Since it was first announced in December that Chestermere residents would be hit with an increase to their utilities rates, it has been a constant sore spot within the city. Constant social media outrage and residents not afraid to speak their mind – it has been no secret how anyone felt about this announcement and since the decision was finally made by council this past week, residents remain angry.
In December 2015, Chestermere Utility Inc. (CUI) CEO Leigh-Anne Palter, informed Chestermere City Council that she had discovered an oversight in the way that utility rates were being calculated and that the company was facing a significant shortfall. Simply put, the cost of services that CUI pays to the City of Calgary were not being fully covered by the rates charged by CUI to its customers and funds that are intended for future projects had been used to cover the shortfall for the past three years.
In the initial announcement in December, Chestermere City Council explained that CUI had calculated the need for a rate increase of approximately $30 per month per household in order to have utility rates cover the costs of services that CUI provides to the residents of Chestermere. It was stated then and in conversations since, that this increase was not being requested in an effort to recoup lost costs but to stabilize rate costs on a go forward basis.
January 18th, 2016, Palter presented the CUI rate increase to City Council in a meeting that had council chambers and the lobby at the municipal building packed with residents. During a lengthy question and answer period, residents made it no secret that a rate increase was something they were not interested in and were actually extremely angry over.
At that meeting, City Council asked questions of CUI but they did not make a decision about the rate increase request as the purpose of that meeting was only for CUI to provide information about the situation and then give council time to investigate and get better prepared to make a decision.
In a recent conversation with the CEO of Chestermere Utilities Inc., I was told “When we prepared the CUI 2016 rates application for approval by City Council, we endeavored to balance three key regulatory principles: 1. Avoiding rate shock 2. Ensuring customers pay for the cost of service in the year that service is received, and 3. Creating a financially sustainable corporation that is able to meet is short and long-term obligations.
The CUI Board and Management team weighed these factors very carefully before coming forward with the 2016 rates application. Our request for a 25% increase would not have fully recovered our cost of service in 2016, but it would have allowed the corporation to be in a ‘break even’ position by the end of its fifth full year of operations”.
From the adjournment of that January meeting until this topic came back to council on February 16th, how residents felt about the whole situation was loud and clear. From a petition campaign kicked off by Chestermere resident Laurie Bold, to residents dropping off their bags of trash on the door step of the Chestermere Municipal Building, to say people were outraged is an understatement.
On February 16th at a regular meeting of Council which only had about twenty residents in attendance, a report was presented by Patrick Bowman of InterGroup Consultants who was asked to conducted a third party review of the rate increase request. In that report, Bowman stated that a 25% rate increase would “under any reasonable definition, qualify as rate shock” which he further stated “under normal regulatory principles, to be avoided where possible”.
The report also mentions, “The review to date suggests Council should at minimum grant CUI three-quarters of the requested increase, comprising the full requested amount for Solid Waste and Storm, and on the order of a 15% increase for Water and Sanitary services (over half of the 25% increase requested). The remaining components of the CUI requested increase do not appear to be as strongly justified in 2016 and should be carefully assessed by Council balancing:
(a) significant factors highlighted in this review that suggest there could be room to maintain the rate increase to 15% in 2016 (instead of the proposed 25%) to help avoid rate shock, with (b) possible risks CUI faces in 2017 and beyond in the event assumed growth does not occur”.
(The full report can be viewed at www.ab-chestermere.civicplus.com/Index.aspx?NID=627 )
So, with that presentation, City Council decided more time was needed to thoroughly go over the InterGroup report and they moved forward with tabling the decision and called for a special meeting of council on January 18th, 2016.
Some residents felt that it was a good idea that council not make a knee jerk decision to the information that was provided and to take a couple days to go over the information further, while others were livid and felt that this was some scandalous behind the scenes stall tactic. Once again, social media lite up with comments surrounding the decision – or lack thereof – and also the low turnout of residents at the meeting.
Forty eight hours later, a special meeting of council was called to order with around 80 – 100 people in attendance including Chestermere Peace Officers and members of the Chestermere RCMP. With no question and answer period, as special meetings of council do not permit them, in less than an hour, the by-law changes were presented and voted on with the outcome being and unanimous decision of council to implement a 25% increase for storm water and solid waste collection, and a 15% increase for water and sewer.
The petition to dissolve CUI that had been circulating throughout Chestermere was also delivered to City of Chestermere CAO Dr. Randy Patrick prior to the start of the special meeting of council. With less than 2000 signatures, Dr. Patrick has advised that, “I have 30 days to review it and ensure the petition meets the requirement under the Act. If it does, Council is informed”.
Following the meeting, Mayor Patricia Matthews said, “I think that considering the amount of time and effort that was put in over the last few months to collect as much information from the experts and from CUI as well as from staff, that council took a very round, well thought out and very intense look at where we needed to go and made the right decision in moving forward with these rates in the best interest of the community”.
As this rate increase was not what CUI initially requested of council, CEO Leigh-Anne Palter commented, “Council’s decision to partially approve CUI’s rates application [25% for storm water and solid waste collection, but only 15% for water and sanitary (sewer)] serves the first regulatory principle, but moves CUI further away from the second and third regulatory principles”.
“The negative impact of this decision is that the Shareholder’s (being the City of Chestermere) equity will continue to decrease, the accumulated operating shortfall of -$2.8 million will continue to grow in 2016 and this will likely translate into higher rates for customers in future years. Another unintended consequence might be that CUI will not have sufficient funds available in future years to repair or replace critical infrastructure, which would result in additional rate increases for our customers”, explained the CEO.
CUI’s residential customers will receive one final bi-monthly bill at 2015 rates. “Customers may notice that this bill contains higher consumption then their usual bill, that is because we’ve delayed our meter reading by two weeks to ensure that we capture as much of the pre-March 1st consumption as possible at the old (lower) rates. New utility rates will become effective March 1, 2016 and these rates will be reflected on the April 2016 bill. Once the new rates come into effect, the average residential customer can expect to see an increase of $21 per month ($0.72 per day) on their household utility bill. New rates for commercial customers, who already receive monthly billing will also come into effect on March 1”, added Palter who provided the following for rate comparison of the 2015 rates and the newly approved 2016 rates.
Residential Utility Rates
2015 Rates $/month 2016 Rates $/month
Water
Fixed Monthly
Variable 0 – 18m3
• Variable +18m3
19.36
0.92
1.85
22.26
1.06
2.13
Sanitary (Sewer)
Fixed Monthly
Variable 0 – 18m3
• Variable +18m3
35.66
1.09
1.54
40.89
1.25
1.77
Storm Water
• Fixed
9.90
12.38
Solid Waste Collection
• Fixed
23.89
29.87
Lifecycle Fund
3.56
3.56
And for anyone wishing to ‘opt out’ of participating in CUI services, the CEO says that is not an option.
The City of Chestermere is now moving forward with a regulatory review that will be discussed at an upcoming regular meeting of council.
