City hall will charge SaskWater less for water rates since the Crown corporation contributed more money to a joint project to upgrade geothermal wells that support Temple Gardens Mineral Spa.
During its Dec. 7 regular meeting, city council voted unanimously to reduce the external potable water customer rate that it charges SaskWater to 1.875 times from 2.25 times, effective June 1, 2019. The cost would be calculated based on the rate that city hall charges in-city residents, which means SaskWater will pay a surcharge of 87.5 per cent.
This will result in an annual revenue decrease of $95,000 for the municipality, with the existing contract to expire Nov. 8, 2021, a council report explained. Additionally, the city will waive late payment penalties of $6,986.54.
Adjusting this agreement will only affect SaskWater and not water co-operative groups or property owners outside the city.
The current residential consumption rate is $1.3954 per cubic metre. SaskWater is currently paying $3.1396 per cubic metre, but after the change kicks in, the Crown corporation will pay $2.6163 per cubic metre.
Background
The municipality and SaskWater entered into a potable water agreement on Nov. 8, 2011, with city hall charging the Crown corporation a water supply rate 1.25 times the rate charged to consumers, city manager Jim Puffalt explained.
During the 2019 budget deliberations, city council increased the surcharge to 2.25 times the in-city rate, thinking that was a 50-per-cent increase. However, it was really an increase of 80 per cent.
SaskWater disputed the increase, so both parties met to discuss potable water rates, Puffalt said. During the meeting, the Crown corporation raised the municipality’s long-standing supply and disposal agreement for geothermal water. It indicated that the wells needed rehabilitation due to age and high-pressure operations.
Both parties then worked to resolve the potable water rate issue, analyzed the infrastructure and completed the necessary work on the wells. SaskWater hired a consultant to oversee a team of Saskatchewan-based contractors to assess and rehabilitate the wells. That project occurred this summer.
Turning the injection well — which was never commissioned — into the main well and decommissioning the supply well cost the City of Moose Jaw $133,087 and SaskWater $368,632.
As per the agreement, if SaskWater doesn’t want the wells, the municipality has the first right to purchase them.
“It’s important that we … look after Temple Gardens,” Puffalt added. “It’s a huge tourism feature of the city.”
Council discussion
Puffalt’s report confused Coun. Dawn Luhning, especially about how much the municipality had charged SaskWater during the initial rate increase. She pointed to the supposed 50-per-cent increase in 2019 to 2.25 times as the confusing part since it wasn’t 50 per cent. The decrease to 1.875 times is the true 50-per-cent increase.
“I don’t think the report is clear. I read it a few times and I’m not sure what you’re telling us or the public,” she added.
City council reduced water rates in 2017 and put that tax on property bills, explained Mayor Fraser Tolmie. Council then recognized a year later that taxpayers were subsidizing water rates for users in the rural municipalities and SaskWater. That funding should have been directed toward the utility and its operational costs.
Council changed water rate in 2018 and saved about $240,000, which was roughly one per cent of taxes, he continued. That also created a “rate shock” for the outlying areas, so council spoke with those parties and the provincial government.
“That’s where it sparked and initiated the conversation with SaskWater: can we come up with a different deal for them? So that’s what we’re actually doing and approving (now),” Tolmie added.
The next regular council meeting is Monday, Dec. 16.
