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 2 12/ 14/ 2011

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. 3 12/ 14/ 2011

Water Utility - Context • Capacity – Regional growth – Climate change – High consumers • Health – Clean water via Regional filtration 4 12/ 14/ 2011

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) 5 12/ 14/ 2011

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 6 12/ 14/ 2011

Sewer Utility – 2012 Initiatives • Capital program striving to separate 1% of 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 7 12/ 14/ 2011

Solid Waste Utility - Context • Canadians are some of the highest generators of Municipal Waste Generation (2007) waste: (kg pre capit a) 1000 • Recognition of our local 900 800 700 Ecological Footprint 600 500 – New Regional S olid Waste 400 300 Management Plan 200 100 – City GCAP Long Term Goal #5 0 US Japan weden UK Canada Belgium It aly France Germany wit erland Irland Denmark Norway Aust ria Aust ralia – Zero Waste S – New Provincial Extended S Source: Conference Board of Canada Producer Responsibility (EPR) programs 8 12/ 14/ 2011

Solid Waste Utility – 2012 Initiatives • 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). 9 12/ 14/ 2011

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) Volumetric Pricing Bi-Weekly Garbage Need Coordinated Approach 10 12/ 14/ 2011

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 11 12/ 14/ 2011

NEU – 2012 Initiatives • 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 12 12/ 14/ 2011

Overall Utilities Plan 2012: Financial Considerations - Expenditures Utility Expenditure Drivers 1% 100% 4% 90% 80% 58% 59% 70% 69% 60% Reserve M etro 50% 95% Debt 40% O & M 30% 32% 19% 41% 20% 10% 12% 10% 0% 13 12/ 14/ 2011 Water Sewer Solid Waste N EU

Overall Utilities Plan 2012: Financial Considerations - Revenues Utility Revenue Sources 100% 2% 90% 34% 36% 80% 43% 55% 70% 60% 27% 50% 26% 40% 66% 30% 43% 20% 37% 31% 10% 0% Water Sewer Solid Waste NEU Taxes Fixed Fee Variable Fee Reserves/Line of Credit 14 12/ 14/ 2011

Overall Utilities Plan 2012: Financial Considerations - Reserves Current Utility Reserve Balances Balance 70.0 Current Reserve Balance ($M) 60.0 50.0 $ 72.3M 40.0 30.0 20.0 $15.8M 10.0 * $3.7M - Water Sewer Solid Waste *Note: NEU utilizes a line of credit (2010 – 2012 $4.2 Million LOC) 15 12/ 14/ 2011

Financial Considerations – Metro Rates (Water & Sewer) • 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 Metro Water Cost Projections $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2020 16 12/ 14/ 2011

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 Metro Sewer Cost Projections 200,000,000 1 80,000,000 1 60,000,000 1 40,000,000 1 20,000,000 1 00,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 2008 201 1 2020 2030 2007 2009 201 0 201 2 201 3 201 4 201 5 201 6 17 12/ 14/ 2011

Financial Strategies Stabilization Reserve (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 18 12/ 14/ 2011

Financial Strategies Pay as You Go (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) • 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++ 19 12/ 14/ 2011

Utilities Recommended Rate Impact Water Sewer SW NEU • 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% *Includes rate escalation factor 20 12/ 14/ 2011

Impact on Average Home Owner Rate Average Home Change Increase Owner Cost 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 21 12/ 14/ 2011