Water deal carries risk if complications arise

Penticton must consider the potential risks in deal to sell water to West Bench

Living in B.C., the idea of paying for water sometimes seems inconceivable. After all, we’re surrounded by the stuff.

But water is, like many other things, a commodity. And for water drawn from the great outdoors to be drinkable, it needs to be treated before being pumped to your faucet. All of which seemingly gets more expensive every year as costs rise for equipment, chemicals and manpower.

So we have to wonder if Penticton City Hall is making the right decision as they proceed with a deal to sell water to West Bench at price point 17 cents per cubic metre lower than the calculated cost of production.

There is some profit in the deal. The saving grace is a $3.6 million up-front payment, which, averaged out, equals about $130,000 annually over the course of the 25-year contract the city is planning to enter into. The price, though, had to be set to be competitive with the cost of West Bench building its own treatment system.

So there is profit in it for Penticton. But it’s an even better deal for West Bench residents, who already pay considerably more for water than their counterparts in Penticton and, if the deal goes through, will be getting treated water pumped into their system faster than they could build their own system.

Penticton is assuming most of the risks in this deal, while West Bench has few, other than those related to their own antiquated infrastructure. If problems develop at the Penticton treatment plant over 25 years of nearly doubling the plant’s output, that’s the city’s responsibility to fix and pay for.

A possible profit of $130,000 a year is a pittance compared to the amount Penticton has spent building its water system, according to Coun. John Vassilaki. If water is a commodity, city council needs to be responsible to its community by ensuring that the water is sold at a price that reflects costs and the potential risks in being a commodity supplier, which, over 25 years, are bound to be considerable.

 

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