2012 Utility Program Council Presentation December 13, 2011 Agenda - - PowerPoint PPT Presentation

2012 Utility Program

Council Presentation

December 13, 2011

Agenda

• Utility Programs Overall Context
• Individual Utilities – Context & 2012

Initiatives

• Financial Considerations and S

trategies

• Rate Impacts

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Utilities Overall Context (Water, Sewer, Solid Waste, & NEU)

• In a state of transition due to provincial,

regional, and local initiatives

• 2012 rates reflect some of these impacts

though many are still to come

• 2012 rates reflect a series of financial

strategies intended to mitigate maj or change drivers.

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Water Utility - Context

• Capacity

– Regional growth – Climate change – High consumers

• Health

– Clean water via Regional filtration

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Water Utility – 2012 Initiatives

• Require water metering for all new single family/ duplex

dwellings – Fixed/ Variable/ S easonal – signal intention to encourage voluntary single-family home metering

• Implement seasonal rates for residential and commercial

metered customers

• Begin transition away from debt-financing to pay-as-you-

go for ongoing infrastructure replacement programs

• Begin initiatives to “ close the gap” between conservation

programs and GCAT water target (33% per capita reduction)

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Sewer Utility - Context

• Clean Water – Regulation

– Eliminate Combined S ewer Overflows (CS O’ s) into surrounding waters by 2050

• Rebuilding our sewer system

– Regional Liquid Waste Management Plan

• S

econdary Treatment upgrades

• Climate Change Adaptation

– S torm intensity – S ea level rise – Flooding

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Sewer Utility – 2012 Initiatives

• Capital program striving to separate 1%
• f sewer system annually to meet CS

O commitment

• Developing strategic long-term approach

to eliminate CS O’ s

• Initiating financial strategy to mitigate

impact of regional secondary treatment program on residents

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Solid Waste Utility - Context

• Canadians are some of the

highest generators of waste:

• Recognition of our local

Ecological Footprint

– New Regional S

• lid Waste

Management Plan – City GCAP Long Term Goal #5 – Zero Waste – New Provincial Extended Producer Responsibility (EPR) programs

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Municipal Waste Generation (2007) (kg pre capit a)

100 200 300 400 500 600 700 800 900 1000

Japan Belgium S weden It aly France UK Germany Aust ria Aust ralia S wit erland US Irland Denmark Norway Canada

Source: Conference Board of Canada

• Expand Residential Food S

craps Recycling City-wide

– Complete pilot by March 2012 (2000 homes) – S pring report to Council on findings and recommendations

• 2012 garbage fee includes contribution to landfill for

cost of closure and post closure care

• Other fees represent general holding pattern

– Pending report back on food scraps recycling plan – Pending clarification of provincial EPR program and impact on blue box materials (2014) – Recycling commodity prices (economic volatility) - set at 2011 levels ($1.65M) rather than five year moving average ($1.90M).

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Solid Waste Utility – 2012 Initiatives

• Report Back Spring 2012

– Integration of learnings from Residential Food S craps Recycling Pilot into plan for City Wide Implementation – key issues: – Pickup – weekly (compostables)/ bi-weekly (garbage) – Coordinate with introduction of linear (volumetric) garbage cart pricing (align price signals to reduce residential garbage)

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Need Coordinated Approach

Solid Waste Utility – 2012 Initiatives

Bi-Weekly Garbage Volumetric Pricing

Neighbourhood Energy Utility - Context

• At least 50%

GHG reductions compared to development without the NEU

• Expansion of NEU services as development

proceeds in S EFC and vicinity

• NEU expansion dependent on development

rates and opportunities outside of S EFC S ervice Area

• Business model – long term approach -

losses in early years and profits in later years – 6% ROI over 25 years

• Expert Advisory Panel input

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NEU – 2012 Initiatives

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• 56%

GHG reductions – S EFC – compared to typical mix of gas + electric heating

• 72%

GHG reduction – S cience World boiler replaced by NEU

• Opportunity to expand beyond S

EFC

Overall Utilities Plan 2012: Financial Considerations - Expenditures

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Utility Expenditure Drivers

12% 10% 95% 41% 19% 32% 4% 59% 69% 58% 1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Water Sewer Solid Waste N EU Reserve M etro Debt O & M

Overall Utilities Plan 2012: Financial Considerations - Revenues

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Utility Revenue Sources

37% 43% 27% 66% 31% 55% 36% 34% 26% 43% 2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Water Sewer Solid Waste NEU

Taxes Fixed Fee Variable Fee Reserves/Line of Credit

Overall Utilities Plan 2012: Financial Considerations - Reserves

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Current Utility Reserve Balances

Balance

$15.8M $3.7M $ 72.3M

• 10.0

20.0 30.0 40.0 50.0 60.0 70.0

Water Sewer Solid Waste Current Reserve Balance ($M)

*

*Note: NEU utilizes a line of credit (2010 – 2012 $4.2 Million LOC)

• Metro Vancouver – Water

– Cost of Water over the last 5 years has increased significantly due to ongoing impact of S eymour Filtration Plant capital cost

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Metro Water Cost Projections 2020 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000

Financial Considerations – Metro Rates (Water & Sewer)

• Metro Vancouver - Sewer

– Regional S ewer costs proj ected to increase substantially 2020 to 2030 due to North S hore and Iona Treatment Plant replacements (estimated cost $1.5B)

Impact on Vancouver residents is dependent on cost allocation and availability of senior government funding

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Metro Sewer Cost Projections

2007 2008 2009 201 201 1 201 2 201 3 201 4 201 5 201 6 2020 2030 20,000,000 40,000,000 60,000,000 80,000,000 1 00,000,000 1 20,000,000 1 40,000,000 1 60,000,000 1 80,000,000 200,000,000

Financial Considerations – Metro Rates (Water & Sewer)

• Stabilization Reserve

– Past practice is to smooth out Metro increases through use of the stabilization reserves – Relationship between the 2 reserves – use of Water consumption as a proxy for S ewers – weather impact – 2012 Strategies:

• Water – drawing down reserve to mitigate Metro impacts and

transition to “ pay as you go” City capital funding

• S

ewers – begin to build up reserves to mitigate Metro treatment upgrade impacts in 2015 & thereafter.

• Implement annual adj ustment between reserves for weather

impacts

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Financial Strategies Stabilization Reserve (Water & Sewer)

• Debt Servicing

– 100% debt financing – S ewers debt costs increasing by 10.3% in 2012 reflecting increased sewer separation rate – Annual interest cost for Water $4.1 M and S ewer $5.8 M (2012)

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• 2012 Strategies - Debt vs Pay as You Go

– Water utility opportunity: reducing stabilization reserve and increasing fees to introduce pay as you go for 1/ 3 of Cap Plan – Report out on long term strategy for Water and S ewer – 2013++

Financial Strategies Pay as You Go (Water & Sewer)

Utilities Recommended Rate Impact

• Metro S

ervices 3.3% 1.2%

• Debt – AM/ S

eparation 0.6% 2.6%

• Pay as You Go

5.0%

• S

tabilization Reserve (2.0% ) 3.0%

• Conservation Initiative 0.7%
• O&M

0.3% 0.1% 4.2% 3.2% *

• Landfill Closure

1.5%

• Demand Adj ustment

2.0% 3.0% Total 9.9% 9.9% 5.7% 3.2%

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Sewer Water SW NEU

*Includes rate escalation factor

Impact on Average Home Owner

Rate Increase Average Home Owner Cost Change Over 2011 Water 9.9% $513 $46/year Sewer 9.9% $273 $25/year Solid Waste 5.7% $242 $13/year NEU 3.2% N/A

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