Report to: General Committee Date Report Authored: August 9, 2010
SUBJECT: Amendment of Waterworks Fees
PREPARED BY: Noris Dela Cruz, Ext. 4800
RECOMMENDATION:
1) That the report titled “Amendment of Waterworks Fees” be received;
2) And that the proposed fees outlined in Attachment ‘A’ for service provided by the Waterworks Division be approved effective October 1, 2010;
3) And that By-Law No. 2002-276 be amended to update the fees set under ‘Community Services – Water’ section of Schedule A, with fees outlined in Attachment A;
4) And that Staff be authorized to adjust the volumetric rate component of fees in an on-going basis, to match water rates upon approval of new rates;
5) And that a new Waterworks deferred revenue account be established and funds collected for automatic meter reading/advanced metering infrastructure be deposited to this account;
6) And further that Staff be authorized and directed to do all things necessary to give effect to this resolution.
EXECUTIVE SUMMARY:
Not applicable.
The purpose of this report is to update Council on the amendments to Fee By-Law 2002-276 with fees outlined in Attachment ‘A’ effective October 1, 2010 and seek the approval.
In a report on Process and Status of the Waterworks Service Fees, dated January 29 2010, staff suggested that it will review the service fees in 2010 and recommend necessary updates to ensure equitable and fair recovery of Waterworks service cost. Staff also indicated that it will continue to gauge and monitor customer satisfaction for paid Waterworks services.
The Town of Markham follows the “User Pay” principle to recover the cost of providing Waterworks services and resources from the actual users of the service. The fees were last amended in 2008 using 2007 costs. It is proposed, the labour component of Waterworks service fees be updated by an approximate increase of 11% to reflect non meter related increases over the last three years. Additional increases in overhead costs, as compared to 2007, are also reflected in the proposed fees.
The water rate used in the setting of fees is based on the applicable rate at the time fees were approved. Staff recommends that the volumetric rate component of fees be adjusted to coincide with new water rates upon approval. This will ensure the recovery of costs related to water purchases and eliminate water revenue loss from deferred fees updates.
The 5-year guaranteed fixed price contract with Neptune Technology Group expired on July 31, 2009. The contract covers water meter supply, installation, replacement and maintenance services. On December 15, 2009, Council approved a 2-year extension of contract until October 31, 2011. The associated 4.8% increase over the 2004-2009 contractual pricing is included in the proposed fees update.
Automatic Meter Reading (AMR)
Waterworks is considering implementing an AMR system to automatically collect water consumption data that is currently outsourced. AMR uses Advanced Metering Infrastructure (AMI), a fixed network system to allow remote data management.
Since AMR/AMI implementation would entail substantial cost to the Town, Waterworks proposes that the AMR/AMI components of meter costs be included in charges for new development through site plan and subdivision agreements, so this funding and cost-recovery opportunity is not lost. The AMR/AMI components for typical meter sizes (5/8” to 1-1/2”) is approximately $200.00 per meter (E-Coder & MIU $140.00 and Head-end - Software & Hardware cost $60.00).
Customer Satisfaction
In support of the Town’s NQI – Progressive Excellence Program and continuous improvement, Waterworks expanded its survey mechanism to include fee based services. With a rating scale of 1 to 5 (1 for not satisfied at all and 5 extremely satisfied), “Water Turn Off/On” service resulted in overall satisfaction of 4.28 (very satisfied) rating. The survey had a 32 per cent response ratio. There were four complainants who felt that no fees should be charged for the service.
Based on the increase, additional revenue of approximately $73K ($292K annualized) will be generated in 2010. The anticipated revenue increase will be considered in the 2011 Waterworks Budget.
Not applicable.
The AMR/AMI initiative is aligned with the National Quality Institute’s “Excellence Principles” and strongly supports several corporate goals including Green Print and Technology Enabling Plan. The fees amendment in general supports the Town’s Growth Management Strategy as it allows for the funding and recovery of growing customer service needs without compromising infrastructure integrity, operational efficiency, water quality and regulatory compliant operation of the water distribution and wastewater collection systems.
BUSINESS UNITS CONSULTED AND AFFECTED:
· Financial Services – providing access to Cayenta Utilities for invoicing, collection of receivables, and financial reporting.
· Contact Centre – providing customer contact support and revenue collection.
RECOMMENDED
BY: ________________________ ________________________
Jerry Klaus Peter Loukes, P. Eng.
General Manager, Waterworks Director, Operations Department
________________________
Brenda Librecz
Commissioner, Community and Fire Services
Attachment A – Waterworks Service Fees