'Everybody's trading something off': Saskatoon mayor on proposed regional water sharing deal
Surrounding communities will pay lower rates for water sold by the city
Communities around Saskatoon will be paying less for the water they receive from the city if a recommendation made to city council is approved.
It's the result of a deal negotiated between Saskatoon and SaskWater, which sells the city's water to Warman, Martensville, Osler and the RM of Corman Park.
The new mechanism would see the introduction of a "reseller" rate category.
SaskWater has been a "commercial" client of the city since 1983 and has been selling water to surrounding communities under the commercial rate structure.
Trade-off for Saskatoon
It's estimated Saskatoon would lose about $500,000 in water utility revenue each year under the new arrangement, at least in the first two years.
But the loss of revenue would be offset by an increase in off-site levies, according to a report prepared for city council.
It says that's because all new water users outside city limits would now pay a connection fee equivalent to fees currently paid by city properties.
Galen Heinrichs, the city's manager of water and sewer engineering, wrote the report and presented it to the city's standing policy committee on environment, utilities and corporate services today.
Heinrichs says the surrounding municipalities are behind the plan because of pressure they're facing from high water rates.
"But also they're interested in having more growth over time and so this provides a mechanism that allows that to happen for them," he said.
'Level playing field'
Heinrichs says from the city's point of view, it appreciates the idea that there will be "balanced growth on a level playing field throughout the region."
He estimates the loss of water utility revenue will result in a 0.5 per cent increase to water rates for city customers during a recommended transition period in 2020 and 2021. The new reseller rate for those two years would be "frozen" at the rate paid by SaskWater in 2019.
When asked during the committee meeting whether city customers would be "subsidizing" water rates for surrounding communities, Heinrichs said he is comfortable with the deal because it's "principle-based" and a reflection of how much the cities of Martensville and Warman, in particular, have grown since the current system was implemented in 1983.
He says most regional water customers are currently paying $4.74 or more per cubic metre, whereas Saskatoon is selling its water to residential customers at an average of about $3.38 per cubic metre.
"So hitting the reset button on this, I think, is a good principle," he said.
Even though the new mechanism would result in less severe increases to water rates in surrounding municipalities, Heinrichs says water customers in those communities would continue to have higher water rates than customers within Saskatoon.
Mayor Charlie Clark says the deal involves some give-and-take in the name of regional development.
"Everybody's trading something off in order to think more like a region and to plan together, " he said. "And it's taken quite a bit of trust-building to get to this point to actually be able to think that way."
Neal Sarnecki, the director of Saskatoon North Partnership for Growth, says the reseller rate is important in establishing a predictable, stable and level rate structure for all involved.
"This not only assists the members in planning for their own communities," he said. "It also provides certainty and stability to investors, making the region a more attractive place to do business."
The deal still has to be approved by city council, but the committee unanimously approved recommending the plan to council.
The new reseller rate category will be introduced alongside the established residential and commercial rates during the budget and utility discussions in November, according to Heinrichs.
Council will be presented with all of the specific financial details of any proposed rate changes for the utilities for 2020-21 at that time, he says.