An overview of Regina's Utilities

Here's a summary of how Regina's utility rate system works. A great deal of thanks is owed to city staff who helped me compile this information. 

Utility rates, and water rates specifically, was one of the most important issue I encountered on the doorstep during the campaign. In fact, my first policy platform focused on water. You can see my position here. Water is expensive in our city, and much of this has to do with our aging infrastructure and the cost of maintaining the Buffalo Pound Water Treatment Facility. Still, as I said during the election: "It's time for the City of Regina to relook at how we do water rates." And we are. The City is set to review the utility rate structure this year. For me the biggest concern is that rate increases hurt low income residents the most. That's why I've spent the last few weeks working with staff to compile information that outlines what you are paying for in your utility bill. 

Regina’s Water Utility operates on a full-cost recovery basis as per City Council’s policy expectation.  It includes water, waste water and drainage.  Paramount in the operation of our water utility are safe drinking water, reliable service and long term sustainability.  All revenue collected through the City’s utility bills is used to pay for all the costs of delivering the service on a daily basis and for building and maintaining the infrastructure required. This infrastructure work is a major capital investment that has required annual rate increases above the rate of inflation for the last ten years. The planned capital investment for 2017 is $66 million.  This Utility rate strategy will be reviewed in the near future. Input from Regina residents, like yourself, will be important during this review.

In the setting of rates, the Utility presents a balanced budget. Within that budget is included a transfer to the utility reserve to cover capital projects/infrastructure requirements for the next 25 years as well as emergency funds. The 25 year model is built on the existing one year budget and five year capital plan as a starting point. From there based on assumptions around growth, CPI, capital investments, and a long list of other assumptions.

In the event that the Utility incurs an operating deficit in a given year, the deficit would also be funded from the reserve.

The Utility Operating Expenses include an access fee, which is a transfer to the City’s General Operating Fund.  Any organization or utility operating in a municipality would be required to pay either property taxes or an access fee for the rights to use or access civic assets.  Policies on these types of fees vary between cities. Calgary’s Utility pays 10% of revenue plus a 10% return on equity.  Saskatoon’s Utility pays a franchise fee based on 10% of revenue. Winnipeg’s is also 10% with dividends paid.  Moose Jaw’s rate is 5% of revenue. Regina’s transfer is the total of:  

  • 7.5% of the previous year’s budgeted revenues for billed water consumption, wastewater charges and drainage infrastructure levy
  • The amount of $675,000, estimated to be three-sevenths of the Goods and Services Tax (GST) rebate received by the Utility – this amount is the additional rebate provided by the federal government starting in 2004. For 2017, these amounts total $9.9 million.

The Utility Operating Expenses also include a Utility Administration Charge, which is an approximate measure of ongoing corporate administration costs attributable to the Utility.  It is calculated as 5% of the budgeted utility revenues for the previous year.  All corporate functions, including City Council, Committees, City Manager, CFO, Corporate Services, Human Resources, City Solicitor, City Clerk are involved in activities related to the Water and Waste Water Utility.  There are also allocations that occurs between departments for work that can be attributed to the Utility.  These are shared costs where the items are budgeted in the operating fund and then a portion is allocated to the utility fund and, as these vary from year to year. The total charge for 2017 for the Utility Administration Charge is $6.3 million.

Do utility rates function as a "backdoor tax"?

I think the “backdoor tax” that comes up is referring to the Access Fee that the General Fund charges the Utility fund. Because Utility Operations is using land that the city could otherwise collect tax on the utility fund has a Payment in Lieu of Taxes or Access Fee in its budget. For 2017 that Access Fee is $9.1 million. This is in addition to the $6.2 million Administrative Fee that covers corporate costs to support Utility Operations.

Utility rate increases and rates across comparator cities

 
Regina
Calgary
Edmonton
Saskatoon
Winnipeg
2012
1350.54
1261.51
1489.68
908.74
1318.65
 
 
 
 
 
 
2013
1470.01
1354.18
1571.4
883.12
1365.65
 
9%
7%
5%
-3%
4%
2014
1589.49
1474.88
1671.99
980.12
1416.3
 
8%
9%
6%
11%
4%
2015
1716.21
1609.41
1908.4
874.04
1342.8
 
8%
9%
14%
-11%
-5%
2016
1805.07
1755.48
1805.43
1202.18
1600.45
 
5%
9%
-5%
38%
19%