Chestermere Utilities Inc. (CUI) will not be asking for an increase to utility rates in 2018.
“CUI and the City of Chestermere Council, recognizes the rate and pace of change over the last two years has been challenging for our customers,” said CUI Chief Executive Officer Leigh-Anne Palter in a release Jan. 2.
“Given our progress to date, we are pleased that we’ve been able to provide customers with stable rates in the creation of our 2018 plan,” she said.
The announcement means that utility rates in the city will stay at the current rate approved by Chestermere City Council on Dec. 19, 2016.
The decision not to request an increase comes after two year consecutive years of extremely unpopular rate increases by the utility company.
The primary driver of the rate freeze has been the CUI’s ability to renegotiate contracts with Epcor surrounding the financing for CUI’s capital expenses.
“We’ve been working quite aggressively with Epcor to try to renegotiate that agreement,” said Palter.
She said that while Epcor continues to be an important partner agency for CUI, they have terminated the section of their agreement that gave Epcor the right to finance all of CUI’s water and sanitary capital project investments.
“Extricating ourselves from that part of the agreement has allowed us to go to market and secure alternate financing at a much, much lower rate,” said Palter.
This negotiation was completed two days after council approved the last increase in December 2016.
The ability to find more cost-effective ways of financing has been particularly timely as CUI embarked on several water and sanitary projects over the course of 2017.
“Given the nature and magnitude of the capital investments that we expect to make over the next number of years that has a huge impact on our forecast of expenses,” she said.
The savings and projected savings from the new agreement is being passed on to consumers with the rate freeze.
Palter said that due to confidentiality agreements, she can’t release the details of the of contract but they do estimate that CUI will save tens of millions of dollars in financing costs over what would have been the remaining term of the agreement.
Another factor in their decision to maintain the 2017 rates comes from working with the new city council and interim CAO on different financial forecasting methods.
“Where we’ve made very conservative assumptions in the past, we’ve found a way to work together to develop a reasonable forecast for the next year,” said Palter.
While rates are staying the same this year, Palter said that CUI still has a lot of work ahead of it to balance their priorities as presented in the company’s mandate as Chestermere’s utility company.
With the new way of forecasting for the year, Palter said that they still are working on a break even budget and does not forecast CUI to run a deficit this year to keep the rates the same.
There is also no new investment by the city in CUI.