h 500 Jan 1 to Dec 31 2004A v li i f1

1tJ t2005 OAOO O 547 A 0 f 0 Jan 1 2005 to Feb 28 2005

Itw 1 1J fl 0

l

f t

2005 b 446 1f 0 579 fil 2 6 Mar 1 2005 to Feb 28 2006v i

2006 1liif 0491 lfiO 6081tJ

5 Mar 1 2006 to Feb 28 20075at

ll tJi t10

2007fI al f iF

0 613 43 0 8 Mar 1 2007 to Feb 29 2008O 5 1 2ii

2008 7 6 64 Mar 1 2008 to Feb 29 20090 554 0 655mt

t

f

l J

Until 2007 the Regioq charged for both water and sewage based on the calculated rate

times the volume treated Water charges continue using this method However for

sewage the total annual charge is determined in advance by multiplying the rate times

the average flow over the prior three years Thus the 2008 sewage charge has alreadybeen determined to be 11 730 523 based on Niagara Falls actual 2005 to 2007 sewage

flows and the sewage rate of 0 655 m3 In addition to the wholesale rates the Region

levies a capital charge amounting to 164 802 for water and 124 953 for sewage in

2007

NF User Rale Report Apil 2008 fmol doc 22 R M Loudon LId



42 Customers

The number ofwater and sewage customers by meter size is provided in Exhibit 9

Exhibit 9 Water Sewage Customer by Meter Size 2007 2008

1 250 121

15mm 1 25 114 25 401

18mm I 482 482 475J to

25mm 1 357 362 f Jrii 354iJ

j r Wil37mm 3 2221

228231 227tl IfJ I

294tt tP

SOmm 6 293 301 29j t

1 1 if75mm 12 71 i f d74 t1t72 72

l it j71 r 1

IOOmm 2 1 39 38 f 36 362lo jf t i

l t 311

150mm 42ir

17 15 1 5l1Ji fiWft S l Y

1

1200mm 75 i ir 2 2 1fii rijtr250mm L05 2 tt 2 2 2

f h

l t

iC iTotal26 849 27 035 26 733 26 858

A

1i t litIl i1

llThere are fewer se g 1 water customers 0 7 in 2008 because there are some

water onlycustomerswith no sewers in the more rural areas

r

43 Consumption

4 3 1 Regional Water Supply Sewage Treated Volumes

The Region wholesales water supply and sewage treatment and bills Niagara Falls basc d

on the volume at the treatment plants The volumes billed monthly and annually for water

and sewage to the City by the Region from 2005 to 2007 are shown below in Ixhi it 10

NF User Rale Rep011 Apill 2 2008 Finaldoc 23 R M LOlldon Lid

Or



Exhibit 10 Water Sewage Volumes Purchased from Region 2005 to 2007

I Water I Sewage IMonth 2005 2006 2007 2005 2006 2007

January 1 30848 1 184 17 1 136 60 1 863 86 1 928 67 1 862 03

February 140591 1 086 69 1 12099 1 626 08 1428 86 1 099 99

March 1 286 66 1 206 82 1 217 53 1 801 69 141675 1 800 64

Apnl 1 268 52 1 223 58 1 174 84 2 142 62 1 357 08 1 456 80

May 1432 58 1415 64 1442 70 1 31043 1 293 83 07047June 1 698 68 1 675 65 1 802 10 1 257 68 1 143 02 1 136 39

July 2 005 93 1 823 90 1 567 72 1 332 07 I 1408 11 1 303 84

August 1 835 63 1 704 76 1 720 57A1 466 8 rft 92 83 1 240 58

September 1475 99 1 312 07 1482 43 1 455 19 55 1 187 96

October 1 341 94 1 203 57 1 298 38 1 71546 2 1 5 16 1 166 91

1 11449 1 10871November 1 170 57 1 633 82 1444 1 1 267 92December 1 203 26 1 100 67 1 163 21 1 510 61 1 769 13 1 61698Total 17434 15 16 052 00 16 235 78 19 116 35 r 18 154 17 16 210 51

NFData 2008 xIs Region Flows 1 Mar 08 tut i JfHf

1 t

The monthly water flows are used to bill the current Region rwater ch arges for the same

i

period Up to 2006 this method was used fO f ge Startii inl 007 historical 3 yearn1J r J f j

uH v 1 J

average flows are used i e 2005 to 2007 average f6r 2008 bill so that sewage chargesJ t N

ffor a given year are fixedmount kno it advance

o

fif l i

4 3 2 Annual COrlsumPtion ik fq

t

t1 r t f 1 i

1f N t

Annual p hased watF volume COln ith the volume ofwater the City billed to

customers for 2005 to 20P is compareoin Exhibit I belowTt t

f1 t 41fiti 0

i f r

li kti

YiJf1Jorrc1 Itit ltl

t iiI

NF UseRate Report Api 2 2008 Fmal doc 24 R M Laldoll Lid

City ofNiagat Q Falls Final Report

Water Sewage RateStructure Review Page 25 of78Exhibit 11 Consumption vs Supply 000 mJ 2005 to 2007

Water

Consumption 13 915 68 13 488 56 4 211 98 13 872 1 13 984 8

Supply 17434 15 6 052 00 16 235 78 16 257 1 6 452 8

UFW 5407 6 4 558 7 3 140 6

UFW 20 2 16 0 12 5t i

J

Summer weather Very dry Very Wet Very Dry ifi

Sewage k ii1

BIllable City 13446 64 13 113 23 13 614 96Jl

1 068 813 39i6

Treated Region 19 111 87 1 8 154 17 17 909 2 f8 214 816 210 S 1l

tJ 1 t Qly lh ft1

t

rijrit t ft

UnbiHed Water Consumption UWQ4 is a normal phe omt on andii ludes losses suchi B k rfiit WI

A

1 t r ib

as watermain leakage as well as usage sucnasma n fushinglan rfire fighting trainingfJ 11

Unaccounted for water W has bJ creasing fr n tP2 in 2005 to 12 5 in

t r f2007 The AWWA suggests that it is notturrCommon to find UWC to be over20 in

1 1 tI

4older systems than 1Jl w well1 ed systemss

O f

ConsumptipIVin 2005 nd 2007 bo1ci Y y ars was about 3 higher than 2006 a wetjJl

1 llyear 1 1f0

t Io ft t t 1

jc j Wfr

4 3 3 con QQ Profile

o

An analysis has be cfriitd out ofannual usage by all customers in 2007 From this a

cross section ofann fl nd monthly usage has been derived as shown in Exhibit 12

4Fonnerly referred as Unaccounted for Water UFW tbe American Waterworks Association AWW A

now prefers the tenn Unbilled Water Consumption

sA WWA Water Conservation Programs A Planning Manual 2006

NFUse Rate Reporr Aplll 22008 Fmal doc 25 R M wildon LId

City ofNiagara Falls Final ReportWater Sewage Rate Structure Review Page 26 of 78

Exhibit 12 Water Consumption Profile m3 2007

Wd lmf 1tf ld I 1 J j Y 1lojj h ne@OrfsUltlRtI I centIDslbg V olumesoown ori SSlJ il n c v

71 iii rlOk

WillI

r t i 1 M Iun on mets f 1i 0 urneIli Il t S Y l W L ui I J q Ao rJ Qn 4i rt f

25 21 5 0

55 4 6 10 1

80 6 7 5 1

102 8 5 20t

2

123 10 3 25t 4

3ttI

i142 118 30l r 5

13 3 35W Pi J

160 6

177 14 8 40 1

t

f 8 yJ

J frJ G

193 161 45O

rr 1 0to

J

211 17 6 50 P 12oif t l i

230 19 2j fL

1555r

j

249 20 8 r 60 j R 171

Jt

f

t 1

J I

269 224 i 6ti 20l

t

tI t

E 24 4 ii 1 JlI

293 II J 70 23rj lo os J

319 2 6 6f

75 26

3511 lt298 JlJ c

80 29L iL 042 J rj

395 rJ32 92Jj v 85 33ttr

l

tift461 5 384 W 90 38r J 1

1 1656 lit1l11 54 6 95 43fJ

f 1 r

I

352 9 99 554 235

884 720 i f 73 726 100 00I P

1 r

fr4 ti1

An example of how to read this table is about 50 ofcustomers use 211 cubic metres

per year 17 6 m3 rnonth or less and they represent only 12 ofconsumption This

means that the median customer uses 211 m3 year or 17 6 m3 month or Iess 6According

G The median customer is in the middle in terms ofconsumption about 50 use more than the median and

50 use less

NFUser Rate Report AplJI 2 2008 Fmal doc 26 fIM lolldon Lid



to Environment Canada average 2001 residential water use in Ontario was 285 litres per

capita per day lpcd7

Statistics Canada reports a 2001 Niagara Falls population of

78 815 and 32 447 private dwelling units equivalent to 243 persons per dwellings Based

on this median Niagara Falls residential consumption was about 211 365 243 x

1000 240 Ipcd This would indicate that residential usage in Niagara Falls is probably

average or less and thus not wasteful water users

t

At the other end ofthe scale there are a few very large users wh h represent a large share

ofusage I of customers 294 customers use 45 ofconsum ii Ihe remaining 99It

ofcustomers 26 555 customers only use 55 of total usage t t

rq

Jf

4 34 Largest Users l1

1

1f F Y k 5

A list ofthe 10 largest users is provided below in Exhi t 13 1fhc 61iYr td ers are listedr fl i 1ft

because they will be the most impacted by an nerease in th vo1uw tric rate and decreasef f 9ot AI

1Ytt t J rtcrr rt

In the servIce charge 1 7 i

ti iJly I

j F

r ll

i JJ

t FI f J Oo

11i B t t

lF

jrt 4 I

AIIC ft1

t1

v

t 1tO

ofj 1

t1 ttt

J A

j1 Wt1f

J

1Municipal Water Use 200 I Statistics Environment Canada

8 Statistics Canada website

NFUse Rate Report Ap12 2008 Fmal doc 27 R M Loudon LId

CityofNiagara Falfs Fmal Report

Water Sewage RateStructw e RevIew Page 28 of 78

Exhibit 13 10 Largest Customer Consumption m3 2007

Niagara Falls View Casino 150 mm 6 inch 884 720

Slrabag Incorporated 200 mm 8 inch 269 420

Niagara Parks Commission 250 mm lO inch 210 350

Ontario Power Generation 150 mm 6 inchI

203 190i r

Niagara Water Park Properties ISO mm 6 inch 1 7 720I r f

Vr

Marineland 250 mm lO inch 169 860l

2095527 Ontario Limited 100 mm 4 inchit l

151 370 i tt tj i

nCanadian Niagara Hotels 150 mm 6 inch 143 050 IJ ft r

r

st t

ffiHilton Niagara Falls 150 mm 6 inch jJ y128880

c

jv b

t

Casino Niagara ISO mm inch ik z 21 060f

jt J r f

jllftf

10

Tdtall j

u 2 459 610q fa

lj

A

J s

Total tbnsumpti n stomerst

13 938 983

8lR 10 as a fJ alA

A

1 ftiT SI

4 i2006 Tota1 2 108 798

9 b

ti f l2do5 Total 2 145 883rl

J

il

l

xt

The 10 largestcJ f6 rs used 18 of tota consumption in 2007

c lrt 1

t ljJ 4 lf4

t1f

NFUser Rale RepO1April 2 2Q08 Filial doc 28 R M LOlldon Ltd



44 Budget

The 2007 and 2008 water and sewage utility budgets are provided below in Exhibit 14

Exhibit 14 Water Sewage Utility Budgets 2007 2008

I Water I Sewage IBudget Budget Budget Budget

Budget Component 2007 2008 i 2007 2008

fExpenditures 6h

Operations il1lLocal Operations 3 064 351 3 240 015 2 209 528 3 068 611

Billing Costs 601 136 601 164 6 0ITotal 3 665487 3 841 179 2 209 528 3 O68 611

Capital J iffLong Term Debt Principal 94 137 8718

I81 6 4 iJ 85 861

Transfer to Own Funds 4 080 000 4 500 000 l1 4 645 OOO 4 500 000

Total 4 174 137 4 598718 4726 654 4 585 861

Regional Charges ttFixed Charges 161 9 t 164 8 f i

124 953 124 953

Volumetric Charges 8423 812 9 006450 1 135 692 11 730 523

Total 8 588 614 9f171 252 11 260 645 11 855 476

Total Expenditures l fl6 428 238 17 6 h1 1fl9 18 196 827 19 509 948

Regional Cost Share i 52 1i52 62 61l t 7i

Operations Regional 12 2qM101 13 012 431 13470 173 14 924 087l

Revenues 1 f

Non User Rate Qttl Reven s iTank Truck iF Vi 50 0ifOM 50 000 0 0

Sundry f 115 OOO 115 000 0 0w J tj il

Fire Hydrants ifo j r274 694 274 694 0 0

d O t13 t730 000 30 000Sewer i leamng 5 0 0

SudrYR enuel ff 0 0 100 000 100 000Other 1r 0 0 0 0

sj

ub total Other Revenues 439 694 439 694 130 000 130 000

Net from User Rti

15 988 544 17 171455 18 066 827 19 379 948

NIagara Falls UserRates 200B xls Budget 25Mar 08

ilf

NF Usel Rale Report Apill 22008 FlfIlll doc 29 R M Loudon Ltd

City of Niagara Falls Final Report

Water Sewage Rate Structure Review Page 300178

4 5 Conservation Water Efficient Use Programs

The entire Niagara region is covered by a watershed based protection strategy Imown as

the Niagara Water Strategy WaterSmart Niagara9 was released in October 2003 It is a

strategy that works towards the common goals of protection restoration and management

ofwater resources across the Niagara watershed Operation ofthe strategy is organized as

follows

11li

it1 S C C d f I d Rl Vri

ii 1 dteenng ommlttee ompnse 0 mUnIClpa an egJOna ounCl ors an

senior staff from MOE NPCA Niagara Region and area iRalities The CityfPijl

ofNiagara Falls is a member 1r il lilJ

N

ij il r r F

2 Action Coordination Team Includes Techni9ifsuppqrt ialfro Niagaraiift I

Region NPCA MOE watershed municipalities Env ironmenfGrmada etc

ilib JE

3 Water Advisory Group Citizensi lit1i I omimi Staff communityf 1 H

stakeholders and genera citizen s lt ti It I i iter

J if 4 f4 r 1i

tJ tt41

l1

WaterSmart Niagara has develQped six ceiftr hthemes and goalsj j i r

rL J I Jlr l lll 1a jjt

twI Hum Healllf Clean an labundant qfinking water for our safe consumption

i1

T Jir

ial Env I nt Waterr uffiCient quantity and quality in natural areas

Ii PS and streams ensuring healthy plants species and the integrity ofthe

ecosy

t tw

3 Flooding and Efosion Protection for our residential commercial industrial andftilf

public land uses from detrimental flooding and erosion

4 Recreation Sufficient clean water to support and sustain recreational uses such

as beaches and natural areas

9 Tnfonnation on WaterSmat1 Niagara can be accessed by logging on to www watersmartniagara ca

NF User RaTe RepOIl Apill 22008 Fmol doc 30 R M LOJdoll Lid


Water Sewage Rate Structure Review Page 31 of785 Commerce Clean and abundant water for commercial users

6 Agriculture Clean and abundant water for agriculture operations

A number of actions have been developed to be addressed over30 years organized under

11 action programs

1 Education and awareness buildingf

ri 41

t l t2 Watershed and natural hentage system study b

j

lrrt

3 Data collection and monitoring iff tii

i 1t5 Htt4 Land use plannmg t

O

vr

y

t

b

f5 Regulations and policies tl el V

f

f1jt f

c l r J

6 Land and property management J t1 i sq iit

lk7 Groundwater st and protect

iItf

sl

1 ra

8 Agricultu1lbest praq qiiJ1i fj

t1t

i

9 FundiIig incentives financirlg and taxationf Ir 1 err b

iff A r49 r I

1 O Maintenance h1anagement and repair of infrastructure and remediation ofi frIt itA

conhilhin ated sitesitJ ok

1

11 Energy ne t lofogy and best practicesJ

WaterSmart Niagara p oduces an annual WaterSmm1 Tip Calendar which provides many

hints for reducing water usage

There is no apparent direct impact ofthe water strategy on the formulation ofwater and

sewage rates However it is expected that water usage per residential customer will

reduce over time due in pmt to changes in customer usage habits as encouraged byinitiatives such as the WaterSmart Tip Calendar as well as the plumbing code which

NF Um Rale Report Apill 2 2008 Filial doc 31 R M Loudon Lid



requires water efficient fixtures in new construction and more water efficient appliancessuch as washing machines

The City ofNiagara Falls implemented a voluntary water conservation program in 2000

which continued until 2003 This program included an education campaign low flow

showerheads and rain barrels The program costs were shared with other utilities The

program was discontinued in 2004 due to funding constraints and declining interestW

l

The City is revisiting this initiative as a component ofits Pollution Control Plan andf t t 1

J l

Combined Sewer Overflow CSO Abatement Strategy and is plannilfgto implement a

ir 4

new program over the next 16 months that includes t ri t

Water conservation kits io

t ii F

Educational Workshops fi

A Low Flow Toilet Incentive program and tfr

f j 4 1JtfA Rain Barrel program

t t ttThese programs target residential users ari Rf9vide opp0l1unities to reduce consumption

by encouraging efficient use qi R9 ble wat H Jki Jl 11 i r f

sr1 l

l n rfr

fr 4f

k tt

i VlJ

r j r

W Nfif

ai ffrU1

NF User Rate Report Apll 2 2008 Final doc 32 R M Loudon LId


Waler Sewage RateSI l1ClUre Review Page 33 of 78

5 Alternative 2007 User Rates

5 1 Principles

There are a number ofprinciples and objectives to be considered when formulating

metered water rates Some seem rather obvious others may be harder to choose Some

may not go well together so a choice is needed as to which is preferred

Some are basic objectives that are compatible with others Otlicirs may conflict with thet f

result that choices may have to be made But in any case it is usefultt consider andi r

decide what principles will be used before deciding cost recovery metfi ataHdJ

Jf iJ

developing the format of the charges i i41 7 J

i k

In any case it is important for the City to agree them 1pey Ii Mit9 t s rategy1

it rJA7 tfi

adopt a rate format and to explain and defend the user ratesJQ cust9 nerscif

l tt jr t 5 l j O

1 tri

JI

T LhIt

f 1

J 1

t 1t jJ

The following is a list ofpossible princJpIes for Ni8g Falls and has been drawn fromlr

tiivarious sources and usep y the

cons111 hin the devcJ9Ppf eilt ofuser rates for a number0 t iO tt

ofmunicipalities 07 1

1To j fo If

r 1 1 foil lfif

5 1 1 Revenue Adequacy Revenue Secimty6

3f P tr

ReveIJt1eitm t be a iat to meet fi 1tfiing needs This is a basic principle that must be

aChi ved tt b ingS a degree of evenue instability due to rate revenues beinginfluenced by Ye1i 7year variations in consumption due to seasonal precipitation

1i r l 1

fluctuations The lis t t format can be finessed to improve revenue security but toi

some extent it comes rrf sacrificing the extent to which charges are tied to usage

51 2 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 The Provincial legislation does not prescribe or proscribe the format of the

rates The legislation focuses more on ensuring that the cost recovery levels are

NFUser Rale Reporl Apll 2 2008 Flllal doc 33 R M LOldon Lf



appropriate For example as previously mentioned Regulation 244 02 ofthe Municipal

Act requires that water and sewage fees should not exceed the cost of service Bill 175

the Sustainable Water and Sewage Systems Act speaks to ensuring that utilities budgetand recover the full cost ofwater and sewage systems Legality would also be abasic

requirement

5 1 3 PracticalityJ

i

The rates must be practical to apply The main constraint for1t glates that targettt kti

peak usage is the practical and economic frequency ofmeter readingr Tn e ability to metertlJ 1i1

and bill based on instantaneous peak usage rates has long been availabl f he elestricityr f J

industry Thus rates that reward customers for staying a9idiiig qigh usage ddriilg peaka

yt

4ir

demand penods have long been common In the electdc mdustrY tich meters have onlyf J

recently become available in the water industry and peaR ti of u1t jjmings are not yet

applied for water A second limitation rela5o e practit ijt ffbaICulating complexi t 1ll i i

bills became aminor consideration once Inanual blllfhgs we e placed by computerizedrrlL ti

systems The capabi1iti of the curre6t bi Jing system tq Huidle rate formats must be1 x

L

considered 1

ftr2 l5 14 Fai ss User Pay J i

tl

1 iii

Faim en ch ri are as close i asiblc to the actual cost ofproviding thef t r w

service to fi cusiomer The location or class of customer in Niagara Falls would not beF02

a factor All js 6 rs are treated equally The advantages of common municipal systemst

are shared For exampf a customer located near the water source does not pay a lowerq fE

rate than one more distant

This principle is probably the one most important if customers are to believe they are

being treated fairly Thus user pay is a basic principle that should be followed for both

legal and fairness reasons Charges based on user pay are the easiest to defend

NFUse Role RepOlI Apll 2 2008 Fmol doc 34 II M Loudon Ltd

Oty ofNiagara Falls Final ReportWaleI Sewage Rate Structure Rcv ew Page 35 of 78

5 1 5 Affordability

The ability of customers to pay for essential services such as water supply and

wastewater treatment can be an important issue Metering ofwater does give the

opportunity to manage costs ifaffordability is an issue In some jurisdictions where

affordability is of concern water rates can be formulated with affordability in mind

Lifeline rates are ofthis type Usually water rates are not used to implement social

policy and affordability is addressed with programs specificallyNesigned for thisf l t

ill lf ir

purpose

Jt bt 11

5 1 6 SImplicity i7 t l

ir tfj fi x

Customers should be able to understand howthe chargeS reJate i6 their water usage5 j

Charges should be simple enough to explain and bill 4Wou i dJ 5 ftlication The

simplest format would be a single block voluP ic rate fotJl usag with no otherw

rtt 1tA l 1charges However this may not be a fair f6 itt cost pd also revenue security

may suffer due to year to year seaSOnal Nariations trTl t t

tf1Iik

5 r

5 1 7 Conservatpn Wat tbUse Effi itfQ YIJ Itf lVt rt

fFair and equitable pricing will encor ge the efficient use of water However there are

several t rmulati hs that can la Pt ifiC types ofuse whether year round or

vri Jcr

sea ofiaj s s ap forniulated to target a certain type of water usage pattern Wherell 1

total water availiltjjlity is limited all usage may be targeted Where supply is constructed1J1Iit 1

to meet peak slUnttl rlage rcsidential use is then targeted But fairness might bei 1f 1

sacrificed if specific cli tomer classes or usage patterns are targeted with punitiveI

charges

5 1 8 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 ofcustomer and the differential is shared by all customers or paid from

some other source This type ofrate structure violates several other objectives including

NF User Rale Repm I Api 2 208 Frnal doc 35 R M Loudon LId


Water Sewage RateStructure Review Page 36 of78

user pay and fairness Moreover cities usually have other more effective methods to

attract development for example by the provision of serviced land

5 1 9 Principles Summary

It is essential that the user rates be set on a sound roster of principles

Exhibit 15 lists the principles and provides an initial assessment ofhow they might bej

h d fI d3

welg te or ISCUSSlon purposes C

7ti ffl

Exhibit 15 Summary ofPriuciples for Financial User Rate

PoJiSYtr y i Z 2r ra i ffRrmcl Iesl i i

c IndlaI ssessmeritIC 1 fM 1t ro b9 AloT il iOf 1f

Revenue adequacy security It is s f tl ese be iisfjed Customers

Legali ty sho lJ be j stifi iJ ir assumption thatthese are being satisfied

Practicality if1

Fairness User Pay f 3ihis is ttiffffiQsrtmportant priority when itL J u t

comes to supporting the rates to the publiclil lttl

l Tlie user rates should be based on thef

3 S princ ples offairness and user payr

Affordability l Whether affordability should be an issue in

ii v1of 1

1

t o inatting the rates needs to be decidedt

r p

Simplicity flc 1 if1ii The charges should not be so complex that

gI

yr fjf customers cannot reasonably understand themt1 J

Simply by metering and basing bills on volumeConse Y i Wate efficiency iV4 t i r used plus combining sewage and water charges1 Gtr f f

1 ft i encourages conservationlt iF

fi i

Biasing rates to encourage development wouldEncourage indiiS WtQel ment

f rcome at a cost to other objectives such as

itt

lf conservation and equity4

ITThis list has been generated over time based on discussions in a number of

municipalities There may be other items of importance in Niagara Falls that could be

added

Although there are a number of principles listed the most important from a public view

point is that they should befair and equitable

The following policies are related to achieving the principles

NFUser Rate Report Apill 2 2008 Finaldoc 36 R M LOldOIl Ltd


Water Sewage RateStructure Review Page 370 78

Metering Although metering has already been adopted it is worth noting its value

in increasing user pay addressing affordability customers can control their water and

sewage bills and conservationwater use efficiency

Decreased Service Charges Increased Volumetric Rate Making the user rates

more volume oriented will enhance several ofthe objectives It increases user pay It

also assists with the affordability principle since by reducing usage customers can

decrease their water and sewage bill Also conservation wiiif e assisted if a higher

proportion of the bill is volume related

l

Combined Water Sewage Rates Several municipalities a1readY fj1 Jne waterf e

and sewage rates including the City ofToronto and ver j nicipalitjt Yorkh t

Region including Markham This will increase thefsimplic itYi t tQ r tes It has alsoJ

i

1

been found that a combined water and sewagebilli fu rf accept 6ii to residential

kcustomers in the summer than a separate s yagy bill ba dol Vater consumption

zt ff i i ftf

fr f7tJ i

Single Block Volumc ric Rates thifCity curren i ih a single block volumetrich f

rate A single block rate format lias th a9yantage ofsimplicity It is also the fairesti 1

t 0 J

approach fo E ty sinI

asons fOr lp block rates are primarily due to

supply cOJits and the City purclt water from the Region at a single block rate NotIetf r

only isiit single blq k fair it has tHtM I2eption of fairness to the public compared to4 ft 11

muli1W ock rates since all customerS are charged the same ratef

t

ts jiJ2

A set ofprincip igost suited to Niagara Falls should be agreed and should be the basisr f oj

on which the userr tes areestablishedll 4 of

4 t

5 2 Rate Format

Alternative rate formats are reviewed in detail in Section 8

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

NFUser Rote Report Apill 2 2008 Fmal doc 37 R M LOldon Lid

cay ofNiagara Falls Final Report

Water Sewage Rate Stnlcture Review Page 38 oj 78

This combination is considered a fair way10

to recover costs and improves revenue

stability over volumetric charges alone The AWW A states From a utility s standpointboth revenue stability and equity are generally enhanced as appropriate types ofcosts are

recovered through fixed costsI

The use oftwo part rates with both fixed and volumetric components is common by other

utilities as well gas hydro and telephone all have two part rates Cable is an exception4

with fixed charges only that vary by service package 1q i

In the review ofwater and sewage charges in 16 Ontario municipaWEi5JW Section 6 3 it0 t

was found that 81 have adopted two part rates f

4 4 tiThe water service charge component usually varies by nieter sizeHn order to allow costs

l

to be allocated to customers in proportion to their cost 2 seryite i rt ore complex

approach than volume alone but this factor is outweighed bxincreased fairnessf 1t L li Ifllir f

iIi

111 4

J

With regard to the volumetric rate compoQent as piHjt d out in Section 5 1 above aJ t itjlJ

l

Jlit

single block rate is consistent with the sirnplicity and fairhess principlesrY J

y

tfi tIl W f

tr

Customer bills ba ed on rates tii tlinclude b6tij rNice charges and volumetric charges4 h q i ijl

will vary deperiiH g how muth customer ul s lfthe total bills are divided by tbe4rf

volume the resul1m g voIumetri rltte will vary somewhat since it includes the

imp cttt tfrxed This is illus iated by drawing from an example provided byMr Biela fe presentation to Council July 23 2007 see Section 11 fourth last

page ofhis m

r t4 0oJ1Pl41

10 The Canadian Water and WastewaterAssociation suggests this approach in their Municipal Water and

Wastewater Rate Manual

II

Principles of Water Rate Fees and Charges A WWAMI Fifth Edition Pg 18

NF Use RareRepoll Apill 2 2008 Fmal doc 38 R M Loudon Lid

City ofNsagara Falls Final Report


Exhibit 16 Niagara Falls Water Sewage Bills Converted to Volumetric Only for

Standard Meter Customer

tvlonthly Bill Equivalent Unit Costs 1mUsage Service Service

cmrronth Charge Volurre Total Charge Volume Total

5 38 65 7 28 45 93 773 1 46 9 1910 38 65 14 57 53 22 3 87 146 5 3215 38 65 21 85 60 50 2 58 L 1 46 4 03

20 38 65 29 14 67 79 193 t 1 46 3 39

37 88I

Jjt26 38 65 76 53 1 49 1 2 94

c 1fi

30 38 65 43 70 82 35 1 29 1 k 2 75

Rate 14568 1m3 ff111i

Niagara Falls UserRates 2008xls Unit QJstCoi7paliSOOiI t 3Or r fj

iJ 1 11j T

Columns have been added above compared to Mr Biejlyski m ieiaH provide thertk

Jj 1t

total unit costs including both service charge and volumetricfharge The unit costsr tr aJ l

1r tl t

shown are not part of the normal rate calculati5nioia have 5eerLcalculated only tof

v lr

NrW

illustrate the impact of converting bothHixed and voiil lhetric charges back to a perl jf r 1 t

l

i JO llli 9volume rate 1 t 4

tIiJ 1 lI J L iilf

1 r l r4 f f ot

jy

5 3 R t tial s eBills anO

1 Usaget 1P

i l f tThe installa

DQ ter meters is an essential element for achieving user pay for

municipal w Most municipalities also bill for sewage charges based on water billingIJ

information agairi rgetilser pay since sewage meters are not available for measuringiif J

residential flow v

Water meter readings are commonly used to allocate sewage costs as well as water costs

A customer s water meter reading is used to bill sewage since it is the only mechanism

available to assess the customer s actual utilization ofthe sewage system A customer s

metered water consumption is a surrogate used to determine share ofsewage costs

Basically using water meter readings to bill both water and sewage is a method of

NFU el Role Report Apnl 2 2008 FIfIQI doc 39 R M Lolldon LId

CIty ofNiagara Falls Final Report

Watet Sewage Rate Structure Review Page 40 of 78

allocating the costs incurred by both systems based on a customer s relative usage of the

system It is a method ofsharing costs

The public readily accepts the use ofwater meter readings to achieve user pay to recover

water system related costs The use ofwater meter readings to calculate sewage bills to

recover sewage system costs is for the most part also accepted except during the summer

when water meter readings include usage that does not directly go to the sewer This was

an issue raised by some residential customers at the City s p um on January 24j l

2008 see Section 3 Public Forum ff1 l J

One customer at the City public meeting suggested the installation of se lmeters

However there are no practical or effective sewage met s iU le for re id iiai

customers Using water meter readings is an economicji d pr ftTI l met od ofachievingJi fJ 1 1

user pay Note that customer meters do not measure a1itfub r of flo p iegories

affecting water supply such as water syste L and sew g 2 T1ent such as sewageFI I l lwft

system inflow and infiltration However ttuse ot n 10mer Witer meter readings allowsr 1 v m

these costs to be sharedtn propOltion i cu tomers uSg1

i 1rtfl

The vast majority ofOntario ni llJ cipalitie l5iiiif rse age based on water meterkR 1

yM r jf

readings with5 ut dJJstment Hg r there a few who have adopted specialJ t1

A

methods an atlempt sp I11crease the9r ptlon offaIrness related to seasonal usage

7 jit ir

Metlid h txrmum Bill Barrie Ontario has a maximum sewage charge of45

m3 month Ioriresidential customers Barrie previously has a maximum sewage charger3

oJi t J

of30 m Imontli nd that too many customers were qualifYing The increasedV

threshold has resulted in a flood ofcomplaints Halton also has amaximum threshold

of60 m3 month but has found that only large users qualify and many of these some

users have high usage year round Consideration is being given to abandoning this

concession

Method 2 Discount Peel Ontario For residential customers the sewage rate is

applied 10 85 oftota water consumption year round Peel also once had a

NF USCI ROIc Report Api I 2 2008 Final doc 40 R M Loudon Ud

City ofNiagara FafIs Final Report

Water Sewage RateStrUClure RevIew Page 41 of78maximum sewage bill feature of30 000 gallons quarterly 136 m3 but that practice

has been discontinued

Method 3 Winter Usage Essentially a customer s winter usage level is used to

bill for sewage in the summer This was one method suggested at the public meeting

This method is not known to be used in Canada One municipality using it is Portland

Oregon Portland uses water meter data for billing sewage but has developed

methodology to exclude outside water usage when billingl 2 ntial sewage in the

summer A number ofrules have been developed in Porti lOd to p npIiSh this As a

starting point winter residential water consumption by a customeft d to calculateJ

the summer sewage billing Winter usage is assumed to start in abou taO and end

in April depending on billing frequency However h 1J bill fe rJt d to beIf t

added due to a large number of snowbirds who e a ay dUtili9 lewinter butt l JZ Z j

werehome in the summer These customers no longer could be coi sidered user pay1

rhS w hI

Also pool filling durmg winter monthsIJ d tDi reaIS Pt g ss so that their usage

could be reduced to reflect samtary only usage In 8ome cases summer water usageI f f 1

lrprorated to a 30 day 1Sg iod is 10 th AVinter ave g e Using the actual winter

Jiaverage would result in customers paying1more than their actual summer average

A lt J i trq ir

water usag T verthi tii fipn when s ii1 er water consumption is less than thefr j1

winter arerage ac ual summer av t g water usage is used for the sewage bills j fu tft

ApParently a siglJifiClmt proportion of customers fall into this categorytu

11

f pttAll

Method 4 ased Sewage Rate in Summer This was another customer

suggested m tlicrd Sincecoverall rates would have to be increased to produce the sameik1

revenues it is concjd that such an approach would result in customers paying the

same amount ana the approach would only be to make the charge appear fairer in

effect window dressing

Method 5 Combined Water Sewage Rates By combining water and sewage

charges into one rate the perception that seasonal sewage charges include a

component which does not discharge to sanitary sewers is decreased It has the

advantage of showing the total impact of rates on water usage thereby increasing the

NFUser Rate Report April 2 2008 Fmal doc 41 R M Loudon Lid


Watet SelVage Rate Structure Review Page 42 of 78

incentive to moderate water usage in the summer a water conservation objective It

also has the advantage of not requiring special policies that complicate billing thereby

simplifying the utility billing process and customer understanding of rates

Methods ofadjusting for non sanitary summer residential usage are rarely used but they

have been available for many years To a great extent they are more for appearance since

revenue targets must still be met and that is done by increasing sewage rates to offset the

lower consumption figures used to calculate sewer bills 51 1

flVi liJJ

Method 5 which combines water and sewage charges into one rat h uld make the use

1l

ofwater meter readings to calculate the bill year round simpler to undetst fi9indf

increase the acceptability ofusing water meter readings for ih total water ahcie ageK

M 3bill

r t t rr

ijt J i l5 4 Alternative Rate Calculation

1 t tEli r1

ft 1j z

l tj a1fi ilf4

f p

5 4 1 Fire Protection Cost 4

I tJ 1fl1 l 4

t fj I WIlWater systemsin61ude capacity oIllStandby for fire protection Water system fire

protectio ts oftenferred as Hya jRentalhave commonly been recovered

from grbp I1Y taxes irt nt rio NiagaifFalls follows this practice It is considered11J o f

appiopriath jJQJLJ ijelates directly to the fire department which recovers its costs fromiff

the property ttl fver fie protection costs go beyondjust the costs ofhydrant

installation and main l1ce and many municipalities do not recover all such costs fromty

the property tax the City being an example In fact many have removed all water system1

fire protection costs from propeliy taxes altogether due to pressures on the property tax

Where fire protection costs are included in the water rates they are often included in the

service charge since it is a cost that is largely unrelated to volume used by a customer

The City currently recovers a portion ofwater system fire protection costs from the

property tax and the balance from the user rate In 2007 the amount budgeted for the

property tax was 274 694 and the revenue category is referred to as Fire Hydrants

NFUser Rale Report April 2 2008 F nal doc 42 R M Loudon Lid



The actual total City water system fire protection costs are calculated below based on the

following

Local System The proportion offire protection costs for local systems varies for

example by size of main as well as size ofmunicipality In terms ofmain sizing

local mains are sized primarily for fire protection and so receive a relatively high

percentage Larger mains have a smaller share In terms ofmunicipality size large

municipalities have a relatively smaller fire protection perntage and smallerf

municipalities a larger percentage A detailed fire protection gb c lculation can be1 1

time consuming Considering that the results will be used in this tgcbnly toe

distribute costs in the service charge information is used from detaiitcff alysis ofti 4t

other municipalities of similar size The allocation ustd i i6 based on cftailedt t f

analysis ofother systems where detailed analysis w carI ed oit ni lt i J

I 1u

z t

Billing Costs Billing costs have no fir p t ion COr1lp f1l Pti 10

l4

l dl J

tt

rI

Regional Charges his relates t pply costs5 for fire fighting is kept in1 1

storage which is refil1eCl from the suPPlY plant at a tater time Fire protection has noJ

impact on th g Of PIY faciiii rhus the allocation is only for the

actual volume used estiinatea at about O 5 oftotaJ usage on an annual basist h u

Ji i ti jF r

w

So I ll 1J

The blJdii t9ata used f@ lJe water syst iJJfire protection cost calculation is based on the1 ct

water budgeiitoViiled in Exhibit 140 Iu fi i

The calculation ft ater ystem fire protection cost is carried out below in Exhibit 17

I tif

J

12Percentage taken from a detailed study of the Peterborough water system Water System Fire Protection

Costs Coopers Lybrand RM Loudon Limited 983 which calculated the fire protection cost share for

mains at 9 Pcterborough is a mid sized city similar to Niagara Falls

NFUser Rate Repol l April 2 2008 Fmal doc 43 R M Laudon LId



Exhibit 17 Water System Fire Protection Costs 2007 Budget

Fire

Fire Protection

Budget Component Share Budget Total

Local Operations 1 20 0 2 710 051 542 000

Bllltng Costs 2 0 0 601 136 0

Capital 1 20 0 4 528437 906 000

Regional Charges 3 0 5 8 588 614 43 000

Total 16428 238 1491 000Less Hydrant Charge 100 0 274 694 27S OGO rTotal 16 153 544 1 216 OOO1i

iJl

Percentage of Total Budget 8 fffNOTES 1 Based on likely capacity in local mains for fire W

2 Billing costs not related to fire protection i t

3 Supply share based on annual volume used for fir eds

Niagara Falls User Rates 2008 xIs FP Costl

J

17 M q 2Jti

J t tiZ 1

Total 2007 fire protection costs are estimated at 1 4911 bbO hich r i sents 8 ofthe

total water budget This is in line with findingstel where After de eting 275 000l1jli E4 i fF1g 41fi v

revenue from property taxes the residu l ost isl r OOO TRis cost is allocated to theI oc r

I I b IHl O J t

servIce C 1arge ca Cll atIO e ow fA 1i

fl t

542 Cost Al19yations to 9A jIie Cha t Ydiu etric ChargeH t So

J 111Approximately 52 ofwater eosts nf9 ofsewage costs are related to the Regional

1n l t

f

charg1 it costs r c rently rec yefed from the service charge which results in veryl 1 v

high servic 1n g s This has the advantage of revenue stability It also allocates localfl wtt

costs which aie J g ly fixed and not variable by volume to the fixed charge portion of11 oV

the utility bill In ifiisJ ci the charge can be considered fair However there arc manyI

reasons for decreasing1tlie fixed charge share A high service charge

Decreases the incentive for conservation

Decreases the opportunity for savings on the water sewage bill

Affects low income customers sinee they have less control over the level oftheirwatersewage bill

Results in relatively higher bills for small users and lower bills for large users

NFUser Rate Report Aptll2 2008 Fmal doc 44 R M LOlldon Lid

City ofNwgara Falls Final Report


A service charge is an appropriate method for recovering certain costs such as billing

costs fire protection costs and local capital costs For revenue stability and fairness

reasons a service charge is appropriate but at a lower level A target level ofcost

recovery from the service charge has been set at 25 oftotal costs with the volumetric

charge recovering the remaining 75 In essence this decreases the service charge by

more than 50 These arc referred below as the Alternative Rates with Exhibits

involving this calculation referred as 25 se Costs have be lallocated to the servicelh

charge and the volumetric rate in Exhibit 1 below lif

yftit

For water and sewage combined 25 oftotal 2007 rates revenue requ 9 1 8 503 848v r f

which is allocated to the service charge t1tn tfc ifi H I tnl ltr1r

f1 hRExhibit 18 Allocations to Service Charge VoltimetriciRate 25 SC 2007

M

t J

7fiVIi fpJ

j fff

Budget COI1llOOent Water Sewage C6inbine j f SCAllocation Method

g fi PRates Revenues Required it i 4 f if

t tf i

Operations 3 665487 2 209 528 l 5 875 015

Ca t I 4 174 137r

4 726 654t G rF 8 900 791pJ a fi Ir

I

1

si IRegional Charges 8 588 614 1 260 645 19 849259

Total Expenditures 16 28 238 18 196 827 34 625 065

Deduct Other Revenues mB 439 694 fit160 000 569 6941I b

Rates Revenues Requirea 15988 5M 18 066827 34 055 371t

AItn

c

1 t i 1t

Rates Revenues by Component 1lff n l dti1Percent Service Gharge u 25 25 25

ServiceCh tge R flue d 3 997 136 4 516 707 8 513 84314f i

Fire Protection fiy tf 1 216 000 0 1 216000 Based on CapacityBilling Charges t lt

601 136 0 601 136 Uniform

Capital Financing 1 fi 2 180 000 4 516 707 6 696 707 Based on Costeo

Volumetric Revenue f 11 991408 13 550 120 25 541 528ln

NOTES 1 Capital Rnancl g is the residual after deducting theother listed cost sectors from total SC Revenue

Niagara Falls UserRates 2008 xis Rev 25Mar 08

iF Usftr RalfRftpOrlAprll2 2008 Fznal doc 45 R M Loudon LId

City ofNwgara Falls Fmal Report


54 3 Service Charge Calculation

The service charge is calculated based on meter size The allocation of costs is done by

percentages ofwhich there are three categories

1 Uniform Allocation Some costs such as billing costs are allocated equally to

all sizes

i2 Cost Basis Some costs such as capital costs are a115icf M rroportion to the

relative costs ofbuilding works ofdifferent sizes ft1ttJ1r

3 Capacity Basis Costs related to fire protection are ba d on capatifY costs ThisJ i i lt

only applies to the water system h ijJ iff

i j l l tt 1

li f Jloi

The Cost Basis and Capacity Basis percentage factors u d re base 1on the Americanil l

Waterworks Association AWW A rate mamia1 Ml t i iftf

f

The costs by category a entified iJfIEx ibil 8 abi T e costs are allocated by meter

tl j t f i

size in Exhibit 19 below I ti

llo

A

i 1

Ii itk

Il iJi 1t1 r t1

1e Pli j1 iI 1S J

1

If A Pf

f ii r6

@ht tf P

1 ti t1 J

1t

h

l

i 1rJ

rp

NF User Rale Reporl ApI 11 2 2008 Fmal doc 46 R M Loudon LId

City ofNiagara Falfs Final Report

Wafer Sewage Rate Structure RevIew Page 47 of 78

Exhibit 19 Service Charge Calculation 25 SC 2007

Meter Size 1 I Number I Billing Costs 2 I Fire Protection 3 I Capital Financing Costs 4 I Total Imm Inches Of Meters Factor Rate Factor Rate Factortl i Rale Factor 5 Rate 6 Revenues

Water Imo mo S tPh Imo mo

Unmetered 125 1 1 817 1 2285 1 0 i 6 145 1 0 10 25 15 37519 0 25 883 1 1 817 1 2 285 1 0 f i 6 145 1 0 1025 3 183 609

25 1 362 1 1 817 2 4 798 14 8 603 1 5 15 22 66 116

38 11h 231 2 3 633 6 14 165 1 8 lr O61 2 8 28 86 80 000

50 2 301 2 3 633 13 29 701 38 23 350 5 5 5669 204 764

75 3 74 2 3 633 37 84 533 8 49 i5B 134 137 33 121 949

100 4 38 2 3 633 79 180490 1 t 86 5 7J J6 4 27015 123 188

150 6 17 2 3 633 229 523 192 1 1l 1l 129 04qi 64 0 655 87 133 797

200 8 2 2 3633 488 1 114 924 i129 1781991 t1265 1 296 76 31 122250 10 2 2 3 633 878 2 005 949 0 38 i tlJ

23 502 2188 2 243 09 53 834

Total 27 035 t 1L A 4 013 755

EqUIvalent Meters 1 27 575 44 353 P l 29 564 i V 32 507

Expenditures 601 136 1 216 000 2 180 000 ReqUired 3 997 136

Unit Cost IEquivalent Meter 1 817 2 285 6 145 IiSevvage SIma Imo t ma mo

Unmetered 121 1 1 ifii 1 0 12 884 10 12 89 18 716

19 25 732 1 1l rrj h

1 6J

w t 12 884 1 0 12 89 3 980 226l Ji ii i f25 1 356 1 2 iir ij 1 4 18 038 1 4 18 04 77 067

38 1 228 2 6 t1

1l 1 8 23 192 1 8 2320 63 475

50 2 295 2r

1 3 ir 48 960 38 4897 173 354

75 3 72 2 y 37 ia J ItB 0 103 074 8 0 103 08 89 061

100 4 36 2 1 79 1 14 0 180 380 14 0 180 38 77 924150 6 15 2 229 rfitl 21 0 270 570 21 0 270 57 48 703200 8 1 2 B8 29 0 373 644 29 0 373 65 4 484

250 10 2 2 i il1 38 0 489 603 38 0 48961 11 751Total 26 858 t1 l4

iJ4 544 760

Equivalent Meters 1 27 386 15 29 262 29 583

Expendituresti 4 524 207 Required 4 524 207

Unit Cost ECluivalent MeIerw t

1m12 884

Total Avg W S IV F mo mo ma

Unmetered 123 dq 1 8117 i 2 285 1 0 19 029 1 0 23 140 34 155

19 Y 25 808 ii Ir 1iff7 1 2 285 1 0 19 029 1 0 23 140 7 166 227

25 1 359r il r

26 641 14 33 260 143 2841 J 1 817 4 798 14

38 1 230 2 0t 3 633 14 165 1 8 34 252 2 2 52 060 143 373

50 2 298 2 0 f 3 633 29701 3 8 72310 4 6 105 660 377 840

75 3 73 2 0 3 633 84533 8 0 152 232 104 240410 210 599

100 4 37 2 0 ef 633 180 490 14 0 266407 19 5 450 530 200 035

150 6 16 2 0 r 33 523 192 21 0 399 610 40 0 926440 177 876

200 8 2 2 0 3 t 1 114 924 29 0 551 843 722 1 670410 30 067

250 10 2 2 0 3 2 005949 38 0 723 104 118 1 2 732 700 65 585Total 26 947 l 8 549 042

r jExpenditures 601 136 1 216 000 6 704 207 Required 6 521 343

NF User Rate Reporr Apllf 2 2008 Finaldoc 47 R M Loudon LId


Watet Sewage Rate Structure Review Page 48 of78

Notes in Exhibit 19 are as follows

1 Equivalent meters calculated by multiplying factors time number ofmeters

and totaling2 Costs are allocated uniformly but adjusted for bimonthly bills to 19pmm

monthly for larger users

3 Fire Protection costs are allocated based on capacity AWWA factorsused

4 Capital Financing costs are allocated based the relationship een sizeand costs AWWA factors used i I tt

5 Factors are calculated from the total rate

6 Rates rounded up to the nearest cent l L

rL

JfiJ

yfI1

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Exhibit 20 Vo umet l ate Calc n 25 S 3007

I

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A

Total i 1 J tl

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NFUser Rale Report Apflll 2008 Frnal doc 48 R M LOldOIl Ud


Water Sewage Rate Structure Review Page 49 0 78

545 Current vs Alternative Rates

The current versus Alternative rates are summarized below in Exhibit 21

Exhibit 21 Current vs Alternative Rates 25 SC 2007

I Existing Rates I Alternative Rates ISewage Combined Water Sewage Combined

Service Char

M t S 1e er lze r

mm inches j18 20 07 18 58 38 65 10 25 12 89 23 14

25 1 20 07 18 58 38 65 15 22 r to 33 261 A t

37 1Yz 60 21 5574 11595 28 86 23 201 5206t l J

50 2 12042 11148 231 90 J 4897 t 1 lt 05 66

75 3 240 83 222 96 463 79 A5137 3 i 103 08 V24041100 4 44152 408 76 850 28 F 270 1 51 M80 38 450 53

150 6 842 91 780 37 1 623 28 t 65 87 fO 7 92644

200 8 1 505 19 1 393 50 2 898 69 1296 76 373 65 1 67041

250 10 2 107 27 1 950 91 4 05 18 2 2409 48961 2 732 703 f l 1 i

Volumetrc Rates m f 1I M I et t t J

A B

All Consumptior 0 6024 0 8544 1 457tif i 0 858 1 039 1 897d ftC

NOTE Test Year 2007 t t1c Costs in SC 251 o i

Ju

NIagara Falls User Rates 2008Vrit a ft ummary If 18 Mar 08

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NF User Rate Repoll April 2 2008 Fmal doc 49 R M Loudo1LId

OtyofNwgara Falls Final Report

Water Sewage Rate Structure Review Page 50 0178

6 Impact 25 in Service Charge

6 1 Cross Section of Customers

A cross section of customers including both residential and non residential with different

annual consumption and meter sizes has been chosen to illustrate the impact ofthe

Alternative Rates compared to the current rate structure The sample includes for

residential single family dwelling condominium townhouse ap apartmenl

development For non residential avariety ofcustomers are i it fited and also providefjf

examples fdt 1

I 1 r

r ijJ

The results ofthe comparison for rates with 25 of costs tn t 5eiservice chitg areii

provided below in Exhibit 22 Some observations on thfimpari ar as followE

t f U R t4

J 77 1 tfI qoo

j

The bulkof residential customers would pay less if the plterna ye Rates were

implemented In the examples shown tHiM16mers US 297i 3year and less see

i Jft itf J 1

reductions A cross section ofuSag ii rovidedt1 i Exhibjt 22 which indicates thatI J r J j

customers using 2933

year or l t li sent 70 f il customers

tit

oS 1 i

The three towhl1ouse cust5Jifrsruse large v iifffies ofwater per customer and as ar i1 t 141

result tjcie he v lumetric r te i i rcr Jin pay much higher billsJ

tli 2 157

Th conaominiumt llasr the lowest increase ofthe multi unit customers due to its1

j i if titrelatively l per unit consumption

M tI

f

t1tThe motel and n Jow users per unit and both see savings

iV

The other non residential customers see mixed results depending on their

combination ofmeter size and consumption

NFUser Rate Report Aplll 22008 Fmal doc 50 RM Loudon Lid


Water Sewage Rate Structure Review Page 51 0 78

Exhibit 22 Impact on Cross Section ofCustomers 25 SC 2007

cl

b

Meter 2006 Volume Current Rates i Alternative Rates Alt vs Current

Description Location Units Size Total Per Unit Water SewaQe Total Cost Unit iwater SewaQe Tolal Cost Unrt Total Total

mm m3year m3year year year Iyear N ar lyear Iyear year jResidential

i liit II

SFD Woodfield Av 1 18 180 180 349 377 726 S 726 277 JJ r 342 619 619 107 15

SFD Epsom Sf 1 18 183 183 351 379 S 730 dno 260 J45 625 625 106 14

Duplex ArmourySl 2 18 293 147 417 473 691 445 1 374 S 459 834 417 57 61 J 41

SFD Hawkins St 1 18 297 297 419 476 S 89 6 896 iL 37 S 463 840 840 56 6

SFD Mount Carmel Blvd 1 18 469 469 523 624 1 1H e 1 147 1 l 642 1 167 1 167 20 2

SFD January Dr 1 18 1 275 1 275 1 009 1 312 2 321 321 1 217 1479 S 2 696 2 696 375 16

Townhouse Thorold Stone Rd 33 37 12 308 373 8 137 11 1l 1 9 321 1 5 YlO 906 13 066 23 972 726 4 651 24

Townhouse Thorold Stone Rd 33 37 12 326 374 8 148 11 200 J il19 348 58th 10 922 13 085 24 007 727 4 659 24

Condo DorchesterRd 75 75 13 659 182 11 118 1J346 546 r34o S 13 367 15429 28796 384 3 332 131 Sb

Townhouse ThoroldStoneRd 33 37 17 340 525 S11 168A YS484 26 63fl 808 15 224 18 295 33 519 1 016 6 866 26

Apartment Drummond Rd 95 75 29 402 J09 20 6Q4 27 797 48 398 l1 509 26 875 31 786 58 661 617 10 262 21

Non ResidentialrC t ti P

w H I

Motel Lundy s Lane 60 50 905 15 h 1 990 2 1 1 h 4 01 68 1 457 1 528 2 985 50 1 116 27

Mall Montrose Rd 11 50 1 t 16 f 1 2 89 3 1 5434 494 2 242 2479 4 720 429 714 13

Medical Centre MOrrison St 1 50 835 3 835 Z55 4 614 8 370 8 370 3 971 4 572 8 543 8 543 173 2

Car Wash FerrySt 1 5q 4 104 4 104 39t 4 14 8762 8 762 4 202 4 852 9 053 9 053 292 3

School Drummond Rd 1 100 6 601 6 601 9 275 J 10 545 19 820 S 19 820 8 905 9 023 17 928 17 928 1 891 10

Laundromat DrummondRd 1 i 5Q 7 925A 7 925 6219 8 109 14 328 S 14 328 7480 8 822 16 302 16 302 1 974 14t s 1 of iT I

Arena Centre Sf 100 8 3481l1 8 348 10 327 12 038 22 365 S 22 365 10404 10 838 21 243 21 243 1 122 5l flt

NIagara Falls User Rates 2008 xis Impacl i 1B MarDBo

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NF User Rare Reporl April 2 2008 Fmal doc 51 R M Loudon Lrd



6 2 Impact on Large Customers

The Impact on large customers is provided below in Exhibit 23 The shift ofcharges from

the Service Charge to the volumetric charge affects large volume water users the most

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NF User Rale Report Apl 1 2 2008Fmal doc 52 R M Loudon LId


Water Sewage RateStructure RevIew Page 53 of 78

Exhibit 23 Impact on Large Customers 25 SC 2007

1LL

rvaer 2OC6 I OmrtRtes I llltl fIJtEm3tive R3tes I Alt IS OJrert IRai CEscri1irn RroTs Sze Vdure Wier TciaI 0EtIRxm fJJer t simJa TctaI CcstJFbrn TctaI TctaI

111lV m3im er Iym Iym O

1 Casiro 1 1 884720 13070 765 200 133339 1 38339 700 003 920i7 t 1 687 ffi4 1 687 004 379325 o

2 Irdstry 1 200 200 42 100 331 246914 4Z1 Z15 4Z1275 2 1fZ h

283872 f axJ 53J Em 103 324 243 Mridra 1 2E 210 39 152002 2D3 134 355 128 355 128 aJ7 2240C8 i1431 410 431410 76 274 21

4 Uility 1 1 2D3 100 132517 182970 315 487 315 48 18221 f8J3 393 165 393 165 00 678 26

5 fttelffcuism Em 1 177 720 117 173 161 200 278 332 464 ti 100 W 347 800 500 00 517 25

6 Tcuism 1 2SJ 1008J 127 615 168 531 293 133 293 128if 17i653 1ai610 354003 354 003 58527 20

l i

7 HteJITcuism 512 100 151 370 00484 134 233 23719 1 451 1 Iji 1eB 135 292254 571 61 535 27

8 ftteUTcuism 670 1fQ 143 cro 00288 131 500 227 87E t 13J6jQ 151 500 282200 421 54325 24

9 fttellTcuism 513 1fQ 128 800 fSl7ff2 119 400 22Z 92 1 118 133 800 255348 498 48 116 2301010 Casiro 374 1fQ 121 ID ffi 041 r1 2793 10010 524 1 11 742 1287ffi 240 529 643 44689 23

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NF User Rate Report ApfI 220GB Fmal doc 53 RM Loudon Lid

City of Niagara Falls Fmal Report


6 3 Rates Comparison With Other Municipalities

Water and sewage rates information has been gathered for 16 mid to large sized Ontario

municipalities in order to provide context for the current and alternative Niagara Falls

user rates A synopsis of the rates formats used is provided Comparisons of2007

combined water and sewage charges for two customer categories are provided for each

municipality and for Niagara Falls both current rates and Alternative Rates41 ltr

1

A summary of the water rates formats for each municipality is 1a d in Exhibit 24YYfiri J

ljl 1

lExhibit 24 Water Rate Formats in 16 Municipalities 2007 i

tllii l C

Service Charge ltff0 Sr

2001 I V jiinetric Rates 2Municipality

d t w

Population 9 mm IOO mm to 100 f9i f SBIt iBR DBR OtherJi1v 4 fIH

90 36J 15Belleville 45 986 15 89 1 1

f X1

Cobourg I7 1 72 1045 f61d5 fitfrS t Xr4J j t I ti O 4rt f

10 5 30r

XDurham Region 506 901 307 Astkrl JAi f

3

588 83 r 65Halton 375 229 99 11ll oA Humpi r fii f

tJ

6 55Hamilton 490 268 15 XJ 101 52 r

114 19 8 55Pln r

Kingston r 57 56 7 Res ICIitll1tri

j336 539

I l

76 Res ICILondon r O 52 39364 C

Newmar f 95 788S F lJ

6 00 1 X6 OO hT

Niag raWJz ntl

22 Xf78 815 20 07 441 52

7 f1WJ78 815 10 26 27030 26 XNiagara AIt tq t

Ottawa tt 774 072 X1 i iIl

Peel Region 988 948 Xl 1y

Port Hopet

444 2843 6 X15 605

St Catharines 129 170 10 00 36 67 4 X

Toronto 2 481 494 HumpWaterloo City 86 543 242 5186 2 X

Windsor 208402 16 84 373 85 22 X Seasonal

Summary 81 have S C 8 4 4 3

Notes 1 Statistics Canada website 2 Abbreviations Single Block Rate IncreasingBlock Rate Decreasing Block Rate Humpback Seasonal

NFUse Rare RepOlr April 2 2008 Fmar doc 54 R M toldon Lid

Cityof Niagara Falls Fmal Report

Water Sewage RateStmcture Review Page 55 of 78

The approaches to water rate formats vary Most common is the use oftwo part rates

with 81 adopting this practice Service charges for 19 mm and 100 mm meters are

shown Virtually all increase with meter size from very little to a maximum of76 times

larger in London Niagara shares the middle ground with Durham Waterloo City and

Windsor at about 25 times larger In terms of volumetric rate onnats about halfuse

single block rates and one quarter using increasing block rates and one quarter using

decreasing block rates

It I

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The first water and sewage bill comparison is for a customer usiiigi 3year 52 800

gallons which would be fairly typical for an average residential custofuef d is shownr

J1 Tt

in Exhibit 25 below l

ii i iti fi

Exhibit 25 Vater Sewage Charges in 15 MuniciR itjes ojiii ye r 2007ff S

I

11 000

j t 1002 I i y r

Q C1900

M r90 Yo Ol

l rf w t 0

800vi

F

r 800 nl0 llt

D JCIO Os

700 co 700lcto Uao

0 00

o 600 60 CQ

500s

50

CU 11400 1 40

0 Cc 300I

30 Yocu

c 200f

200 U

il0

100 i7 10 ar

j0

C 01 tV rei E C c c tV c Q

QC

0 0 0 c 00 c Cl

c0

0 rei Xc 0

Q 0 0rei c C u C

c Q to c Qi QL

cuo Jl E 0 E 0 J z c

t0 rei C J tV S i UcU I Q rei u

z U z

The chart shows total annual water sewage charge vertical bars with annual bill and

percentage ofbill that is fixed black dot and percentage at right side ofchart

2007 charges were highest in Niagara Falls but drop behind Windsor and Kingston with

the Alternative Rates

NFUsel Rate Report Apll 22008 Flnaldoc 55 R M Lor don LId

City ofNwgara Falls Final Report

Water Sewage Rale Structure Review Page 56 oI78Peel Toronto Ottawa Waterloo and London fixed charges represented less than 0 of

a residential bill The average fixed charge level was 30 with about half between 20

and 40 including the Niagara Falls Alternate rate Four are above 40 with the highestabout 70

The second comparison is for a large customer using 227 000 m3 year and a 100 mm

meter which would be 3rd largest user in Niagara Falls The results are graphed below in

Exhibit 17 Ari ltrit

Exhibit 26 Water Sewage Charges in 15 Municipalities 227 00 rear 2007e1j if

pt

I 600 000GO

IQ J r

11 N It M IllM 00 Ol co co t

C 500 000 t

cu C tQ C rD n

11400 000

ffi In co

Ig g co r fgI Ll fO

300 000 CIO N N

al N NN N

II

ctlJ 200 000cc

t 100 000

0c 0 C Qj E 1 r 0 r

UI CIl 0 cu II II2 UI 0 Ql 0 CIl 9 C 0lI Co E

III 0 g 0 c iii 0 1II 5IE 0 5l I III

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c III I ClI tll 0lD

0 0 Zc

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ttWith current rates a I f ge customer would be 6th lowest out of 15 and would increase to

1 IIII

lowest with the Alternative Rates

NF Usel Rate Report Aplll 2 2008 Final doc 56 R M Loudon LId



7 Other Issues

7 1 Volume Only Rates No Service Charge

Some municipalities have adopted a volumetric only water and sewage rate structure

Examples are Peel Region and the City of Toronto along with a few others

Although not palt ofthis rate study proposal see Section 13 t e option ofa volumeJl

only rates structure has been advanced by Mr Bielawski andaii aJlesult will likely be of

interest to Council during deliberations In order to provide a comp1 1 to the

Alternative Rate format calculated in Section 5 information on a vOI e J1IY block ratecl

J f

structure has been calculated and its impact provided bel tlfi

2007 Niagara Falls volume only user rates are calcula e9 belQw inlExhibit 27Jf dIf

Exhibit 27 Volume Only Rate Calculat l 2q07 i 1JT 1 r

i oo rral a U lilIfl WlIi 9 1li lll3 ffllt 3

iiS t eV 1YlJE g 11 1 NolUme m I atelIR s 1 i l1 HiOi wrt f 1 e 1ii It cmqWater T988 S44 ifi1 Y 3 984 84 f 1 144I 5 S

Sewage 18 O96 8 7s

N 06 836 1 38510 5

tN

t 2 529Total ok 34 083@1 1I C1 lli

t Zt tf 1

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The ni fhiofelimin4i i the service c rge completely is illustrated below in Exhibit4Jt 11F

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NF User Rale Report Aprtl 2 2008 Fmal doc 57 R M Loudon LEd



Exhibit 28 Impact of2007 Volume Only Rates

j r

fv1eter 2CC6Velure Current Rates l r r AlternatIVe Rates Alt IS Cur

Description location Units SIze Teta Per Unit Vlkrter Sevooe Total OlsVUnrt iIt i Jwater Sewl99 Total CostUnit Total

rrm m ear m3Iyear lyea year year t ar ear yearResidential J1it

rl

SFD Wlodfield Av 1 18 180 180 349 377 726 726 200 249 455 455 271

SFD Epsom Sl 1 18 183 183 351 379 730 Jlt ll30 1269l 253 463 463 268If

Duplex Armoury St 2 18 293 147 S 417 473 891 iifl 335t 406 741 370 150

SFD HavKlns Sl 1 18 2fJ7 297 419 476 BOO 8001 339r 411 750 750 146ut tft 1 1IW

1 tiSFD rvblllt Carmel 8M 1 18 469 469 523 624 1 7 1 147 i 537 650 1 186 1 186 39

vill f 1

003SFD January 1 18 1 275 1 275 1 009 1 312 2 3211i 2321 Jll 459 1 766 3 224 3 224

TOM1house Thorold store Rd 33 37 12 308 373 8 137 11 184 19 32 1 f 585 iij714 080 17 046 31 126 943 11 005p

14 101 17 072 31 172 945TCMft10use Thorold stone Rd 33 37 12 326 374 8 148 11 200 19 348 5B6 11 825

Corda DJrchester Rd 75 75 13 659 182 11 118 14 t W 15 626 18 918 34 544 461 9 080

TOM1house Thorold Store Rd 33 37 17 340 525 11 168 15 484 1 20652 808 19 837 24 016 43 853 1 329 17 201oS l

33 636 40 722 74 358 783 25 959Apartrrent Drunmond Rd 95 75 29 402 309 20 602 1 J 797 48J

509

NonResidential fI

iIJ1 ijl oi ff h t

1 035 1 253 2289 38WbteJ Lundys Lane 60 50 005 15 1 990 i 2 11 1 4 101 68 1 812

tall IVbntrose Rd 11 50 1 820 165 2541 2 K 5 434 494 2082 2521 4 603 418 831

Mldical Centre IVbrrison 51 1 50 3 835 3 835 Ass 4614 t tl1i1 8 370 8 370 4387 5 311 9 699 9 699 1 329

Car Wash Ferry st 1 50 4 104 tA 104JI 4 695 5684 10 379 10 379 1 618

t1A

t 3 4 844 t 8762 8762School llurmond Rd 1 100 E 1 6 601 9 2 10 545 19 820 19 820 7 552 9142 16 694 16 694 126

laurdromat lJrurmojRd 1 50 nfl5 7 925 6 219r i 99 14 328 14 328 9 006 10 976 20 042 20 042 5714f 1

Arena Centre st 1 100 8 348 B 10 327 r ir12 Q38 22 365 22365 9 550 11 562 21112 21 112 1 253

Casino 1 1501 720 j20 543 070 i65 269 1 308 339 1 308 339 1 012 120 1 225 337 2237 457 2237 457 929 117

Irdustry 1 2001t f 69420 180 361 246 914 427 275 427 275 308 216 373 147 681 363 681 363 254 088

Munapa 1 250 210 350 210 350 152 002 203 134 355 136 355 136 240 640 291 335 531 975 531 975 176 839

Utility 1 150 203 100 203 100 132 517 182970 S 315 487 315 487 232449 281 418 513 868 513 868 198 381

HoteIfTounsm 600 150t

l t

117 173 161 208 278 382 464 203 312 246 142 449 454 749 171 072177 720fi 200

Tourism 1 250 fIo

127 605 168 531 200 136 296 136 194 308 235 242 429 551 429 551 133415169 850 1 169 850

HoteIfTourism 512 100 151 370 J 200 t 00 484 134 236 230 719 451 173 167 209 647 382 815 748 152 000I 1odfl t

HoteIITOlJlsm 670 150 143 050 14 00288 131 586 227 875 340 163 649 198 124 361 773 540 133 899

bteVTounsm 513 150 128 880 251 87 752 119 480 207 232 404 147 439 178 499 325 938 635 118706

Caslno 374 150 121 000 324 83 041 112 798 195 840 524 138 493 167 668 300 161 819 110 321

Magata Falls user Rates 2008 xis 1rrpac1 31MarOO

NFUser Rate Report Ap 2 2008 Filial doc 58 R M Loudon Ltd


Water Sewage Rate Structure Revifw Page 59 of 78

A volumetric only rate would result in small customers pay much less and large users pay

a lot more compared to current rates

One advantage ofthis approach is that all customers pay the same volumetric charge It

has been argued that this would be the fairest approach However small users and

customers who are away such as snowbirds would be contributing nothing even thoughthe water and sewage systems are in place ready to serve and costing money on an

1 i

ongoing basis even if the customer is not actively using the fli9t ample meters are

read and bills sent out as well as fire protection being available t s mebOdY isl lt 1

away Thus it can be argued that at least some service charge should b ifiplace toi

recover ongoing costs which continue whether the customel is IOme or norr jrtJS l f

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I

A minimum bill feature is sometimes used to ensure tltit owflJse gt iow bird type

1 i

absent customers pay at least something to cover ong i coSts OnM icipaJity13

t

eliminated a minimum bill feature for residefitif@ ince it m ktth1t true small users suchJhJt 1

as the elderly were not rewarded for conservation orother efforts to save money on

Jtp

t

rconsumption In that ca e there was are gt flservice chaJge which fulfilled the function

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ofrecovering fixed costs oirti jirv

iI 14 I t tfP fI e

In regard to lirness the two part s designed for fairness by allocating certain fixeda I

pcosts to a fixed charge and remaining costtto the volumetric rate Italso enhances

f1i 7P iI 1l tr a J

rev pue s g fiY by nsuring some revenues are not vulnerable to consumptionI J f

fluctuations However the volume only approach has its supporters and does remain anl ir ti

option that is u yeralplltario municipalitiesi Jt lf IJ

tJ r

A minimum monthl iTt ofS m3jmonth has been suggested On an annual basis this

would be equivalent to 60 m3 year Based on the consumption profile in Exhibit 12 this

minimum bill level would impact about 10 of customers

13 The Region of Durham efiminated a minimum bill for standard meter customers targeted at residential

in the 1980 s but retained it for meters 25 mm and larger

NFUsel ROle Reporl AplfJ 2 2008 Finaldoc 59 R M LOlldon Lid

City ojNJagara Falls Final ReportWater Sewage Rate Structwe ReVieW Page 60 of 78

7 2 Revenue Security

The decrease in fixed charges and increase in volumetric charges will make annual

revenues more vulnerable to changes in consumption patterns due to conservation over

the long term and seasonal usage on a year to year basis Revenue shortfalls can occur

due to a wet summer low seasonal use economic conditions business closure or

reduced usage due to conservation or plumbing fixture replacementd

litJ I

Protection against negative revenue variances can be accornni dt

combination of

f1i ii

By basing revenue projections used to calculate the next year rates iiit 9servativecli o

consumption projections This would be done by assYm i1 w growthfi re sedfR f

penetration oflow flow plumbing fixtures and apRli mces mQ 16 se son al usagett I lfie if tiii ITj

The maintenance of a rate stabilization reserve fund witlifsuffici nt balance to offsetJ l J 7r

possible revenue shortfalls Xlll l i t 1f ict J 7il

I f sJI t

4IA surplus at year end wpilld be contrib tedi

to the Rate Stabilization Reserve Fund Tov f11 f

offset excessive accumulation ofreserve fwrd balances funds would be applied toJl

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moderate rate il2 as but qJfti pe extentt dgd to keep the Reserve Fund at target1 i b

levels 14

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The R te labilizati01f gserve Fund le 1 can be established by an analysis ofhistorical4 5 iJf

f jjf

consumPtionr s and fluctuations and the resultant impact on revenues Both basic

trends and sea tiO would be considered As a guide it is noted that the RegionIfii

considered a range on to 10 ofrevenues as a target balance and adopted a level ofrf

10 for water and 5 for sewage The lower value for sewage is presumably a result of

adopting a fixed annual charge approach where sewage revenue variations are more

predictable

14Alternatively surplus funds could be directed to capital needs such as major projects to avoid

debenturing orasset management to provide capital funds for needed replacement projects

NF User Rale Report Aprrl 22008 Flnaldoc 60 R M Loudon LId


Water Sewage RateStructure ReView Page 610 78

7 3 Metering of Condominium Townhouse Development

In the past Niagara Falls has agreed to the installation ofCity meters in individual

condominium units in a few condominium developments The City issues bills to those

individual units However in the majority ofcondominiums bulk meters are installed and

the condominium corporation is billed

Most Municipalities have tended to avoid installing individual p ters for each unit withinJ Fo

multi unit developments such as condominiums for several fa 6hsIi

The ability to shut off individual customers for non payment of l sewage

bills is compromised since the shut offvalve to individuahcustomers j g private11t it

property and the master shut offto the condominium de mpfuent whictiX at theJ t 1i A

property line would shut offthe whole complex Tni wuld oe rUfficult situationJlirj 5 bf

since the other customers who likely hav pJid their bi JJ wo J received a service1 fkft 1 tU fi

Il

mterruptlOn due to a smgle customer 1iil fr

40ff

The individual metei Y90 not me i 1sses in t C mains and services LeakyiI 1 1

private mains would be unsrlirged T t s t is master meter would be neededf 1fk ij

Th ld b blew

rk 1 h d h b fIS wou

sffGome pro m r

ce It 1 p 1 e y t at even un er t e est 0

circumstatices thejndividual me otatconsumption is unlikely to match the masterf Jt lfi

meti ading dU J combinatiorifPnot being able to read all the meters at exactlyr

ril

the sa plis meter accuracy limitations

Clearance t tion and maintenance standards for roads and other facilities1

within private de opmel1t may be lower within private property compared to publicstreets which cou1ii impede access by utility vehicles

The allowance ofmetering ofthis type on private properties could lead to the

argument that separate meters should be installed in malls where policing of illegalconnections would be virtually impossible because plumbing is often hidden but

easily accessible if somebody wants to make an illegal connection

NF Uel Rate Reporl AprIl 22008 Fmal doc 6 R M Loudon Lid



It is recommended that multi unit customers slIch as condominiums be bulk metered and

billed by the City using bulk meter readings Individual metering meter reading and

billing ofeach unit should be the responsibility ofthe property owner or condominium

corporation This does not apply to freehold townhouse development or other customers

where there are individual services from City mains these customers would continue to

have individual City meters since they could be shut off ifrequired for water and sewage

bill collection actioniil

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NFUsel Rule RepOl Aplll 2 2008 Flnoldoc 62 R M Loudon Lid

City o Niagara Faffs Final Report

Water Sewage Rate Structure ReView Page 63 of 78

8 APPENDIX A Rate Structure Alternatives

8 1 Basic Components

Wateruser rates are charges levied to serviced customers on an ongoing basis to recover

recurrent water system costs expended to provide the service There are basically two

types ofcharges that can be used to make up the user rates

rf Jl

Fixed Charges In the case of unmetered systems only flX a harges referred to asr fr

flat rates are levied For metered systems fixed charges are opt l but common1 1It l

They are usually known as service charges but other names are s k imes used such

as basic charges Sometimes a single fixed charge is appJ o all cu n f Morevt IA

often the charge varies in relation to the size of cU 9mers ht Fixed h rgesl ill 1

cover some costs that are unrelated to usage volunl sucH as billiilgAosts lnt

M1 4

addition to being a fair way of recovering C Jtain costs i y PrQ a level ofi r S

revenue stabllrty to the utIlity r d II

i rl

Volumetric Chargef These ar i itges that are ti tb the actual volume ofwaterIJt f V1J Ji

used by a customer Meter we neededj o 9Ium etiic charges to be levied There are4 a 1 f

l

j

anumber o Rptiimal vo ij ate for jfo water utilities to choose fromh l fh

Varjous ptlOns a e dIscussed ITi 2PJJ tatl below

f7 lf1F

For l t l es a 51itinetric chargejs ssential Usually but not always it isI vL J f4 y

combined ty itnl a fixed charge to fonn what is called two part rates This combination

is conSidere te5t way to recover costs and improves revenue stability over

o 1

volumetric charges al9b 7il

There are acouple ofother rate features to consider

Minimum Bills The fixed charge mayor may not include a minimum consumptionallowance Where it does it is referred to as a minimum bill The minimum biB

provides the customer with aspecified consumption allowance at no additional cost

The customer pays the minimum charge plus the volumetric consumption charge on

any water used in excess ofthe consumption allowance The minimum bill can be

NF Usel Rate Reporl Aprl2 2008 Fmal doc 63 R M Loudon Lid



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

Demand Charge This is a fixed charge per billing perioq t at is based on a

i Icustomer s peak demand Different approaches may be used t lsure peak

1l t F

demand but for a retail rate maximum month demand in the prex q s year isa o

appropriate The measure of peak demand for a customer remains cdi1s tlt for the

Pfr rtl7Ir l

billing year The demand charge can replace the met rt1i ge as a fixed charge This5i r

f

t

charge is common for electricity sales but not usuallfor water

iUnmctered Fire Line Charge This is a fixed mo thly chargc io customers with

4iivh 1i J Afire lines A fire line would serve priv Jfiigif9Jrctionrf 1lti s such as private fire

fi q

hydrants sprinklers standpipe c g ctions PU ij 91i ter systems include capacityf t 4 i

on standby for fire pIofection Watehpsei for fire fighting is not sold based on

livolume used G9sts are nqrjn I1Y recovef wtro al1 customers by means ofwater

L J li fuser rates Ari 1fri1etered h 1i echarge co a form part of this

j lIt t1

l i l

8 2 Vohi metric Rai Format Alteiiuitivesll 10511

1Ir5 fk Jtr to f I

iIl

The e are tnt berof optional volumetric rate formatsliP

frk

C rii p A

82 1 Single BloC 1f3et SBRft

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

NFUser Rate RepOll Aplll 2 2008 Final doc 64 R M Loudon LId

City ofNiagaw Falls Final Report


Exhibit 29 Single Block Rate Structure

Price cu metre Waterbillmc

tj

0 0 0 0J at

0 0 Water use monthlf

0 0 ter use monthtf

A J J

f N

Structure of the Volumetric Rate tlf Montbly water nill1T 4

1

3 1IW 1 11

1

r ir JJ

tp o Jt2

Sample calculation ofacustomer bill witlLthe SBR struCture

3 r

rr

Volumetnc rate I5O ms d ifltt h

J t f

J 3Customer water use in one month 24mt

w

rE tf Y

Jffi1

u l

44

3 jl 3Monthly water bill 1 50 m x 241IUt 36 00

t1T

ito1 1 i r

k A1f e

if5j

8 2 2 De l ock Ra e DBRii

at o

A declining block rat reases in steps as usage increases Traditionally the1

consumption limits for the first block were set to encompass the largest amount that a

customer in asingle family dwelling might use The upper consumption limits for the

2nd block would encompass the consumption ofmost 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 ofcharge due to their poor

reputation for water conservation It is argued that they d9 not promote water

NF User ROle Repor Api I 2 2008 Fmal doc 65 R M Loudon Ltd

City afNlagara Falls Final ReportWater Sewage RateStructure Review Page 66 of78

conservation since the price ofwater declines as more water is used But this reputation is

more a matter ofoptics 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 ofwater

used increases

Declining block charges wereoriginally designed to achieve an equitable allocation of

costs among customers Costs for building and operating the eH ess system capacity that

is used to satisfy peak demands are recovered primarily fromje identjal customers whorrii

as a customer class are the main cause ofpeaks demands The rat d Jgn is cost basedtvtJ

and is not meant to favour industry in order to promote economic devIifP lt

1Exhibit 30 Dcchnlllg block rate r t t 1 r

it ft tnPrice cu metre Water i

iMtt v

bililmo I i

I 1j kfZfi lh j j

5 it ii Jr 4 t IT I t 4 1

lf AI

tMf9p tJ is I Nlis

I

ljlllI

j

tii O O i J B 0 0

f Itvrt5 lI lt K

h 0 0 Water use montht i O ofeo Vater use IQ6ntIti

tStructuJc of the Volumetric Rate Monthly Water Bill

iItt1

1 t

l1

iwi

k

i J

NF User Rate Report AplIJ 22008 Fmal doc 66 R Ai Lotdon Lid

City ofNiagara falls Final Report

Water Sewage RateStructure RevIew Page 67 of78

Sample calculation ofa customer bill with the DBR structure

Volumetric rates

o to 24 m3 month 1 207 m3

241 to 200 m3 month 1000 m3

200 1 to m3 month O 700 m3 tri5 f1i i

Il t o

1ICustomer water use in one month 28 m3cfl a

tJ i3 3 3

tlin

Monthly water bill 1207 m x 24 m lOOO m9xlt i qO 32 9zf l l rf t Ii4t A J

fr v

4ril r i 5

ii 1 iIf

i li r i

8 2 3 Increasing Block Rates IBR i t Ki Z t1

The block rate increases with increasing u e This t iure is designed to encourage1 f 4

l it it f

water conservation Thellirst block fd customer class wou1d be designed to cover thej t

normal use ofan average custo1ner in that ci ss Fortsubsequent blocks the differential in

the charge level d be det giVe a

t

nd strong economic incentive to the

customer oi servetter Howe t di erentialS between the blocks of5 10

iiior e

nl11ay no 1je e ough to chnge water use by some domestic customers

bec use t arges are still relatively low compared to otber utilities This typer

ofcharge is nor rop iate for residential customers since they are the ones most

likely to be causing seasonal demands usually the hardest and most expensive to

lrjjjsupply It would be ifliable for industrial customers where water availability limitations

outweigh the disadvantages ofshifting the cost burden to the largest users

NFUser Rate Report April 2 2008 Frnol doc 67 R M Lalldon Lid

I



Exhibit 31 Increasing Block Rate

Price eu metre Water bill mo

II

jfrL A

0 0 00I

0 0 Water use monthi1

0 0 rj Water use monthtta

J IItlL

Structure of the Volumetric Rate i1

MonttiIY J ter Billq I f Jt r

t fli rlt

gt1 ti

l

1 J

Sample calculation ofa customer bill with the IBR structure iii f il

lW r

Volumetric ratef 7if 13t l

r ro to 10 m3 month at O 350 m3 F ti M

i j 1 1

t

1 0 to 25 mJ month at O iOOlIn3 ij trr

I

l

j25 1 mlmon1h at 1 40011113 1 tj l1I o

0 i 3t1 WI lht s J

I 3Customer water use in one month B5 m jt

r t lj

Monthlf ater bill O 350 m3 tin 0 700 m3 x 25 m3 10m3t ttJ t

1 Q611p 35 m3 Q5m3 0 28 001tI t 1 r r tl

1

i141 r

lil1t LJIt T

8 24 Humpback R t HBRr

tfi

i

This looks like and inverted U when the rates are graphed It is ahybrid 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 ofallocated costs to

component blocks then creates a peak charge for the consumption block that captures

most of the seasonal demand ofresidential customers This format encourages

conservation by residential customers by using the increasing block limits to encompass

NF UseRate Report ApllJ 22008 Fmal doc 68 R M Loudon Lid


1Vater Sewage Rate Structure Review Page 69 of 78

residential usage while at the same time offering large industrial users declining charges

which reflect the economies of scale ofproviding such customers with water

Exhibit 32 Hump backed rate

Price cll metre Water

bill mo

I I

I I

T 11 1

1 iJ t J

4v

i 3r

f

0 0 0 0 i t

0 0 Water use monthtt lJf O O Water use month

i1Jt

rH

1 rr

1t t fStructure of the Volumetric Rate

U

r t t tl Monthly Water Bill7f el 4 fttJ

Sample calculation ora customer bill with thcHBR strUcturel rr jl 5 iif 1l j AJ

Volumetnc charge i l

3 3 r1 lW

R t fw

t ifI

o to 25 m month at O 600 m v i lll t f t

25 1 to 75m3 month at SJAOO m3p

I

35 13

th1

0600 3Ym mon m t r

171 f fr f3

Customer water use in one month 3S m

M t2 water bil 1 0 600 m3 31 AOO m3 x 10 m3 36 40

s 4it

f

J

8 2 5 Lifeline RatfH R 1

This format features aft bsjdized volumetric charge covering an estimate ofthe 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 decreasingblock rate structures

NF User ROle Repoll April 2 2008 Finaldoc 69 R M Loudon LId


WaleI Sewage RateStructure Review Page 70 of 78

Calculation ofa customer bill with the LR structure

Volumetric charge

o to 5 m3 month O 750 m3

5 m3 month 1350 m311

A

f1 t lU

Monthly meter charge J ij ti1

3 V tJ

Customer water use in one month 28 m iii 4

i f F

oft t f I

Monthly water bill 0 750 m3 x 5 m3 1 350 m iX 23 m3 4 off q i

1 f i

1irt

51 I P1

1il I r t ft i l

V

8 2 6 Seasonal Excess Use Rate EUR l

j tI

f

This is a high volumetriC harge tha appii s to all demaird during the peak water demandp Lt g 1y

ffo iI

q

season in excess fa thresholdiFbe threshold isrs fequal to a customer s average off

f r ffiK tfli t

peak season consumption or a modestmultiple ofthis amount for example 1 3 times11

r Jft gf

winter d e nd A b e is used for irusage during the offpeak season and to

lllJ if 3

con urrlption during ttie peak season that lies below the threshold

i

8AlIrA

jc Uf

v

Ir

NF Use Rate Report Apl 22008 Filial doc 70 R M LOldOll Ltd



Exhibit 33 Excess use ratc

WaterPrice cu metre

bill mo

I

I

I

summer

excess use

thresholdl

rot

f0 0 0 0

Water use month0 0 0 0 Water use month1Iilii

Structure ofthe Volumetric RateG l l

itifiiM 6 MonthlYIVater BIllj lj L

1

1 t

Sample calculation of a customer bill with the EU I uc tpred

Volumetnc charge f l t itl fi

f 3 i 2f t1 1 I

3 ll 1 ZBase charge l OOO m IJi f jY W W t rA

t

3 pt

Excess use Charge p 145 m

tIft7 f

Excess use ap i emaJ ab ii20 of i ter consumptionIi i

rrl

flCustoniilf vater use i1zY iJ1 e month 16 h3 in the winter 28 n in the summer

G J ffI A

o 7

Winter biif trJ Jtt r IW J J t

tfft lIn winter l OOO m r6 m3 22 00

InSummer 1 000 13 x 1 2x 16 m3 3 145 m3 x 28 m3 1 2x16 m3 46 88

8 2 7 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 offpeak or base rate applies to water consumed during the

NF Use Rate Report Api 22008 FlIlal doc 7J R M Loudon LId

CIty ofNwgara Falls Final Report

Water Sewage Rate Structure RevIew Page 72 of78

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 ofsupply facilities relative to the capacity required to

meet demand for most ofthe year With a seasonal charge the extra costs ofthis excess

capacity are recovered directly from that component of demand that causes those costs

Exhibit 34 Seasonal Rates

Wr

p aterinee ell metresummer rate b IlI

r ifjiI mot i

t rf

i 1M i ffir r

wmter ratejfr1fl

f rrr1f

l t ft4

t hlt1I Will er c argef n iJ t

I

0 0 O O iit 7

0 0 Water use montl1 tJ O O Water use monthi4

f

P

Lv 1i

tJt

Jr

Structure of theNolurnctric Rate i Monthly Water Billl j r it 4

I r rJ

Sample calculation ofa customer bill with tlie SR structure4

t JtTo

1 hJir t l

O

Volumetrictcharge fj ijit1w

hfJ t

1fr It ftl J f i M 3Off peaK season rate l OOO m

Jt1tif trfgthiA J i 3

Peak season raie 1462 mMf

P u

l ftlCustomer water use ift e month 28 m3 in the summer and 16 m3 in the winter

Monthly water bill

In winter 1 OOO m3 x 16 1113 16 00

In summer I462 m3 x 28 m3 40 94

NF User Rate Repon Aplll 2 2008 Fmoldoc 72 R M Loudon LId

City ofNiagara Falls Fmal Report


8 2 8 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 leI 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

NFUser Rate Repon April 2 2008 FInal doc 73 R M Loudon Lcd

Cay ofNiagara Falls Final Report


9 Attachment 1 City ofNiagara Falls Study ofWater Sewer Rates Following

Metering Final Report November 2000 Loudon Fortin

See following pages numbered 1 to 16

i a11

I 1

I1t

II

I

NFUser RatlReport Aprrl 1 1008Fmal d 74 R M Loudon LId

City ofNiagara Falls

Study of Water Sewer Rates Following Metering Final Report

CITY OF NIAGARA FALLS

STUDY OF WATER SEWER RATES FOLLOWING METERING

SYNOPSIS

This report reviews the current water and sewer rates and makesrecommendations on futurerates to be implemented as a result of the metering program The level ofthe rates is based on

preliminary budget data and should be reviewed and revised based on final budget data once itis available The following summarizes the report findings

Metering Program The City has completed the metering ofapproximately 22 500

customers billed flat rates Most ofthese are residential but there are a few commercialcustomers

Current Situation There are approximately 3 I00 customers currently billed metered

rates The current rates are two part with a fixed charge variable by meter size and a

volumetric charge with 6 declining rate blocks

Proposed Two Part Rates The proposed rates are also two part with a fixed chargevariable by meter size and a volumetric charge The proposed volumetric charge is singleblock there are no reduced volumetric rates for large volume users This proposedchange to a single rate block is recommended due 10 the fact that water is purchasedwholesale from the Region at a constant rate for all usage and as a result there are no

large volume savings realized by the City that could be passed on to large volume users

Water Sewer Combined The sewer charges are currently billed as a 150 surcharge on

the water bill The City 2000 water and sewer budgets are prepared with the water and

sanitary sewer costs combined As a result a single combined water and sewer rate has

I been calculated This approach is increasingly used as it simplifies the customer billingI

and improves the flexibility of financially managing the water and sewer utilities TorontoIII

has followed this approach for years

Recommended Volumetric Rate Option Two options are provided for the volumetricrates Option l1inks the retail volumetric charge to the Region s volumetric charges Thevolumetric charge would recover about two thirds ofthe user rate revenues Option 1 isrecommended since it minimizes revenue uncertainty while maintaining a high enoughproportion of charges based on volume to encourage conservation Option 2 is provided as

an alternative It allocates 80 ofthe costs to the volumetric charge which wouldincrease the conservation element would allow more control by customer s oftheir water

bills but would decrease revenue security during years with low seasonal use

Recommended Service Charge Option Two service charge alternatives are providedAlternative A is a single service charge for all customers It has the advantage of

simplicity Alternative B has service charges variable by meter size This is recommendedas it more closely allocates the costs to each customer This is the same approach as is

currently used except that the service charges proposed are higher for larger sized meters

than those currently applied

Implementation An implementation plan is suggested in Section 8 of the detailedrep0l1

NFRateReport doc Loudon Fortin

City ofNwgara Falls

Study ofWater Sewer Rates Following Metering FinalReport

Proposed 200 Water Sewer Rates monthly Recommended in Bold Italics

Option I Option 2

Volumetric rate recovers Volumetric rate

Regional charges recovers 80 of costs

Volumetric Rates cubic metre 1309 549

Service ChargesA Single Uniform Charge 26235 16 182

B Charge Variable by Meter Size

5 mm 22 54 3 90

18 mm 22 54 13 90

25 mm 22 54 13 90

37 mm 56 35 34 75

50mm 135 23 8341

75 mm 27046 166 82

100mm 495 84 305 83

150 mm 946 61 583 85

200 mm 1 69037 1 042 59

NFRa eReport doc 2 Loudon Fortm

I J


Study ofWater Sewer Rates Following Metering Final Report



DETAILED REPORT

1 INTRODUCTION

During 1999 and 2000 the City ofNiagara Falls has carried out a program of installing meters

on the water services to all customers Formerly only non residential customers were meteredThe metering program mostly is for single family dwellings but has had the benefit of

identifying some other larger customers that escaped metering in the past and that are alsonow being metered

A previous study was carried out ofwater rates following meteringI that provided preliminary

rates recommendations That study recommended two part water rates with a singlevolumetric charge and a service charge variable by meter size The method used was as set out

in the Canadian Water Wastewater Association Municipal Water Rate Manual

In the following study the estimate ofwater consumption following metering has been

refined based on preliminary readings taken on the newly metered customers Expendituredata is also based on preliminary 2001 budgets

2 CURRENT WATER SEWER RATES

The 2000 water and sewer rates are as follows

Exhibit 1 2000 Volumetric Water User Rates quarterly basis

Block limits Industrial Commercial Residential

gaHons qualter 000 gallons 000 gallonso to 99 000 3 13 3 52

100 000 to 199 000 2 74 Sl3 13

200 000 to 299 000 2 35 2 74

300 000 to 499 000 2 20 235

500 000 to 699 000 2 04 2 20

700 000 over 187 2 04

Note that some larger metered customers are billed monthly rather than the quarterly basisused for most metered customers

1City of Niagara Falls Residential Water Metering Study Financial Analysis prepared by Fortin Loudon In

conjunction with Acres Associated Limited August 998

NFl aLeReporl doc 3 Loudon Fortin

1 J l 11flfl

City fNiagara Falls


Exhibit 2 2000 Service Minimum Charges quarterlyMinimum Bill

Meter Size Service Chargemillimetres quarter Charge Nominal Volume Allowance

quarter m3 quarter see note

15 mm 1 25 43 00 11 000

18mm 2 00 57 00 5 000

25mm 2 50 95 00 26 000

37mm 3 00 155 00 44 000

50mm 4 00 231 00 66 000

75mm 7 50 385 00 125 000

IOOmm 12 00 768 00 285 000

150 mm 30 00 1 158 00 529 000

200 mm 50 00 1 932 00 967 000

NOTE The minimum consumption allowance volume is approximate only The dollar

volume is applied rather than the published volume

The metered rates are mostly applied every three months quarterly The flat rate charge isbilled every four months at 8246

Sewer charges are levied on the water bill as a surcharge The sewer surcharge is currently150 ofthe water charge

3 CUSTOMERS

By the time the metering program is complete about 22 500 unmetcred customers are

expected to be converted to meters When added to the 3 100 customers previously meteredthis will bring the total number of meters to the following

NFRafeReporl doc 4 Loudon For in

nnn



Exhibit 3 Number ofMetered Customers by 2001

Meter Size Numbermillimetres

15 mm 24 250

18mm 387

25mm 343

37mm 221

50mm 291

75 mm 52

100 mm 42

150 mm 18

200 mm 3

Total 25 607

4 CONSUMPTION

Wholesale The City pays wholesale charges for the volume ofwater supplied and thc

sewage treated by the Region ofNiagara which is responsible for this service The City onlyhas jurisdiction over the retail operation of distributing water and collecting sewage The

Region charges the same wholesale rates year round and to all of the area municipalities Thewholesale rates over the past 3 years are as shown below in Exhibit 4

Exhibit 4 Niagara Region Water Sewer Charges mJ

Water Sewer

1998 0275 0465

1999 0 291 0479

2000 0 300 0489

The 1999 water and sewage volumes which the Region billed the City are summarized inExhibit 5 below

lvFRaleRepOfl doc 5 Loudon For m

1 nllll



Exhibit 5 1999 Water Sewage Volumes Billed to Niagara Falls by Region m3

Month Water Sewer

January 1 269 279 1 821 812

February 1 122 577 1 754 075

March 1 233 599 1 836 082

April 1 274 006 1 738 828

May 1 746 304 1 616411

June 2 242 640 1 582 608

July 2 820 323 1 723 472

August 1 849 745 1 814 831

Septem ber 1 661 525 1 666 689

October 441 157 1 697414

November 1 297 101 1 739 527

December 1 315 656 1 747 952

Total 19 273 912 20 739 701

The monthly water and sewage flows billed by the Region starting in 1998 and up to

September 2000 are graphed in Exhibit 6 This graphically illustrates the nonnal seasonalityofthe water purchases Monthly water flows in the summer of 1999 reached almost threetimes the spring level There was much less of an increase in 2000 a wet year

The sewage flows on the other hand show less variation with only a modest decrease in thesummer and occasional higher flows in the spring and fall no doubt due to inflow andinfiltration There are sewage flow variations in the summer of2000 are not consistent with

historical trends but could relate to the dates that the meters were read

NFRaleRepvrt doc 6 Loudon FoYin

I IM ll l



Exhibit 6 Niagara Falls Monthly Water Sewage Flows

I

I

I

I10 3 50

I 3 00

c 2 50SmQI

a 200

eMCI

EGl 1 50

0

E 1 00QI

I0

a oo

Ja Ma Ma J Se No Ja Ma Ma J Se No Ja Ma Ma J Se

n r y ul p y n y ul p y n y ul p

98 98 98 98 98 98 99 99 99 99 99 99 00 00 00 00 00

Month

Consumption by Currently Metered Customers There are about 3 100 customers

currently charged metered rates Most are billed quarterly but the larger customers are billed

monthly Their consumption for the past 2 years is as shown in Exhibit 7

Exhibit 7 1998 1999 Metered Customer Consumption m3

1998 1999

Quarterly metered 7 172 986 6 736 805

Monthly metered 671 582 699 483

Total metered 7 844 568 7436 288

Pumpage 19 541 564 9 646 127

Unmetered use 11 696 996 12 209 839

Unmetered Use To narrow down the likely range of unit consumption by the newlymetered customers meter readings were specially taken in May and June ofall meters

installed to that point There were 17 823 meters read There were 105 customers with meter

reading dates errors There were some very large meter readings the largest 10 or 178customers were as a result treated separately The results ofthe reading program are

summarized in Exhibit 8

NFRateReport doc 7 Loudon Fortin

A r n lt


Study of Water SewerRates Following Metering Final Report

Exhibit 8 Newly Metered Customer Consumption Results Summary to June 2000

Number of Average Total Monthly Unit ConsumptionDescription Customers Consumption m3 month customer

m3 month

Date errors note 1 49 N a N a

o reading 56 0 N a

Normal residential 7 540 431 865 24 6

Larger customers 178 38 158 2144

Normal Larger 7 648 470 023 26 5

Note The reading dates were not feasible such as 1980 installation or installation date after the

date of the latest meter reading

The customer name and address meter serial number meter installation and reading dates and

volumes were input in Excel spreadsheet format Meter installation was spread out from about

May 1999 until the date ofthe special readings The average monthly usage for all customers

was 26 5 m3 month Much ofthis consumption was not in the summer Only about 20 of the

customers had been metered by the end of last summer

The customers are mostly residential but there are some non residential customers includingsome larger users If the largest 1 ofusers is removed from the calculation the average use

drops to 24 5 m3 month 99 ofthe customers used less than 90 m3 month Usage by the topI ranged up to in excess of 1 000 m3 month

Exhibit 9 illustrates the average consumption by customers and includes the variance in level

depending on how long customers have been metered Customers that have been metered the

longest include both summer and winter usage These are plotted on the right hand side of the

graph The average monthly consumption level ofcustomers that weremetered prior to July999 was about 29 5 m3 month These customers were metered for a full year But as

customers are progressively metered and customers with only winter consumption are

included in the average the level drops This can be seen by as the vertical bars get shorter

during the winter since usage by these customers only includes winter usage


City afNiagara Falls


Exhibit 9 Consumption vs Month When Customer Metered

I

I CONSUMPTION versus MONTH WHEN CUSTOMER METERED

I30 100

29cJ

c

Q0

J E 0

f g s 60

g0027 scl 3u ClI 6

C0

5t

2iUJ

gsC

s25 30

c24

23

Jun OO M yOO AprOO M rOO FebGO JonGO 0 c 99 Nov 99 Qct 99 5ep 99

Month

Based on the initial consumption levels and recognizing the fact that summer usage is much

higher than winter it seems feasible that the average usage for these newly metered customers

might well be about 28 m3 month

Unmetered use is a combination ofunaccounted for water UFW losses such as watennain

leakage hydrant flushing sewer flushing ete plus water used by unmetered customers i e flatrate customers Exhibit 0 illustrates possible combinations of UFW and unmetered customer

consumption in 1998 and 1999 based on 22 500 unmetered customers An average level of 28m3 month customer over a full year is equivalent to 23 UFW This is relatively high but

not unreasonable compared to previous staff estimates ofabout 19 UFW Full meter readingwill clarify this calculation Ifthe top 1 of newly metered customers are excluded then thisis equivalent to about 26 m3 month customer for residential customers In the originalmetering financial study2 it was concluded that residential usage by unmetered residentialcustomer is about 27 m3 month customer That conclusion was based on other municipalitiesas well as a small sample ofmetered flat rate customers in the City

2City of Niagara falls Residential Water Metering Study Financial Analysis Draft Discussion Paper Fortin

Loudon In association with Acres Associated Ltd August 998 page 14

NFRaleRepor doc 9 Loudon Fortin

r r 11Fl fl



Exhibit 10 Possible Combinations ofUnmetered Unit Consumption vs UFW

IPOSSIBLE COMBINATIONS OF UNMETERED UNIT i

CONSUM PTION vs UFWIIII

45 III

I

4010 II

j 3510

s 301tI

o 25

IC Is 20

IcJ

8 150res

5 10

5

I0 1

15 17 19 21 23 25 27 29 31 33 35 I

Unit Consumption mJ Icust Imonth

Impact ofMetering Experience with the impact ofmetering varies There are manyinfluences primarily cost level and amount ofdiscretionary use primarily summer use

Often there is an initial impact followed by a rebound since the water is not really highcompared to other utilities Water and sewer combined is less than cable television chargesA typical residential customer is likely to use in the range of18 to 22 m3 month based on

experience in other similar Ontario municipalities Excluding the 1 largest users in thenewly metered group the likely consumption now is about 26 m3l1nonth According to

research by Environment Canada3 reduction in water use doe to metering is likely to be 30or more A drop to 20 m3 month after metering would represent a decrease from 26 m3 month

of23 Combining this information it is assumed that consumption will drop by 25 in thefirst year The level of consumption following metering is calculated in Exhibit 12

Guidelines for Municipal Water Pricing Environment Canada McNeill and Tate page 7

NFRa eReport doc 10 Loudon For in

1 1 J illllll


Study ofWater Sewer Rates Following Metering FinalReport

5 Financial

The 2001 draft water and sewer budget has been prepared with water and sewer costs

combined In the past these costs have been kept separate and the water and sewer tariffs set

separately There is a trend in Ontario towards issuing asingle combined water and sewer

charge see Section 6 below

The water and sewer budgets are summarized in Exhibit 11

Exhibit 11 2000 Budget 2001 Draft Budget2001

2000 Water Sewer Total

BUDGET

Revenues

Sewer Surcharge 14338000 13514300 13514300

Water Sales 9677000 11347400 11347400

Service Charges 89000 40000 34000 74000

Sewer lateral Cleaning Fees 25000 25000 25000

Discount 612000 0Total 23517000 11412400 13548300 24960700

ExpendituresAdmmistration 832500 245600 245600 491200

Regional Charges 16244600 5500000 11300000 16800000

Sewer Maintenance Operation 2105100 2214300 2214300

Water Maintenance Operation 1230300 1296500 1296500

New Replacement Mams 450000 1000000 1000000

New Equipment 17500 17500 17500

Contribution to Capital Budget 720000 1000000 1000000

Water Metering Program 50000 61000 61000Cathodic Protection 250000 600000 600000

Debt Charges 1617000 1196500 283700 1480200

Total 23517000 10917100 14043600 24960700

USER RATE REVENUE REQUIREMENTS

Total Expenditures 23517000 10917100 14043600 24960700Less Other Revenues

Water Sales 89000 40000 34000 74000

ServIce Charges 25000 25000 0 25000Sewer Lateral Cleaning Fees 612000 0 0 0

Tota 498000 65000 34000 99000User Rate Revenue Requirements 24015000 10852100 14009600 24861700

Less Regional Charges in volumetnc rates 16244600 5500000 11300000 16800000local Costs in fixed charge 7770400 5352100 2709600 8061700

NFRoteReport doc II Loudon Fortl1

lli

City ofNlagara Falls


6 TariffCalculations

The current water tariffs are two part with both fixed variable by meter size and volumetric

decreasing block The following is recommended

That water and sewer tariffs be billed as one combined rate This is done in several

municipalities in Ontario the largest being the City ofToronto This was also the practicefollowed in many of the six local municipalities in Metropolitan Toronto previously TheTown of Markham has also followed this practice for many years The Town ofMarkham

is similar to the City ofNiagara Falls with respect to their being the retail provider ofwater and sewer services inside the Region ofYork which bills for both wholesale

services based on volume both water and sewer are billed based on watervolumes at thewholesale level however This year the Town ofNewmarket has also switched to a

combined water sewer charge The use ofa combined charge provides much greaterflexibility with regard to budgeting these services and allowing for annual revenue

fluctuations

Eliminate Declining Block Rates There is little or no cost justification for decliningblock rates in Niagara Falls There are economies of scale for large water users but these

occur mostly in the water production area which is a Regional responsibility It does not

affect the City s costs

The following comments are also added regarding the water and sewer rates

Note that the use ofwater consumption as a basis for billing sewer charges is common inOntario This is the most feasible way ofapproaching user pay for recovering sewer costs

Water meter readings are a surrogate for measuring sewage flows During 1999 total

Niagara Falls sewage flows billed by the Region were close to total water flows onlyabout 6 higher and in 1998 sewage flows were about 10 higher than water flows In

Niagara Falls as in most other municipalities customer metered water flows are used inthe calculation ofa customer s sewage charges Overall this is a fair way ofachieving user

pay for the sewage costs It is meant to allocate sewer costs in proportion to eachcustomer s use of the system Although there are flow differentials between water and

sewer systems due to seasonal water use in the summer and for sewer due to inflow andinfiltration these variations more or less even out over the year The use of water

consumption is a reasonable surrogate for sewage flows and is the only practical way of

achieving user pay for sanitary sewer chargesSeasonal Charges Note that water consumption normally has a very high seasonal

component in Niagara Falls Water consumption in the summers of 1998 and 1999exhibited very high increases see Exhibit 6 The wet summer of2000 showed very littleincrease Since the cost of meeting summer peaks occurs at the Regional level there islittle justification for the City to consider seasonal rates This may have to be reconsideredif the Region decides to utilize some form ofseasonal rates to moderate the high summer

peak water flows

The combined water and sewer rates are calculated in Exhibit 12

NFRateReport doc 2 Loudon Fortm

ltI h

Llln1


Study of Water Sewer Rates Following Metering Final Report

Exhibit 12 Proposed 2001 Water Rate Calculation

Step 1 Consumption cubic metres

ConsumptionCurrent Consumption Levels Reduction Level for

Consumption Cons Cons Due to Metered Rate

Customers Imo lcust Monthly Annually Metering CalculatIon

Metered now billed quarterly 6700000 1 6633000Metered now bllled monthly 700000 1 693000

Newly metered top 1 178 x 241 42898 514776 15 437559 6

Newly metered reSidual 22322 x 24 6 549121 2 6589454 4 23 5073879 888

Total Annual W1th resulting percentage difference 145042304 11 1283743949

Volume Used forRate Calculation m3

1283743949

Step 2 Volumetric Rate Calculation

Optioll1 Volumetric Rate Recovers Regional ChargesAnnual Regional Charges 16 800 000

Volumetric Charge 16 800 000 128374395 1 309 f cubic metre

Option 2 VolumetricRate Recovers 80 of Costs

Cost Share 24 861 700 x 80 19 889 360

VolumetriC Charge 19 889 360 12837439 5 1 549 I cubiC metre

Step 3 Service CharQe Calculation Opllon 1 Option 2

Local Costs 20

Cost included In service charge 8 061 700 4 972 340

A Single Uniform Service ChargeNumber of Meters 25607 25607Monthly Charge Imonth 26235 16 182

B Variable Service Charge Varies by Meter Size see also chart below

EquivalentAllocation Numberof Service Charge Imonth

Meter Size Meters RatiO Meters Option 1 Option 2

15 mm 24250 1 0 24250 2254 1390

18mm 387 10 387 2254 1390

25mm 343 10 343 2254 13 90

37mm 221 2 5 5525 5635 34 75

50mm 291 60 1746 135 23 8341

75mm 52 120 624 270 46 166 82100 mm 42 22 0 924 495 84 305 83

150 mm 18 420 756 94661 583 85

200 mm 3 750 225 1 69037 1 04259Tolal 25607 29807 5

Two options are provided

Option I Recover Regional Volumetric Charges from Volumetric Rate This approachis based on revenue security plus relating obviously variable charges to the volumetric rate

and largely fixed charges to the fixed service charge It is a fair approach UnfOltunatelythe conservation aspect ofmetering is weakened since only about two thirds ofcosts in

the volumetric rate

Option 2 Recover 80 of Costs in the Volumetric Rate This alterna ive would recover

all ofthe Regional costs in the volumetric rate plus some of the City costs It would havea higher conservation element which may translate into reduced usage and reduced

Regional charges as a result

NFRaleReporl doc 13 Loudon Forlinnn


Study ClfWater Sewer Rates Following Metering Final Report

The service charge is calculated both as A a single charge for all customers and B one

variable by meter size

The volumetric rates and service charges are provided in Exhibit 12

7 1mpactThe impact of the proposed rates compared to the current rates is provided in Exhibit J 3

For flat rate customers those that use below average volumes pay less and above averageusers pay more The average customer pays slightly less

For currently metered customers most pay more due to the elimination ofthe volume

discounts



Study o Water Sewer Rates Following Metermg Final Report

Exhibit 13 Impact of Proposed 2001 Rates vs Current 2000 Rates

C u rren t C h arg e Prooosed Rates

WaterMete r Volum etrlc Service 8 ewer Volum etr c Service

C uslom er Usaoe Size C h ara e C tla roe To ta I 150 T ata I C h arae C h a roe Tata I Differencem 31m a mm 5

Option 1 VolumetrIc Rate Recovers Regional ChargesResidential currently flat rate

Small 10 15 S 20 62 30 93 51 55 13 09 22 54 35 63 15 92

Average 20 15 S 20 62 30 93 51 55 S 26 18 22 54 48 72 2 83

La rg e 40 15 20 62 30 93 51 55 52 36 22 54 74 90 S 23 35

Laundrom al 780 25 S 604 50 2 50 607 00 910 50 1 51750 1 021 02 22 54 1 043 56 47394

Hospital H aIel 9000 100 5 28698 12 00 5 298 98 7 94847 13 24744 11 781 00 49584 12 27684 S 970 60

Large Holel 16250 100 8 561 38 12 00 8 57338 12 860 07 21 43345 21 271 25 49584 21 76709 S 333 64N ragara Parks Com m 18250 150 9 459 38 30 00 9489 38 14 23407 23 72345 23 889 25 946 61 24 835 86 1 1 12 41Large Industry 21000 200 10 694 13 50 00 10 74413 16 116 19 26 86032 27 48900 1 69037 29 17937 2 31904

Option 1 Volum etrlc Rate Recovers 80 of Costs

Residential currenlly flat rate8m all 10 15 20 62 30 93 51 55 15 49 I 13 90 I 29 39 22 16

Average 20 15 20 62 30 93 I 51 55 30 98 13 90 44 88 6 67La rg e 40 15 20 62 30 93 51 55 61 96 13 90 75 86 24 31

Laundrom at 780 25 537 42 2 50 539 92 S 809 88 is 1 349 80 1 208 22 13 90 S 1 222 12 127 68Hospital Hotel 9000 100 4 76868 S 12 00 4780 68 S 7 171 01 11 95169 13 94100 30583 14 24683 2 295 14Large Hotel 16250 100 7775 36 12 00 778736 S 11 681 04 19 468 40 25 17125 30583 25 47708 6 00868

Niagara Parks Com m 18250 150 8 59936 30 00 is 8 62936 5 12 94404 21 57340 28 269 25 583 85 2 8 8 53 1 0 7 27971

Large Industry 21000 200 973236 50 00 9 78236 14 67354 24 455 90 32 52900 1 042 59 533 571 59 9 11570

RATES USED IN CALCULATIONSCurrent Rates P TO DOS e If R a Ie s

Volumetric Rates Accumulated Service ChargesBlock Llm Its Rate C h a roe Size C tlarQe o otlon 1 o ntlon 2

m 1m onth S m mm m onlh Va lu m e tTic S 1 309 S 1 549Commercial 15 1 25 Service Charge

0 S 0 775 0 18 2 00 15 22 54 13 901350 o 689 1046 25 25 2 50 18 22 54 13 90

2714 S 0 604 1986 046 37 3 00 25 22 54 13 90

4077 S o 518 2809 298 50 4 00 37 S 56 35 34 756805 o 485 4222402 75 75 00 50 S 135 23 83419532 0 449 5544997 100 12 00 75 27046 166 82

Industrial 150 30 00 100 495 84 305830 o 689 0 200 50 00 150 946 61 583 85

1350 o 604 930 15 200 1 69037 1 042 59

2714 o 518 17540064077 S 0 485 2460 04

6805 o 449 378312

9532 0 412 5007 543

VFRateReportdoc 1 oudon Fortin

NOlember 2000


Study ofWater Sewer Rates Following Metering Final Report8 ImplementationThe following suggestions for implementation are made

There should be public notices in advance ofthe impending rates and how they mightaffect customers

The bill should include a phone number where customers can ask questions about theirbill

The new tariffs should not be first applied during the summer season as the differentialfrom the flat rate charges will highest at that time

The billing staff should be prepared to answer questions about why customers bills have

changed They should also be helpful in suggesting ways to reduce usage

Also there will be high residential water users who will not be happy with paying for what

they use It must be emphasized that this is now a user pay system and that customers

have a measure of control over the size oftheir bill

For larger customers notification should go out in advance oftheir expected increaseThis will often avoid adverse reaction once the bills are received

Some municipalities choose to initially send out demonstration bills to illustrate the

potential impact of the metered rate charges so that customers can adjust usage before thereal billings start

NFRaleReport doc 16 Loudon Fortm

City ofNlagara Falls Final Report

Water Sewage RateStructure Review Page 75 of78

10 Attachment 2 City ofNiagara Falls Report F 2000 74 Utility Rate Structure

See following 16 pages not numbered

M PJIor s

ilJ II

4Q

h

NF User Rate Report April 2 2008 Fmal doc 75 RM LOldon LId

Corporate Services Department F 2000 74

The Clly of Finance Ken Burden

Niagara Falls 4310 Queen Street DirectorP O Box 1023

Canada Niagara Falls ON L2E 6X5

J web site 1MYW city niagarafalls on ca

Tel 905 3567521Fax 905 357 2016E mail kburden@city niagarafaUs on ca

December 11 2000

Alderman Wayne Campbell Chairand Members of the Corporate Services Committee

City ofNiagara Falls Ontario

Members Re F 2000 74 Utility Rate Structure

RECOMMENDATION

1 That the proposed use based billing structure be adopted for determining water sewer utilityrates and

2 That the proposed use based billing structure be applied tothe 2000 Budget expenditures to set

rates for the new Water By law

BACKGROUND

In February of 1999 Council approved the installation of water meters for the residential sector

Council permitted the flat rate billing structure to continue until Staff could study and reconunenda use based billing structure that provid s for the equitable distribution ofcosts

In the spring of2000 R M Loudon Ltd was engaged to assist Staffwith the study of future rate

structure recommendations A copy of the Consultant s Report is attached for the Committee s

considerati on

The basic recommendation from the consultantsreport provides for a two part rate structure The

first part is aservice charge distributed on the basis ofthe number ofmeters constant rate regardlessofmeter size or the number and size ofmeters varies with meter size This service charge funds

the maintenance ofboth the water and sewer systems It ischarged commencingwith the connectionofaprivate water system to the City water system and tenninates when the private water system is

permanently discormected The second part ofthe rate structure is the volumetric or consumptioncharge It is designed to fund the expenditures for water and sewer charges from the Region Thevolumetric charge only occurs when water is consumed

Working Together to Serve OUT CommunityClerks Finance Human Resources Information Systems Legal Planning Development

December 11 2000 2 F 2000 74

Staff recommends that the utility rate structure be based on the service charge that apportionsmaintenance expenditures based on meter size and a volumetric charge that allocates water andsewer services charged to the City by the Region This rate structure distributes the Water Sewer

Utility Expenditures equitably among ratepayers and provides ause basedsystem that fairly chargesthe small consumption ratepayers or those ratepayers who have historically controlled usage throughconservation methods

Restating rates for the 2000 Budget according to this recommended utility rate structure indicatesthat the averageresidential consumerwill find this rate structure revenue neutral low consumptionconsumers will save but high consumption consumers may experiencebilling increases Exhibit 1Commercial consumers as shown in Exhibit 2 may experience billing increases however the rates

as proposed equitably share the cost of the Water Sewer Utility among the consumers that are

serviced by the City

In addition Staffalso recommends that ratesbased on the 2000 Budget be shown in the new Water

By law until the 2001 Budget is adopted by Council With the adoption of the 2001 Budget theschedules ofrates accompanying the Water By law will be amended accordingly

Prepared by

TIYsubmit

ff 1E P LustigT

Manager ofRevenue ChiefAdministrative Officer

Reconunended by

K E BurdenDirector ofFinance

Approved by

fPaJT RavendaExecutiveDirector of Corporate ServicesAttachH IWPFlLESlCoUl1 F 200014 U idy kolC SINCllftwpd

I

I II j

I

I I Exhibit 1

Water Sewer UtilityI Rate Structure Comparisonj

AnnualI

II 900

800

700 I

600I

500 tC

400I

u

rI f

300I

10 15 20 25 30 35 40

Monthly Consumption RateCubic Meters

k2000 Flat Rate2000 Revised Metered

Water Sewer UtilityRate Structure Comparison

CuM 2000 FlatRate 2000 Revised Decrease

per month Metered Increase

10 599 88 374 91 224 97 I

15 599 88 442 33 157 55

20 599 88 509 75 90 13

25 599 88 577 17 227130 599 88 644 60 4472

35 599 88 712 02 112 14

40 599 88 77944 179 56

City of Niagara Falls Exhibit 2

Comparison of 2000 Metered Rates

Cu Meters 37 mm Meter Increase Cu Meters 50 mm Meter Increase

per month Revised 2000 Existing 2000 Decrease per month Revised 2000 Existing 2000 Decrease

150 2 826 96 3496 80 669 84 150 3 56928 3 500 80 68 48

900 13 248 96 18 604 20 5 355 24 900 13 991 28 18 608 20 4 616 92

1300 18 807 36 23 521 20 4 713 84 1300 19 549 68 23 525 20 3975 52

2200 31 313 76 34 134 00 2 820 24 2200 32 056 08 34 138 00 2 081 92

3100 43 820 16 45 024 00 1 203 84 3100 44 56248 45 028 00 465 52

4000 56 326 56 53 868 00 2 458 56 4000 57 068 88 53 872 00 3 196 88

5000 70 222 56 67 332 00 2 690 56 5000 70 964 88 67 336 00 3 628 88


per month Revised 2000 Existing 2000 Decrease per month Revised 2000 Existing 2000 Decrease

150 5 054 16 3 514 80 1 539 36 150 7 529 04 3 532 80 3 996 24

900 15 476 16 18 622 20 3 146 04 900 17 951 04 18 640 20 689 16

1300 21 034 56 23 539 20 2 504 64 1300 23 50944 23 55720 47 76

2200 33 540 96 34 152 00 611 04 2200 36 015 84 34 170 00 1 845 84

3100 46 047 36 45 042 00 1 005 36 3100 48 52224 45 060 00 3462 24

4000 58 553 76 53 886 00 4 667 76 4000 61 028 64 53 904 00 7 124 64

5000 72 449 76 67 350 00 5 099 76 5000 74 924 64 67 368 00 7 556 84


per monti Revised 2000 Existing 2000 Decrease per month Revised 2000 Existing 2000 Decrease

150 12 478 68 3 604 80 8 873 88 150 20 645 76 3 684 80 16 960 96

900 22 900 68 18 712 20 4 18848 900 31 067 76 18 792 20 12 275 56

1300 28 459 08 23 629 20 4 829 88 1300 36 626 16 23 709 20 12 916 96

2200 40 96548 34 242 00 6 723 48 2200 49 132 56 34 322 00 14 810 56

3100 53471 88 45 132 00 8 339 88 3100 61 638 96 45 212 00 I 16 426 96

4000 65 978 28 53 976 00 12 002 28 4000 74 145 36 54 056 00 20 089 36

5000 79 874 28 67 440 00 12 434 28 5000 88 041 36 67 520 00 20 521 36



DETAILED REPORT

1 INTRODUCTION

During 1999 and 2000 the City ofNiagara Falls has carried out aprogram of installingmeters on the water services to all customers Formerly only non residential customersweremetered The metering program mostly is for single family dwellings but has hadthe benefit ofidentifying some other larger customers that escaped metering in the pastand that are also now being metered

Aprevious study was carried out ofwater rates following metering that providedpreliminary rates recommendations That study recommended two part water rates with a

single volumetric charge and a service charge variableby meter size The method usedwas as set out in the Canadian Water Wastewater Association Municipal Water RateManual

In the following study the estimate ofwater consumption following metering has beenrefined based on preliminary readings taken on the newly metered customers

Expenditure data is also based on preliminary200 1 budgets

2 CURRENT WATER SEWER RATES

The 2000 water and sewer rates are as follows

Exhibit 1 2000 Volumetric Water User Rates quarterly basis

J8 n lI tn OO5 gauo c r J

to

I

Note that some larger metered customers arebilled monthly rather than the quarterlybasis used for most metered customers

Exbibit 2 2000 Service Minimum Charges quarterlyMeter SIze mdhmetres SelVlce Charge quarter 1mlmum BIll i

I ICharge quarteff i Nonunal Volume

Allowance mJ jquarter see note

TSmm 25 43 00d

r1 ooo II

1 TS rririi z oon j

SST OO T5 OJO j2S mrn

n

2 50 i S9S 0U 2 OOO i37 inm

u

3 00 155 000

1 44 OOOn o

SO mrn it oo 23100 1166 000

n

iI

t7S mrn0

750 383 00 115 OOOI

J I

Tmrmm s12mr 768 OO 2851000 1I IT50mm tl 3U OD Tsr158 00 r519 00n

n

jJ I I

ZOOIimi t sso OO i Sl 93Vron u tg67 OOO

I 1 iNOTE The mlIDmutn consumptIon allowance volume IS approXlmate only The dollar

volumeis applied ratherthan the published volume

Themetered rates are mostly applied every three months quarterly The flat rate chargeis billed every fOUT months at 8246

Sewer charges are levied on the water bill as a surcharge The sewer surcharge is

currently 150 of the water charge

3 CUSTOMERS

By the time the metering program is complete about 22 500 unmetered customers are

expected to be converted to meters When added to the 3 100 customers previouslymetered this will bring the total number ofmeters to the followingExhibit 3 Number ofMetered Customers by 200t

MeterSiZe iiiilhmetres

hs mm 242S0u

I

fWmm J7

l25mm I 4rn

J

tLr50 mm rg

1

I

4 CONSUMPTION

Wholesale The City pays wholesale charges for the volume ofwater supplied and thesewage treated by the Region ofNiagara which is responsible for this service The Cityonly has jurisdiction over the retail operation of distributing water and collecting sewage

The Region charges the same wholesale rates year round and to all ofthe areamunicipalities The wholesale rates over the past 3 years are as shown below in Exhibit 4

Exhibit 4 Niagara Region Water Sewer Charges 51m30 0

i Waferu

Seweru

n

EJ980

u

0

on u

0 275 OA55

rgg9u

i O291 nn

O 479

i 7000n u n u

suJUO 0489

The 1999 water and sewage volumes which the Region billed the City are summarized inExhibit 5 below

Exhibit 5 1999 Water Sewage Volumes Billed to Niagara FaUs by Region m3Month ater

iI

i 1 849 745

Ii eto er

IL

on LnO

The monthly water and sewage flows billed by the Region starting in 1998 and up toSeptember 2000 are graphed in Exhibit 6 This graphically il1ustra es the nonnalseasonality ofthe water purchases Monthly water flows in the sutrimer of 1999 reachedalmost three times the spring level There was much less ofan increase in 2000 awetyear

The sewage flows on the other hand show less variation with only Ii modest decrease inthe summer and occasional higher flows in the spring and fall no doubt due to inflow andinfiltration There are sewage flow variations in the swmner of2000 are not consistentwith historical trends but could relate to the dates that the meters were read

Consumption by Currently Metered Customers There are about 3 100 customerscurrently charged metered rates Most are billed quarterly but the larger customers arebilled monthly Their consumption for the past 2 years is as shown in Exhibit 7

Exhibit 7 1998 1999 Metered Customer Consumption m3

o

1998w

1999n

Quarterly metered 1 172 986 6 736 805

MontIilY metered i 67r5 2 699483n

Totarmetered 7 844568 7436 28 8I

f1umpage i 19 S41 564r

1 g 646 127

Unmeterea use r 11 696 996h r

r2 19 8Jgn

I

Unmetered Use To narrow down the likely range of unit consumption by the newlymetered customers meter readings were specially taken in May and June ofall metersinstalled to that point There were 17 823 meters read There were 105 customers withmeter reading dates errors There were some very large meter readings the largest 10or 178 customers were as a result treated separately The results ofthe reading programare swnmarized in ex ij it 8

Exhibit 8 Newly Metered Customer Consumption Results Summary to June2000

Descnptlon I Number ot Custo ers

on y onsumptton m mon rot nsumptlon m

11 1 f l

i1IINormarresioentiiir lT54U 43Tgo y21 f I

h argercustomeis 178ou

38 r58 1214 4 1rNOriiial Largef TlI048 1 naU23 12O 5 1

I iNote The readmg dates werenot feasIble such as19 O mstallatlOn or l1lstallation dateafter the date ofthe latest meter reading

The customer name and address meter serial number meter installation and reading datesand volumes were input in Excel spreadsheet fonnat Meter installation WaS spread out

from about May 1999 until the date ofthe special readings The average monthly usagefor all customers was26 5 m3 month Much ofthis consumption wasnot in the summer

Only about 20 ofthe customers had been metered by the end oflast summer

The customers are mostly residential but there are some non residential customers

including some larger users If the largest 1 ofusers is removed from the calculationthe average use drops to 24 5 mJ month 99 ofthe customers used less than 90m3 month Usage by the top 1 ranged up to in excess of 1 000 m3 month

EXQibit 9 illustrates the average consumption by customers and includes the variance inlevel depending on how long customers have been metered Customers that have beenmetered the longest include both summer and winter usage These are plotted on the righthand side ofthe graph The average monthly consumption level ofcustomers that were

metered prior to July 1999 was about 29 5 mJ month These customers were metered for a

fun year But as customers are progressively metered and customerswith only winterconsumption are included in the average the level drops This can be seenby as thevertical bars get shorter during the winter since usage by these customers only includeswinter usage

a

Based on the initial consumption levels and recognizing the fact that summer usage ismuch higher than winter it seems feasible that the average usage for these newly meteredcustomers might well be about 28 m3 month

Unmetered use is a combination ofunaccounted for water UFW losses such as

watennain leakage hydrant flushing sewer flushing etc plus water used by unmeteredcustomers i e flat rate customers pxhlbit 1 Q illustrates possible combinations ofUFWand umnetered customer consumption in 1998 and 1999 based on 22 500 unrneteredcustomers An average level of28 m3 month Icustomer over a full year is equivalent to

23 UFW This is relatively high but not unreasonable compared to previous staffestimates of about 19 UFW Fun meterreading will clarify this calculation If the top1 ofnewly metered customers are excluded then this is equivalent to about 26 m3month Icustomer for residential customers In the original metering financial study it was

concluded that residential usage by unmetered residential customer is about 27 m3 monthIcustomer That conclusion wasbased onother municipalities as wen as a small sampleofmetered flat rate customers in the City

Impact of Metering Experience with the impact ofmetering varies There are manyinfluences primarily cost level and amount ofdiscretionary use primarily summer use

Often there is an initial impact followed by a rebound since the water is notreally highcompared to other utilities Water and sewer combined is less than cable televisionchargesA typical residential customer is likely to use in the range of 18 to 22 m3 month based on

experience in other similar Ontario municipalities Excluding the 1 largest users in thenewly metered group the likely consumption now is about 26 m3 month According toresearch by Environment Canada reduction in water use doe to metering is likely to be30 or more A drop to 20 mJ month after metering wouldrepresent adecrease from 26m3fmonth of23 Combining this information it is assumed that consumption will dropby 25 in the first year The level ofconsumption following metering is calculated inExhibit 12

5 Financial

The 200 1 draft water and sewer budget has been prepared with water and sewer costscombined In the past these costs have been kept separate and the water and sewer tariffsset separately There is a trend in Ontario towards issuing a single combined water andsewer charge see Section 6below

The water and sewerbudgets are summarized in Exhibit 11

6 Tariff Calculations

The current water tariffs are twopart with both fixed variable by meter size andvolumetric decreasing block The following is recommended

That water and sewer tariffs be billed as one combined rate This is done in several

municipalities in Ontario the largest being theCity ofToronto nuswas also the

practice followed in many ofthe six local municipalities in Metropolitan Toronto

previously The Town of Markham has also followed this practice for many yearsThe Town ofMarkham is similar to the CityofNiagara Palls wi1h respect to their

being the retail provider ofwater and sewer services inside the Region ofYorkwhichbills for both wholesale services based on volume both water and sewer are billedbased on water volumes atthe wholesale level however This year the Town ofNewmarket has also switched to a combined water I sewer charge The use ofa

combined charge provides much greater flexibility with regard to budgeting theseservices and allowing for annual revenue fluctuations

Eliminate Declining Block Rates There is little or no cost justification for decliningblock rates in Niagara Falls There are economies ofscale for large water users butthese occur mostly in the water production area which is aRegional responsibility Itdoes not affect the City s costs

The following comments are also added regarding the water and sewer rates

Note that the use ofwater consumption as abasis for billing sewer charges iscommon in Ontario This is the most feasible way of approaching user pay forrecovering sewer costs Water meter readings are a surrogate for measuring sewageflows During 1999 total Niagara Falls sewage flows billed by the Region were closeto total water flows only about 6 higher and in 1998 sewage flows were about 10higher than water flows In Niagara Falls as in most other municipalities customermetered water flows are used in the calculation ofa customer s sewage chargesOverall this is a fair way ofachieving user pay for the sewage costs It is meant toallocate sewer costs in proportion to each customer suse of the system Althoughthere are flow differentials between water and sewer Ajstems due to seasonal wateruse in the summer and for sewer due to inflow and in ltration these variations more

or less even out over the year The use ofwater consumption is a reasonable surrogatefor sewage flows and is the only practical way ofachieving user pay for sanitarysewer chargesSeasonal Charges Note that water consumption nonnally has a very high seasonalcomponent in Niagara Falls Water consumption in the summers of 1998 and 1999exhibited very high increases see Exhibit 6 The wet summer of2000 showed verylittle increase Since the cost ofmeeting sununer peaks occurs at the Regiona11evelthere is little justification for the City to consider seasonal rates This may bave to bereconsidered if the Region decides to utilize some fonn ofseasonal rates to moderatethe high summer peak water flows

The combined water and sewer rates are calculated in E ibit 12 Two options are

providedOption 1 Recover Regional Volumetric Charges from Volumetric Rate This

approach is based on revenue security plus relating obviously variable charges to thevolumetric rate and largely fixed charges to the fixed service charge It is a fair

abProach Unfortunately the conservation aspect ofmetering is weakened since onlya out two thirds of costs in the volumetric rate

Option 2 Recover 80 ofCosts in the Volumetric Rate This alternativewouldrecover all ofthe Regional costs in the volumetric rate plus sqme ofthe City costs Itwould have ahigher conservation element which may translate into reduced usageand reduced Regional charges as aresult

The service charge is calculated both as A a single charge forall customers and B one

variable by meter size

The volumetric rates and service charges are provided in Exhibit 12

7 ImpactThe impact ofthe proposed rates compared to the current rates is provided in Exhibit 13

For flatrate customers those that use below average volumes pay less and above averageusers pay more The average customer pays slightly less

For currently metered customers most pay more due to the elimination ofthe volumediscounts

8 ImplementationThe following suggestions for implementation are made

There should be public notices in advance ofthe impending rates and how they mightaffect customers

The bill should include a phone number where customers can ask questions abouttheir bilL

The new tariffs should not be first applied during the summer season as thedifferential from the fiat rate charges will highest at that time

The billing staff should be prepared to answer questions about why customers billshave changed They should also be helpful in suggesting ways to reduce usage

Also there will be high residential water users who will not be happy with paying forwhat they use It must be emphasized that this is now a userpay system and thatcustomers have a measure ofcontrol over the size oftheir bill

For larger customers notification should go out in advance oftheir expected increaseThis will oftenavoid adverse reaction once the bills are received

Some municipalities choose to initially send out demonstration bills to illustrate the

potential impact ofthe metered rate charges so that customers can adjust usagebefore the real billings start

I

I

EXHIBIT 6

NrAGARA FALLS MONTHLY WATER SEWER FLOWS

000 000 m33 50

I

1

i t1i E 3 00j

i 0

1 0J 0

I

I g 2500

I J C

IJ0

OJ 2 00

IQn

Ia0 1 50Qu

0

i 5 1 00I CD

I J EI c s

I g 0 50

I

o

0 00I

fb tbffb o

fb fJq fJfb Oj OJ fJOJOJ fJcI rJ t

I I MonthI l

I

INFdBbI

NIlIgllla 1Is Wer R S1udy

DtJ11 20Loudon Fcttlrt

I

III

I

II

EXHIBIT 9

I CONSUMPTION versus MONTH WHEN CUSTOMERS

METEREDII

I100

I 1I

90

I J29 0

I c 80

IL 0c

Sc

1 28 00

J J e70 E

I G

I SoE0

0 0

I o0

60 c

J 27s c

be 50tJ

CIJ 0

cs c

coS

5s 0 260 40CD

Co eE

T G s fit Im E 30c

U 25 0C1J

0

0

GI

G20 Q

J

0 240 10

r

23 04

JunQO MayoO AproO Maroo FebOO JanO Oec 99 NoY 99 Oct 99 Sep 99Aug 99 JuJ 99

I Month Customer MeteredI

I

HFdiJtutaNl r41 Falls Tarllta FdloWhg

0011 20loodor1 Fcril

I

II EXHIBIT 10I

II

Ii

POSSIBLE COMBINATIONS OF UNMETERED UNIT

CONSUMPTION vs UFW

45

40J

7

535l

J

j

oS 30ns

325

g

20c

r 8 15r 0

nJ3

5 10I

IJ

0 5r

O A

15 17 19 21 23 25 27 29 31 33I

35

Unit Consumption m3icust ImonthJ

I

I

NFdD Niag FallsMeeRdRaStu1I0011 20 LouinFor1In

CITY OF NIAGARA FALLS EXHIBIT 11WATER SEWER SYSTEM2000 BUDGET 2001 DRAFT BUDGET

20012000 Waler Sewer Total

aUDGETRerllnues J

Sewer Surcharge U 338 OOO 13 514 300 13 514 300Water Sales 877 000 11 347 400 11 347100Service Charges 89 000 40 000 34 000 74 000

Sewer Lateml Cleaning Fees 25 000 25 000 25 000DIscount 612 000 0Total 23 517 000 11 0412 400 13 548 300 24 960t7oo

ExpendituresAdministration 832 500 245 600 245 800 491 200Regional Costs 16 24 eoo 5 500 000 11 300 000 16 800 000Sewer Maintenance operaUon 2 105 100 2214 300 2 214 aooWater Maintenance Operation 1 230 300 1 296 500 1 296500New Replacement Mains 50 000 1 000 000 1 000 000New Equipment 17 500 17 500 17 500ContnbuUon to Capital Budget 720 000 1 000 000 1 000 000Water Metering Progflim 50 000 8t Ooo 61 000Cathodic Protectlon 250 000 600 000 600 000Oebt Charges 1 617 000 1 1ge SOO 283 700 1 60 200

23 517 000 10 817 100 14 043 600 24 960 00USFR RATE REVENUF REQUlRIM NSTotal Expenditures 23 517 000 10 917 100 14 043 600 24 60 700Less OthorRevenues

Water Sales 89 000 40 000 34 000 7 000Service Cha es 25 000 25 000 0 25 000Sewer Lateral CleanIng Fees 612 000 0 0 0Total 98 000 65 000 3 000 119 OOO

UserRate Revenue RequlremenJts 2 015 000 10852 100 14 009 600 24 861 700Less Regional Charges On volumetrtc rates 16 2 600 5iOO DOO 11 300000 16 800 000local Costs in fixed charge 7 710400 5 352 100 2 709 600 8 061 700

Nfdtt xe FlMnelel 2 Nov

i TO c i i Q 1 11 00r

CiTY OF NIAGARA FALLS EXHIBIT 12

COMBINED WATER SEWER RATE CALCULATION

PROPoseo 2001

tl1D 1 Con mptlon cuble metre

Consumptloncunent Consumption lINels Reductjon level forCooIJmonth Con Con Due to Metered Rate

Custom rs Icultomer Monthlt Annually Metering C lculetloo

Metered now billod quarterly e 700 OOO 1 6 e33 000

Metered now billed monthly 700 000 1 693 000

Newly metered top 1 118 x 241 42 898 614 776 15 437 56G

Newly metered resldual 22 322 25 549 121 e 589 54 23 5 073 860

Total Annuel with resulting percentage difference 504 230 1 12 837 439

Volume V fOlRate Calculaflon ml 12837 439

Step Volutnetrl R8te CalClflatlon

Optlon1 Relowr Roglonal Ch rgelAnnual RegIonal Chargn 15 800 000

Volumetric Charge 11 S 16 600 000 12 837 43 1 309 Icubic metre

Option 2 Percentago COlt RecoveryCost Shere II 24 861 700 x 0 1 g 8S9 360Volumetric Charge S 19 889 360 12 837 439 1 549 Icublc mebe

Step 3 SaMe barae CeleUlatloDOption 1 Option 2

local Coste 20Cost Ineluded In service chargll 8 001 700 4 912 340 I

ASingle Servlc UnltQrm ChargeNumber ofmeters 2sea7 25 607

Monthly Charge S1month 26 235 115 182

e Service Charge Variable by Meter Slle lee al obelow

Equivalent Number ofMeters 2 808 2Q eOe

Equfvalent Mgnthly Service Charg 22538 1UlO1

Charge distributed by meter size I a Option 1 6 2 billow

Meter Size

SeMee Cha

EqUivalentAllocation Number of

Metee Slze Metees Ratlo Met o Uon2

16mm 24 250 1 24 250 13 90

18mm 387 1 337 13025mm 343 1 33 S 13 90

37mm 221 3 553 304 1550mm 291 e 1 7415 83 4175mm 52 12 624 166 82100 mm 42 22 92 305 83

150 mm 16 2 15e S 583 85200 mm 3 75 225 1 042 59Total 25 807 29 BOa

OR CaIc NotO

I 9 rll nnnn1 1 10 c JJ 0 I C 1 11

CityofNiagara Falls Final Report

Water Sewage RateStructure Review Page 76 oj78

11 Attachment 3 Material Presented by Mr Ed Bielawski to the CorporateServices Committee ofthe City ofNiagara Falls on July 23 2007

Two Parts

Deputation by Mr Ed Bielawski 5 pages not numbered

I Presentation material 12 pages notnumbered

I

A

ij

I 1

f

r1

J

LPl Y

1

NF User Rate Report April22008 Finaldoc 76 R M Loudon Lid

l 1 V lP BJ D6

background You are on Oty Council and I sought out Kim Craitor and I went

through what I found out I asked Wayne to arrange a meeting with senior

staff so we cango through this and I present to you what I found 1t

certainly isn t faIr So we had a couple meetings and the last one we had

was Friday morning That s when I was shown that my name was beingused I said that this was ratherstrange that someone would make a

recommendation I am tetany unaware that my name s there So I took

some of the reports that I prepared that are qu te extensive th y would fili a

suitcase almost All the data I collected was very diffIcult to coUed becausewhat you have Is a system that doesn t lend itself any business type of

atmosphereSo now we can proceed to page 1 What you see before you are the

objectives taken from a report dated March 271 1995 These were the

objectIves It was a well written report The first objective a nd on the

recommendation on that report was that we establfsh a water sewer utlityNow that says that you are going to establish a utility and its goIng to be run

as a business ThiS utility Is no different that Niagara Falls Hydro And if youtake a look at these objectives you ll find that none of them would say whywhy aren t these aChieved these are the objectives of the new system Theanswer s simple jf you don t a utility you don t have anyone responsibleand therefore you have a fragmented system which this is as it exists todayIt Is still a totally fragmented systemOn the second page the conclusions which become obvious as we gothrough the charts I prepared Go to page 3 you will see how the systemworks Number 1 you have the homeowner The homeowner pays 39 65 In

service charges monthly They have one meter The second one shows that

condominium compleWIth 28 units whIch is probably the on y one in the

city that has 28 one inch meters as a consequence pays 1 082 20 as a

service charge Now that 1 082 20 the highest user in this city pays1 623 22 As a reSIdent of one of these condominiums I couldn teven find

the office for a refund because there Is nothing here you can t t lk to

anybody The thIrd one you ll see 21 condo units whiCh 15 typical condounIts broken up in units cmd it has one meter a 2 Inch meter and they pay23190 in other words 11 04 versus what residents pay compare to

38 65 If we go to a 22 condo unit that is split up you have 2 one Inchmeters Those 2 one Inch meters the total service charge s 77 30 for 22units which works out to 3 51 The neKt scenario you have In the city is 5one inch meters servIcing 55 condo units They pay 3 28 Now rr we go toapartment complex 120 unit apartment which uses a 3 inch meter pays a

service charge of 4 03 Then we have the 78 unit condo apartment whichhas a 2 inch meter pays 231 90 which equates to 2 97 1his is a familyunit obviously 2 97 versus the homeowner who pays 38 65 for the same

servIce1We ve had these meetings and to this day r can t find anybody who will say

JHN l l b UP 04 E6

you don t know what the hell you re talking about That s what I came tosee Now go to page 4 you have the rate increase which was published In

the paper as 6 8 for a family using 30 cubic meters a month Well that s a

fine thing to say but you ll notIce 2 things about this You ll notice that thisis the first time when you receive the water rate sChedu e that you do nothave a rate increase In there It says you will pay a charge of 5 20Because it isn t a 6 8 increase it s a 74 increase This little lady thatwas brought up in 1995 that was on a fixed income She was struggling andconcerned and was using somewhere around 10 cubic meters Well isn t thatwonderful she will pay 11

increasefor her a 11 IncreaseIf you go to the next page these are the actual consumption rates of the 6inch meter customer so it shows you that per the 6 Inch meter you have alltypes of volumes associated The highest user is the 521200 cubic metersand it stops as high as 72 000 cubIc meters That person ls charged 3 centsa cubic meter The high user that will incur incremental costs of bringing a

huge volume In and what Is the equivalency rate of that That 6 inch unitmeter means noth

ngnothing What we have here if we look at in simpleterms we now have moved up a flat rate from one scenario in 2001 to a flatrate which shifted down to the servIce charge What Is a service charge Its

not a varIable that they say In all of these reports The setllce chargehappens to be a flat rate in essence 3B 65 for a 5 8 Inch meter 38 65for a 3 4 inch meter 36 65 for a one inch meter One Inch meter uses upto 1000 1100 1200 cubic meters in the lawn So If you want to look at inlament terms we now have a flat rate and service charge which impacts thepoor ltttle lady that uses 10 cubIc meters and there s no conservatIonId lIke to summarize thisr I only had Friday afternoon to get the volume ofreports that I have I had to make it as simply as I couldNow we go to page 6 You will see a comparison of the j ncrease h your

te By this rate structure you will note that if we use the homeowner 26CUbiC meters we have a rate increase of 74 If you go to the lady with afixed income her increase is 11 But now you gO to the hig h user and thisis based on 50 000 cubic meters hIs rate increase is 2 89 Now factorthat take 0289 and elevate it to 11 and yeah that s not I 100

Increaser thats not a 200 increase you are now moving Into the regimenof 1000 increase Thousands That s faIrness That s equity Not byengineering know how

Councillor Ianonnl Mr Bielawski so what you re telling us and I noticed youused the Casinor I see that that S the number the useryou have there Sothe little old lady who s tryIng to save Is using 10 cubic meters her rate Isgoing up and the casino whos USing 50 000 meters their rate is goingdown So the richer are paying less and the poorer are paying more 9E B The more you use the less you pay Thats the whole purpose of this

P El5 2lS

Councillor Ianonni You re scenario is the more you use the less you pay

E B Yes As a matter of fact when I brought this report to a senior staffmember he saId that is your opinioand I said I beg your pardon that 1s

my opinion These my good man are your numbers It las nothIng to do

with me and opinions these are your numbersSo now we jump to the high user you can see we dont have here Wehave a shoppin9 plaza which has umpteen restaurants we have a hotel and

thIs is what we re talking about Now think of the people that are competingagainst this guy is paying 3 2 cents per each cubic meter and yet he lias 17

places he has 10 rest lIrants when I first did this scenario and so what we

have is all these all these businesses get hidden under an umbrella of a hugecomplex Because we put them all under ol1e roof and use only one meter

we say that s great well not by my standards not by the numbers that this

reveals I indicate to you that this a totally flawed system Now if you recallone of the things in there mention that here we are and now In 2001 we sent

out this part cular flyer This was sent in the mail And what it sa d was if

you take a look it says calculating charges But if you take a rook at that

paragraph it has nothing to do with calculating charges all it says fs thatthey were going to save you adminlstratfve costs Looking at putttng this bill

into this envelope listen thclt s wonderful that s true genius But In the 3 d

paragraph they say oM by the way don tworry bout it we are going to

save you here we are goIng to turn around and read your meter every 2months 50 we re 90lng to have that guy take 6 trips We are going to have

this done I can t thInk that way So we went through this qu1ckly you re

going to have to digest it and when you have gOl1e and readthis

andwhoever wants to conduct a meetingr 1 can to into all the details 1 can bringout all my files and everything e se So we get to the point where we have a

recommendation And the recommendatlon says let s call in a new

consultant That makes no sense to me as a business man Lowden is a veryreputable firm so therefOre it makes no sense its not ethical to turn around

to jump 1n and say hey get somebody else in here What I recommend thatthis Council recommends is simply this you re calling Mike Lowden and you

say Mike you know in 2001 we had this scenario and we all agree that thissystem was fa r to people would be fa rand equitable 50 you s Yr Mike sltdown let s go through and see and prove that thIs guy is crazy doesn tknow what he s talking about He s only an old engineer a senior turnsaround and plays with some numbers and see how he can test the systemSo to me that is a proper recommendation you use the same man whorepared those lengthy reports both In 1997 and In 2000 prepared the final

report Now that type Of scenario Is the type that I wOlld sit down wjth Thatthis is the only thing you can do sit down with the man and say let s go

4through this Just find out why did the system fail Why did it fail it was a

good system Ill tell you why itfailed slmple

wha you don t have and It

J HI IIJ 11b tJl lJP 06 05

is the most important thing yoU should have Is a utUity A sewer water

utility In 1995 you say ok lets establ1sh a utility let them run tnelrbus ness let hIm select the building system let him do these thingsbecause thats what business is all about The problem that r have is thatthis existing scenario makes no sense You have to go to turn around andthere s no utility and there s no place to call You call over to Niag ra FallsHydro and want to speak to a Customer Service SupervIsor Oh we re onlythe building we don t anything about that So r call another number and rsaid who do I speak to who s the supervisor So I look at the organizationchart and it doesn t even mention the word utility But if have no

responsibility you have no accountability you have nothing but a flawedsystem You call up Hydro for Instance for me to get information It took 6weeks in one cas@ to get information back It ma Kes no sense but tha tiswhat happens when you have a fragmented system EverythIng is all overthe place no one Is accountable

4

TOTAL P 06

CONCLUSIONS

the City has NO water sewer utility

the use based principle for water billing is applicableONLY for the CONSUMPTION charge

3the use of meter size for allocation of service charge is

TOTALLY flawed

all multi unit structures that have a single meter aret

SIGNIFICANTLY SUBSIDIZED BY RESIDENTIALcustomers

Jl the pricing policy for water and sewer service is UNFAIR

AND NOT EQUITABLE

yearly percentage rate increases as reported are notlr factual

the FACTOR USED to calculate weighted meter isunrealistic and thus totally flawed

Q lliill u 2

CUSTOMER SERVICE CHARGE COST I UNIT

No of Meter Service Service ChargeMeters Size Charqe Cost Unit

1 Homeowner 5 8 38 65 38 65

28 28 unit condo 5 8 1 082 20 38 65

1 21 unit condo 2 231 90 11 04

2 22 unit condo 1 77 30 3 51

5 55 unit condo 1 192 25 3 29

1 120 unit

apartment 3 483 79 4 03

1 78 unitcondo apt 211 231 90 2 97

0 illLfJIT 3

2007 RATE INCREASE AS A FUNCTION OF USAGE HOMEOWNER

Usaae 36 m3 30 m3 26 m3 10 m3 5 m3

2006 85 80 77 06 71 24 47 94 40 66

2007 91 07 82 33 76 51 53 21 45 93

6 1 6 8 7 4 11 0 11 3

Actual 2007 increase based on 26 cubic metre usage

wIT@fl4

6 inch meter

2006 SERVICE CHARGE COST I CUBIC METRE

Monthly Usaqe cu m Cost cu m

1 330 1 222 320 0 703 520 046

I 4 090 0 40III

4 630 0 35III 5 520 0 29II

6 630 0 249 340 0 1712 830 0 1312 940 0 13131020 0 1213 670 0 1220 290 0 0821 960 0 0752 200 0 03

Service charge 1 623 28

ID lliill U 5

COMPARATIVE RATE INCREASE

Homeowner Homeowner Large User26 Cubic Metres 10 Cubic Metres 50 000 Cubic Metres

2007 7 4 11 00Jo 0 289

2006 2 0 6 6 1 2

2005 5 2 2 5 2 5

2004 7 1 10 0 1 7

wmmj U6

FALLSVIEW CASINO

Rooms 368

Restaurants Dining Areas 17

Retail Shops 23

Service Charge 1 623 28

Water Usage 50 000 cubic metres I month

Service charge costcu metre 0 032

Q ffiffi Lf7

CALCULATING CHARGES

The City ofNiagara Falls has already taken steps to keepyour bill as low as possible Administration costs were

reduced by having water and sewer charges included in

your Hydro bill The discount offered to residents who

pay their bill promptly was increased over last year The

city plans to spend over 3 4 million dollars in 2001 on

improvements to the water and sewer infrastructure

Among other things the improvements will reduce

leakage from the system which keeps rates under control

CAN THIS SYSTEM REDUCE MY BILL

To determine how much water you have used your meter isread at the same time as your Hydro meter Every two months

your water sewer charges are included in your Hydro bill

8

wnu LOOKH JG OUT Ol YOU C I CUL TrNG CHIRGfS VIIIY r r nTr s mvrcr CIIARGr S0 te

fllI

The watel from your tilp continues to be an important lhe City of Niagara Fllfs has already takn steps 10 ep Servlc charges for laterand sewer 1r 001 new Und1r

but very affordable ommodity A mbk meter of 220 gal Ol1r bill as low as pos ible Admloilril fon costs Vo Ele lh old llaHatl bllllng 5yslem thl ete Indud d In the

mor treated wafer costs approximately 1 n Thl1 City reduced b h1nnl wler and SCVl r Chrtlg included in lolal pIke you paid and nat shown as pmille ltl

Ior Niagara FilnS Jlurcham lIs water from the Regional lJr Ilydro hit The discount offered to residenls who pay

Undll the neW bnUrg system TAle sl what you are paying

Municipality of Niagara through ItN Nlilgara Fa Water lt1e bin prompt was increased over last year The Cityfor each It m so ytlu know exactly hoW yaUl tolal charge

I Treatment plant 1he source Is surface water slIpply pliltls II slend OVN 3 4 million dollars III 001 onWas ca Icu ated

from Ihe Niagara River vjj the Wefilnd Imer lhe wilter Is improvements to I later and sewer inflastructure The Bill wnl appeal with 4 separate ne lttms

oisnlbuled to residents through approimate v 422 km of Amonq other things the improvcmenls willledllte Ieil SlMtt Chatg 4 Wal 1 e table belowlcity wa ermall15 and 39 km of Region watl lrfllns 11 age from the syslem which kelps ratES IIndef ontrol

I i City of Niagara Falls conllnlIously samples the municipal er fce Charge Sewet See table beloW

I water supply 10 m ke ure If compiles with ptovincial trv1ce rhalgS ill bIf d on the fI1 t Srilte silt

II Dtinking Wate Prollttlon RlllluJallo 1s ConsumpllOll ChMge Wa r S0410 cubk m lr JI T 11 I r l P l F 1111l l 1 1 j 11 COl1SlImplkln Chat Sl lIer 0 BOS ruble metfl

II

I III j UIllI JC UI VVll I r lrll R Abollltelyl Many Niilgara Falrs fpsldPrtts ha e IOlVlred1 01 r 1 1 C 1 i I l 11 I r 1 1 lU 1 1

their waler anti s Wer costs hecause they now pay for Met t Slrt Wa @t t@ @I@t Rfttl

In addItlon 10 blng much more laIr for the consumer J011 the wat r Ihey use and flOt the same lIilt tate as15ll1m Oilll 1392 7 4S

0 M trldwilter usagE IEads 0 other beMfiLfor Ihe City Pleryone else Klr example YOll use on1y 10 cubicpo IGmm 015 113 92 S7 sA of Magara Falls and IlS rdtepayflS Trn efficient use of merm of water per monrl1 YOIJ willlile over 23 DO i

1 2 mtl1 1 JD ll92 7 45

Na1r C3U5es les wa le and r sufts In monthlmclr the meter system romp red 10 thi old flat 37lrJm 150 si 1 7S 2234

Reduced water and sewage treatment plant1 le You now hil nlrot owr how much water you SOmm f2 OJ S8lS1 IWiB

operlUng C05tus B practiCing con e lIa1iorr ann rlpairing llaktnq 75 mm 3 00 t67 01 t8935faIJce in your home yo u call redO our bill 100 mm 1400 jll6 fD ll8UI

An eKlendcd fife splln 10f WilIer ilnrl sewerTo dlletl1 in how much Wllllt yoll have Used OUt

l j tftfl1 too i5SB W273ladlltles zoo 111m IB OOI 1 04383 5S58A5

meler is rfarl al the same time as YOUf Hydro meler

ltoMr demand during peak r lods 01 Every IY o months your wattse t cllarges are

a

Watf cJnsumpl1on Indudl d in your Hydro bill Dn our bill the tolal

I IdenllnlS leaks 10 th SY5temamount YOt pay for Wil H sewel l Nice is btuhn NOrmFlal RaIM Gailanlud SeMte

down inlo r011l lfl msWatel 12H7 per month

l den ifles where waler Is beillused so5e11lr 18 l9 per month

future system lmpTOvements can bI planned ISNViu Chlfgl Willet v ed to maintaInota S3 6 IIllO th

I loe Will r meler Installed at your residence r ds ill cublelht sYltem and i J1it llmprovel1Knlsl R1Iudanl flal RatM tllSlm m not 11101 11119 melef

r IWaW t1i 6 p@l month

ITete15 1 m3 ZlO ljilUns Every 100 lllre01 Valet mn Consumption Chalgl Waler how much waterI SeIItf SSG pftll10nlh

I sumed catses dll sweep hand on the meter to make onl YOII have used multiplied by i tail set by the cityI

tolll 161 5 pel mohlh

I IleYOIUllon and dum lh blac wheel on Ihe mel rs St rvicl Chargp SlNer used to maintain

0 ooomelel to Inmase by 0 1 tuble tneter or 22 gilllom 01 If yot him questions abouI meter problems Willer 1 lt5

I the system and cilpJlal implovemenls

I Vater The aVl Iage amt of rOll in Canada coosumes 3 leaks and malnt anteor new Insl1ll1aUons all the City of0

CubIc Meters 7 9QO gaRom of water pel month IconsumptIOn Cllalje Sewer your wa r Niagara FdllsWol DI rtmelt5llVice enIre at3 5675210

iI tOI1SUmptiDn multiplied by a rail sel by the city eX14322 For water rate quellJons plme cIIal xr4286

i iI

I

5 8 inch meter

MONTHLY CONTRIBUTION TO SERVICE CHARGE

Monthlv Usage cu m Cost cu m

5 7 7310 3 8715 2 5820 1 9326 14930 1 29

Service charge 38 65

0 ffiffirIT

1 inchMonth of Meters Consumption AverageJanuary 219 32 560 6 148 7

February 230 37 611 9 163 5March 236 34 643 5 146 8

April 204 30 657 2 150 3

May 208 29 059 8 139 7June 243 44 063 6 181 3July 204 37 0970 181 8

August 252 54 896 1 217 8

September 219 46 527 0 212 5October 250 51 700 7 206 8November 205 34 6954 169 2December 233 38460 4 165 1

471 973 2

@ lliill IT

4 inch meter

SERVICE CHARGE COST I CUBIC METRE

Monthly UsaQe cu m Cost cu m

2 000 0 433 000 0 284 000 0 215 000 0 176 000 0 147 000 0 128 000 0 11

Service charge 850 28

QrnruCSl

2006 HIGHEST CUSTOMER MONTHLY USAGE BY METER SIZE

Meter BillinQ PeriodSize 1 2 3 4 5 6 7 8 9 10 1 1

1 894 775 1166 1109 1149 961 1052 1396 1003 731 731

1 5 1470 1001 1191 1111 1461 1075 1530 2078 1800 2091 1217

2 1935 2590 1925 2617 2455 2883 4220 6245 4500 2625 1905

3 3410 2990 3550 3204 3241 5309 4347 5144 3868 4051 3265

8

CVJI



12 Attachment 4 Niagara Falls Terms of Reference for Review ofWater Sewer

Rate Structure November 9 2007

See following 2 pages not numbered

t

NFUser Rale Report April 2 2008 Final doc 77 R M Loudonud

Terms of Reference


Review of Water and Sewer Rate Structure November 09 2007

A Introduction

In an effort to create a greater understanding of the cost for water and sewer services the

City of Niagara Falls Counci I has directed City Staff to proceed with a review of the

existing water and sewer rate structure Questions have focused on the fairness and equityof rates especially the use of fixed monthly charges Other concerns have focused on the

increasing costs for services and the ratepayers ability to control costs by reducing usage

City Council is responding to these concerns by directing a review ofthe existing water and

sewer rate structure that was implemented seven years ago when a universal water

metering program was completed in 2000

The metering program enabled the City to cease the pre existing flat rate billing systemwhich or many ratepayers was a significant concern At that time an extensive multi year

analysis prefaced the Council s approval ofa two part rate structure Today rate structure

includes a fixed monthly charge and avolumetric rate The fixed monthly charge is for the

annual maintenance and capital costs for the water and sewer systems The volumetric

charge is for the Region ofNiagara s costs for water supply and sewer treatment

City Council in its direction to Staff is considering a change in the water and sewer rate

structure This review is intended to provide the Council with appropriate timely and

accurate information about changing water and sewer rates

B Objectives

The objectives of the review are

J To study the financial impacts from changing the existing water and sewer rate

structure

2 To examine the optional rate structures for water and sewer services inaccordance with all legislation and regulation governing water and sewer

distribution systems3 To compare the advantages and disadvantages of appropriate rate structures in

relation to the public concerns for the costs ofwater and sewer services4 To recommend a water and sewer rate structure s for water and sewer services

that

complies with all relevant legislation and regulation and best satisfies the publicconcerns

C Tasks

The Water and Sewer Rate Structure Review should include a variety ofanalytical tasksThe tasks would include but not limited to gathering relevant information seekingpublic input analysis of rate structures and comparative study of the financial impacts on

ratepayers These tasks would conclude in a final repol1 and presentation to City

Council or a Standing Committee composed of all Council Members that identifies a

recommendation for changing the water and sewer rate structure

D Work Schedule

City Council has directed Staff to complete the review as part ofthe 2008 budget processThe review work would be ideally completed by the end of January 2008 A delayedcompletion may interfere with the Council s ability to approve a change that could be

implemented in a timely manner

E Staff Assistance

City Staffwill be available to provide assistance Regular contact between the consultantand Staff will be managed by the Acting Executive Director of Corporate Services As

required the consultant is expected to meet with Staff for interim writtenverbal progressreports The final written report including twelve paper copies and one electronic copywill be submitted to the City Clerk

F Deliverables

The consultant will provide a work plan that identifies and timetables the tasks for thereview within the suggested work schedule Upon Staffs approval of the work plan theconsultant will implement the work plan provide interim written verbal reports to Staffsubmit the final report to the City Clerk and conclude with a presentation to CityCouncil

G Conclusion

Council has directed City Staff to proceed with a review of the existing water and sewer

rate structure To engage a consultant s assistance for this review this Terms ofReference document is intended to guide the consultant in preparing a Water and SewerRate Structure Review Proposal

Page 2



13 Attachment 5 City ofNiagara Falls Review ofWater Sewer Rate Structure

Proposal RM Loudon Ltd

See following pages numbered 1 to 7

J

4Wy

ip

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I

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1

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NFUser Rate Report Apnl2 2008 Frnal doc 78 R M LOlldon Ltd

City ofNiagara Falls ProposalReview ofWater Sewage Rate Structures Prepared by M Loudon


Review of Water and Sewer Rate Structure

Proposal

1 Introduction

This proposal is in response to Terms of Reference related to review the City of NiagaraFalls water and sewage rates dated November 9 2007

As stated in the Terms of Reference the current rates are two part with a volumetric

charge which recovers Region ofNiagara charges and a fixed charge which varies bymeter size and recovers local system costs The rates format was originally adopted basedon a 2000 report1 for application when universal metering was completed Since that time

the format has been retained but rates adjusted to reflect annual costs Two options were

offered The recommended option was adopted The second option had a lower service

charge and a higher volumetric chargeThe selected format was the preferred alternative at the time ofadoption primarily basedon an objective ofproviding revenue security customer consumption can be highlyvariable when meters are first introduced By tying the volumetric charge to Regionalcosts decreases in usage due to metering should relate closely to reduced bills by the

Region The approach was arguably fair since variable costs were linked to the variable

portion ofthe rate

Since that time the fixed charge component has gradually increased compared to the

volumetric charge There is now a feeling that the fixed charge component is too largecompared to the volumetric component This will be a very important issue in the reviewof the watcr and sewage rate structure

2 Objectives Tasks

The objectives stated in the Terms of Reference are as follows

1 To study the financial impacts of changing the existing water and sewer rate

structure

2 To examine the optional rate structures for water and sewer services inaccordance with all legislation and regulations governing water and sewer

distribution systems

ICity of Niagara Falls Study ofWater Sewer Rates Following Metermg Loudon Fortin

November2000

NF Wale Rate StudyProposal Dee 4 2007 doc J3 03 20081

City ofNiagara Falls Proposal

Review ofWater Sewage Rate Structures Prepared byM Loudon

3 To compare the advantages and disadvantages ofappropriate rate structures inrelation to the public concerns for the costs of water and sewer services

4 To recommend a water and sewer rale structure s for water and sewer servicesthat complies with all relevant legislation and regulation and best satisfies the

public concerns

A variety oftasks are needed to fully reach the report objectives The Terms ofReferencestated a few

l Gather relevant information

2 Seek public input3 Analyze alternative rate structures

4 Compare financial impacts on ratepayers

These tasks form the coreof what is needed

3 Proposed Work Program

3 1 Establish PrinciplesIt is very important that the rates be formulated based on asound set of agreed principlesAt the outset prior to any meetings a discussion paper on a range ofprinciples for water

and sewage user rates will be provided to City staff for their review The preferredapproach would be for staff to have read the material before the first meeting so that theyare familiar with the concept and options In any case the issues can be reviewed and

discussed at the first meeting Most principles will probably be easily agreed at that timehowever some may need further discussion or may be appropriate for furtherconsultation Others might be added

3 2 Discuss Rate Format OptionsA discussion paper on alternative rate approaches will also be provided prior to the first

meeting The paper would set out different rate approaches and discuss the advantagesand disadvantages ofeach The rate options as well as the recommended rates would beconsistent with Provincial legislation related to water and sewage systems

Again the first meeting would be a good forum to perhaps narrow the options downestablish a preferred option or initiate a strategy for further discussion Principles andalternative rate option formats are possible issues to include in public forums

3 3 Data RequirementsTo some extent the data request can be massaged to accommodate availability and abilityofthe City to extract information from financial and billing databases

NF WOler ROle Study Proposal Dee 4 2007 doc 13 0312008

2

City ofNiagara Falls Proposal

Review ofWater Sewage Rate Stnlctures Prepared by M Loudon

The allowing is a preliminary list of data requests covering both water and sewage Note

data in Excel spreadsheet format is much preferred

Category Data Description

Billed Consumption Annual billed since 20002005 2006 2007 YTD

Monthly volumes billed by class

Largest 10 users by billing periodInformation on residential customer billing profilediscuss

Individual customer examples for impact analysis 2006List will include a cross section of customers in terms ofvolume used and category

Customers 2005 2006 Number annually since 2000

2007Number by class

Number by meter size

Operating Budget 2007 Initially provide broken down by major categories The

2008 degree ofdetail will depend on the rate onnat selected

Capital Budget 2007 Budget documents providing list ofprojects2008 projected to 2012

Debt principal interest

Identification of capital programs related to meetinglegislative upgrade requirements such as the Federal P2

req uirements

Revenue Budget 2007 Broken down by category2008

Provide actuals for 2006

Rates 2000 to 2007 Regional rates and billings monthly

City water and sewage rates

Water Sewage Monthly 2005 2006 2007 YTD

Regional volumes

Again the list may be augmented and will be finalized based on discussion of

availability and need as the project progresses

NF Water Rate SlIIdy Proposal Dee 2007 doc J3 03 2008

3

City ofNiagara Falls ProposalReview ofWater Sewage Rate Structures Prepared by M Loudon

34 Public InputGiven the interest already expressed in the current rate format it is important that an

opportunity be provided for those concerned to provide feedback A change in the current

rate configuration will have varying degrees ofimpact depending on the format chosenand customer usage and meter size characteristics

The type of information provided and required as well as timing format participants and

target groups need to be decided In addition to views already expressed target groupswould include large users and residential customers

In terms oftiming it would likely be after enough material has been assembled and

organized to be useful in presenting to the target groups but prior to finalization oHhe

approach to rates

It is suggested that this be discussed to achieve City objectives and utilize most

effectively the resources available

3 5 Financial Plan

A projection will be made ofexpenditures and revenues for the period 2008 to 2012based on financial and customer data as available in consultation with the Region and

City staff as well as utilizing available projections This will be used to project annualrate increase requirementsA Financial Plan offers an opportunity to tie rate increase needs with relevant issues such

as government regulations as well as asset management needs for replacement

3 6 User Rates

Water and sewage user rates will be calculated for 2008 It is expected that two optionswill be required one status quo and another with higher consumption charge and lower

fixed chargesThe options calculated and the complexity ofthe calculations will be influenced bydiscussion and public input

3 7 ImpactThe following impact calculations will be carried out

Impact ofrates on a variety oftypical and specific customers including a range ofresidential customers a variety ofnon residential customers covering a range of typesand volumes as well as the largest customer perhaps top 0 The specific exampleswill be decided in discussion with City staff

Calculations will be made using 2007 City rates as well as for each optional 2008rates

NF Waler Rale Sludy Proposal Dee 4 2007 doc 13 03 20084

I

City afNiagara Falls ProposalReview afWater Sewage Rate Structures Prepared byM Loudon

Comparisons will also be made for a typical customer and a large customer with a

cross section ofselected municipalities nearby and oomparable across the Province

3 8 ImplementationIt is possible that the preferred option will have significant impact on some customers Ifthis is the case then a well thought out implementation plan will be important Customersare more likely to accept changes if they think they are fair and they have some warning

Ifrequired an implementation plan will be discussed

4 Timing Project Organization

4 1 TimingThe target completion date is the end ofJanuary 2008 This timing coincides with the

City s 2008 budget process A delay may interfere with Council s ability to approve a

change that could be implemented in a timely manner Schedule 1 following is a

timetable fOlmulatcd to achieve this goalThe timing is extremely tight but if followed the end ofJanuary target can be achieved

City of Niagara Falls Schedule 1

Review of Water Sewage Rate Structure

Work Plan

Prepared by M Loudon

I Week Ending ITask Descripllon 14Dec 07 21 Dec 07 28Dec 07 4 Jan 08 11 Jan 08 18Jan 08 25 Jan 08 1 Feb 08

1 Establish PrinCiples Holiday Penod

Preliminary X

Finalize X2 Discuss Rate Format Options

Preliminary XFinalize X

3 Data ReqUirements X X

4 Public Input X5 Financial Plan X X X6 User Rates X X X7 Impact X

8 Implementation X

Write Report X X X X

Meetings Staff Staff Public Staff Council

InputNF WS User Rate Study Worl Plan Dee 4 2 7xIs

NF Water Rate Stlldy Proposal Dee 4 2007 doc J 3 03120085

I

I

City afNiagara Falls ProposalReview ofWater Sewage Rate Structures Prepared by M Loudon

The critical path includes data generation by the City in December public input at the

beginning ofJanuary and report preparation during January

4 2 Staffing

City Staff have been offered to provide assistance This is critical to the success of the

project not only to provide the data that only is available from City resources but also to

provide valuable input in the formulation ofdifferent aspects ofthe report The reportshould be a cooperative effort

The consultant will provide Mike Loudon and Mike Fortin as needed to complete tbe

report Both were involved in the original rate report and have worked to together 011

many projects CVs ofboth are provided

4 3 level of Effort

The level ofconsultant effort in days per task as well as an estimated cost is providedbelow in Schedule 2

City ofNiagara Falls Schedule 2

Review of Water Sewage Rate StructureCost Estimate


Task Description EstimateEstimated Time days

1 Establish Principles 0

2 Discuss Rate Format Options 0

3 Data ReqUirements Analysis 3

4 PubJjc Input 4

5 Financial Plan 36 User Rates 37 Impact 1

8 Implementation 1

Write Report 3

Meetings 3Total 21

Projected Cost

Daily Rate 7 5 hours I 130 hr 975

Fee 20 475

Disbursements 1 500Total Cost excl taxes 21 975

NF Walel Rale Study Proposal Dee 42007 doc 13 03 2008

6

City ofNiagara Falls ProposalReview ofWater Sewage Rate Structures Prepared by 111 Loudon

The estimated cost ofthe consultant contribution is based on the above proposed work

plan but could be modified in discussion jf adifferent work plan is preferred One taskthat could affect the cost would be the degree to which the consultant is involved in the

Public Input phase


R M Loudon Limited

Phone 416 225 208

Fax 416 225 8144

Email mloudon@ica net

December 4 2007

NF Water Rale Study Proposal Dee 4 2007 doe J3 03 20087

The City of Niagara Falls OntarioResolution

No

Moved by

Seconded by

WHEREAS all meetings ofCouncil are to be open to the public and

WHEREAS the only time ameeting or part of a meeting may be closed to the public if the subjectmatter falls under one of the exceptions under s 239 2 ofthe Municipal Act 2001

THEREFORE BE IT RESOLVED THATon April 14 2008 Niagara Falls Council will go intoa closed meeting to consider a matter that falls under the subject matter of 239 2 c of the

Municipal Act 200f a proposed or pending acquisition or disposition ofland by the municipality

AND The Seal of the Corporation be hereto affixed

DEAN IORFIDA RT TED SALCI

CITY CLERK MAYOR

4

Water Sewage Rate Structure ReviewPresentation to


Corporate Services Committee

April 14 2008

Presentation byMike Loudon P Eng

April 14 2008 1

Purpose

To examine optional water sewage ratestructures

To compare advantages disadvantages of

optional structures

To provide an alternative rate structure

To provide impact of changing existing ratestructure

April 14 2008 2

Background

November 2000 Loudon Fortin ReportDecember 2000 Council ratifies Option 1

2001 New metered rates appliedJuly 2007 Ed Bielawski presentationOctober 2007 Council requests proposalDecember 2007 Loudon proposal approved byCouncil

April 14 2008 3

Background

November 2000 rates report used as basis forcurrent rates Passed by Council December2000

Option 1 adopted volumetric rates recover

Regional costs service charges cover localcosts

Option 2 Service charge covers 20 of costs

April 14 2008 4

Attachments

Appendix A Rate Structure Alternatives

Attach 1 Loudon Fortin Report Nov 2000

Attach 2 City Rate Structure Report Dec 2000

Attach 3 Bielawski material July 2007

Attach 4 City RFP for this studyAttach 5 Loudon proposal for this study

April 14 2008 5

November 2000 OptionsOption 1 Option 2

Volumetric rate recovers Volumetric rate recovers

Regional charges 80 of costs

Volumetric Rates cubic metre 1 309 1 549


A Single Uniform Charge 26 235 16 182

B Charge Variable by Meter Size

15mm 22 54 13 90

18 mm 22 54 13 90

25mm 22 54 13 90

37mm 56 35 34 75

50mm 135 23 8341

75mm 270 46 166 82

100 mm 495 84 305 83

150 mm 946 61 583 85

200 mm 1 690 37 1 042 59

April 14 2008 6

2007 Water Sewage Rates

Rate Component Water Sewage Total

Volumetric Rates m3 0 6024 0 8544 1 4568


15 to 25 mm 20 07 18 58 38 65

37mm 60 21 55 74 115 95

50mm 120 42 111 48 231 90

75mm 240 83 222 96 463 79

100 mm 441 52 408 76 850 28

150 mm 842 91 780 37 1 623 28

200 mm 1 505 19 1 393 50 2 898 69

250 mm 2 107 27 1 950 91 4 058 18

April 14 2008 7

City Cost Share Has Increased

2001 2002 2003 2004 2005 2006 2007

Regional 63 63 64 6100 5800 600Jb 57

City 3700 37 3600 3900 4200 4000 43

April 14 2008 8

Calculation of Volumetric Rate

Component Water Sewage

Regional Volume m3 16 452 757 18 214 832

Wholesale Regional Rate 0 5120 0 6130

m3

Regional Charge 8 423 812 11 165 692

City Billed Consumption 13 984 843 13 068 836

m3

City Volumetric Rate m3 0 6024 0 8544

City vs Regional Volume 850k 6500

Anril 14 nnA 9

Public Forum January 24

About 25 attended

Main Issues

Service charges too highUsing water consumption in summer to bill

sewage not fair to residential since seasonal

usage does not enter sanitary sewer

April 14 2008 10

Issues Addressed

Alternative rates have lower service

chargeSummer sewage billing alternatives

1 Maximum residential bill

2 Residential discount

3 Winter average4 Decreased sewage rate in summer

5 Combine water sewage rates

April 14 2008 11

2007 Customer Data

26 849 water customers

25 114 with standard 16 mm meters

16 236 m3 water purchased from Region13 489 m3 sold to customers

12 50 0 unbilled water consumption UWC

AWWA says range of 1 000 to 2000 UWCcommon

April 14 2008 12

2007 Consumption Profile

m3 month or less Customers Volume

8 5 m3 2000 2

17 6m3 5000 12

38 4 m3 9000 3800

353 m3 990 0 55

294 cust over

April 14 2008 13

1 0 Largest Water Users

2007 usage ranges from 884 720 m3 per year to121 060 m3 per year

Represents 18 of total consumption

April 14 2008 14

2007 Water Sewage Budgets

Water Sewage

City Operations 3 665 000 2 210 000

City Capital 4 174 000 4 727 000

Total City 7 839 000 6 937 000

Regional 8 589 000 11 260 000

Total Costs 16 428 000 18 197 000

User Rate Revenues 15 989 000 18 067 000

April 14 2008 15

Optional User Rate Principles

Revenue adequacy security

Legality

Practicality

Fairness User Pay

Affordabi I ity

Simplicity

Conservation water use efficiency

Encourage industrial development

April 14 2008 16

Policies vs Principles

Policies Principles Achieved

Metering User pay affordabilityconservation

Decreased Service Charge User pay affordabilityIncreased Volumetric Rate conservation

Combined WIS Rates Simplicity

Single Block Rate Simplicity fairness

April 14 2008 17

Two Part Rates

Recommended by AWWA CWWA

Fixed volumetric componentsFixed

metering billingFire protectionSome local system capital costs

Volumetric covers the remainder

April 14 2008 18

Fire Protection Costs

Extra water system capacity on standby for fire

protectionProperty tax service charge best places torecover neither related to actual volume used

Based on capacity providedHydrants 1 0000

Supply very small 0 5

Mostly local system costs

Niagara Falls 1 491 000 or 800 of total water

April 14 2008 19

Service Charge Share

Alternative rate option based on 2500 inservice charge2000 November Report Option 2 based on

2000

Combined water and sewage rate revenue

required 25 542 000

Service charge at 25 8 514 000

April 14 2008 20

Service Charge Cost Allocation

Method of allocating costs to each meter size

Based on cost characteristics

Uniform Allocation Allocated equally to allmeter sizes Billing costs

Cost Allocation Based on the relative cost of

meters and services by size Capital costs

Capacity Allocation Based on the relative

capacity of different sized pipes FireProtection

April 14 2008 21

Service Charge Cost Breakdown

Standard Meter 100 mm Meter

Factor month Factor month

Billing 1 0 1 82 2 0 3 63

Fire 1 0 2 28 79 180 49

System 1 0 6 15 14 86 03

Total 1 0 10 25 26 270 15

April 14 2008 22

Volumetric Rate Calculation

System Revenue Volume Rate

Required m3 m3

Water 11 991 000 13 985 000 0 858

Sewage 13 573 000 13 069 000 1 039

Total 25 564 000 1 897

April 14 2008 23

Current versus Alternative Rates

Water Sewage Combined

Existinq Rates

Standard Meter 20 07 18 58 38 65

100 mm 441 52 408 76 850 28

m3 0 602 0 855 1 457

Alternative Rates

Standard Meter 10 25 12 89 23 14

100 mm 270 15 180 38 450 53

m3 0 858 1 039 1 897

April 14 2008 24

Alternative Rate Impact

Customer m3 year Meter Current Alt Diff unit

SFD 180 Std 726 619 1500 619

SFD 469 Std 1 147 1 167 2 1 167

Condo 13 659 75mm 25 464 28 796 130lb 384

75 units

Car 4 1 04 50mm 8 762 9 053 3 9 053

Wash

10 Largest customers increase from 2000 to 2900

April 14 2008 25

Rate Formats 16 Municipalities

80 have service charges11 mm vs 19 mm vary up to 76 times as largeNiagara current at 22 time and Alternative rate at26 times about mid range8 single block rates

4 increasing block rates

4 decreasing block rates

3 other rate formats

Some have more than one differ by class

April 14 2008 26

Comparative Charges 240 m3 yr

1 000 100G

900 90 CD

mo 0

o

500 50

m

300 30

c 200 20C 100 10

0a

0 C CI CG E 0 c c CI U c CICI

a c 0CI 0 0 CI C 0 0 c C

CI c 0 CG U CI CGa 0 0

0 CG c C LL U CJ CI CG C CG CI CI

oc E 0 E 0 J U CG Z

I0

CG cJ CI 3 0

co 0J CI

m CG LLa

Z 0 Z

27

Volume Only Rate Calculation

System Revenue Volume Rate

Required m3 m3

Water 15 989 000 13 985 000 1 144

Sewage 18 097 000 13 069 000 1 385

Total 34 086 000 2 529

April 14 2008 28

Volume Only Rates Impact

Customer m3 year Meter Current Alt Diff unit

SFD 180 Std 726 455 3700 455

SFD 469 Std 1 147 1 186 300 1 186

Condo 13 659 75mm 25 464 34 544 3600 461

75 units

Car 4 1 04 50mm 8 762 10 379 18 10 379

Wash

10 Largest customers increase from 500 0 to 660 0

April 14 2008 29

1

Other Issues

Revenue SecurityUse conservative projectionsRate stabilization reserve fund

Metering of Condominium Townhouses

Use bulk meteringNon payment shutoffs

Private mains not metered

Bad precedent for other multi unit customers

April 14 2008 30

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Water Sewage Rate StructureReview Recommendations

Presentation to


Corporate Services Committee

April 14 2008

Presentation byMike Loudon P Eng

May 5 2008 1

Recommendation 1

Principles User Rate Best ImplementedFormat Priority Using Other Method

Revenue adequacy security V

Legality V

Practicality V

Fairness User Pay

Affordability V

Simplicity V

Conservation V

Encourage industrial development V

May 5 2008 2

Recommendation 2

Combined water and sewage rates be used tobill customers

Simplifies bills method used by some others

A separate water only rate would still be

required for water only customers

Water only rate with volumetric and service

charge components is preferred for the water

only customers but a water rate expressed as a

percentage of the combined water and sewagerates also acceptable

May 5 2008 3

Recommendation 3

A two part rate format with a single blockvolumetric rate and service chargesvarying by meter size should continue

Do not link Regional costs to thevolumetric rate and City costs to theservice charge current approach

May 5 2008 4

Recommendation 4

The proportion of costs allocated to thevolumetric charge be increased to 750k

The proportion of costs allocated to

service charges be decreased to 2500

May 5 2008 5

Recommendation 5

Phase in the 250 0 750 0 service chargeversus volumetric charge cost allocationover a period of two to three years to ease

the impact

May 5 2008 6

Recommendation 6

Revisited the 25 7500 service chargeversus volumetric rate cost split approachfor the 2013 water and sewage user rates

May 5 2008 7

Recommendation 7

Some residential customers use high volumesduring summer for irrigationRecommend that no special rate or billingconcessions be adopted for residential summer

Increases In usageApproach recognizes the high cost of supplyingwater to meet seasonal irrigation demands andto encourage conservation

Simplifies billing treats all customers the same

This is the approach used by the majority ofOntario municipalities

May 5 2008 8

Recommendation 8

Lower service charge potentially reducesrevenue securityRates projections should be made usingconservative assumptionsEstablish and maintain adequate balancein a Rate Stabilization Reserve Fund tocushion against unexpected user rate

revenue shortfalls

May 5 2008 9

Recommendation 9

Relates to multi unit customers such as

condominiums apartments malls

Bulk meters preferred over individualmeters

Customers with direct connections to Citymains such as freehold townhouseswould continue to have individual meters

May 5 2008 10

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