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Minimal rate increases for Penticton utilities

Preliminary results of study says utility reserves are healthy
A new study recommends Penticton’s electricity rates stay the same until 2022. (File photo)

Penticton residents could get a break on electricity rates for the next few years if the recommendations of a new study are implemented.

The study, conducted by Intergroup Consultants in conjunction with the city’s rate review committee, found that balances in the city’s utility reserves are forecast to be higher than the recommended minimal or optimal balances.

READ MORE: Utility Rate Review ready to get back on track

As a result, they’re recommending no increase to the rate charged by Penticton’s electric utility until 2022. For the water utility, the report recommends a “modest” annual increase of 0.6 per cent for treated water. Agricultural water would continue to increase at 4 per cent a year

Sanitary sewer rates are where the biggest hit would come. There, the report recommends 16.5 per cent/year for the next two years.

A prime consideration is for the city’s utilities to be self-sustaining, generating enough income to cover ongoing operations, maintenance and put enough away to cover upgrades and expansion as well as replacing older infrastructure.

Coun. Frank Regehr was concerned, however, about the inclusion of some city buildings as part of the pool of overhead costs to the utilities.

Regehr said he understood City Hall, as a building that provides services to the utilities like collection, being included, but didn’t see a direct connection justifying the inclusion of police and fire department buildings.

“I would think that, with the hundreds of thousands of dollars that are being added to the utility bills, based on that one topic that is pushing the limits,” said Regehr.

“We are looking at not only cover the costs of purchasing utilities and maintaining the utility infrastructure, but we are looking to add on overhead, like the RCMP building, that is going farther than it needs to go.

“It’s nice to make a profit, but utilities are being used as a profit centre in some areas or also recovering overhead costs that are going further than I personally believe it needs to go.”

Mitch Moroziuk, director of operations, said some buildings had been removed from the overhead costs, but there was still a service relationship with emergency services.

He also pointed out that those costs don’t go away.

“If you take it out of here, you have to add it back in somewhere else, which means it’s going to probably go to the tax side. You can’t eliminate it, you’re just moving it around,” said Moroziuk, who also promised to review the inclusion of the buildings before the final report was delivered.

Even if council implements the recommendations as set out in the draft study, it’s no guarantee the city won’t need to change the rates as circumstances change.

Moroziuk said particular attention is paid to what FortisBC is charging for the city’s wholesale purchase of electricity.

“These rates are based on a five-year average of what FortisBC has done for rate increases,” said Moroziuk. “We will monitor that and if we are way out from what they actually do, then we will have to make an adjustment to those rates. Electrical costs are a huge part of the cost associated with our electrical utility, so it is very sensitive to changes in that.

“We will be watching that on an annual basis.”

READ ALSO: Penticton electric rates may stay static in 2018

Andrew McLaren, who presented the report to council on behalf of Intergroup Consultants, said this was a preliminary review of the findings, and they plan to bring the final report back to council at the end of May, after further review and public consultation.

Steve Kidd
Senior reporter, Penticton Western News
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