This is the exact embedded text of the captured official document.
Snapshot 5eddd68ffc47 · verified 2026-10-28 ·
original document ·
archived snapshot ·
unofficial consolidation, the official version is held by the municipal clerk.
Watson & Associates Economists Ltd.
905-272-3600
October 15, 2024
[email protected]
Water and Wastewater Rate Study
Municipality of Chatham-Kent Public Utilities
Commission
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table of Contents
Page
Executive Summary ....................................................................................................... i
1.
Introduction ...................................................................................................... 1-1
1.1
Background ............................................................................................. 1-1
1.2
Study Process ......................................................................................... 1-2
1.3
Regulatory Changes in Ontario ............................................................... 1-2
1.4
Sustainable Water and Sewage Systems Act ......................................... 1-3
1.5
Financial Plans Regulation ..................................................................... 1-5
1.6
Water Opportunities Act, 2010 ................................................................ 1-7
1.7
Infrastructure for Jobs and Prosperity Act, 2015 (I.J.P.A.) ...................... 1-8
1.8
Forecast Growth and Servicing Requirements ..................................... 1-10
2.
Capital Infrastructure Needs ........................................................................... 2-1
2.1
Capital Forecast ...................................................................................... 2-1
3.
Lifecycle Costing ............................................................................................. 3-1
3.1
Overview of Lifecycle Costing ................................................................. 3-1
3.1.1
Definition .................................................................................... 3-1
3.1.2
Financing Costs ......................................................................... 3-1
3.1.3
Costing Methods ........................................................................ 3-4
3.2
Impact on Budgets .................................................................................. 3-6
4.
Capital Cost Financing Options ..................................................................... 4-1
4.1
Summary of Capital Cost Financing Alternatives .................................... 4-1
4.2
Development Charges Act, 1997 ............................................................ 4-2
4.3
Municipal Act .......................................................................................... 4-4
4.4
Grant Funding Availability ....................................................................... 4-6
4.5
Existing Reserves/Reserve Funds .......................................................... 4-8
4.6
Debenture Financing............................................................................... 4-9
4.7
Infrastructure Ontario .............................................................................. 4-9
4.8
Recommended Capital Financing Approach ......................................... 4-11
Table of Contents (Cont'd)
Page
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
5.
Overview of Expenditures and Revenues ..................................................... 5-1
5.1
Water Operating Expenditures ................................................................ 5-1
5.2
Water Operating Revenues .................................................................... 5-1
5.3
Wastewater Operating Expenditures ...................................................... 5-3
5.4
Wastewater Operating Revenues ........................................................... 5-3
6.
Pricing Structures ........................................................................................... 6-1
6.1
Introduction ............................................................................................. 6-1
6.2
Alternative Pricing Structures .................................................................. 6-2
6.3
Assessment of Alternative Pricing Structures ......................................... 6-4
6.4
Rate Structures in Ontario ...................................................................... 6-9
6.5
Recommended Rate Structures and Base Charges ............................. 6-10
7.
Analysis of Water and Wastewater Rates and Policy Matters ..................... 7-2
7.1
Introduction ............................................................................................. 7-2
7.2
Water Rates ............................................................................................ 7-2
7.3
Wastewater Rates .................................................................................. 7-3
8.
Recommendations .......................................................................................... 8-1
Appendix A Detailed Water Rate Calculations ...................................................... A-1
Appendix B Detailed Wastewater Rate Calculations ............................................ B-1
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
List of Acronyms and Abbreviations
Acronym
Full Description of Acronym
A.M.O.
Association of Municipalities of Ontario
C.W.W.F.
Clean Water and Wastewater Fund
D.C.A.
Development Charges Act, 1997
F.I.R.
Financial Information Return
H.E.W.S.F.
Housing-Enabling Water Systems Fund
I.J.P.A.
Infrastructure for Jobs and Prosperity Act, 2015
I.O.
Infrastructure Ontario
M.O.E.
Ministry of Environment
O.C.I.F.
Ontario Community Infrastructure Fund
OLT
Ontario Land Tribunal
O. Reg.
Ontario Regulation
O.S.I.F.A.
Ontario Strategic Infrastructure Financing Authority
P.S.A.B.
Public Sector Accounting Board
P.T.I.F.
Public Transit Infrastructure Fund
S.W.S.S.A.
Sustainable Water and Sewage Systems Act, 2002
Executive Summary
Watson & Associates Economists Ltd.
PAGE i
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Executive Summary
The Municipality of Chatham-Kent Public Utilities Commission (P.U.C.) retained Watson
& Associates Economists Ltd. (Watson) to undertake a water and wastewater rate
study. This study aims to provide an analysis of current capital and operating forecasts,
costing for lifecycle cost requirements, current volumes and customer profiles. The
results of this analysis provide updated water and wastewater base charges and volume
rates for customers within the Municipality. The rate analysis contained herein provides
fiscally responsible practices that are in line with current provincial legislation at a level
of rate increases that are reasonable.
The analysis presented herein provides the following:
- The 2025 to 2034 capital spending program for water and wastewater is $870.17
million and $305.53 million (inflated), respectively;
- Reserve transfers for both water and wastewater have been provided over the
forecast period to meet the asset management needs beyond 2034;
- The operating expenditures (for water and wastewater) presented herein have
been adjusted to recognize inflation, which is assumed to be an average of 4%
per year over the forecast period.
- The present rate structure of a base monthly charge (urban vs. rural) and 2-Step
declining block volume rate (Step 1 is < 67m3 per day and Step 2 is the balance)
is continued. ;
- The Municipality currently has 39,057 water customers and 30,990 wastewater
customers. 2,486 new water and wastewater customers are assumed to be
added over 2034 forecast period.
To meet these expenditure requirements, the following rate increases to water and
wastewater are suggested:
- The water and wastewater base charges are calculated to increase at 4% per
year. For rural water customers, their base charges are calculated to equal an
additional $1.00 to $5.00 to the urban base charges, depending on meter sizes
- The water and wastewater Step 1 volume rates are calculated to initially increase
by 15% per year for 2025 to 2027, then by 10% per year from 2028 to 2030, and
5% per year for the remainder of the forecast period.
Watson & Associates Economists Ltd.
PAGE ii
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- The water and wastewater Step 2 volume rates are proposed to be discounted
by $0.40 of the Step 1 volume rate over the forecast period.
Based on the above, the combined water/wastewater bill will increase by an average of
7% annually over the 2025 to 2034 forecast period. This represents an average annual
increase of $112 on the combined water and wastewater bill (based on 188 cubic
metres of usage and a ¾" meter.)
Tables ES-1, ES-2, and ES-3 summarizes the recommended water and wastewater
rates and average annual bill, respectively, (assuming an annual volume of 188 cubic
metres) based on the analysis provided herein over the forecast period.
Tables ES-4 and ES-5 provides the combined water and wastewater bills.
Watson & Associates Economists Ltd.
PAGE iii
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table ES-1
Municipality of Chatham-Kent P.U.C.
Water Rate Summary for Urban Customers - Based on a ¾" Meter and Annual Volume of 188 cubic metres
Table ES-2
Municipality of Chatham-Kent P.U.C.
Water Rate Summary for Rural Customers - Based on a ¾" Meter and Annual Volume of 188 cubic metres
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$28.14
$29.27
$30.44
$31.65
$32.92
$34.24
$35.61
$37.03
$38.51
$40.05
$41.65
Step 1 Rate
$1.42
$1.63
$1.88
$2.16
$2.38
$2.61
$2.87
$3.02
$3.17
$3.33
$3.49
Step 2 Rate
$0.87
$1.23
$1.48
$1.76
$1.98
$2.21
$2.47
$2.62
$2.77
$2.93
$3.09
Annual Base Rate Bill
$337.68
$351.19
$365.23
$379.84
$395.04
$410.84
$427.27
$444.36
$462.14
$480.62
$499.85
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$266.96
$307.00
$353.05
$406.01
$446.61
$491.28
$540.40
$567.42
$595.79
$625.58
$656.86
Total Annual Bill
$604.64
$658.19
$718.29
$785.86
$841.65
$902.11
$967.68
$1,011.79
$1,057.93
$1,106.21
$1,156.71
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$29.14
$30.27
$31.44
$32.65
$33.92
$35.24
$36.61
$38.03
$39.51
$41.05
$42.65
Step 1 Rate
$1.42
$1.63
$1.88
$2.16
$2.38
$2.61
$2.87
$3.02
$3.17
$3.33
$3.49
Step 2 Rate
$0.87
$1.23
$1.48
$1.76
$1.98
$2.21
$2.47
$2.62
$2.77
$2.93
$3.09
Annual Base Rate Bill
$349.68
$363.19
$377.23
$391.84
$407.04
$422.84
$439.27
$456.36
$474.14
$492.62
$511.85
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$266.96
$307.00
$353.05
$406.01
$446.61
$491.28
$540.40
$567.42
$595.79
$625.58
$656.86
Total Annual Bill
$616.64
$670.19
$730.29
$797.86
$853.65
$914.11
$979.68
$1,023.79
$1,069.93
$1,118.21
$1,168.71
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Watson & Associates Economists Ltd.
PAGE iv
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table ES-3
Municipality of Chatham-Kent P.U.C.
Wastewater Rate Summary
Customer Bill - Based on a ¾" Meter and Annual Volume of 188 cubic metres
Table ES-4
Municipality of Chatham-Kent P.U.C.
Water and Wastewater Rate Summary - Urban
Total Combined Customer Bill - Based on a ¾" Meter and Annual Volume of 188 cubic metres
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$29.76
$30.95
$32.19
$33.48
$34.81
$36.21
$37.66
$39.16
$40.73
$42.36
$44.05
Step 1 Rate
$1.45
$1.67
$1.92
$2.21
$2.43
$2.67
$2.94
$3.08
$3.24
$3.40
$3.57
Step 2 Rate
$0.86
$1.27
$1.52
$1.81
$2.03
$2.27
$2.54
$2.68
$2.84
$3.00
$3.17
Annual Base Rate Bill
$357.12
$371.40
$386.26
$401.71
$417.78
$434.49
$451.87
$469.95
$488.74
$508.29
$528.62
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$272.60
$313.49
$360.51
$414.59
$456.05
$501.65
$551.82
$579.41
$608.38
$638.80
$670.74
Total Annual Bill
$629.72
$684.89
$746.77
$816.30
$873.83
$936.15
$1,003.69
$1,049.36
$1,097.12
$1,147.09
$1,199.37
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Annual Base Rate Bill
$694.80
$722.59
$751.50
$781.56
$812.82
$845.33
$879.14
$914.31
$950.88
$988.92
$1,028.47
Annual Volume Bill
$539.56
$620.49
$713.57
$820.60
$902.66
$992.93
$1,092.22
$1,146.83
$1,204.18
$1,264.38
$1,327.60
Total Annual Bill
$1,234.36
$1,343.09
$1,465.06
$1,602.16
$1,715.48
$1,838.26
$1,971.37
$2,061.14
$2,155.06
$2,253.30
$2,356.08
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Watson & Associates Economists Ltd.
PAGE v
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table ES-5
Municipality of Chatham-Kent P.U.C.
Water and Wastewater Rate Summary - Rural
Total Combined Customer Bill - Based on a ¾" Meter and Annual Volume of 188 cubic metres
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Annual Base Rate Bill
$706.80
$734.59
$763.50
$793.56
$824.82
$857.33
$891.14
$926.31
$962.88
$1,000.92
$1,040.47
Annual Volume Bill
$539.56
$620.49
$713.57
$820.60
$902.66
$992.93
$1,092.22
$1,146.83
$1,204.18
$1,264.38
$1,327.60
Total Annual Bill
$1,246.36
$1,355.09
$1,477.06
$1,614.16
$1,727.48
$1,850.26
$1,983.37
$2,073.14
$2,167.06
$2,265.30
$2,368.08
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Report
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 1
Introduction
Watson & Associates Economists Ltd.
PAGE 1-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
1. Introduction
1.1 Background
The Municipality of Chatham-Kent Public Utilities Commission (P.U.C.) provides water
and wastewater services to customers located in Chatham-Kent, Southwest Middlesex,
Municipality of Lakeshore, and the Municipality of Leamington. Of these areas, there
are some customers that receive servicing from external purchased water originating
from the Tri-County Water Supply System, through the connection from the Municipality
of Southwest Middlesex.
Currently, there are 39,057 water customers and 30,990 wastewater customers within
the Municipality. These users are billed a fixed monthly charge (separated by urban vs.
rural) as well as a 2-Step decreasing volume rate based on their water consumption.
Revenues received from the charges directly fund the capital and operating budgets.
Table 1-1 provides the existing rates currently in effect.
Table 1-1
Municipality of Chatham-Kent P.U.C.
Water and Wastewater Rates - 2024
Since the Walkerton crisis, the Province has continued to make legislative changes for
municipal water and wastewater systems. Noted below are the historical changes along
with pending legislation anticipated to be implemented in the future. Watson &
Associates Economists Ltd. (Watson) was retained by the P.U.C. to assist in addressing
¾"
28.14
¾"
29.14
¾"
29.76
1"
32.08
1"
33.33
1"
34.24
1 ¼"
47.00
1 ¼"
48.00
1 ¼"
38.10
1 ½"
66.70
1 ½"
68.20
1 ½"
44.95
2"
87.24
2"
88.74
2"
64.01
3"
147.46
3"
149.46
3"
74.13
4"
186.60
4"
188.10
4"
95.56
6"
277.49
6"
282.49
6"
134.04
8"
415.97
8"
420.47
8"
161.33
Decreasing
Decreasing
Decreasing
1.420
$
Step 1 (<67 m3 per day)
1.420
$
Step 1 (<67 m3 per day)
1.450
$
Step 1 (<67 m3 per day)
0.870
$
Step 2 (Balance)
0.870
$
Step 2 (Balance)
0.860
$
Step 2 (Balance)
2024 - Water Billing Rates - Urban
2024 - Wastewater Billing Rates - Urban
Volume Charge
Base Charge
Base Charge
Volume Charge
2024 - Water Billing Rates - Rural
Base Charge
Volume Charge
Watson & Associates Economists Ltd.
PAGE 1-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
these changes in a proactive manner as they relate to the water and wastewater
systems. The assessment provided herein addresses changes recommended to the
water and wastewater rates based on the most current information and forecasts the
implications over the forecast period.
1.2 Study Process
The objectives of the study and the steps involved in carrying out this assignment are
summarized below:
- Identify all current and future water and wastewater system capital needs to
assess the immediate and longer-term implications;
- Identify potential methods of cost recovery from the capital needs listing. These
recovery methods may include other statutory authorities (e.g. Development
Charges Act, 1997 (D.C.A.), Municipal Act, etc.) as an offset to recovery through
the water and wastewater rates;
- Identify existing operating costs by component and estimate future operating
costs over the next ten years. This assessment identifies fixed and variable
costs in order to project those costs sensitive to changes to the existing
infrastructure inventory, as well as costs which may increase commensurate with
growth; and
- Provide staff and Commission/Council the findings to assist in gaining approval
of the rates for 2025 and future years.
1.3 Regulatory Changes in Ontario
Resulting from the water crisis in Walkerton, significant regulatory changes have been
made in Ontario. These changes arise as a result of the Walkerton Commission and
the 93 recommendations made by the Walkerton Inquiry Part II report. Areas of
recommendation include:
- watershed management and source protection;
- quality management;
- preventative maintenance;
- research and development;
- new performance standards;
Watson & Associates Economists Ltd.
PAGE 1-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- sustainable asset management; and
- lifecycle costing.
The legislation which would have most impacted municipal water and wastewater rates
was the Sustainable Water and Sewage Systems Act (S.W.S.S.A.) which would have
required municipalities to implement full cost pricing. The legislation was enacted in
2002, however, it had not been implemented pending the approval of its regulations.
The Act was repealed as of January 1, 2013. It is expected that the provisions of the
Water Opportunities Act will implement the fundamental requirements of S.W.S.S.A.
Furthermore, on December 27, 2017, O. Reg. 588/17 was released under the
Infrastructure for Jobs and Prosperity Act, 2015 (I.J.P.A.), which outlines the
requirements for asset management for municipalities. The results of the asset
management review under this Act will need to be considered in light of the recent
investments undertaken by the Municipality and the capital spending plan provided
herein. The following sections describe these various resulting changes.
1.4 Sustainable Water and Sewage Systems Act
As noted earlier, the S.W.S.S.A. was passed on December 13, 2002. The intent of the
Act was to introduce the requirement for municipalities to undertake an assessment of
the "full cost" of providing their water and wastewater services. It is noted, however,
that this Act has been repealed. To provide broader context and understanding to other
legislation discussed herein, a description of the Act is provided below.
Full costs for water service was defined in subsection 3(7) of the Act and included
"...source protection costs, operating costs, financing costs, renewal and replacement
costs and improvement costs associated with extracting, treating or distributing water to
the public and such other costs which may be specified by regulation." Similar
provisions were made for wastewater services in subsection 4(7) with respect to
"...collecting, treating or discharging waste water."
The Act would have required the preparation of two reports for submission to the
Ministry of the Environment (or such other member of the Executive Council as may be
assigned the administration of this Act under the Executive Council Act). The first report
was on the "full cost of services" and the second was the "cost recovery plan." Once
these reports were reviewed and approved by the Ministry, the municipality would have
been required to implement the plans within a specified time period.
Watson & Associates Economists Ltd.
PAGE 1-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
In regard to the full cost of services report, the municipality (deemed a regulated entity
under the Act) would prepare and approve a report concerning the provision of water
and sewage services. This report was to include an inventory of the infrastructure, a
management plan providing for the long-term integrity of the systems, and would
address the full cost of providing the services (other matters may be specified by the
regulations) along with the revenue obtained to provide them. A professional engineer
would certify the inventory and management plan portion of the report. The
municipality's auditor would be required to provide a written opinion on the report. The
report was to be approved by the municipality and then be forwarded to the Ministry
along with the engineer's certification and the auditor's opinion. The regulations would
stipulate the timing for this report.
The second report was referred to as a cost recovery plan and would address how the
municipality intended to pay for the full costs of providing the service. The regulations
were to specify limitations on what sources of revenue the municipality may use. The
regulations may have also provided limits as to the level of increases any customer or
class of customer may experience over any period of time. Provision was made for the
municipality to implement increases above these limits; however, ministerial approval
would be required first. Similar to the first report, the municipal auditor would provide a
written opinion on the report prior to Council's adoption, and this opinion must
accompany the report when submitted to the Province.
The Act provided the Minister the power to approve or not approve the plans. If the
Minister was not satisfied with the report or if a municipality did not submit a plan, the
Minister may have a plan prepared. The cost to the Crown for preparing the plan would
be recovered from the municipality. As well, the Minister may direct two or more
regulated municipalities to prepare a joint plan. This joint plan may be directed at the
onset or be directed by the Minister after receiving the individual plans from the
municipalities.
The Minister also had the power to order a municipality to generate revenue from a
specific revenue source or in a specified manner. The Minister may have also ordered
a regulated entity to do or refrain from doing such things as the Minister considered
advisable to ensure that the entity pays the full cost of providing the services to the
public.
Watson & Associates Economists Ltd.
PAGE 1-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Once the plans were approved and in place, the municipality would be required to
submit progress reports. The timing of these reports and the information to be
contained therein would be established by the regulations. A municipal auditor's
opinion must be provided with the progress report. Municipalities would also revise the
plans if they deem the estimate does not reflect the full cost of providing the services, as
a result of a change in circumstances, regulatory or other changes that affect their plan,
etc. The municipality would then revise its prior plan, provide an auditor's opinion, and
submit the plan to the Minister.
1.5 Financial Plans Regulation
On August 16, 2007, the M.O.E. passed O. Reg 453/07 which requires the preparation
of financial plans for water (and wastewater) systems. The M.O.E. has also provided a
Financial Plan Guidance Document to assist in preparing the plans. A brief summary of
the key elements of the regulation is provided below:
- The financial plan will represent one of the key elements for the municipality to
obtain its Drinking Water Licence;
- The financial plans shall be for a period of at least six years, but longer planning
horizons are encouraged;
- As the regulation is under the Safe Drinking Water Act, 2002, the preparation of
the plan is mandatory for water and encouraged for wastewater;
- The plan is considered a living document (i.e. will be updated as annual budgets
are prepared) but will need to be undertaken, at a minimum, every five years;
- The plans generally require the forecasting of capital, operating and reserve fund
positions, providing detailed inventories, forecasting future users and volume
usage and corresponding calculation of rates. In addition, P.S.A.B. information
on the system must be provided for each year of the forecast (i.e. total non-
financial assets, tangible capital asset acquisitions, tangible capital asset
construction, betterments, write-downs, disposals, total liabilities and net debt);
- The financial plans must be made available to the public (at no charge) upon
request and be available on the municipality's website. The availability of this
information must also be advertised; and
- The financial plans are to be approved by Resolution of the Council or governing
body indicating that the drinking water system is financially viable.
Watson & Associates Economists Ltd.
PAGE 1-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
In general, the financial principles of the draft regulations follow the intent of S.W.S.S.A.
to move municipalities towards financial sustainability. Many of the prescriptive
requirements, however, have been removed (e.g. preparation of two separate
documents for provincial approval, auditor opinions, engineer certifications, etc.).
A Guideline ("Towards Financially Sustainable Drinking Shores - Water and
Wastewater Systems") had been developed to assist municipalities in understanding the
Province's direction and provided a detailed discussion on possible approaches to
sustainability. The Province's Principles of Financially Sustainable Water and
Wastewater Services are provided below:
Principle #1: Ongoing public engagement and transparency can build support for, and
confidence in, financial plans and the system(s) to which they relate.
Principle #2: An integrated approach to planning among water, wastewater, and
stormwater systems is desirable given the inherent relationship among
these services.
Principle #3: Revenues collected for the provision of water and wastewater services
should ultimately be used to meet the needs of those services.
Principle #4: Lifecycle planning with mid-course corrections is preferable to planning
over the short term, or not planning at all.
Principle #5: An asset management plan is a key input to the development of a financial
plan.
Principle #6: A sustainable level of revenue allows for reliable service that meets or
exceeds environmental protection standards, while providing sufficient
resources for future rehabilitation and replacement needs.
Principle #7: Ensuring users pay for the services they are provided leads to equitable
outcomes and can improve conservation. In general, metering and the
use of rates can help ensure users pay for services received.
Principle #8: Financial plans are "living" documents that require continuous
improvement. Comparing the accuracy of financial projections with actual
results can lead to improved planning in the future.
Watson & Associates Economists Ltd.
PAGE 1-7
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Principle #9: Financial plans benefit from the close collaboration of various groups,
including engineers, accountants, auditors, utility staff, and municipal
Council.
1.6 Water Opportunities Act, 2010
As noted earlier, since the passage of the Safe Drinking Water Act, 2002, continuing
changes and refinements to the legislation have been introduced. Some of these Bills
have found their way into law, while others have not been approved. Bill 72, the Water
Opportunities Act, 2010, was introduced into legislation on May 18, 2010 and received
Royal Assent on November 29, 2010.
The Act provides for the following elements:
- The fostering of innovative water, wastewater and stormwater technologies,
services and practices in the private and public sectors;
- Preparation of water conservation plans to achieve water conservation targets
established by the regulations; and
- Preparation of sustainability plans for municipal water services, municipal
wastewater services and municipal stormwater services.
With regard to the sustainability plans:
- The Act extends from the water financial plans and requires a more detailed
review of the water financial plan and requires a full plan for wastewater and
stormwater services; and
- Regulations will provide performance targets for each service - these targets
may vary based on the jurisdiction of the regulated entity or the class of entity.
The financial plan shall include:
- An asset management plan for the physical infrastructure;
- A financial plan;
- For water, a water conservation plan;
- An assessment of risks that may interfere with the future delivery of the municipal
service, including, if required by the regulations, the risks posed by climate
change and a plan to deal with those risks; and
Watson & Associates Economists Ltd.
PAGE 1-8
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- Strategies for maintaining and improving the municipal service, including
strategies to ensure the municipal service can satisfy future demand, consider
technologies, services and practices that promote the efficient use of water and
reduce negative impacts on Ontario's water resources, and increase co-
operation with other municipal service providers.
Performance indicators will be established by service, with the following considerations:
- May relate to the financing, operation or maintenance of a municipal service or to
any other matter in respect of what information may be required to be included in
a plan;
- May be different for different municipal service providers or for municipal services
in different areas of the Province.
Regulations will prescribe:
- Timing;
- Contents of the plans;
- Which identified portions of the plan will require certification;
- Public consultation process; and
- Limitations, updates, refinements, etc.
As noted earlier, it is expected that this Act will implement the principles of the
S.W.S.S.A. once all regulations are put in place.
1.7 Infrastructure for Jobs and Prosperity Act, 2015 (I.J.P.A.)
On June 4, 2015, the Province of Ontario passed the I.J.P.A. which, over time, will
require municipalities to undertake and implement asset management plans for all
infrastructure they own. On December 27, 2017, the Province released Ontario
Regulation 588/17 under the I.J.P.A. which has three phases that municipalities must
meet:
Watson & Associates Economists Ltd.
PAGE 1-9
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Figure 1-1
Legislative Timelines set out by the Infrastructure for Jobs and Prosperity Act
Legislation related to Asset Management Plans
Note: on March 15, 2021, the Province filed Regulation 193/21 to extend all of the
timelines of Regulation 588/17 by one year (reflected in the table above).
Every municipality in Ontario was to have prepared a strategic asset management
policy by July 1, 2019. Municipalities will be required to review their strategic asset
management policies at least every five years and make updates as necessary. The
subsequent phases are as follows:
- Phase 1 - Asset Management Plan (by July 1, 2022):
o For core assets, municipalities must have the following:
- Inventory of assets;
- Current levels of service measured by standard metrics; and
- Costs to maintain levels of service.
- Phase 2 - Asset Management Plan (by July 1, 2024):
o Same steps as Phase 1 but for all assets.
- Phase 3 - Asset Management Plan (by July 1, 2025):
o Builds on Phase 1 and 2 by adding:
- Proposed levels of service; and
- Lifecycle management and financial strategy.
In relation to water and wastewater (which is considered a core asset), municipalities
were to have an asset management plan that addresses the related infrastructure by
July 1, 2022 (Phase 1). O. Reg. 588/17 specifies that the municipality's asset
management plan must include the following for each asset category:
1-Jan-18
1-Jul-19
1-Jul-20
1-Jul-21
1-Jul-22
1-Jul-23
1-Jul-24
1-Jul-25
Strategic Asset Management Policy
Asset Management Plans - Current Levels of Service
Asset Management Plans - Proposed Levels of Service
Deadline for completion
Update
- Current levels of service
- Asset (inventory) analysis
- Current performance of assets
- Lifecycle activities and costs to maintain current levels of service
- Impacts of growth on current levels of service
- Proposed levels of service
- Proposed performance of assets
- Lifecycle activities and costs to achieve proposed levels of service
- Financial strategy
- Impacts of growth on proposed levels of service
Core municipal
infrastructure assets
All municipal
infrastructure assets
Watson & Associates Economists Ltd.
PAGE 1-10
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- The current levels of service being provided, determined in accordance with the
following qualitative descriptions and technical metrics and based on data from at
most the two calendar years prior to the year in which all information required
under this section is included in the asset management plan;
- The current performance of each asset category, including:
o a summary of the assets in the category;
o the replacement cost of the assets in the category;
o the average age of the assets in the category, determined by assessing
the average age of the components of the assets;
o the information available on the condition of the assets in the category;
o a description of the municipality's approach to assessing the condition of
the assets in the category, based on recognized and generally accepted
good engineering practices where appropriate; and
- The lifecycle activities that would need to be undertaken to maintain the current
levels of service.
1.8 Forecast Growth and Servicing Requirements
As described earlier in this chapter, the P.U.C. services 39,057 water customers and
30,990 wastewater customers. Information on the existing number of customers and
existing billable volumes was obtained from the P.U.C.
For future water and wastewater customers to be added to the systems, consideration
has been given to the potential new developments identified in the Development
Charges Background Study over the forecast period between 2025 to 2034.
The forecast assumes the addition of 2,4,86 water and wastewater customers over the
forecast period. For operating revenue purposes, it would be undesirable to forecast
too high as it could produce a potential operating deficit should the growth in the water
and wastewater systems not materialize.
Based on historical information, the P.U.C.'s volumes per customer is 188 m3 per year.
For forecasting purposes, the assumed billable volumes per customer will be based on
that figure.
Table 1-2 provides for the forecast of water users and volumes for Chatham-Kent, while
Table 1-3 provides the forecast of wastewater users and volumes.
Watson & Associates Economists Ltd.
PAGE 1-11
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 1-2
Municipality of Chatham-Kent P.U.C.
Water System Forecast
Water Users Forecast
Year
Total Users
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2024
226
113
226
226
226
226
226
226
226
226
226
226
2025
226
113
226
226
226
226
226
226
226
226
226
2026
226
113
226
226
226
226
226
226
226
226
2027
226
113
226
226
226
226
226
226
226
2028
226
113
226
226
226
226
226
226
2029
226
113
226
226
226
226
226
2030
226
113
226
226
226
226
2031
226
113
226
226
226
2032
226
113
226
226
2033
226
113
226
2034
226
113
Total
2,486
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
m3/user
188
188
188
188
188
188
188
188
188
188
188
188
Annual Flow
21,244
63,732
106,220
148,708
191,196
233,684
276,172
318,660
361,148
403,636
446,124
Water Customer Forecast
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing - Urban
32,692
32,692
32,692
32,692
32,692
32,692
32,692
32,692
32,692
32,692
32,692
Existing - Rural
5,450
5,450
5,450
5,450
5,450
5,450
5,450
5,450
5,450
5,450
5,450
Existing - Bulk Water Customers
721
721
721
721
721
721
721
721
721
721
721
Existing - Non-CK Customers
194
194
194
194
194
194
194
194
194
194
194
New - Growth
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Total
39,170
39,396
39,622
39,848
40,074
40,300
40,526
40,752
40,978
41,204
41,430
Water Volume Forecast (m³)
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Step 1 (<67 m3 per day)
Existing
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
9,503,870
New
21,244
63,732
106,220
148,708
191,196
233,684
276,172
318,660
361,148
403,636
446,124
Subtotal Step 1
9,525,114
9,567,602
9,610,090
9,652,578
9,695,066
9,737,554
9,780,042
9,822,530
9,865,018
9,907,506
9,949,994
Step 2 (Balance)
Existing
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
New
-
-
-
-
-
-
-
-
-
-
-
Subtotal Step 2
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
Total
13,166,413
13,208,901
13,251,389
13,293,877
13,336,365
13,378,853
13,421,341
13,463,829
13,506,317
13,548,805
13,591,293
Watson & Associates Economists Ltd.
PAGE 1-12
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 1-3
Municipality of Chatham-Kent P.U.C.
Wastewater System Forecast
Wastewater Users Forecast
Year
Total Users
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2024
226
113
226
226
226
226
226
226
226
226
226
226
2025
226
113
226
226
226
226
226
226
226
226
226
2026
226
113
226
226
226
226
226
226
226
226
2027
226
113
226
226
226
226
226
226
226
2028
226
113
226
226
226
226
226
226
2029
226
113
226
226
226
226
226
2030
226
113
226
226
226
226
2031
226
113
226
226
226
2032
226
113
226
226
2033
226
113
226
2034
226
113
Total
2,486
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
m3/user
188
188
188
188
188
188
188
188
188
188
188
188
Annual Flow
21,244
63,732
106,220
148,708
191,196
233,684
276,172
318,660
361,148
403,636
446,124
Wastewater Customer Forecast
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
New - Growth
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Total
31,103
31,329
31,555
31,781
32,007
32,233
32,459
32,685
32,911
33,137
33,363
Wastewater Flows Forecast (m³)
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Block 1
Existing
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
7,236,377
New
21,244
63,732
106,220
148,708
191,196
233,684
276,172
318,660
361,148
403,636
446,124
Subtotal Step 1
7,257,621
7,300,109
7,342,597
7,385,085
7,427,573
7,470,061
7,512,549
7,555,037
7,597,525
7,640,013
7,682,501
Block 2
Existing
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
New
-
-
-
-
-
-
-
-
-
-
-
Subtotal Step 2
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
Total
9,442,488
9,484,976
9,527,464
9,569,952
9,612,440
9,654,928
9,697,416
9,739,904
9,782,392
9,824,880
9,867,368
Note: Above flows are water flows on which the wastewater billing will be calculated
Watson & Associates Economists Ltd.
PAGE 1-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 2
Capital Infrastructure Needs
Watson & Associates Economists Ltd.
PAGE 2-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
2. Capital Infrastructure Needs
2.1 Capital Forecast
Capital forecasts have been provided for the water and wastewater systems and are
presented in Tables 2-1 and 2-2 (note: the costs are in inflated dollars). The basis for
these forecasts include the P.U.C.'s capital requirements, development charge projects,
as well as other lifecycle-related works. It is noted that the inflation assumption for the
capital program is assumed to be 6% per year.
For water, the capital costs over the forecast period totals $870.17 million. For
wastewater, the capital costs over the forecast period totals $305.53 million.
Watson & Associates Economists Ltd.
PAGE 2-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 2-1
Municipality of Chatham-Kent P.U.C.
2025 to 2034 Water Capital Forecast Summary (Inflated $)
Total
Total
2025-2034
2025-2034
Capital Expenditures
New raw water transmission main.
40,506,000
2028-2030
Raw Water Pumping Station
5,670,000
2032
600mm Treated water transmission main. Refer to Figure 10-
4
39,898,000
2026-2028
11 kms of new 600mm transmission main from existing
Water Treatment Plant Highlift pumping station to the
Southwest area of Chatham Water System (Partial Ring TM).
Refer to Figure 10-1
65,931,000
2032-2034
2.6 km New Charing Cross Road 600mm transmission main.
Refer to Figure 10-5
11,624,000
2031
Increase storage capacity at the existing Chatham Water
Treatment Plant. Refer to Figure 7-4
22,263,000
2025-2027
5.6 km of new 200mm local distribution system Looping.
Refer to Figure 10-6
10,233,000
2030
Increase treatment capacity at the existing Chatham Water
Treatment Plant. Refer to Figure 7-1
266,522,000
2027-2029
Increase pumping capacity at the existing South Chatham
Kent Water Treatment Plant Highlift Pumping Station.
1,326,000
2027
Increase pumping capacity at the existing Chatham Water
Treatment Plant Highlift Pumping Station.
3,682,000
2027
New Booster Pumping Station to transfer water supply from
Wheatley WS to Tilbury WS. Refer to Figure 10-7
3,419,000
2030
Conduct condition assessment for existing raw water
transmission main.
1,060,000
2025
New local booster pumping station for east of Wheatley WS.
Refer to Figure 10-7
3,494,000
2034
300mm watermain from Thamesville Elevated Tank to Zone 6
Rd. Refer to Figure 10-2
11,476,000
2032
Decommissioning of Tilbury inground reservoir and pumping
station.
3,228,000
2032
Zone 6 Road to Delaware Nation 200mm watermain Refer to
Figure 10-2
1,943,000
2033
Various Investigative Studies
897,000
2025-2029
New Booster Pump Station at the Northeast corner of Zone 5
Road and Baseline. Refer to Figure 10-2
507,000
2033
Preventative Maintenance of the Composite Elevated Tanks,
Stand Pipes and Spheroid Tanks, and their replacement.
27,943,000
2025-2034
New 300mm watermain from Zone 6 Rd and Baseline to
Bothwell. Refer to Figure 10-2
17,407,000
2034
Rate Study and Financial Plan (split with water and
wastewater)
63,000
2029-2034
Replace the Thamesville Standpipe with a 2.3ML Standpipe.
Refer to Figure 10-2
7,093,000
2030
Wheatley WTP Rehabilitation
4,770,000
2025
300mm Integration Transmission Main for Blenheim and
Ridgetown. Refer to Figure 10-3
31,761,000
2028-2029
Decommissioning - Dealtown WTP
947,000
2028
Retrofitting existing water treatment plant as pumping station
for Ridgetown.
6,401,000
2028
Decommissioning - Dresden WTP
893,000
2027
Replacement / Rehabilitation of the existing Ridgetown
Elevated Tank.
11,910,000
2027
Ridgetown S2 & C2 Well pump and adapter
636,000
2025
New Water Treatment Plant for Wallaceburg-Dresden
Integrated Water System.
78,616,000
2028-2030
600mm Transmission Main Eberts-KBR - phase 1 for NE
WDS
13,227,000
2026
New storage reservoir (56ML).
71,196,000
2028-2030
Annual Watermain Lifecycle Replacement
85,500,000
2025-2034
New intake and lowlift pumping station for new Wallaceburg
Water Treatment Plant.
18,132,000
2028-2030
Total Capital Expenditures
870,174,000
Description
Years Undertaken
Description
Years
Undertaken
Watson & Associates Economists Ltd.
PAGE 2-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 2-2
Municipality of Chatham-Kent P.U.C.
2025 to 2034 Wastewater Capital Forecast Summary (Inflated $)
Total
2025-2034
Capital Expenditures
Pumping Station Upgrades to Chatham SPS-103 (Campus
Parkway/Grand Ave Area) (Figure 10-12)
· Twin Forcemain to Water Pollution Control Plant
5,955,000
2027
· Long Term Complete Station Upgrade
15,045,000
2026-2027
Pumping station upgrades to Chatham main lift station to
WPCP (Figure 10-13)
· Pumping Upgrades, increasing firm capacity to 800L/s
2,025,000
2027
· Twin 750mm Forcemain Section
1,434,000
2032
Pumping station upgrades to Wallaceburg SPS-405 (Dundas
St/ Thomas Ave Area)
· Upsizing Pumps to 185 L/s Firm Capacity
797,000
2032
Pumping station upgrades to Wallaceburg SPS-402 (Arnold
St / Biden St Area)
· Upsizing Pumps to 140 L/s Firm Capacity
797,000
2032
Pumping station upgrades to Wallaceburg SPS-401 (Bill
McDougall Park)
· Upsizing Pumps to 240 L/s
638,000
2032
Erie Street / Tecumseh Street 600mm (Figure 10-8)
2,550,000
2032
West Street 300mm (Figure 10-8)
760,000
2033
Marlborough Street / Industrial Avenue 525mm (Figure 10-9)
7,163,000
2034
SPS - 602 Pumping Upgrade
638,000
2032
Inflow and Infiltration Reduction Study
318,000
2025
Inflow and Infiltration Study
318,000
2025
Optimizing capacity of the combined sewer trunks /
interceptors
34,930,000
2025-2034
Continuing Sewer Separation Program for Chatham Targeting
largest Downstream Sewers Feeding the Trunk / Interceptor
69,857,000
2025-2034
Rate Study and Financial Plan (split with water and
wastewater)
63,000
2029-2034
Chatham WPCP - Plant#1 Concrete repairs to elevated
walkways- access to gears and scimmers
2,146,000
2028
Lynwood Subdivision PS#14 (formerly 9A)
13,382,000
2029
PS#7 -John Street Chatham - complete rebuild
4,015,000
2029
New South Hub PS - Chatham
44,528,000
2025-2028
S9- Chatham- North Area Intermediate Sewer Servicing,
Pumping Stations, Forcemains
17,469,000
2025-2026
Annual Sewermain Lifecycle Replacement
80,700,000
2025-2034
Total Capital Expenditures
305,528,000
Description
Years Undertaken
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 3
Lifecycle Costing
Watson & Associates Economists Ltd.
PAGE 3-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
3. Lifecycle Costing
3.1 Overview of Lifecycle Costing
3.1.1 Definition
For many years, lifecycle costing has been used in the field of maintenance engineering
and to evaluate the advantages of using alternative materials in construction or
production design. The method has gained wider acceptance and use in the areas of
industrial decision-making and the management of physical assets.
By definition, lifecycle costs are all the costs which are incurred during the lifecycle of a
physical asset, from the time its acquisition is first considered to the time it is taken out
of service for disposal or redeployment. The stages which the asset goes through in its
lifecycle are specification, design, manufacture (or build), install, commission, operate,
maintain and disposal. Figure 3-1 depicts these stages in a schematic form.
3.1.2 Financing Costs
This section will focus on financing mechanisms in place to fund the costs incurred
throughout the asset's life.
In a municipal context, services are provided to benefit tax/rate payers. Acquisition of
assets is normally timed in relation to direct needs within the community. At times,
economies of scale or technical efficiencies will lead to oversizing an asset to
accommodate future growth within the Municipality. Over the past few decades, new
financing techniques such as development charges have been employed based on the
underlying principle of having tax/rate payers who benefit directly from the service
paying for that service. Operating costs which reflect the cost of the service for that
year are charged directly to all existing tax/rate payers who have received the benefit.
Operating costs are normally charged through the tax base or user rates.
Capital expenditures are recouped through several methods, with operating budget
contributions, development charges, reserves, developer contributions and debentures,
being the most common.
Watson & Associates Economists Ltd.
PAGE 3-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Figure 3-1
Lifecycle Costing
Select
or Specify
Purchase
Install
Commission
Operate
Maintain
Monitor
(Throughout Life
of Assets)
(To End of
Useful Life)
Remove
Dispose
User
Cost to User
Investment
Costs
Operating Costs
Maintenance Costs
Monitoring Costs
Disposal
Costs
Life Cycle
Costs
New construction related to growth could produce development charges and developer
contributions (e.g. works internal to a subdivision which are the responsibility of the
developer to construct) to fund a significant portion of projects, where new assets are
Watson & Associates Economists Ltd.
PAGE 3-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
being acquired to allow growth within the Municipality to continue. As well, debentures
could be used to fund such works, with the debt charge carrying costs recouped from
taxpayers in the future.
Capital construction to replace existing infrastructure, however, is largely not growth-
related and will therefore not yield development charges or developer contributions to
assist in financing these works. Hence, a municipality will be dependent upon
debentures, reserves and contributions from the operating budget to fund these works.
Figure 3-2 depicts the costs of an asset from its initial conception through to
replacement and then continues to follow the associated costs through to the next
replacement.
As referred to earlier, growth-related financing methods such as development charges
and developer contributions could be utilized to finance the growth-related component
of the new asset. These revenues are collected (indirectly) from the new homeowner
who benefits directly from the installation of this asset. Other financing methods may be
used as well to finance the non-growth-related component of this project, such as
reserves which have been collected from past tax/rate payers, operating budget
contributions which are collected from existing tax/rate payers and debenturing which
will be carried by future tax/rate payers. Ongoing costs for monitoring, operating and
maintaining the asset will be charged annually to the existing tax/rate payer.
When the asset requires replacement, the sources of financing will be limited to
reserves, debentures and contributions from the operating budget. At this point, the
question is raised: "If the cost of replacement is to be assessed against the tax/rate
payer who benefits from the replacement of the asset, should the past tax/rate payer
pay for this cost or should future rate payers assume this cost?" If the position is taken
that the past user has used up the asset, hence he should pay for the cost of
replacement, then a charge should be assessed annually through the life of the asset,
to have funds available to replace it when the time comes. If the position is taken that
the future tax/rate payer should assume this cost, then debenturing and, possibly, a
contribution from the operating budget should be used to fund this work.
Charging for the cost of using up an asset is the fundamental concept behind
depreciation methods utilized by the private sector. This concept allows for expending
the asset as it is used up in the production process. The tracking of these costs forms
Watson & Associates Economists Ltd.
PAGE 3-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
part of the product's selling price and, hence, end-users are charged for the asset's
depreciation. The same concept can be applied in a municipal setting to charge
existing users for the asset's use and set those funds aside in a reserve to finance the
cost of replacing the asset in the future.
Figure 3-2
Financing Lifecycle Costs
Purchase
Install
Commission
Operate
Maintain
Monitor
(Throughout Life
of Assets)
(To End of
Useful Life)
Removal/Decommission
Disposal
New Assets
Replacement Assets
Development Charges (Growth)
Reserves/Reserve Funds
Debentures
Taxation
User Fees
Grants
Other
Proceeds on Disposal
Funding of Disposal/
Decommissioning Costs
Tax Supported Operating Budget
User Fees Operating Budget
Financing Methods
Purchase
Install
Commission
Operate
Maintain
Monitor
(Throughout Life
of Assets)
(To End of
Useful Life)
Removal/Decommission
Disposal
3.1.3 Costing Methods
There are two fundamental methods of calculating the cost of the usage of an asset and
for the provision of the revenue required when the time comes to retire and replace it.
The first method is the Depreciation Method. This method recognizes the reduction in
the value of the asset through wear and tear and aging. There are two commonly used
Watson & Associates Economists Ltd.
PAGE 3-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
forms of depreciation: the straight-line method and the reducing balance method
(shown graphically in Figure 3-3).
The straight-line method is calculated by taking the original cost of the asset,
subtracting its estimated salvage value (estimated value of the asset at the time it is
disposed of) and dividing this by the estimated number of years of useful life. The
reducing balance method is calculated by utilizing a fixed percentage rate and this rate
is applied annually to the undepreciated balance of the asset value.
The second method of lifecycle costing is the sinking fund method. This method first
estimates the future value of the asset at the time of replacement. This is done by
inflating the original cost of the asset at an assumed annual inflation rate. A calculation
is then performed to determine annual contributions (equal or otherwise) which, when
invested, will grow with interest to equal the future replacement cost.
The preferred method used herein for forecasting purposes is the sinking fund method
of lifecycle costing.
Watson & Associates Economists Ltd.
PAGE 3-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Figure 3-3
Process
STRAIGHT LINE DEPRECIATION
Original Cost
$x
$x
$x
$x
$x
$x
$x
$x
$x
$x
Formula:
Original Cost - Salvage Cost
Number of Years of Useful Life
SINKING FUND METHOD
$x
$x
$x
$x
$x
$x
$x
$x
$x
$x
1. "Estimate Future Replacement Cost"
Original Cost
Future
Replacement
Cost
Future
Replacement
Cost
2. "Estimate Annual Contribution which will Grow with Interest to Equal Future Replacement Cost"
Total Annual Contributions Equal Original Cost
"Annual Inflation"
"Annual Interest Earnings"
3.2 Impact on Budgets
Based on the P.U.C.'s review of its water and wastewater assets, an annual
replacement program has been established to address the aging water and wastewater
infrastructure. An annual contribution amount of up to $9 million for water and up to
$8.5 million for wastewater has been included in the calculations. Over the 10-year
forecast period, this totals to $85.5 million for water and $80.7 million for wastewater.
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 4
Capital Cost Financing
Options
Watson & Associates Economists Ltd.
PAGE 4-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
4. Capital Cost Financing Options
4.1 Summary of Capital Cost Financing Alternatives
Historically, the powers that municipalities had to raise alternative revenues to taxation
to fund capital services have been restrictive. Over the past decade, legislative reforms
have been introduced. Some of these have expanded municipal powers (e.g. Bill 26
introduced in 1996 to provide for expanded powers for imposing fees and charges),
while others appear to restrict them (Bill 98 in 1997 providing amendments to the D.C.A.
along with recently proposed changes through Bill 23, More Homes Built Faster Act,
2022).
The Province passed a new Municipal Act which came into force on January 1, 2003.
Part XII of the Act and O. Reg. 584/06 govern a municipality's ability to impose fees and
charges. In contrast to the previous Municipal Act, this Act provides municipalities with
broadly defined powers and does not differentiate between fees for operating and
capital purposes. It is anticipated that the powers to recover capital costs under the
previous Municipal Act will continue within the new Statutes and Regulations, as
indicated by s.9(2) and s.452 of the new Municipal Act.
Under s.484 of Municipal Act, 2001, the Local Improvement Act was repealed with the
in-force date of the Municipal Act (January 1, 2003). The municipal powers granted
under the Local Improvement Act now fall under the jurisdiction of the Municipal Act. To
this end, on December 20, 2002, O. Reg. 390/02 was filed, which allowed for the Local
Improvement Act to be deemed to remain in force until April 1, 2003. O. Reg. 119/03
was enacted on April 19, 2003, which restored many of the previous Local Improvement
Act provisions; however, the authority is now provided under the Municipal Act.
The methods of capital cost recovery available to municipalities are provided as follows:
Recovery Methods
Section Reference
- Development Charges Act, 1997
4.2
- Municipal Act
o Fees and Charges
o Sewer and Water Area Charges
o Connection Fees
4.3
Watson & Associates Economists Ltd.
PAGE 4-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Recovery Methods
Section Reference
o Local Improvements
- Historical Grant Funding Availability
4.4
- Existing Reserves/Reserve Funds
4.5
- Debenture Financing
4.6
- Infrastructure Ontario
4.7
4.2 Development Charges Act, 1997
In November, 1996, the Ontario Government introduced Bill 98, a new Development
Charges Act. The Province's stated intentions were to "create new construction jobs
and make home ownership more affordable" by reducing the charges and to "make
municipal Council decisions more accountable and more cost effective." The basis for
this Act is to allow municipalities to recover the growth-related capital cost of
infrastructure necessary to accommodate new growth within the municipality.
Generally, the Act provided the following changes to the former Act:
- Replace those sections of the 1989 Act that govern municipal development
charges;
- Limit services which can be financed from development charges, specifically
excluding parkland acquisition, administration buildings, and cultural,
entertainment, tourism, solid waste management and hospital facilities;
- Ensure that the level of service used in the calculation of capital costs will not
exceed the average level of service over the previous decade. Level of service is
to be measured from both a quality and quantity perspective;
- Provide that uncommitted excess capacity available in existing municipal facilities
and benefits to existing residents are removed from the calculation of the charge;
- Ensure that the development charge revenues collected by municipalities are
spent only on those capital costs identified in the calculation of the development
charge;
- Require municipalities to contribute funds (e.g. taxes, user charges or other non-
development charge revenues) to the financing of certain projects primarily
funded from development charges. The municipal contribution is 10 percent for
services such as recreation, parkland development, libraries, etc.;
Watson & Associates Economists Ltd.
PAGE 4-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- Permit (but apparently not require) municipalities to grant developers credits for
the direct provision of services identified in the development charge calculation
and, when credits are granted, require the municipality to reimburse the
developer for the costs the municipality would have incurred if the project had
been financed from the development charge reserve fund;
- Set out provisions for front-end financing capital projects (limited to essential
services) required to service new development; and
- Set out provisions for appeals and complaints.
In late 2015, the Province approved further amendments to the D.C.A. With respect to
water and wastewater, the only changes are for the municipality to provide an asset
management calculation for the growth-related works and for the Council to consider
(but not necessarily approve) area-specific rates.
As of 2019, a number of amendments to the D.C.A. were made through the Bill 108 the
More Homes, More Choice Act, 2019, Bill 138 the Plan to Build Ontario Together Act,
2019, Bill 197 the COVID-19 Economic Recovery Act, 2020, and Bill 213 the Better for
People, Smarter for Business Act, 2020. With respect to water and wastewater, a few
changes may impact D.C. revenue collections:
1. Timing of Collection:
a. D.C. Rate Freeze - For developments proceeding through site plan or
zoning by-law amendment, the D.C. rate is frozen at the time the
application is submitted. The D.C. remains frozen for two years after the
application is approved. Should the D.C. study be updated to increase
water and wastewater D.C. rates during this period, the Municipality would
not be able to collect for this increase.
b. D.C. Installment Payments - For rental housing and institutional
development D.C.s are paid over 5 years and for non-profit housing, D.C.s
are paid over 20 years. This provides a delay in receipt of D.C. revenues
which will need to be cash-flowed by the Municipality.
2. Mandatory Exemption (additional units) - For existing dwellings, one additional
dwelling unit could be constructed within the existing dwelling. This additional
dwelling unit is exempt from D.C.s. With the changes to the Act, one additional
dwelling unit may be constructed within a new residential dwelling, which would
Watson & Associates Economists Ltd.
PAGE 4-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
be exempt from D.C.s. Further, one ancillary dwelling unit may be constructed
on the same property as a new unit. This ancillary dwelling would be exempt
from D.C.s. As these new additional units are exempt from D.C.s, no D.C.
revenue may be collected for these units, however, each additional unit provides
additional population which requires capacity in the water and wastewater
treatment plants. As a result, consideration for these additional units should be
made during the D.C. study process to ensure all capacity available to growth is
allocated appropriately.
3. Mandatory Exemption (universities) - A new mandatory exemption has been
introduced which exempts the payment of D.C.s for developments of land
intended for use by a university that receives operating funds from the
Government.
On October 25, 2022, the Province introduced Bill 23: More Homes Built Faster Act,
which subsequently received Royal Assent on November 28, 2022. The Bill amended
several items within the D.C.A. and other legislation. These changes would impact a
municipality's ability to recover D.C.s for growth-related water and wastewater capital
costs.
4.3 Municipal Act
Part XII of the Municipal Act provides municipalities with broad powers to impose fees
and charges via passage of a by-law. These powers, as presented in s.391(1), include
imposing fees or charges:
- "for services or activities provided or done by or on behalf of it;
- for costs payable by it for services or activities provided or done by or on behalf
of any other municipality or local board; and
- for the use of its property including property under its control."
Restrictions are provided to ensure that the form of the charge is not akin to a poll tax.
Any charges not paid under this authority may be added to the tax roll and collected in a
like manner. The fees and charges imposed under this part are not appealable to the
Ontario Land Tribunal (OLT, formerly known as Local Planning Appeal Tribunal
(LPAT)).
Watson & Associates Economists Ltd.
PAGE 4-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Section 221 of the previous Municipal Act permitted municipalities to impose charges,
by by-law, on owners or occupants of land who would or might derive benefit from the
construction of sewage (storm and sanitary) or water works being authorized (in a
specific benefit area). For a by-law imposed under this section of the previous Act:
- A variety of different means could be used to establish the rate and recovery of
the costs and could be imposed by a number of methods at the discretion of
Council (i.e. lot size, frontage, number of benefiting properties, etc.);
- Rates could be imposed with respect to costs of major capital works, even
though an immediate benefit was not enjoyed;
- Non-abutting owners could be charged;
- Recovery was authorized against existing works, where a new water or sewer
main was added to such works, "notwithstanding that the capital costs of existing
works has in whole or in part been paid;"
- Charges on individual parcels could be deferred;
- Exemptions could be established;
- Repayment was secured; and
- OLT approval was not required.
While under the new Municipal Act no provisions are provided specific to the previous
s.221, the intent to allow capital cost recovery through fees and charges is embraced
within s.391. The new Municipal Act also maintains the ability of municipalities to
impose capital charges for water and sewer services on landowners not receiving an
immediate benefit from the works. Under s.391(2) of the Act, "a fee or charge imposed
under subsection (1) for capital costs related to sewage or water services or activities
may be imposed on persons not receiving an immediate benefit from the services or
activities but who will receive a benefit at some later point in time." Also, capital
charges imposed under s.391 are not appealable to the OLT on the grounds that the
charges are "unfair or unjust."
Section 222 of the previous Municipal Act permitted municipalities to pass a by-law
requiring buildings to connect to the municipality's sewer and water systems, charging
the owner for the cost of constructing services from the mains to the property line.
Under the new Municipal Act, this power still exists under Part II, General Municipal
Powers (s.9 (3) b of the Municipal Act). Enforcement and penalties for this use of power
are contained in s.427 (1) of the Municipal Act.
Watson & Associates Economists Ltd.
PAGE 4-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Under the previous Local Improvement Act:
- A variety of different types of works could be undertaken, such as watermain,
storm and sanitary sewer projects, supply of electrical light or power, bridge
construction, sidewalks, road widening and paving;
- Council could pass a by-law for undertaking such work on petition of a majority of
benefiting taxpayers, on a 2/3 vote of Council and on sanitary grounds, based on
the recommendation of the Minister of Health. The by-law was required to go to
the OLT, which might hold hearings and alter the by-law, particularly if there were
objections;
- The entire cost of a work was assessed only upon the lots abutting directly on the
work, according to the extent of their respective frontages, using an equal special
rate per metre of frontage; and
- As noted, this Act was repealed as of April 1, 2003; however, O. Reg. 119/03
was enacted on April 19, 2003 which restores many of the previous Local
Improvement Act provisions; however, the authority is now provided under the
Municipal Act.
4.4 Grant Funding Availability
Federal Infrastructure Funding
Phase 1 (April 1, 2016 to March 31, 2018)
Funding was provided by the Government of Canada to expressly help municipalities
with repair and rehabilitation projects. Funding was mainly provided through the Clean
Water and Wastewater Fund (C.W.W.F.) and Public Transit Infrastructure Fund
(P.T.I.F.) in Federal Phase 1 projects. The C.W.W.F. was announced in Ontario on
September 15, 2016. The Fund is $1.1 billion for water, wastewater, and storm water
systems in Ontario. The federal government provided $569 million and Ontario and
municipal governments provided $275 million each.
Over 1,300 water, wastewater, and storm water projects have been approved in Ontario
through the C.W.W.F. In Ontario, P.T.I.F. accounted for nearly $1.5 billion of the
national total of $3.4 billion. The program was allocated by ridership numbers from the
Canadian Urban Transit Association. The Association of Municipalities of Ontario
(A.M.O.) understands that $1 billion of Ontario's share has been approved.
Watson & Associates Economists Ltd.
PAGE 4-7
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Phase 2: Next Steps
The federal government announced Phase 2 of its infrastructure funding plan with a
total of $180 billion spent over 11 years. In addition to the balance of funding for
previous green, social, and public transit infrastructure funds ($20 billion each, including
Phase 1), the government has added $10.1 billion for trade and transportation
infrastructure and $2 billion for rural and northern communities. This funding must be
implemented by agreements with each Province and Territory.
In Phase 2, Ontario will be eligible for $11.8 billion including $8.3 billion for transit, $2.8
billion for green infrastructure, $407 million for community, culture and recreation and
$250 million for rural and northern communities.
Federal Gas Tax
The federal Gas Tax is a permanent source of funding provided up front, twice-a-year,
to Provinces and Territories, who in turn flow this funding to their municipalities to
support local infrastructure priorities. Municipalities can pool, bank and borrow against
this funding, providing significant financial flexibility. Every year, the federal Gas Tax
provides over $2 billion and supports approximately 2,500 projects in communities
across Canada. Each municipality selects how best to direct the funds with the
flexibility provided to make strategic investments across 18 different project categories,
which include other water and wastewater servicing.
Ontario Government
The Province has taken steps to increase municipal infrastructure funding. The Ontario
Community Infrastructure Fund (O.C.I.F.) was increased in 2016 with formula-based
support growing to $200 million, and application funding growing to $100 million
annually. As well, $15 million annually will go to the new Connecting Links program to
help pay for the construction and repair costs of municipal roads that connect
communities to provincial highways. This is on top of the Building Ontario Up
investment of $130 billion in public infrastructure over 10 years starting in 2015.
Housing-Enabling Water Systems Fund
In Ontario's 2023 Fall Economic Statement, the Province announced the Housing-
Enabling Water Systems Fund (H.E.W.S.F.), which aims to invests a total of $200
Watson & Associates Economists Ltd.
PAGE 4-8
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
million over three years towards the repair, rehabilitation, and expansion of core water,
wastewater, and stormwater infrastructure to promote growth and enable new housing
development. The H.E.W.S.F. is a competitive application-based funding program and
the program guidelines were release on January 29, 2024.
Eligible Asset types include:
- Drinking water assets (e.g., treatment plants, reservoirs, local pipes including the
distribution system watermain and the municipal portion of service lines, pump
stations)
- Wastewater assets (e.g., lagoon systems, pump stations, lift station, linear
assets, treatment plants, storage tanks and collection systems)
- Stormwater assets (e.g., management facilities, linear assets including
conveyance piping/ditches/culverts)
The first round of funding initially started with $200 million and subsequently increased
to $825 million, with an application deadline of April 19, 2024. Under the first intake, the
Province announced that the H.E.W.S.F. was allocated to 54 infrastructure projects
across 60 municipalities that will help enable the construction of more than 500,000 new
homes across Ontario.
Given the high demand for this program, the Province announced a second round of
funding with an additional $250 million. The application deadline for this round is
November 1, 2024.
Grant Funding
For this study process, grant funding has not been identified. However, if the status of
the grant funding changes, the rate study may need to be amended to reflect the
appropriate funding sources.
4.5 Existing Reserves/Reserve Funds
The P.U.C. has established reserves and reserve funds for water and wastewater. The
estimated balances to the end of December 31, 2024 are presented in Table 4-1:
Watson & Associates Economists Ltd.
PAGE 4-9
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 4-1
Water and Wastewater Reserves and Reserve Funds
Estimated as of December 31, 2024
4.6 Debenture Financing
Although it is not a direct method of minimizing the overall cost to the ratepayer,
debentures are used by municipalities to assist in cash flowing large capital
expenditures.
The Ministry of Municipal Affairs regulates the level of debt incurred by Ontario
municipalities, through its powers established under the Municipal Act. Ontario
Regulation 403/02 provides the current rules respecting municipal debt and financial
obligations. Through the rules established under these regulations, a municipality's
debt capacity is capped at a level where no more than 25% of the municipality's own
purpose revenue may be allotted for servicing the debt (i.e. debt charges). The
Municipality of Chatham-Kent's calculation on Debt Capacity is shown on Schedule 81
of the Municipality's most recent Financial Information Return (F.I.R.). This calculates
to the Municipality's estimated annual repayment limit of approximately $67.45 million.
Based upon 20-year financing at an assumed rate of 3.5%, the available debt for the
Municipality is approximately $958.67 million. Based on the calculations provided
herein, it is assumed that the Municipality will require $187.45 million of additional debt
over the forecast period.
4.7 Infrastructure Ontario
Infrastructure Ontario (I.O.) is an arms-length crown corporation, which has been set up
as a tool to offer low-cost and longer-term financing to assist municipalities in renewing
their infrastructure (this corporation has merged the former O.S.I.F.A. into its
Reserve
Dec. 31 2024
Water
Capital Reserve
3,668,949
Lifecycle Reserve Fund - Watermains
8,185,382
Lifecycle Reserve Fund - Facilities
423,578
Wastewater
Capital Reserve
13,968,706
Lifecycle Reserve Fund - Sanitary Sewer
5,868,319
Lifecycle Reserve Fund - Facilities
18,042,592
Watson & Associates Economists Ltd.
PAGE 4-10
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
operations). I.O. combines the infrastructure renewal needs of municipalities into an
infrastructure investment "pool." I.O. will raise investment capital to finance loans to the
public sector by selling a new investment product called Infrastructure Renewal Bonds
to individual and institutional investors.
I.O. provides access to infrastructure capital that would not otherwise be available to
smaller borrowers. Larger borrowers receive a longer term on their loans than they
could obtain in the financial markets, and can also benefit from significant savings on
transaction costs such as legal costs and underwriting commissions. Under the I.O.
approach, all borrowers receive the same low interest rate. I.O. will enter into a
financial agreement with each municipality subject to technical and credit reviews, for a
loan up to the maximum amount of the loan request.
The first round of the former O.S.I.F.A.'s 2004/2005 infrastructure renewal program was
focused on municipal priorities of clean water infrastructure, sewage treatment facilities,
municipal roads and bridges, public transit and waste management infrastructure. The
focus of the program was expanded in 2005/2006 somewhat to include:
- clean water infrastructure;
- sewage infrastructure;
- waste management infrastructure;
- municipal roads and bridges;
- public transit;
- municipal long-term care homes;
- renewal of municipal social housing and culture; and
- tourism and recreation infrastructure.
With the merging of O.S.I.F.A. and I.O., the program was broadened in late 2006 to also
include municipal administrative buildings, local police and fire stations, emergency
vehicles and equipment, ferries, docks and municipal airports.
To be eligible to receive these loans, municipalities must submit a formal application
along with pertinent financial information. Allotments are prioritized and distributed
based upon the Province's assessment of need.
Watson & Associates Economists Ltd.
PAGE 4-11
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
4.8 Recommended Capital Financing Approach
Of the various funding alternatives provided in this section, the following are
recommended for further consideration by the P.U.C. for the capital expenditures
(inflated) provided in Chapter 2:
Table 4-2
Municipality of Chatham-Kent P.U.C.
Capital Forecasting Financing Sources
Inflated $
Tables 4-3 and 4-4 provide for the full capital expenditure and funding program by year
for water and wastewater, respectively.
Water
Wastewater
2025-2034
2025-2034
Capital Financing
Development Charges Reserve Fund
497,858,550
16,345,200
Non-Growth Related Debenture Requirements
149,687,300
37,461,500
Lifecycle Reserve Fund - Facilities
86,041,950
61,567,100
Lifecycle Reserve Fund - Watermains / Sewers
129,498,200
177,375,200
Water Reserve / Wastewater Reserve
7,088,000
12,779,000
Total Capital Financing
870,174,000
305,528,000
Description
Watson & Associates Economists Ltd.
PAGE 4-12
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 4-3
Municipality of Chatham-Kent P.U.C.
Capital Budget Forecast - Water (inflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Raw Water Pumping Station
-
5,670,000
-
-
-
-
-
-
-
5,670,000
-
-
11 kms of new 600mm transmission main from existing Water Treatment Plant
Highlift pumping station to the Southwest area of Chatham Water System (Partial
Ring TM). Refer to Figure 10-1
-
65,931,000
-
-
-
-
-
-
-
6,090,000
29,049,000
30,792,000
Increase storage capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-4
-
22,263,000
2,056,000
9,809,000
10,398,000
-
-
-
-
-
-
-
Increase treatment capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-1
-
266,522,000
-
-
24,618,000
117,429,000
124,475,000
-
-
-
-
-
Increase pumping capacity at the existing Chatham Water Treatment Plant Highlift
Pumping Station.
-
3,682,000
-
-
3,682,000
-
-
-
-
-
-
-
Conduct condition assessment for existing raw water transmission main.
1,500,000
1,060,000
1,060,000
-
-
-
-
-
-
-
-
-
300mm watermain from Thamesville Elevated Tank to Zone 6 Rd. Refer to Figure 10-
2
-
11,476,000
-
-
-
-
-
-
-
11,476,000
-
-
Zone 6 Road to Delaware Nation 200mm watermain Refer to Figure 10-2
-
1,943,000
-
-
-
-
-
-
-
-
1,943,000
-
New Booster Pump Station at the Northeast corner of Zone 5 Road and Baseline.
Refer to Figure 10-2
-
507,000
-
-
-
-
-
-
-
-
507,000
-
New 300mm watermain from Zone 6 Rd and Baseline to Bothwell. Refer to Figure 10-
2
-
17,407,000
-
-
-
-
-
-
-
-
-
17,407,000
Replace the Thamesville Standpipe with a 2.3ML Standpipe. Refer to Figure 10-2
-
7,093,000
-
-
-
-
-
7,093,000
-
-
-
-
300mm Integration Transmission Main for Blenheim and Ridgetown. Refer to Figure
10-3
-
31,761,000
-
-
-
15,418,000
16,343,000
-
-
-
-
-
Retrofitting existing water treatment plant as pumping station for Ridgetown.
-
6,401,000
-
-
-
6,401,000
-
-
-
-
-
-
Replacement / Rehabilitation of the existing Ridgetown Elevated Tank.
-
11,910,000
-
-
11,910,000
-
-
-
-
-
-
-
New Water Treatment Plant for Wallaceburg-Dresden Integrated Water System.
-
78,616,000
-
-
-
7,262,000
34,638,000
36,716,000
-
-
-
-
New storage reservoir (56ML).
-
71,196,000
-
-
-
6,576,000
31,369,000
33,251,000
-
-
-
-
New intake and lowlift pumping station for new Wallaceburg Water Treatment Plant.
-
18,132,000
-
-
-
1,675,000
7,989,000
8,468,000
-
-
-
-
New raw water transmission main.
-
40,506,000
-
-
-
3,741,000
17,847,000
18,918,000
-
-
-
-
600mm Treated water transmission main. Refer to Figure 10-4
-
39,898,000
-
3,685,000
17,579,000
18,634,000
-
-
-
-
-
-
2.6 km New Charing Cross Road 600mm transmission main. Refer to Figure 10-5
-
11,624,000
-
-
-
-
-
-
11,624,000
-
-
-
5.6 km of new 200mm local distribution system Looping. Refer to Figure 10-6
-
10,233,000
-
-
-
-
-
10,233,000
-
-
-
-
Increase pumping capacity at the existing South Chatham Kent Water Treatment Plant
Highlift Pumping Station.
-
1,326,000
-
-
1,326,000
-
-
-
-
-
-
-
New Booster Pumping Station to transfer water supply from Wheatley WS to Tilbury
WS. Refer to Figure 10-7
-
3,419,000
-
-
-
-
-
3,419,000
-
-
-
-
New local booster pumping station for east of Wheatley WS. Refer to Figure 10-7
-
3,494,000
-
-
-
-
-
-
-
-
-
3,494,000
Decommissioning of Tilbury inground reservoir and pumping station.
-
3,228,000
-
-
-
-
-
-
-
3,228,000
-
-
Various Investigative Studies
-
897,000
159,000
169,000
179,000
189,000
201,000
-
-
-
-
-
Preventative Maintenance of the Composite Elevated Tanks, Stand Pipes and
Spheroid Tanks, and their replacement.
2,000,000
27,943,000
2,120,000
2,247,000
2,382,000
2,525,000
2,676,000
2,837,000
3,007,000
3,188,000
3,379,000
3,582,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
63,000
-
-
-
-
27,000
-
-
-
-
36,000
Wheatley WTP Rehabilitation
4,500,000
4,770,000
4,770,000
-
-
-
-
-
-
-
-
-
Decommissioning - Dealtown WTP
-
947,000
-
-
-
947,000
-
-
-
-
-
-
Decommissioning - Dresden WTP
-
893,000
-
-
893,000
-
-
-
-
-
-
-
Ridgetown S2 & C2 Well pump and adapter
450,000
636,000
636,000
-
-
-
-
-
-
-
-
-
600mm Transmission Main Eberts-KBR - phase 1 for NE WDS
-
13,227,000
-
13,227,000
-
-
-
-
-
-
-
-
Elevated Tank Michell's Bay - Tender and Construction
3,498,491
-
-
-
-
-
-
-
-
-
-
-
Annual Watermain Lifecycle Replacement
4,500,000
85,500,000
6,000,000
7,500,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
Total Capital Expenditures
16,468,491
870,174,000
16,801,000
36,637,000
81,967,000
189,797,000
244,565,000
129,935,000
23,631,000
38,652,000
43,878,000
64,311,000
Capital Financing
Provincial/Federal Grants
-
Development Charges Reserve Fund
-
497,858,550
2,056,000
11,098,750
46,704,650
133,994,000
163,608,450
47,322,500
5,812,000
19,183,000
25,689,200
42,390,000
Non-Growth Related Debenture Requirements
-
149,687,300
-
8,122,250
11,426,350
22,297,650
52,228,550
55,612,500
-
-
-
-
Growth Related Debenture Requirements
-
-
-
-
-
-
-
-
-
-
-
-
Operating Contributions
-
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Reserve Fund - Facilities
6,100,000
86,041,950
7,526,000
2,247,000
13,764,000
18,369,350
13,500,000
11,500,000
3,007,000
6,023,000
3,379,000
6,726,600
Lifecycle Reserve Fund - Watermains
4,500,000
129,498,200
6,000,000
15,000,000
9,000,000
14,000,000
15,000,000
15,500,000
14,812,000
10,218,000
14,809,800
15,158,400
Water Reserve
5,868,491
7,088,000
1,219,000
169,000
1,072,000
1,136,000
228,000
-
-
3,228,000
-
36,000
Total Capital Financing
16,468,491
870,174,000
16,801,000
36,637,000
81,967,000
189,797,000
244,565,000
129,935,000
23,631,000
38,652,000
43,878,000
64,311,000
Total
Description
Forecast
Watson & Associates Economists Ltd.
PAGE 4-13
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 4-4
Municipality of Chatham-Kent P.U.C.
Capital Budget Forecast - Wastewater (inflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Pumping Station Upgrades to Chatham SPS-103 (Campus Parkway/Grand Ave Area)
(Figure 10-12)
-
-
-
-
-
-
-
-
-
-
-
-
· Short Term Additional Pumping Capacity
300,000
-
-
-
-
-
-
-
-
-
-
-
· Twin Forcemain to Water Pollution Control Plant
-
5,955,000
-
-
5,955,000
-
-
-
-
-
-
-
· Long Term Complete Station Upgrade
-
15,045,000
-
7,303,000
7,742,000
-
-
-
-
-
-
-
Pumping station upgrades to Chatham main lift station to WPCP (Figure 10-13)
-
-
-
-
-
-
-
-
-
-
-
-
· Pumping Upgrades, increasing firm capacity to 800L/s
-
2,025,000
-
-
2,025,000
-
-
-
-
-
-
-
· Twin 750mm Forcemain Section
-
1,434,000
-
-
-
-
-
-
-
1,434,000
-
-
Pumping station upgrades to Wallaceburg SPS-405 (Dundas St/ Thomas Ave Area)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 185 L/s Firm Capacity
-
797,000
-
-
-
-
-
-
-
797,000
-
-
Pumping station upgrades to Wallaceburg SPS-402 (Arnold St / Biden St Area)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 140 L/s Firm Capacity
-
797,000
-
-
-
-
-
-
-
797,000
-
-
Pumping station upgrades to Wallaceburg SPS-401 (Bill McDougall Park)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 240 L/s
-
638,000
-
-
-
-
-
-
-
638,000
-
-
Erie Street / Tecumseh Street 600mm (Figure 10-8)
-
2,550,000
-
-
-
-
-
-
-
2,550,000
-
-
West Street 300mm (Figure 10-8)
-
760,000
-
-
-
-
-
-
-
-
760,000
-
Marlborough Street / Industrial Avenue 525mm (Figure 10-9)
-
7,163,000
-
-
-
-
-
-
-
-
-
7,163,000
SPS - 602 Pumping Upgrade
-
638,000
-
-
-
-
-
-
-
638,000
-
-
Inflow and Infiltration Reduction Study
-
318,000
318,000
-
-
-
-
-
-
-
-
-
Inflow and Infiltration Study
-
318,000
318,000
-
-
-
-
-
-
-
-
-
Optimizing capacity of the combined sewer trunks / interceptors
2,500,000
34,930,000
2,650,000
2,809,000
2,978,000
3,156,000
3,346,000
3,546,000
3,759,000
3,985,000
4,224,000
4,477,000
Continuing Sewer Separation Program for Chatham Targeting largest Downstream
Sewers Feeding the Trunk / Interceptor
5,000,000
69,857,000
5,300,000
5,618,000
5,955,000
6,312,000
6,691,000
7,093,000
7,518,000
7,969,000
8,447,000
8,954,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
63,000
-
-
-
-
27,000
-
-
-
-
36,000
Chatham WPCP - Plant#1 Concrete repairs to elevated walkways- access to gears
and scimmers
-
2,146,000
-
-
-
2,146,000
-
-
-
-
-
-
Lynwood Subdivision PS#14 (formerly 9A)
-
13,382,000
-
-
-
-
13,382,000
-
-
-
-
-
PS#7 -John Street Chatham - complete rebuild
-
4,015,000
-
-
-
-
4,015,000
-
-
-
-
-
New South Hub PS - Chatham
-
44,528,000
3,180,000
15,169,000
16,079,000
10,100,000
-
-
-
-
-
-
S9- Chatham- North Area Intermediate Sewer Servicing, Pumping Stations,
Forcemains
-
17,469,000
8,480,000
8,989,000
-
-
-
-
-
-
-
-
Annual Sewermain Lifecycle Replacement
4,250,000
80,700,000
5,650,000
7,050,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
Total Capital Expenditures
12,070,000
305,528,000
25,896,000
46,938,000
49,234,000
30,214,000
35,961,000
19,139,000
19,777,000
27,308,000
21,931,000
29,130,000
Capital Financing
Provincial/Federal Grants
-
Development Charges Reserve Fund
-
16,345,200
-
3,651,500
11,243,500
-
-
-
-
1,450,200
-
-
Non-Growth Related Debenture Requirements
-
37,461,500
-
3,466,000
18,490,500
4,968,000
10,537,000
-
-
-
-
-
Growth Related Debenture Requirements
-
-
-
-
-
-
-
-
-
-
-
-
Operating Contributions
-
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Fund
300,000
61,567,100
3,180,000
18,820,500
7,500,000
12,246,000
17,397,000
-
-
2,423,600
-
-
Lifecycle Sewers Reserve Fund
11,750,000
177,375,200
15,000,000
16,000,000
12,000,000
13,000,000
8,000,000
19,139,000
19,777,000
23,434,200
21,931,000
29,094,000
Wastewater Reserve
20,000
12,779,000
7,716,000
5,000,000
-
-
27,000
-
-
-
-
36,000
Total Capital Financing
12,070,000
305,528,000
25,896,000
46,938,000
49,234,000
30,214,000
35,961,000
19,139,000
19,777,000
27,308,000
21,931,000
29,130,000
Forecast
Description
Total
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 5
Overview of Expenditures and
Revenues
Watson & Associates Economists Ltd.
PAGE 5-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
5. Overview of Expenditures and Revenues
5.1 Water Operating Expenditures
In this report, the forecast water budget figures (2025 to 2034) are based on the 2024
operating budgets. The costs for each component of the operating budget have been
reviewed with staff to establish forecast inflationary adjustments. Note that these
operating costs include the costs associated with the purchased water from the Tri-
County Water Supply System, which are based on the forecast volumes of the
applicable customers.
With respect to all other operating expenditures, the forecast has assumed a 4% annual
inflation rate.
In addition, debenture payments and contributions to the water reserve funds have been
included. The water reserve fund transfers are used to fund the water capital program
identified in Chapter 2, as well as build-up the reserve balance for future lifecycle
requirements.
5.2 Water Operating Revenues
The P.U.C. has base charges and miscellaneous revenue sources to help contribute
towards operating expenditures. These miscellaneous revenues, include items such as
service connections, meter sales, and bulk sales. Miscellaneous revenues have been
assumed to remain constant.
The water base charges are further discussed in section 6.5 of this study.
Note that the operating revenue presented herein represents the fixed component of the
total operating revenue. The shortfall of the fixed revenue from the operating
expenditures is what is used to calculate the recovery from the water volume rates,
which is presented in Chapter 7. Table 5-1 provides for the water operating budget for
the P.U.C.
Watson & Associates Economists Ltd.
PAGE 5-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 5-1
Municipality of Chatham-Kent P.U.C.
Operating Budget Forecast - Water (inflated $)
Budget
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Expenditures
Operating Costs
Operations and Maintenance
3,727,240
3,876,300
4,031,400
4,192,700
4,360,400
4,534,800
4,716,200
4,904,800
5,101,000
5,305,000
5,517,200
Compliance and Enforcement
480,087
499,300
519,300
540,100
561,700
584,200
607,600
631,900
657,200
683,500
710,800
Purchased Water
230,000
239,200
248,800
258,800
269,200
280,000
291,200
302,800
314,900
327,500
340,600
Plant, ground and equipment
2,701,040
2,809,100
2,921,500
3,038,400
3,159,900
3,286,300
3,417,800
3,554,500
3,696,700
3,844,600
3,998,400
Pumping Stations
1,371,548
1,426,400
1,483,500
1,542,800
1,604,500
1,668,700
1,735,400
1,804,800
1,877,000
1,952,100
2,030,200
Main Maintenance
2,656,650
2,762,900
2,873,400
2,988,300
3,107,800
3,232,100
3,361,400
3,495,900
3,635,700
3,781,100
3,932,300
Service Maintenance
58,269
60,600
63,000
65,500
68,100
70,800
73,600
76,500
79,600
82,800
86,100
Hydrant Maintenance
-
-
-
-
-
-
-
-
-
-
-
Meter Maintenance
781,535
812,800
845,300
879,100
914,300
950,900
988,900
1,028,500
1,069,600
1,112,400
1,156,900
Administration
2,961,808
3,080,300
3,203,500
3,331,600
3,464,900
3,603,500
3,747,600
3,897,500
4,053,400
4,215,500
4,384,100
Meter Reading/Billing & Collection
1,186,020
1,233,500
1,282,800
1,334,100
1,387,500
1,443,000
1,500,700
1,560,700
1,623,100
1,688,000
1,755,500
AM/FM
232,660
242,000
251,700
261,800
272,300
283,200
294,500
306,300
318,600
331,300
344,600
Engineering
802,172
834,300
867,700
902,400
938,500
976,000
1,015,000
1,055,600
1,097,800
1,141,700
1,187,400
Sub Total Operating
17,189,029
17,876,700
18,591,900
19,335,600
20,109,100
20,913,500
21,749,900
22,619,800
23,524,600
24,465,500
25,444,100
Capital-Related
Existing Debt (Principal) - Growth Related
Existing Debt (Interest) - Growth Related
New Growth Related Debt (Principal)
-
-
-
-
-
-
-
-
-
-
New Growth Related Debt (Interest)
-
-
-
-
-
-
-
-
-
-
Existing Debt (Principal) - Non-Growth Related
2,849,198
1,773,001
591,213
620,417
651,062
683,222
354,164
-
-
-
-
Existing Debt (Interest) - Non-Growth Related
265,023
185,227
134,398
105,195
74,549
42,390
8,642
-
-
-
-
New Non-Growth Related Debt (Principal)
-
-
287,212
701,312
1,514,327
3,414,186
5,500,200
5,692,707
5,891,952
6,098,170
New Non-Growth Related Debt (Interest)
-
-
284,279
674,149
1,430,020
3,205,018
5,031,959
4,839,452
4,640,207
4,433,989
Transfer to Capital
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Contribution ($)
5,750,000
9,294,271
12,180,274
12,872,369
9,880,287
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
Lifecycle Watermain Reserve Contribution ($)
2,478,122
6,000,000
7,500,000
9,000,000
14,000,000
15,231,785
15,480,680
13,931,962
13,544,349
18,273,898
20,626,795
Transfer to Capital Reserve
2,550,000
100,000
1,100,000
1,200,000
2,500,000
Sub Total Capital Related
13,892,343
17,252,499
20,505,886
24,269,471
27,181,359
30,401,743
33,962,689
35,964,122
38,076,508
40,306,058
42,658,954
Total Expenditures
31,081,372
35,129,199
39,097,786
43,605,071
47,290,459
51,315,243
55,712,589
58,583,922
61,601,108
64,771,558
68,103,054
Revenues
Base Charge - Urban CK
11,616,136
12,160,150
12,729,099
13,324,107
13,946,350
14,597,054
15,277,500
15,989,026
16,733,030
17,510,973
18,324,377
Base Charge - Urban Non-CK
5,441
5,658
5,885
6,120
6,365
6,619
6,884
7,159
7,446
7,744
8,053
Base Charge - Rural CK
2,020,306
2,101,068
2,182,336
2,266,856
2,354,756
2,446,172
2,541,244
2,640,120
2,742,951
2,849,894
2,961,116
Base Charge - Rural Non-CK
70,397
73,207
76,039
78,985
82,048
85,234
88,548
91,993
95,577
99,304
103,180
Water Bulk Sales
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
Services Connections
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
Meter Revenue
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
Contributions from Development Charges Reserve Fund
-
-
-
-
-
-
-
-
-
-
-
Contributions from Reserves / Reserve Funds
-
-
-
-
-
-
-
-
-
-
-
Total Operating Revenue
14,387,779
15,015,583
15,668,859
16,351,568
17,065,019
17,810,579
18,589,676
19,403,799
20,254,504
21,143,415
22,072,227
Water Billing Recovery - Total
16,693,592
20,113,616
23,428,927
27,253,503
30,225,440
33,504,664
37,122,914
39,180,123
41,346,605
43,628,143
46,030,827
Forecast
Watson & Associates Economists Ltd.
PAGE 5-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
5.3 Wastewater Operating Expenditures
Similar to water expenditures, the wastewater operating expenditures have been
adjusted over the forecast period to reflect the current inflationary pressures in Ontario.
With respect to all other operating expenditures, the forecast has assumed a 4% annual
inflation rate.
In addition, debt payments and contributions to the wastewater reserve funds have
been included. The wastewater reserve fund transfers are used to fund the wastewater
capital program identified in Chapter 2, as well as build-up the reserve balance for
future lifecycle requirements.
5.4 Wastewater Operating Revenues
The P.U.C.'s fixed revenue sources are generated primarily from base charges and
miscellaneous sources, which includes rent, Leachate revenue, etc., connection fees,
and penalties. Similar to water, miscellaneous revenues have been assumed to remain
constant over the forecast period, with the exception of Leachate revenues which are
estimated to increase by 4% per year.
The wastewater base charges are further discussed in section 6.5 of this study.
As noted in the section above, the operating revenue presented herein represents the
fixed component of the total operating revenue. The shortfall of the fixed revenue from
the operating expenditures is what is used to calculate the recovery from the
wastewater volume rates, which is presented in Chapter 7. Table 5-2 provides for the
wastewater operating budget for the P.U.C.
Watson & Associates Economists Ltd.
PAGE 5-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 5-2
Municipality of Chatham-Kent P.U.C.
Operating Budget Forecast - Wastewater (inflated $)
Budget
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Expenditures
Operating Costs
Operations and Maintenance
4,862,695
5,057,200
5,259,500
5,469,900
5,688,700
5,916,200
6,152,800
6,398,900
6,654,900
6,921,100
7,197,900
Compliance and Enforcement
312,920
325,400
338,400
351,900
366,000
380,600
395,800
411,600
428,100
445,200
463,000
Plant, ground and equipment
1,397,570
1,453,500
1,511,600
1,572,100
1,635,000
1,700,400
1,768,400
1,839,100
1,912,700
1,989,200
2,068,800
Pumping Stations
741,966
771,600
802,500
834,600
868,000
902,700
938,800
976,400
1,015,500
1,056,100
1,098,300
Sanitary Maintenance
906,340
942,600
980,300
1,019,500
1,060,300
1,102,700
1,146,800
1,192,700
1,240,400
1,290,000
1,341,600
Administration
1,300,165
1,352,200
1,406,300
1,462,600
1,521,100
1,581,900
1,645,200
1,711,000
1,779,400
1,850,600
1,924,600
Meter Reading/Billing & Collection
694,730
722,500
751,400
781,500
812,800
845,300
879,100
914,300
950,900
988,900
1,028,500
AM/FM
90,971
94,600
98,400
102,300
106,400
110,700
115,100
119,700
124,500
129,500
134,700
Engineering
507,132
527,400
548,500
570,400
593,200
616,900
641,600
667,300
694,000
721,800
750,700
Sub Total Operating
10,814,489
11,247,000
11,696,900
12,164,800
12,651,500
13,157,400
13,683,600
14,231,000
14,800,400
15,392,400
16,008,100
Capital-Related
Existing Debt (Principal) - Growth Related
Existing Debt (Interest) - Growth Related
New Growth Related Debt (Principal)
-
-
-
-
-
-
-
-
-
-
New Growth Related Debt (Interest)
-
-
-
-
-
-
-
-
-
-
Existing Debt (Principal) - Non-Growth Related
2,966,495
1,379,875
1,251,197
1,216,035
1,179,985
1,234,897
699,167
-
-
-
-
Existing Debt (Interest) - Non-Growth Related
379,549
291,691
236,276
181,892
128,395
73,483
15,933
-
-
-
-
New Non-Growth Related Debt (Principal)
-
-
122,561
780,695
983,693
1,390,722
1,439,398
1,489,776
1,541,919
1,595,886
New Non-Growth Related Debt (Interest)
-
-
121,310
764,188
910,744
1,245,109
1,196,434
1,146,055
1,093,913
1,039,946
Transfer to Capital
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Contribution ($)
4,450,751
5,356,960
2,145,881
8,000,000
10,000,000
16,435,520
8,000,000
8,000,000
8,000,000
8,000,000
8,000,000
Lifecycle Sewers Reserve Contribution ($)
4,250,000
10,000,000
16,000,000
12,986,203
12,158,665
8,000,000
19,180,780
21,654,053
23,508,746
25,465,567
27,529,635
Transfer to Capital Reserve
2,300,000
Sub Total Capital Related
14,346,795
17,028,526
19,633,354
22,628,001
25,011,928
27,638,336
30,531,712
32,289,885
34,144,577
36,101,399
38,165,467
Total Expenditures
25,161,283
28,275,526
31,330,254
34,792,801
37,663,428
40,795,736
44,215,312
46,520,885
48,944,977
51,493,799
54,173,567
Revenues
Base Charge
11,355,036
11,893,175
12,456,197
13,045,232
13,661,460
14,306,113
14,980,480
15,685,907
16,423,799
17,195,626
18,002,920
Leachate Revenue
908,960
945,300
983,100
1,022,400
1,063,300
1,105,800
1,150,000
1,196,000
1,243,800
1,293,600
1,345,300
Rent
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
Other
431,751
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
Contributions from Development Charges Reserve Fund
-
-
-
-
-
-
-
-
-
-
-
Contributions from Reserves / Reserve Funds
-
-
-
-
-
-
-
-
-
-
-
Total Operating Revenue
12,758,747
13,333,275
13,934,097
14,562,432
15,219,560
15,906,713
16,625,280
17,376,707
18,162,399
18,984,026
19,843,020
Wastewater Billing Recovery - Operating
12,402,536
14,942,251
17,396,156
20,230,369
22,443,868
24,889,024
27,590,032
29,144,178
30,782,578
32,509,773
34,330,547
Forecast
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 6
Pricing Structures
Watson & Associates Economists Ltd.
PAGE 6-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
6. Pricing Structures
6.1 Introduction
Rates, in their simplest form, can be defined as total costs to maintain the utility function
divided by the total expected volume to be generated for the period. Total costs are
usually a combination of operating costs (e.g. staff costs, distribution costs,
maintenance, administration, etc.) and capital-related costs (e.g. past debt to finance
capital projects, transfers to reserves to finance future expenditures, etc.). The
schematic below provides a simplified illustration of the rate calculation for water.
"Annual Costs"
Operations
- Staff costs
- Distribution costs
- Maintenance
- Meter reading and billing, etc.
Capital Related
- Past debt
- Contributions to reserves
- Contribution to capital
Total Costs
Volume
Rate
These operating and capital expenditures will vary over time. Examples of factors that
will affect the expenditures over time are provided below.
Operations
- Inflation;
Watson & Associates Economists Ltd.
PAGE 6-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
- Increased maintenance as system ages; and
- Changes to provincial legislation.
Capital Related
- New capital will be built as areas expand;
- Replacement capital needed as system ages; and
- Financing of capital costs are a function of policy regarding reserves and direct
financing from rates (pay as you go), debt and user pay methods (development
charges, Municipal Act).
6.2 Alternative Pricing Structures
Throughout Ontario, and as well, Canada, the use of pricing mechanisms varies
between municipalities. The use of a particular form of pricing depends upon numerous
factors, including Council preference, administrative structure, surplus/deficit system
capacities, economic/demographic conditions, to name a few.
Municipalities within Ontario have two basic forms of collecting revenues for water
purposes, those being through incorporation of the costs within the tax rate charged on
property assessment and/or through the establishment of a specific water rate billed to
the customer. Within the rate methods, there are five basic rate structures employed
along with other variations:
- Flat Rate (non-metered customers);
- Constant Rate;
- Declining Block Rate;
- Increasing (or Inverted) Block Rate;
- Hump Back Block Rate; and
- Base Charges.
The definitions and general application of the various methods are as follows:
Property Assessment: This method incorporates the total costs of providing water into
the general requisition or the assessment base of the municipality. This form of
collection is a "wealth tax," as payment increases directly with the value of property
owned and bears no necessary relationship to actual consumption. This form is easy to
Watson & Associates Economists Ltd.
PAGE 6-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
administer as the costs to be recovered are incorporated in the calculation for all
general services, normally collected through property taxes.
Flat Rate: This rate is a constant charge applicable to all customers served. The
charge is calculated by dividing the total number of user households and other entities
(e.g. businesses) into the costs to be recovered. This method does not recognize
differences in actual consumption but provides for a uniform spreading of costs across
all users. Some municipalities define users into different classes of similar consumption
patterns, that is, a commercial user, residential user and industrial user, and charge a
flat rate by class. Each user is then billed on a periodic basis. No meters are required
to facilitate this method, but an accurate estimate of the number of users is required.
This method ensures set revenue for the collection period but is not sensitive to
consumption, hence may cause a shortfall or surplus of revenues collected.
Constant Rate: This rate is a volume-based rate, in which the consumer pays the
same price per unit consumed, regardless of the volume. The price per unit is
calculated by dividing the total cost of the service by the total volume used by total
consumers. The bill to the consumer climbs uniformly as the consumption increases.
This form of rate requires the use of meters to record the volume consumed by each
user. This method closely aligns the revenue recovery with consumption. Revenue
collected varies directly with the consumption volume.
Declining Block Rates: This rate structure charges a successively lower price for set
volumes, as consumption increases through a series of "blocks." That is to say that
within set volume ranges, or blocks, the charge per unit is set at one rate. Within the
next volume range, the charge per unit decreases to a lower rate, and so on. Typically,
the first, or first and second blocks cover residential and light commercial uses.
Subsequent blocks normally are used for heavier commercial and industrial uses. This
rate structure requires the use of meters to record the volume consumed by each type
of user. This method requires the collection and analysis of consumption patterns by
user classification to establish rates at a level which does not over or under collect
revenue from rate payers.
Increasing or Inverted Block Rates: The increasing block rate works essentially the
same way as the declining block rate, except that the price of water in successive
blocks increases rather than declines. Under this method the consumer's bill rises
faster with higher volumes used. This rate structure also requires the use of meters to
Watson & Associates Economists Ltd.
PAGE 6-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
record the volume consumed by each user. This method requires, as with the declining
block structure, the collection and analysis of consumption patterns by user
classification to establish rates at a level which does not over or under collect from rate
payers.
The Hump Back Rate: The hump back rate is a combination of an increasing block
rate and the declining block rate. Under this method the consumer's bill rises with
higher volumes used up to a certain level and then begins to fall for volumes in excess
of levels set for the increasing block rate.
6.3 Assessment of Alternative Pricing Structures
The adoption by a municipality or utility of any one particular pricing structure is
normally a function of a variety of administrative, social, demographic and financial
factors. The number of factors, and the weighting each particular factor receives, can
vary between municipalities. The following is a review of some of the more prevalent
factors.
Cost Recovery
Cost recovery is a prime factor in establishing a particular pricing structure. Costs can
be loosely defined into different categories: operations, maintenance, capital, financing
and administration. These costs often vary between municipalities and even within a
municipality, based on consumption patterns, infrastructure age, economic growth, etc.
The pricing alternatives defined earlier can all achieve the cost recovery goal, but some
do so more precisely than others. Fixed pricing structures, such as Property
Assessment and Flat Rate, are established on the value of property or on the number of
units present in the municipality, but do not adjust in accordance with consumption.
Thus, if actual consumption for the year is greater than projected, the municipality incurs
a higher cost of production, but the revenue base remains static (since it was
determined at the beginning of the year), thus potentially providing a funding shortfall.
Conversely, if the consumption level declines below projections, fixed pricing structures
will produce more revenue than actual costs incurred.
Watson & Associates Economists Ltd.
PAGE 6-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
The other pricing methods (declining block, constant rate, increasing block) are
consumption-based and generally will generate revenues in proportion to actual
consumption.
Administration
Administration is defined herein as the staffing, equipment and supplies required to
support the undertaking of a particular pricing strategy. This factor not only addresses
the physical tangible requirements to support the collection of the revenues, but also the
intangible requirements, such as policy development.
The easiest pricing structure to support is the Property Assessment structure. As
municipalities undertake the process of calculating property tax bills and the collection
process for their general services, the incorporation of the water costs into this
calculation would have virtually no impact on the administrative process and structure.
The Flat Rate pricing structure is relatively easy to administer as well. It is normally
calculated to collect a set amount, either on a monthly, quarterly, semi-annual or annual
basis, and is billed directly to the customer. The impact on administration centres
mostly on the accounts receivable or billing area of the municipality, but normally
requires minor additional staff or operating costs to undertake.
The three remaining methods, those being Increasing Block Rate, Constant Rate and
Declining Block Rate, have a more dramatic effect on administration. These methods
are dependent upon actual consumption and hence involve a major structure in place to
administer. First, meters must be installed in all existing units in the municipality, and
units to be subsequently built must be required to include these meters. Second, meter
readings must be undertaken periodically. Hence staff must be available for this
purpose or a service contract must be negotiated. Third, the billings process must be
expanded to accommodate this process. Billing must be done per a defined period,
requiring staff to produce the bills. Lastly, either through increased staffing or by service
contract, an annual maintenance program must be set up to ensure meters are working
effectively in recording consumed volumes.
The benefit derived from the installation of meters is that information on consumption
patterns becomes available. This information provides benefit to administration in
calculating rates which will ensure revenue recovery. Additionally, when planning what
services are to be constructed in future years, the municipality or utility has documented
Watson & Associates Economists Ltd.
PAGE 6-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
consumption patterns distinctive to its own situation, which can be used to project sizing
of growth-related works.
Equity
Equity is always a consideration in the establishment of pricing structures but its
definition can vary depending on a municipality's circumstances and based on the
subjective interpretation of those involved. For example: is the price charged to a
particular class of rate payer consistent with those of a similar class in surrounding
municipalities; through the pricing structure does one class of rate payer pay more than
another class; should one pay based on ability to pay, or on the basis that a unit of
water costs the same to supply no matter who consumes it; etc.? There are many
interpretations. Equity therefore must be viewed broadly in light of many factors as part
of achieving what is best for the municipality as a whole.
Conservation
In today's society, conservation of natural resources is increasingly being more highly
valued. Controversy continuously focuses on the preservation of non-renewable
resources and on the proper management of renewable resources. Conservation is
also a concept which applies to a municipality facing physical limitations in the amount
of water which can be supplied to an area. As well, financial constraints can encourage
conservation in a municipality where the cost of providing each additional unit is
increasing.
Pricing structures such as property assessment and flat rate do not, in themselves,
encourage conservation. In fact, depending on the price which is charged, they may
even encourage resource "squandering," either because consumers, without the price
discipline, consume water at will, or the customer wants to get his money's worth and
hence adopts more liberal consumption patterns. The fundamental reason for this is
that the price paid for the service bears no direct relationship to the volume consumed
and hence is viewed as a "tax," instead of being viewed as the price of a purchased
commodity.
The Declining Block Rate provides a decreasing incentive towards conservation. By
creating awareness of volumes consumed, the consumer can reduce his total costs by
restricting consumption; however, the incentive lessens as more water is consumed,
because the marginal cost per unit declines as the consumer enters the next block
Watson & Associates Economists Ltd.
PAGE 6-7
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
pricing range. Similarly, those whose consumption level is at the top end of a block
have less incentive to reduce consumption.
The Constant Rate structure presents the customer with a linear relationship between
consumption and the cost thereof. As the consumer pays a fixed cost per unit, his bill
will vary directly with the amount consumed. This method presents tangible incentive
for consumers to conserve water. As metering provides direct feedback as to usage
patterns and the consumer has direct control over the total amount paid for the
commodity, the consumer is encouraged to use only those volumes that are reasonably
required.
The Inverted Block method presents the most effective pricing method for encouraging
conservation. Through this method, the price per unit consumed increases as total
volumes consumed grow. The consumer becomes aware of consumption through
metering with the charges increasing dramatically with usage. Hence, there normally is
awareness that exercising control over usage can produce significant savings. This
method not only encourages conservation methods, but may also penalize legitimate
high-volume users if not properly structured.
Figure 6-1 provides a schematic representation of the various rate structures (note
property tax as a basis for revenue recovery has not been presented for comparison, as
the proportion of taxes paid varies in direct proportion to the market value of the
property). The graphs on the left-hand side of the figure present the cost per unit for
each additional amount of water consumed. The right-hand side of the figure presents
the impact on the customer's bill as the volume of water increases. Following the
schematic is a table summarizing each rate structure.
Watson & Associates Economists Ltd.
PAGE 6-8
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Figure 6-1
"Rate Structure"
"Impact on Individual Customer"
Flat Rate:
Cost Per Unit
Total Bill Charged
Volume
Volume
Constant Rate:
Cost Per Unit
Total Bill Charged
Volume
Volume
Declining Block Rate:
Cost Per Unit
Total Bill Charged
Volume
Volume
Increasing Block Rate:
Cost Per Unit
Total Bill Charged
Volume
Volume
Hump Back Rate:
Cost Per Unit
Total Bill Charged
Volume
Volume
WATER RATE PRICING CONCEPTS
Watson & Associates Economists Ltd.
PAGE 6-9
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Figure 6-2
Summary of Various Rate Structures and their Impact on Customer Bills as Volume
Usage Increases
Rate Structure
Cost Per Unit As Volume
Increases
Impact On Customer Bill
As Volume Increases
Flat Rate
Cost per unit decreases as
more volume consumed
Bill remains the same no
matter how much volume
is consumed
Constant Rate
Cost per unit remains the
same
Bill increases in direct
proportion to consumption
Declining Block
Cost per unit decreases as
threshold targets are
achieved
Bill increases at a slower
rate as volumes increase
Increasing Block
Cost per unit increases as
threshold targets are
achieved
Bill increases at a faster
rate as volumes increase
Hump Back Rate
Combination of an
increasing block at the
lower consumption
volumes and then converts
to a declining block for the
high consumption
Bill increases at a faster
rate at the lower
consumption amounts and
then slows as volumes
increase
6.4 Rate Structures in Ontario
In a past survey of over 170 municipalities (approximately half of the municipalities who
provide water and/or sewer), all forms of rate structures are in use by Ontario
municipalities. The most common rate structure is the constant rate (for metered
municipalities). Most municipalities (approximately 92%) who have volume rate
structures also impose a base monthly charge.
Historically, the development of a base charge often reflected either the recovery of
meter reading/billing/collection costs, plus administration or those costs plus certain
fixed costs (such as capital contributions or reserve contributions). More recently, many
municipalities have started to establish base charges based on ensuring a secure
Watson & Associates Economists Ltd.
PAGE 6-10
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
portion of the revenue stream which does not vary with volume consumption. Selection
of the quantum of the base charge is a matter of policy selected by individual
municipalities.
6.5 Recommended Rate Structures and Base Charges
The P.U.C. currently utilizes a base charge (separated between urban vs. rural
customers) and a 2-Step declining block volume rate for its water and wastewater
customers. It is recommended that the same rate structures be continued in the future.
In order to provide for the P.U.C.'s capital expenditures, future asset replacement
needs, payments to the Tri-County Water Supply System, as well as the day-to-day
operating expenditures, the water base charges for urban customers are proposed to
increase by 4% annually. For rural customers, their base charges are an additional $1
to $5 on top of the urban base charges, depending on meter size as outlined below:
- ¾" = $1.00
- 1" = $1.50
- 1 ¼" = $2.00
- 1 ½" = $ 2.50
- 2" = $3.00
- 3" = $3.50
- 4" = $4.00
- 6" = $4.50
- 8" = $5.00
With respect to wastewater, the base charges are also calculated to increase by 4% on
an annual basis over the forecast period.
The above increases in the base charges are recommended to ensure that the
Municipality can fund the capital and operating costs while minimizing the need for
debentures.
The forecasted base charges and corresponding revenues are provided in Tables 6-1,
6-2, and 6-3.
Watson & Associates Economists Ltd.
PAGE 6-11
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 6-1
Municipality of Chatham-Kent P.U.C.
Base Charge Forecast - Water - Urban Customers
Water
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
32,696
32,696
32,696
32,696
32,696
32,696
32,696
32,696
32,696
32,696
32,696
New
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Total Customers
32,809
33,035
33,261
33,487
33,713
33,939
34,165
34,391
34,617
34,843
35,069
Total Annual Revenue
$11,621,577
$12,165,808
$12,734,983
$13,330,227
$13,952,715
$14,603,673
$15,284,384
$15,996,185
$16,740,476
$17,518,716
$18,332,431
¾" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
31,738
31,738
31,738
31,738
31,738
31,738
31,738
31,738
31,738
31,738
31,738
New
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Subtotal Customers
31,851
32,077
32,303
32,529
32,755
32,981
33,207
33,433
33,659
33,885
34,111
Monthly Base Charge
$28.14
$29.27
$30.44
$31.65
$32.92
$34.24
$35.61
$37.03
$38.51
$40.05
$41.65
Annual Base Charge
$337.68
$351.19
$365.23
$379.84
$395.04
$410.84
$427.27
$444.36
$462.14
$480.62
$499.85
Total Annual Revenue
$10,755,446
$11,265,032
$11,798,176
$12,355,948
$12,939,464
$13,549,893
$14,188,452
$14,856,416
$15,555,116
$16,285,942
$17,050,345
1" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
294
294
294
294
294
294
294
294
294
294
294
New
Subtotal Customers
294
294
294
294
294
294
294
294
294
294
294
Monthly Base Charge
$32.08
$33.36
$34.70
$36.09
$37.53
$39.03
$40.59
$42.22
$43.90
$45.66
$47.49
Annual Base Charge
$384.96
$400.36
$416.37
$433.03
$450.35
$468.36
$487.10
$506.58
$526.84
$547.92
$569.83
Total Annual Revenue
$113,178
$117,705
$122,414
$127,310
$132,403
$137,699
$143,207
$148,935
$154,892
$161,088
$167,531
1 ¼" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
23
23
23
23
23
23
23
23
23
23
23
New
Subtotal Customers
23
23
23
23
23
23
23
23
23
23
23
Monthly Base Charge
$47.00
$48.88
$50.84
$52.87
$54.98
$57.18
$59.47
$61.85
$64.32
$66.90
$69.57
Annual Base Charge
$564.00
$586.56
$610.02
$634.42
$659.80
$686.19
$713.64
$742.19
$771.87
$802.75
$834.86
Total Annual Revenue
$12,972
$13,491
$14,031
$14,592
$15,175
$15,782
$16,414
$17,070
$17,753
$18,463
$19,202
1 ½" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
169
169
169
169
169
169
169
169
169
169
169
New
Subtotal Customers
169
169
169
169
169
169
169
169
169
169
169
Monthly Base Charge
$66.70
$69.37
$72.14
$75.03
$78.03
$81.15
$84.40
$87.77
$91.28
$94.93
$98.73
Annual Base Charge
$800.40
$832.42
$865.71
$900.34
$936.35
$973.81
$1,012.76
$1,053.27
$1,095.40
$1,139.22
$1,184.79
Total Annual Revenue
$135,268
$140,678
$146,305
$152,158
$158,244
$164,574
$171,157
$178,003
$185,123
$192,528
$200,229
2" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
370
370
370
370
370
370
370
370
370
370
370
New
Subtotal Customers
370
370
370
370
370
370
370
370
370
370
370
Monthly Base Charge
$87.24
$90.73
$94.36
$98.13
$102.06
$106.14
$110.39
$114.80
$119.39
$124.17
$129.14
Annual Base Charge
$1,046.88
$1,088.76
$1,132.31
$1,177.60
$1,224.70
$1,273.69
$1,324.64
$1,377.62
$1,432.73
$1,490.04
$1,549.64
Total Annual Revenue
$387,346
$402,839
$418,953
$435,711
$453,140
$471,265
$490,116
$509,720
$530,109
$551,314
$573,366
3" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
55
55
55
55
55
55
55
55
55
55
55
New
Subtotal Customers
55
55
55
55
55
55
55
55
55
55
55
Monthly Base Charge
$147.46
$153.36
$159.49
$165.87
$172.51
$179.41
$186.58
$194.05
$201.81
$209.88
$218.28
Annual Base Charge
$1,769.52
$1,840.30
$1,913.91
$1,990.47
$2,070.09
$2,152.89
$2,239.01
$2,328.57
$2,421.71
$2,518.58
$2,619.32
Total Annual Revenue
$97,324
$101,217
$105,265
$109,476
$113,855
$118,409
$123,145
$128,071
$133,194
$138,522
$144,063
5.90
6.13
6.38
6.63
6.90
7.18
7.46
7.76
8.07
8.40
4" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
38
38
38
38
38
38
38
38
38
38
38
New
Subtotal Customers
38
38
38
38
38
38
38
38
38
38
38
Monthly Base Charge
$186.60
$194.06
$201.83
$209.90
$218.30
$227.03
$236.11
$245.55
$255.37
$265.59
$276.21
Annual Base Charge
$2,239.20
$2,328.77
$2,421.92
$2,518.80
$2,619.55
$2,724.33
$2,833.30
$2,946.63
$3,064.50
$3,187.08
$3,314.56
Total Annual Revenue
$85,090
$88,493
$92,033
$95,714
$99,543
$103,525
$107,665
$111,972
$116,451
$121,109
$125,953
7.46
7.76
8.07
8.40
8.73
9.08
9.44
9.82
10.21
10.62
6" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
6
6
6
6
6
6
6
6
6
6
6
New
Subtotal Customers
6
6
6
6
6
6
6
6
6
6
6
Monthly Base Charge
$277.49
$288.59
$300.13
$312.14
$324.62
$337.61
$351.11
$365.16
$379.76
$394.95
$410.75
Annual Base Charge
$3,329.88
$3,463.08
$3,601.60
$3,745.66
$3,895.49
$4,051.31
$4,213.36
$4,381.89
$4,557.17
$4,739.46
$4,929.04
Total Annual Revenue
$19,979
$20,778
$21,610
$22,474
$23,373
$24,308
$25,280
$26,291
$27,343
$28,437
$29,574
11.10
11.54
12.01
12.49
12.98
13.50
14.04
14.61
15.19
15.80
8" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
3
3
3
3
3
3
3
3
3
3
3
New
Subtotal Customers
3
3
3
3
3
3
3
3
3
3
3
Monthly Base Charge
$415.97
$432.61
$449.91
$467.91
$486.63
$506.09
$526.33
$547.39
$569.28
$592.06
$615.74
Annual Base Charge
$4,991.64
$5,191.31
$5,398.96
$5,614.92
$5,839.51
$6,073.09
$6,316.02
$6,568.66
$6,831.40
$7,104.66
$7,388.85
Total Annual Revenue
$14,975
$15,574
$16,197
$16,845
$17,519
$18,219
$18,948
$19,706
$20,494
$21,314
$22,167
Watson & Associates Economists Ltd.
PAGE 6-12
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 6-2
Municipality of Chatham-Kent P.U.C.
Base Charge Forecast - Water - Rural Customers
Water
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
New
-
-
-
-
-
-
-
-
-
-
-
Total Customers
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
5,640
Total Annual Revenue
$2,090,703
$2,174,275
$2,258,376
$2,345,840
$2,436,804
$2,531,406
$2,629,792
$2,732,113
$2,838,528
$2,949,199
$3,064,297
¾" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
New
Subtotal Customers
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
5,365
Monthly Base Charge
$29.14
$30.27
$31.44
$32.65
$33.92
$35.24
$36.61
$38.03
$39.51
$41.05
$42.65
Annual Base Charge
$349.68
$363.19
$377.23
$391.84
$407.04
$422.84
$439.27
$456.36
$474.14
$492.62
$511.85
Total Annual Revenue
$1,876,033
$1,948,499
$2,023,864
$2,102,243
$2,183,758
$2,268,533
$2,356,699
$2,448,392
$2,543,752
$2,642,927
$2,746,069
1" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
144
144
144
144
144
144
144
144
144
144
144
New
Subtotal Customers
144
144
144
144
144
144
144
144
144
144
144
Monthly Base Charge
$33.33
$34.86
$36.20
$37.59
$39.03
$40.53
$42.09
$43.72
$45.40
$47.16
$48.99
Annual Base Charge
$399.96
$418.36
$434.37
$451.03
$468.35
$486.36
$505.10
$524.58
$544.84
$565.92
$587.83
Total Annual Revenue
$57,594
$60,244
$62,550
$64,948
$67,442
$70,036
$72,734
$75,540
$78,458
$81,492
$84,648
1 ¼" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
1
1
1
1
1
1
1
1
1
1
1
New
Subtotal Customers
1
1
1
1
1
1
1
1
1
1
1
Monthly Base Charge
$48.00
$50.88
$52.84
$54.87
$56.98
$59.18
$61.47
$63.85
$66.32
$68.90
$71.57
Annual Base Charge
$576.00
$610.56
$634.02
$658.42
$683.80
$710.19
$737.64
$766.19
$795.87
$826.75
$858.86
Total Annual Revenue
$576
$611
$634
$658
$684
$710
$738
$766
$796
$827
$859
1 ½" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
23
23
23
23
23
23
23
23
23
23
23
New
Subtotal Customers
23
23
23
23
23
23
23
23
23
23
23
Monthly Base Charge
$68.20
$71.87
$74.64
$77.53
$80.53
$83.65
$86.90
$90.27
$93.78
$97.43
$101.23
Annual Base Charge
$818.40
$862.42
$895.71
$930.34
$966.35
$1,003.81
$1,042.76
$1,083.27
$1,125.40
$1,169.22
$1,214.79
Total Annual Revenue
$18,823
$19,836
$20,601
$21,398
$22,226
$23,088
$23,984
$24,915
$25,884
$26,892
$27,940
2" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
88
88
88
88
88
88
88
88
88
88
88
New
Subtotal Customers
88
88
88
88
88
88
88
88
88
88
88
Monthly Base Charge
$88.74
$93.73
$97.36
$101.13
$105.06
$109.14
$113.39
$117.80
$122.39
$127.17
$132.14
Annual Base Charge
$1,064.88
$1,124.76
$1,168.31
$1,213.60
$1,260.70
$1,309.69
$1,360.64
$1,413.62
$1,468.73
$1,526.04
$1,585.64
Total Annual Revenue
$93,709
$98,978
$102,811
$106,797
$110,942
$115,253
$119,736
$124,399
$129,248
$134,291
$139,536
3" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
5
5
5
5
5
5
5
5
5
5
5
New
Subtotal Customers
5
5
5
5
5
5
5
5
5
5
5
Monthly Base Charge
$149.46
$156.86
$162.99
$169.37
$176.01
$182.91
$190.08
$197.55
$205.31
$213.38
$221.78
Annual Base Charge
$1,793.52
$1,882.30
$1,955.91
$2,032.47
$2,112.09
$2,194.89
$2,281.01
$2,370.57
$2,463.71
$2,560.58
$2,661.32
Total Annual Revenue
$8,968
$9,412
$9,780
$10,162
$10,560
$10,974
$11,405
$11,853
$12,319
$12,803
$13,307
4" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
11
11
11
11
11
11
11
11
11
11
11
New
Subtotal Customers
11
11
11
11
11
11
11
11
11
11
11
Monthly Base Charge
$188.10
$198.06
$205.83
$213.90
$222.30
$231.03
$240.11
$249.55
$259.37
$269.59
$280.21
Annual Base Charge
$2,257.20
$2,376.77
$2,469.92
$2,566.80
$2,667.55
$2,772.33
$2,881.30
$2,994.63
$3,112.50
$3,235.08
$3,362.56
Total Annual Revenue
$24,829
$26,144
$27,169
$28,235
$29,343
$30,496
$31,694
$32,941
$34,237
$35,586
$36,988
6" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
3
3
3
3
3
3
3
3
3
3
3
New
Subtotal Customers
3
3
3
3
3
3
3
3
3
3
3
Monthly Base Charge
$282.49
$293.09
$304.63
$316.64
$329.12
$342.11
$355.61
$369.66
$384.26
$399.45
$415.25
Annual Base Charge
$3,389.88
$3,517.08
$3,655.60
$3,799.66
$3,949.49
$4,105.31
$4,267.36
$4,435.89
$4,611.17
$4,793.46
$4,983.04
Total Annual Revenue
$10,170
$10,551
$10,967
$11,399
$11,848
$12,316
$12,802
$13,308
$13,834
$14,380
$14,949
8" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
0
0
0
0
0
0
0
0
0
0
0
New
Subtotal Customers
-
-
-
-
-
-
-
-
-
-
-
Monthly Base Charge
$420.47
$437.61
$454.91
$472.91
$491.63
$511.09
$531.33
$552.39
$574.28
$597.06
$620.74
Annual Base Charge
$5,045.64
$5,251.31
$5,458.96
$5,674.92
$5,899.51
$6,133.09
$6,376.02
$6,628.66
$6,891.40
$7,164.66
$7,448.85
Total Annual Revenue
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Watson & Associates Economists Ltd.
PAGE 6-13
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table 6-3
Municipality of Chatham-Kent P.U.C.
Base Charge Forecast - Wastewater
Wastewater
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
30,990
New
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Subtotal Customers
31,103
31,329
31,555
31,781
32,007
32,233
32,459
32,685
32,911
33,137
33,363
Total Annual Revenue
$11,355,036
$11,893,175
$12,456,197
$13,045,232
$13,661,460
$14,306,113
$14,980,480
$15,685,907
$16,423,799
$17,195,626
$18,002,920
¾" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
30,129
30,129
30,129
30,129
30,129
30,129
30,129
30,129
30,129
30,129
30,129
New
113
339
565
791
1,017
1,243
1,469
1,695
1,921
2,147
2,373
Subtotal Customers
30,242
30,468
30,694
30,920
31,146
31,372
31,598
31,824
32,050
32,276
32,502
Monthly Base Charge
$29.76
$30.95
$32.19
$33.48
$34.81
$36.21
$37.66
$39.16
$40.73
$42.36
$44.05
Annual Base Charge
$357.12
$371.40
$386.26
$401.71
$417.78
$434.49
$451.87
$469.95
$488.74
$508.29
$528.62
Total Annual Revenue
$10,800,023
$11,315,961
$11,855,895
$12,420,917
$13,012,172
$13,630,854
$14,278,211
$14,955,547
$15,664,225
$16,405,669
$17,181,365
$1.19
$1.24
$1.29
$1.34
$1.39
$1.45
$1.51
$1.57
$1.63
$1.69
1" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
250
250
250
250
250
250
250
250
250
250
250
New
Subtotal Customers
250
250
250
250
250
250
250
250
250
250
250
Monthly Base Charge
$34.24
$35.61
$37.03
$38.52
$40.06
$41.66
$43.32
$45.06
$46.86
$48.73
$50.68
Annual Base Charge
$410.88
$427.32
$444.41
$462.18
$480.67
$499.90
$519.89
$540.69
$562.32
$584.81
$608.20
Total Annual Revenue
$102,720
$106,829
$111,102
$115,546
$120,168
$124,975
$129,974
$135,173
$140,579
$146,203
$152,051
1 ¼" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
22
22
22
22
22
22
22
22
22
22
22
New
Subtotal Customers
22
22
22
22
22
22
22
22
22
22
22
Monthly Base Charge
$38.10
$39.62
$41.21
$42.86
$44.57
$46.35
$48.21
$50.14
$52.14
$54.23
$56.40
Annual Base Charge
$457.20
$475.49
$494.51
$514.29
$534.86
$556.25
$578.50
$601.64
$625.71
$650.74
$676.77
Total Annual Revenue
$10,058
$10,461
$10,879
$11,314
$11,767
$12,238
$12,727
$13,236
$13,766
$14,316
$14,889
1 ½" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
164
164
164
164
164
164
164
164
164
164
164
New
Subtotal Customers
164
164
164
164
164
164
164
164
164
164
164
Monthly Base Charge
$44.95
$46.75
$48.62
$50.56
$52.59
$54.69
$56.88
$59.15
$61.52
$63.98
$66.54
Annual Base Charge
$539.40
$560.98
$583.42
$606.75
$631.02
$656.26
$682.51
$709.81
$738.21
$767.73
$798.44
Total Annual Revenue
$88,462
$92,000
$95,680
$99,507
$103,488
$107,627
$111,932
$116,409
$121,066
$125,908
$130,945
2" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
329
329
329
329
329
329
329
329
329
329
329
New
Subtotal Customers
329
329
329
329
329
329
329
329
329
329
329
Monthly Base Charge
$64.01
$66.57
$69.23
$72.00
$74.88
$77.88
$80.99
$84.23
$87.60
$91.11
$94.75
Annual Base Charge
$768.12
$798.84
$830.80
$864.03
$898.59
$934.54
$971.92
$1,010.79
$1,051.23
$1,093.27
$1,137.01
Total Annual Revenue
$252,711
$262,820
$273,333
$284,266
$295,637
$307,462
$319,761
$332,551
$345,853
$359,687
$374,075
3" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
52
52
52
52
52
52
52
52
52
52
52
New
Subtotal Customers
52
52
52
52
52
52
52
52
52
52
52
Monthly Base Charge
$74.13
$77.10
$80.18
$83.39
$86.72
$90.19
$93.80
$97.55
$101.45
$105.51
$109.73
Annual Base Charge
$889.56
$925.14
$962.15
$1,000.63
$1,040.66
$1,082.29
$1,125.58
$1,170.60
$1,217.42
$1,266.12
$1,316.77
Total Annual Revenue
$46,257
$48,107
$50,032
$52,033
$54,114
$56,279
$58,530
$60,871
$63,306
$65,838
$68,472
4" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
36
36
36
36
36
36
36
36
36
36
36
New
Subtotal Customers
36
36
36
36
36
36
36
36
36
36
36
Monthly Base Charge
$95.56
$99.38
$103.36
$107.49
$111.79
$116.26
$120.91
$125.75
$130.78
$136.01
$141.45
Annual Base Charge
$1,146.72
$1,192.59
$1,240.29
$1,289.90
$1,341.50
$1,395.16
$1,450.97
$1,509.01
$1,569.37
$1,632.14
$1,697.43
Total Annual Revenue
$41,282
$42,933
$44,651
$46,437
$48,294
$50,226
$52,235
$54,324
$56,497
$58,757
$61,107
6" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
6
6
6
6
6
6
6
6
6
6
6
New
Subtotal Customers
6
6
6
6
6
6
6
6
6
6
6
Monthly Base Charge
$134.04
$139.40
$144.98
$150.78
$156.81
$163.08
$169.60
$176.39
$183.44
$190.78
$198.41
Annual Base Charge
$1,608.48
$1,672.82
$1,739.73
$1,809.32
$1,881.69
$1,956.96
$2,035.24
$2,116.65
$2,201.32
$2,289.37
$2,380.94
Total Annual Revenue
$9,651
$10,037
$10,438
$10,856
$11,290
$11,742
$12,211
$12,700
$13,208
$13,736
$14,286
8" Meter Size
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Existing
2
2
2
2
2
2
2
2
2
2
2
New
Subtotal Customers
2
2
2
2
2
2
2
2
2
2
2
Monthly Base Charge
$161.33
$167.78
$174.49
$181.47
$188.73
$196.28
$204.13
$212.30
$220.79
$229.62
$238.81
Annual Base Charge
$1,935.96
$2,013.40
$2,093.93
$2,177.69
$2,264.80
$2,355.39
$2,449.61
$2,547.59
$2,649.49
$2,755.47
$2,865.69
Total Annual Revenue
$3,872
$4,027
$4,188
$4,355
$4,530
$4,711
$4,899
$5,095
$5,299
$5,511
$5,731
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 7
Analysis of Water and
Wastewater Rates and Policy
Matters
Watson & Associates Economists Ltd.
PAGE 7-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
7. Analysis of Water and Wastewater Rates and
Policy Matters
7.1 Introduction
To summarize the analysis undertaken thus far, Chapter 2 reviewed capital-related
issues and responds to the provincial directives to maintain and upgrade infrastructure
to required levels. Chapter 4 provided a review of capital financing options to which
water and wastewater reserve contributions will be the predominant basis for financing
future capital replacement. Chapter 5 established the 10-year operating forecast of
expenditures including an annual capital reserve contribution. The base charge
revenues identified in Chapter 6 are to ensure that fixed costs are recovered regardless
of the amount of volume used by customers. This chapter will provide for the
calculation of the volume rates over the forecast period. These calculations will be
based on the net operating expenditures (the variable costs) provided in Chapter 5,
divided by the water and wastewater volume forecast provided in section 1.8.
7.2 Water Rates
Based on the discussion of rate structures provided in section 6.5 and the
recommendation to continue with the present structures, the rates are calculated by
taking the net recoverable amounts from Table 5-1 (the product of total expenditures
less non-rate revenues and deduct the base charge amounts provided in section 6.5)
and completes the calculation by dividing them by the volumes resulting in the
forecasted rates. Of the P.U.C.'s 2-Step declining block volume rates, Step 1 (which
consist of volumes less than 67m3 per day) are anticipated to increase by:
- 15% per year from 2025 to 2027;
- 10% per year from 2028 to 2030; and
- 5% per year from 2031 onwards.
With respect to the Step 2 rate (volumes equal to or greater than 67m3 per day), the
rates will be discount by $0.40 of the Step 1 rate.
Watson & Associates Economists Ltd.
PAGE 7-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
These increases are required in order to fund the operating and capital expenditure
forecast, while providing reserve fund transfers to prepare for the future lifecycle
requirements. Detailed calculations of the volume rates are provided in Appendix A. A
summary of the recommended base charge and 2-Step declining block volume rates,
along with the total annual bill for an average residential urban and rural user who
consumes 188 cubic meters per year, are presented in Tables 7-1 and 7-2.
Table 7-1
Annual Urban Customer Water Bill
Based on 188 cubic metres of usage and ¾" Water Meter
Table 7-2
Annual Rural Customer Water Bill
Based on 188 cubic metres of usage and ¾" Water Meter
7.3 Wastewater Rates
Similar to water, the calculation of the wastewater rates takes the net recoverable
amounts from Table 5-2 and completes the calculation by dividing them by the volumes,
resulting in the forecast rates. Detailed calculations are provided in Appendix B.
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$28.14
$29.27
$30.44
$31.65
$32.92
$34.24
$35.61
$37.03
$38.51
$40.05
$41.65
Step 1 Rate
$1.42
$1.63
$1.88
$2.16
$2.38
$2.61
$2.87
$3.02
$3.17
$3.33
$3.49
Step 2 Rate
$0.87
$1.23
$1.48
$1.76
$1.98
$2.21
$2.47
$2.62
$2.77
$2.93
$3.09
Annual Base Rate Bill
$337.68
$351.19
$365.23
$379.84
$395.04
$410.84
$427.27
$444.36
$462.14
$480.62
$499.85
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$266.96
$307.00
$353.05
$406.01
$446.61
$491.28
$540.40
$567.42
$595.79
$625.58
$656.86
Total Annual Bill
$604.64
$658.19
$718.29
$785.86
$841.65
$902.11
$967.68
$1,011.79
$1,057.93
$1,106.21
$1,156.71
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$29.14
$30.27
$31.44
$32.65
$33.92
$35.24
$36.61
$38.03
$39.51
$41.05
$42.65
Step 1 Rate
$1.42
$1.63
$1.88
$2.16
$2.38
$2.61
$2.87
$3.02
$3.17
$3.33
$3.49
Step 2 Rate
$0.87
$1.23
$1.48
$1.76
$1.98
$2.21
$2.47
$2.62
$2.77
$2.93
$3.09
Annual Base Rate Bill
$349.68
$363.19
$377.23
$391.84
$407.04
$422.84
$439.27
$456.36
$474.14
$492.62
$511.85
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$266.96
$307.00
$353.05
$406.01
$446.61
$491.28
$540.40
$567.42
$595.79
$625.58
$656.86
Total Annual Bill
$616.64
$670.19
$730.29
$797.86
$853.65
$914.11
$979.68
$1,023.79
$1,069.93
$1,118.21
$1,168.71
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Watson & Associates Economists Ltd.
PAGE 7-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Based on the capital and operating needs over the forecast period, Step 1 of the P.U.C.
declining block volume rate (which consist of volumes less than 67m3 per day) are
anticipated to increase by:
- 15% per year from 2025 to 2027;
- 10% per year from 2028 to 2030; and
- 5% per year from 2031 onwards.
With respect to the Step 2 rate (volumes equal to or greater than 67m3 per day), the
rates will be discount by $0.40 of the Step 1 rate.
Table 7-3 summarizes the recommended rates for wastewater and provides the
average annual bill for a residential customer who uses 188 cubic meters per year:
Table 7-3
Annual Customer Wastewater Bill
Based on 188 cubic metres of usage and ¾" Water Meter
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Monthly Base Rate
$29.76
$30.95
$32.19
$33.48
$34.81
$36.21
$37.66
$39.16
$40.73
$42.36
$44.05
Step 1 Rate
$1.45
$1.67
$1.92
$2.21
$2.43
$2.67
$2.94
$3.08
$3.24
$3.40
$3.57
Step 2 Rate
$0.86
$1.27
$1.52
$1.81
$2.03
$2.27
$2.54
$2.68
$2.84
$3.00
$3.17
Annual Base Rate Bill
$357.12
$371.40
$386.26
$401.71
$417.78
$434.49
$451.87
$469.95
$488.74
$508.29
$528.62
Step 1 (<67 m3 per day)
188
188
188
188
188
188
188
188
188
188
188
Step 2 (Balance)
-
-
-
-
-
-
-
-
-
-
-
Annual Volume Bill
$272.60
$313.49
$360.51
$414.59
$456.05
$501.65
$551.82
$579.41
$608.38
$638.80
$670.74
Total Annual Bill
$629.72
$684.89
$746.77
$816.30
$873.83
$936.15
$1,003.69
$1,049.36
$1,097.12
$1,147.09
$1,199.37
% Increase - Base Rate
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
% Increase - Volume Rate
15%
15%
15%
10%
10%
10%
5%
5%
5%
5%
% Increase - Total Annual Bill
9%
9%
9%
7%
7%
7%
5%
5%
5%
5%
Watson & Associates Economists Ltd.
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Chapter 8
Recommendations
Watson & Associates Economists Ltd.
PAGE 8-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
8. Recommendations
As presented within this report, capital and operating expenditures have been identified
and forecast over a ten-year period for water and wastewater services.
Based upon the foregoing, the following recommendations are identified for
consideration by the Commission and Council:
1. That the Commission and Council provide for the recovery of all water and
wastewater costs through full cost recovery rates.
2. That the Commission and Council consider the Capital Plan for water and
wastewater as provided in Tables 2-1 and 2-2 and the associated Capital
Financing Plan as set out in Tables 4-3 and 4-4.
3. That the Commission and Council consider the base charges provided in Tables
6-1 and 6-2 for water (urban and rural customers) and Table 6-3 for wastewater.
4. That the Commission and Council consider the 2-Step declining block volume
rates for water (urban and rural) and wastewater as provided in Tables 7-1, 7-2,
and 7-3 respectively.
Appendices
Watson & Associates Economists Ltd.
PAGE A-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Appendix A
Detailed Water Rate
Calculations
Watson & Associates Economists Ltd.
PAGE A-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Appendix A: Detailed Water Rate Calculations
Table A-1
Municipality of Chatham-Kent P.U.C.
Water Service
Capital Budget Forecast (Uninflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Raw Water Pumping Station
-
3,557,250
-
-
-
-
-
-
-
3,557,250
-
-
11 kms of new 600mm transmission main from existing Water Treatment Plant Highlift
pumping station to the Southwest area of Chatham Water System (Partial Ring TM).
Refer to Figure 10-1
-
38,208,788
-
-
-
-
-
-
-
3,820,879
17,193,955
17,193,955
Increase storage capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-4
-
19,400,000
1,940,000
8,730,000
8,730,000
-
-
-
-
-
-
-
Increase treatment capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-1
-
206,700,000
-
-
20,670,000
93,015,000
93,015,000
-
-
-
-
-
Increase pumping capacity at the existing Chatham Water Treatment Plant Highlift
Pumping Station.
-
3,091,500
-
-
3,091,500
-
-
-
-
-
-
-
Conduct condition assessment for existing raw water transmission main.
1,500,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
300mm watermain from Thamesville Elevated Tank to Zone 6 Rd. Refer to Figure 10-2
-
7,200,000
-
-
-
-
-
-
-
7,200,000
-
-
Zone 6 Road to Delaware Nation 200mm watermain Refer to Figure 10-2
-
1,150,000
-
-
-
-
-
-
-
-
1,150,000
-
New Booster Pump Station at the Northeast corner of Zone 5 Road and Baseline. Refer
to Figure 10-2
-
300,000
-
-
-
-
-
-
-
-
300,000
-
New 300mm watermain from Zone 6 Rd and Baseline to Bothwell. Refer to Figure 10-2
-
9,720,000
-
-
-
-
-
-
-
-
-
9,720,000
Replace the Thamesville Standpipe with a 2.3ML Standpipe. Refer to Figure 10-2
-
5,000,000
-
-
-
-
-
5,000,000
-
-
-
-
300mm Integration Transmission Main for Blenheim and Ridgetown. Refer to Figure 10-
3
-
24,425,625
-
-
-
12,212,813
12,212,813
-
-
-
-
-
Retrofitting existing water treatment plant as pumping station for Ridgetown.
-
5,070,000
-
-
-
5,070,000
-
-
-
-
-
-
Replacement / Rehabilitation of the existing Ridgetown Elevated Tank.
-
10,000,000
-
-
10,000,000
-
-
-
-
-
-
-
New Water Treatment Plant for Wallaceburg-Dresden Integrated Water System.
-
57,519,000
-
-
-
5,751,900
25,883,550
25,883,550
-
-
-
-
New storage reservoir (56ML).
-
52,090,000
-
-
-
5,209,000
23,440,500
23,440,500
-
-
-
-
New intake and lowlift pumping station for new Wallaceburg Water Treatment Plant.
-
13,266,000
-
-
-
1,326,600
5,969,700
5,969,700
-
-
-
-
New raw water transmission main.
-
29,636,000
-
-
-
2,963,600
13,336,200
13,336,200
-
-
-
-
600mm Treated water transmission main. Refer to Figure 10-4
-
32,800,000
-
3,280,000
14,760,000
14,760,000
-
-
-
-
-
-
2.6 km New Charing Cross Road 600mm transmission main. Refer to Figure 10-5
-
7,730,600
-
-
-
-
-
-
7,730,600
-
-
-
5.6 km of new 200mm local distribution system Looping. Refer to Figure 10-6
-
7,214,063
-
-
-
-
-
7,214,063
-
-
-
-
Increase pumping capacity at the existing South Chatham Kent Water Treatment Plant
Highlift Pumping Station.
-
1,113,005
-
-
1,113,005
-
-
-
-
-
-
-
New Booster Pumping Station to transfer water supply from Wheatley WS to Tilbury WS.
Refer to Figure 10-7
-
2,410,250
-
-
-
-
-
2,410,250
-
-
-
-
New local booster pumping station for east of Wheatley WS. Refer to Figure 10-7
-
1,951,250
-
-
-
-
-
-
-
-
-
1,951,250
Decommissioning of Tilbury inground reservoir and pumping station.
-
2,025,000
-
-
-
-
-
-
-
2,025,000
-
-
Various Investigative Studies
-
750,000
150,000
150,000
150,000
150,000
150,000
Preventative Maintenance of the Composite Elevated Tanks, Stand Pipes and Spheroid
Tanks, and their replacement.
2,000,000
20,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
40,000
20,000
20,000
Wheatley WTP Rehabilitation
4,500,000
4,500,000
4,500,000
Decommissioning - Dealtown WTP
750,000
750,000
Decommissioning - Dresden WTP
750,000
750,000
Ridgetown S2 & C2 Well pump and adapter
450,000
600,000
600,000
600mm Transmission Main Eberts-KBR - phase 1 for NE WDS
11,771,821
11,771,821
Elevated Tank Michell's Bay - Tender and Construction
3,498,491
-
Annual Watermain Lifecycle Replacement
4,500,000
85,500,000
6,000,000
7,500,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
Total Capital Expenditures
16,468,491
667,240,152
16,190,000
33,431,821
70,264,505
152,208,913
185,027,763
94,254,263
18,730,600
27,603,129
29,643,955
39,885,205
Forecast
Total
Description
Watson & Associates Economists Ltd.
PAGE A-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table A-2
Municipality of Chatham-Kent P.U.C.
Water Service
Capital Budget Forecast (Inflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Raw Water Pumping Station
-
5,670,000
-
-
-
-
-
-
-
5,670,000
-
-
11 kms of new 600mm transmission main from existing Water Treatment Plant
Highlift pumping station to the Southwest area of Chatham Water System (Partial
Ring TM). Refer to Figure 10-1
-
65,931,000
-
-
-
-
-
-
-
6,090,000
29,049,000
30,792,000
Increase storage capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-4
-
22,263,000
2,056,000
9,809,000
10,398,000
-
-
-
-
-
-
-
Increase treatment capacity at the existing Chatham Water Treatment Plant. Refer to
Figure 7-1
-
266,522,000
-
-
24,618,000
117,429,000
124,475,000
-
-
-
-
-
Increase pumping capacity at the existing Chatham Water Treatment Plant Highlift
Pumping Station.
-
3,682,000
-
-
3,682,000
-
-
-
-
-
-
-
Conduct condition assessment for existing raw water transmission main.
1,500,000
1,060,000
1,060,000
-
-
-
-
-
-
-
-
-
300mm watermain from Thamesville Elevated Tank to Zone 6 Rd. Refer to Figure 10-
2
-
11,476,000
-
-
-
-
-
-
-
11,476,000
-
-
Zone 6 Road to Delaware Nation 200mm watermain Refer to Figure 10-2
-
1,943,000
-
-
-
-
-
-
-
-
1,943,000
-
New Booster Pump Station at the Northeast corner of Zone 5 Road and Baseline.
Refer to Figure 10-2
-
507,000
-
-
-
-
-
-
-
-
507,000
-
New 300mm watermain from Zone 6 Rd and Baseline to Bothwell. Refer to Figure 10-
2
-
17,407,000
-
-
-
-
-
-
-
-
-
17,407,000
Replace the Thamesville Standpipe with a 2.3ML Standpipe. Refer to Figure 10-2
-
7,093,000
-
-
-
-
-
7,093,000
-
-
-
-
300mm Integration Transmission Main for Blenheim and Ridgetown. Refer to Figure
10-3
-
31,761,000
-
-
-
15,418,000
16,343,000
-
-
-
-
-
Retrofitting existing water treatment plant as pumping station for Ridgetown.
-
6,401,000
-
-
-
6,401,000
-
-
-
-
-
-
Replacement / Rehabilitation of the existing Ridgetown Elevated Tank.
-
11,910,000
-
-
11,910,000
-
-
-
-
-
-
-
New Water Treatment Plant for Wallaceburg-Dresden Integrated Water System.
-
78,616,000
-
-
-
7,262,000
34,638,000
36,716,000
-
-
-
-
New storage reservoir (56ML).
-
71,196,000
-
-
-
6,576,000
31,369,000
33,251,000
-
-
-
-
New intake and lowlift pumping station for new Wallaceburg Water Treatment Plant.
-
18,132,000
-
-
-
1,675,000
7,989,000
8,468,000
-
-
-
-
New raw water transmission main.
-
40,506,000
-
-
-
3,741,000
17,847,000
18,918,000
-
-
-
-
600mm Treated water transmission main. Refer to Figure 10-4
-
39,898,000
-
3,685,000
17,579,000
18,634,000
-
-
-
-
-
-
2.6 km New Charing Cross Road 600mm transmission main. Refer to Figure 10-5
-
11,624,000
-
-
-
-
-
-
11,624,000
-
-
-
5.6 km of new 200mm local distribution system Looping. Refer to Figure 10-6
-
10,233,000
-
-
-
-
-
10,233,000
-
-
-
-
Increase pumping capacity at the existing South Chatham Kent Water Treatment Plant
Highlift Pumping Station.
-
1,326,000
-
-
1,326,000
-
-
-
-
-
-
-
New Booster Pumping Station to transfer water supply from Wheatley WS to Tilbury
WS. Refer to Figure 10-7
-
3,419,000
-
-
-
-
-
3,419,000
-
-
-
-
New local booster pumping station for east of Wheatley WS. Refer to Figure 10-7
-
3,494,000
-
-
-
-
-
-
-
-
-
3,494,000
Decommissioning of Tilbury inground reservoir and pumping station.
-
3,228,000
-
-
-
-
-
-
-
3,228,000
-
-
Various Investigative Studies
-
897,000
159,000
169,000
179,000
189,000
201,000
-
-
-
-
-
Preventative Maintenance of the Composite Elevated Tanks, Stand Pipes and
Spheroid Tanks, and their replacement.
2,000,000
27,943,000
2,120,000
2,247,000
2,382,000
2,525,000
2,676,000
2,837,000
3,007,000
3,188,000
3,379,000
3,582,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
63,000
-
-
-
-
27,000
-
-
-
-
36,000
Wheatley WTP Rehabilitation
4,500,000
4,770,000
4,770,000
-
-
-
-
-
-
-
-
-
Decommissioning - Dealtown WTP
-
947,000
-
-
-
947,000
-
-
-
-
-
-
Decommissioning - Dresden WTP
-
893,000
-
-
893,000
-
-
-
-
-
-
-
Ridgetown S2 & C2 Well pump and adapter
450,000
636,000
636,000
-
-
-
-
-
-
-
-
-
600mm Transmission Main Eberts-KBR - phase 1 for NE WDS
-
13,227,000
-
13,227,000
-
-
-
-
-
-
-
-
Elevated Tank Michell's Bay - Tender and Construction
3,498,491
-
-
-
-
-
-
-
-
-
-
-
Annual Watermain Lifecycle Replacement
4,500,000
85,500,000
6,000,000
7,500,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
9,000,000
Total Capital Expenditures
16,468,491
870,174,000
16,801,000
36,637,000
81,967,000
189,797,000
244,565,000
129,935,000
23,631,000
38,652,000
43,878,000
64,311,000
Capital Financing
Provincial/Federal Grants
-
Development Charges Reserve Fund
-
497,858,550
2,056,000
11,098,750
46,704,650
133,994,000
163,608,450
47,322,500
5,812,000
19,183,000
25,689,200
42,390,000
Non-Growth Related Debenture Requirements
-
149,687,300
-
8,122,250
11,426,350
22,297,650
52,228,550
55,612,500
-
-
-
-
Growth Related Debenture Requirements
-
-
-
-
-
-
-
-
-
-
-
-
Operating Contributions
-
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Reserve Fund - Facilities
6,100,000
86,041,950
7,526,000
2,247,000
13,764,000
18,369,350
13,500,000
11,500,000
3,007,000
6,023,000
3,379,000
6,726,600
Lifecycle Reserve Fund - Watermains
4,500,000
129,498,200
6,000,000
15,000,000
9,000,000
14,000,000
15,000,000
15,500,000
14,812,000
10,218,000
14,809,800
15,158,400
Water Reserve
5,868,491
7,088,000
1,219,000
169,000
1,072,000
1,136,000
228,000
-
-
3,228,000
-
36,000
Total Capital Financing
16,468,491
870,174,000
16,801,000
36,637,000
81,967,000
189,797,000
244,565,000
129,935,000
23,631,000
38,652,000
43,878,000
64,311,000
Total
Description
Forecast
Watson & Associates Economists Ltd.
PAGE A-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table A-3
Municipality of Chatham-Kent P.U.C.
Water Service
Water Debt Forecast
Inflated $
Table A-4
Municipality of Chatham-Kent P.U.C.
Water Service
Water Capital Reserve Continuity
Inflated $
Table A-5
Municipality of Chatham-Kent P.U.C.
Water Service
Water Development Charges Reserve Fund Continuity
Inflated $
Debenture
Principal
Year
(Inflated)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2025
-
-
-
-
-
-
-
-
-
-
2026
8,122,250
571,490
571,490
571,490
571,490
571,490
571,490
571,490
571,490
2027
11,426,350
803,970
803,970
803,970
803,970
803,970
803,970
803,970
2028
22,297,650
1,568,887
1,568,887
1,568,887
1,568,887
1,568,887
1,568,887
2029
52,228,550
3,674,857
3,674,857
3,674,857
3,674,857
3,674,857
2030
55,612,500
3,912,955
3,912,955
3,912,955
3,912,955
2031
-
-
-
-
2032
-
-
-
2033
-
-
2034
-
Total Annual Debt Charges
-
149,687,300
-
-
571,490
1,375,461
2,944,347
6,619,204
10,532,160
10,532,160
10,532,160
10,532,160
2024
Forecast
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
6,880,577
3,668,949
2,523,447
2,528,081
2,632,763
2,777,666
2,626,156
2,704,941
2,786,089
2,119,832
2,183,427
Transfer from Operating
2,550,000
-
100,000
1,100,000
1,200,000
-
-
-
2,500,000
-
-
Transfer to Capital
5,868,491
1,219,000
169,000
1,072,000
1,136,000
228,000
-
-
3,228,000
-
36,000
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
3,562,086
2,449,949
2,454,447
2,556,081
2,696,763
2,549,666
2,626,156
2,704,941
2,058,089
2,119,832
2,147,427
Interest
106,863
73,498
73,633
76,682
80,903
76,490
78,785
81,148
61,743
63,595
64,423
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
-
3,041,185
6,104,778
3,134,100
(36,076,195)
(165,842,867)
(329,445,711)
(377,588,715)
(383,791,226)
(403,285,186)
(429,358,659)
Development Charge Proceeds
2,952,607
4,941,784
8,036,788
8,545,118
9,057,703
9,601,113
10,177,225
10,787,874
11,435,210
12,121,320
12,848,670
Transfer to Capital
-
2,056,000
11,098,750
46,704,650
133,994,000
163,608,450
47,322,500
5,812,000
19,183,000
25,689,200
42,390,000
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
2,952,607
5,926,969
3,042,816
(35,025,432)
(161,012,492)
(319,850,204)
(366,590,985)
(372,612,841)
(391,539,016)
(416,853,067)
(458,899,989)
Interest
88,578
177,809
91,284
(1,050,763)
(4,830,375)
(9,595,506)
(10,997,730)
(11,178,385)
(11,746,170)
(12,505,592)
(13,767,000)
Required from Development Charges
-
2,056,000
11,098,750
46,704,650
133,994,000
163,608,450
47,322,500
5,812,000
19,183,000
25,689,200
42,390,000
Watson & Associates Economists Ltd.
PAGE A-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table A-6
Municipality of Chatham-Kent P.U.C.
Water Service
Water Lifecycle Facilities Reserve Continuity
Inflated $
Table A-7
Municipality of Chatham-Kent P.U.C.
Water Service
Water Lifecycle Watermains Reserve Continuity
Inflated $
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
761,241
423,578
2,257,604
12,556,605
12,014,923
3,631,636
1,680,585
1,731,003
10,530,723
16,487,954
25,347,223
Transfer from Operating
5,750,000
9,294,271
12,180,274
12,872,369
9,880,287
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
Transfer to Capital
6,100,000
7,526,000
2,247,000
13,764,000
18,369,350
13,500,000
11,500,000
3,007,000
6,023,000
3,379,000
6,726,600
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
411,241
2,191,849
12,190,879
11,664,974
3,525,860
1,631,636
1,680,585
10,224,003
16,007,723
24,608,954
30,120,623
Interest
12,337
65,755
365,726
349,949
105,776
48,949
50,418
306,720
480,232
738,269
903,619
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
9,968,852
8,185,382
8,430,944
958,872
987,638
1,017,267
1,286,524
1,305,219
437,937
3,877,214
7,561,552
Transfer from Operating
2,478,122
6,000,000
7,500,000
9,000,000
14,000,000
15,231,785
15,480,680
13,931,962
13,544,349
18,273,898
20,626,795
Transfer to Capital
4,500,000
6,000,000
15,000,000
9,000,000
14,000,000
15,000,000
15,500,000
14,812,000
10,218,000
14,809,800
15,158,400
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
7,946,973
8,185,382
930,944
958,872
987,638
1,249,052
1,267,203
425,181
3,764,286
7,341,312
13,029,946
Interest
238,409
245,561
27,928
28,766
29,629
37,472
38,016
12,755
112,929
220,239
390,898
Watson & Associates Economists Ltd.
PAGE A-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table A-8
Municipality of Chatham-Kent P.U.C.
Water Service
Operating Budget Forecast - Inflated $
Inflated $
Budget
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Expenditures
Operating Costs
Operations and Maintenance
3,727,240
3,876,300
4,031,400
4,192,700
4,360,400
4,534,800
4,716,200
4,904,800
5,101,000
5,305,000
5,517,200
Compliance and Enforcement
480,087
499,300
519,300
540,100
561,700
584,200
607,600
631,900
657,200
683,500
710,800
Purchased Water
230,000
239,200
248,800
258,800
269,200
280,000
291,200
302,800
314,900
327,500
340,600
Plant, ground and equipment
2,701,040
2,809,100
2,921,500
3,038,400
3,159,900
3,286,300
3,417,800
3,554,500
3,696,700
3,844,600
3,998,400
Pumping Stations
1,371,548
1,426,400
1,483,500
1,542,800
1,604,500
1,668,700
1,735,400
1,804,800
1,877,000
1,952,100
2,030,200
Main Maintenance
2,656,650
2,762,900
2,873,400
2,988,300
3,107,800
3,232,100
3,361,400
3,495,900
3,635,700
3,781,100
3,932,300
Service Maintenance
58,269
60,600
63,000
65,500
68,100
70,800
73,600
76,500
79,600
82,800
86,100
Hydrant Maintenance
-
-
-
-
-
-
-
-
-
-
-
Meter Maintenance
781,535
812,800
845,300
879,100
914,300
950,900
988,900
1,028,500
1,069,600
1,112,400
1,156,900
Administration
2,961,808
3,080,300
3,203,500
3,331,600
3,464,900
3,603,500
3,747,600
3,897,500
4,053,400
4,215,500
4,384,100
Meter Reading/Billing & Collection
1,186,020
1,233,500
1,282,800
1,334,100
1,387,500
1,443,000
1,500,700
1,560,700
1,623,100
1,688,000
1,755,500
AM/FM
232,660
242,000
251,700
261,800
272,300
283,200
294,500
306,300
318,600
331,300
344,600
Engineering
802,172
834,300
867,700
902,400
938,500
976,000
1,015,000
1,055,600
1,097,800
1,141,700
1,187,400
Sub Total Operating
17,189,029
17,876,700
18,591,900
19,335,600
20,109,100
20,913,500
21,749,900
22,619,800
23,524,600
24,465,500
25,444,100
Capital-Related
Existing Debt (Principal) - Growth Related
Existing Debt (Interest) - Growth Related
New Growth Related Debt (Principal)
-
-
-
-
-
-
-
-
-
-
New Growth Related Debt (Interest)
-
-
-
-
-
-
-
-
-
-
Existing Debt (Principal) - Non-Growth Related
2,849,198
1,773,001
591,213
620,417
651,062
683,222
354,164
-
-
-
-
Existing Debt (Interest) - Non-Growth Related
265,023
185,227
134,398
105,195
74,549
42,390
8,642
-
-
-
-
New Non-Growth Related Debt (Principal)
-
-
287,212
701,312
1,514,327
3,414,186
5,500,200
5,692,707
5,891,952
6,098,170
New Non-Growth Related Debt (Interest)
-
-
284,279
674,149
1,430,020
3,205,018
5,031,959
4,839,452
4,640,207
4,433,989
Transfer to Capital
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Contribution ($)
5,750,000
9,294,271
12,180,274
12,872,369
9,880,287
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
11,500,000
Lifecycle Watermain Reserve Contribution ($)
2,478,122
6,000,000
7,500,000
9,000,000
14,000,000
15,231,785
15,480,680
13,931,962
13,544,349
18,273,898
20,626,795
Transfer to Capital Reserve
2,550,000
100,000
1,100,000
1,200,000
2,500,000
Sub Total Capital Related
13,892,343
17,252,499
20,505,886
24,269,471
27,181,359
30,401,743
33,962,689
35,964,122
38,076,508
40,306,058
42,658,954
Total Expenditures
31,081,372
35,129,199
39,097,786
43,605,071
47,290,459
51,315,243
55,712,589
58,583,922
61,601,108
64,771,558
68,103,054
Revenues
Base Charge - Urban CK
11,616,136
12,160,150
12,729,099
13,324,107
13,946,350
14,597,054
15,277,500
15,989,026
16,733,030
17,510,973
18,324,377
Base Charge - Urban Non-CK
5,441
5,658
5,885
6,120
6,365
6,619
6,884
7,159
7,446
7,744
8,053
Base Charge - Rural CK
2,020,306
2,101,068
2,182,336
2,266,856
2,354,756
2,446,172
2,541,244
2,640,120
2,742,951
2,849,894
2,961,116
Base Charge - Rural Non-CK
70,397
73,207
76,039
78,985
82,048
85,234
88,548
91,993
95,577
99,304
103,180
Water Bulk Sales
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
470,000
Services Connections
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
Meter Revenue
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
185,500
Contributions from Development Charges Reserve Fund
-
-
-
-
-
-
-
-
-
-
-
Contributions from Reserves / Reserve Funds
-
-
-
-
-
-
-
-
-
-
-
Total Operating Revenue
14,387,779
15,015,583
15,668,859
16,351,568
17,065,019
17,810,579
18,589,676
19,403,799
20,254,504
21,143,415
22,072,227
Water Billing Recovery - Total
16,693,592
20,113,616
23,428,927
27,253,503
30,225,440
33,504,664
37,122,914
39,180,123
41,346,605
43,628,143
46,030,827
Forecast
Watson & Associates Economists Ltd.
PAGE A-7
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table A-9
Municipality of Chatham-Kent P.U.C.
Water Rate Forecast
Inflated $
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Total Water Billing Recovery
16,693,592
20,113,616
23,428,927
27,253,503
30,225,440
33,504,664
37,122,914
39,180,123
41,346,605
43,628,143
46,030,827
Total Volume (m3)
13,166,413
13,208,901
13,251,389
13,293,877
13,336,365
13,378,853
13,421,341
13,463,829
13,506,317
13,548,805
13,591,293
Declining Block Structure
Volume Forecast By Block (m 3)
Block 1
9,525,114
9,567,602
9,610,090
9,652,578
9,695,066
9,737,554
9,780,042
9,822,530
9,865,018
9,907,506
9,949,994
Block 2
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
3,641,299
Check Total Volume
13,166,413
13,208,901
13,251,389
13,293,877
13,336,365
13,378,853
13,421,341
13,463,829
13,506,317
13,548,805
13,591,293
Declining Block Rates ($/m 3)
Step 1 (<67 m3 per day)
1.420
1.633
1.878
2.160
2.376
2.613
2.874
3.018
3.169
3.328
3.494
Step 2 (Balance)
0.870
1.233
1.478
1.760
1.976
2.213
2.474
2.618
2.769
2.928
3.094
Check Revenue
Block 1
13,525,662
15,623,895
18,047,269
20,846,118
23,031,665
25,445,860
28,112,577
29,646,443
31,263,415
32,967,968
34,764,817
Block 2
3,167,930
4,489,722
5,381,658
6,407,384
7,193,775
8,058,804
9,010,337
9,533,680
10,083,189
10,660,175
11,266,010
Check Total Revenue
16,693,592
20,113,616
23,428,927
27,253,503
30,225,440
33,504,664
37,122,914
39,180,123
41,346,605
43,628,143
46,030,827
Annual % Change
15.0%
15.0%
15.0%
10.0%
10.0%
10.0%
5.0%
5.0%
5.0%
5.0%
Watson & Associates Economists Ltd.
PAGE B-1
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Appendix B
Detailed Wastewater Rate
Calculations
Watson & Associates Economists Ltd.
PAGE B-2
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Appendix B: Detailed Wastewater Rate Calculations
Table B-1
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Capital Budget Forecast (Uninflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Pumping Station Upgrades to Chatham SPS-103 (Campus Parkway/Grand Ave Area)
(Figure 10-12)
-
· Short Term Additional Pumping Capacity
300,000
-
· Twin Forcemain to Water Pollution Control Plant
5,000,000
5,000,000
· Long Term Complete Station Upgrade
13,000,000
6,500,000
6,500,000
Pumping station upgrades to Chatham main lift station to WPCP (Figure 10-13)
-
· Pumping Upgrades, increasing firm capacity to 800L/s
1,700,000
1,700,000
· Twin 750mm Forcemain Section
900,000
900,000
Pumping station upgrades to Wallaceburg SPS-405 (Dundas St/ Thomas Ave Area)
-
· Upsizing Pumps to 185 L/s Firm Capacity
500,000
500,000
Pumping station upgrades to Wallaceburg SPS-402 (Arnold St / Biden St Area)
-
· Upsizing Pumps to 140 L/s Firm Capacity
500,000
500,000
Pumping station upgrades to Wallaceburg SPS-401 (Bill McDougall Park)
-
· Upsizing Pumps to 240 L/s
400,000
400,000
Erie Street / Tecumseh Street 600mm (Figure 10-8)
1,600,000
1,600,000
West Street 300mm (Figure 10-8)
450,000
450,000
Marlborough Street / Industrial Avenue 525mm (Figure 10-9)
4,000,000
4,000,000
SPS - 602 Pumping Upgrade
400,000
400,000
Inflow and Infiltration Reduction Study
300,000
300,000
Inflow and Infiltration Study
300,000
300,000
Optimizing capacity of the combined sewer trunks / interceptors
2,500,000
25,000,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
Continuing Sewer Separation Program for Chatham Targeting largest Downstream
Sewers Feeding the Trunk / Interceptor
5,000,000
50,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
40,000
20,000
20,000
Chatham WPCP - Plant#1 Concrete repairs to elevated walkways- access to gears
and scimmers
1,700,000
-
1,700,000
Lynwood Subdivision PS#14 (formerly 9A)
10,000,000
10,000,000
PS#7 -John Street Chatham - complete rebuild
3,000,000
3,000,000
New South Hub PS - Chatham
38,000,000
3,000,000
13,500,000
13,500,000
8,000,000
S9- Chatham- North Area Intermediate Sewer Servicing, Pumping Stations,
Forcemains
16,000,000
8,000,000
8,000,000
Annual Sewermain Lifecycle Replacement
4,250,000
80,700,000
5,650,000
7,050,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
Total Capital Expenditures
12,070,000
253,490,000
24,750,000
42,550,000
42,700,000
25,700,000
29,020,000
16,000,000
16,000,000
20,300,000
16,450,000
20,020,000
Forecast
Description
Total
Watson & Associates Economists Ltd.
PAGE B-3
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table B-2
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Capital Budget Forecast (Inflated $)
Budget
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Capital Expenditures
Pumping Station Upgrades to Chatham SPS-103 (Campus Parkway/Grand Ave Area)
(Figure 10-12)
-
-
-
-
-
-
-
-
-
-
-
-
· Short Term Additional Pumping Capacity
300,000
-
-
-
-
-
-
-
-
-
-
-
· Twin Forcemain to Water Pollution Control Plant
-
5,955,000
-
-
5,955,000
-
-
-
-
-
-
-
· Long Term Complete Station Upgrade
-
15,045,000
-
7,303,000
7,742,000
-
-
-
-
-
-
-
Pumping station upgrades to Chatham main lift station to WPCP (Figure 10-13)
-
-
-
-
-
-
-
-
-
-
-
-
· Pumping Upgrades, increasing firm capacity to 800L/s
-
2,025,000
-
-
2,025,000
-
-
-
-
-
-
-
· Twin 750mm Forcemain Section
-
1,434,000
-
-
-
-
-
-
-
1,434,000
-
-
Pumping station upgrades to Wallaceburg SPS-405 (Dundas St/ Thomas Ave Area)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 185 L/s Firm Capacity
-
797,000
-
-
-
-
-
-
-
797,000
-
-
Pumping station upgrades to Wallaceburg SPS-402 (Arnold St / Biden St Area)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 140 L/s Firm Capacity
-
797,000
-
-
-
-
-
-
-
797,000
-
-
Pumping station upgrades to Wallaceburg SPS-401 (Bill McDougall Park)
-
-
-
-
-
-
-
-
-
-
-
-
· Upsizing Pumps to 240 L/s
-
638,000
-
-
-
-
-
-
-
638,000
-
-
Erie Street / Tecumseh Street 600mm (Figure 10-8)
-
2,550,000
-
-
-
-
-
-
-
2,550,000
-
-
West Street 300mm (Figure 10-8)
-
760,000
-
-
-
-
-
-
-
-
760,000
-
Marlborough Street / Industrial Avenue 525mm (Figure 10-9)
-
7,163,000
-
-
-
-
-
-
-
-
-
7,163,000
SPS - 602 Pumping Upgrade
-
638,000
-
-
-
-
-
-
-
638,000
-
-
Inflow and Infiltration Reduction Study
-
318,000
318,000
-
-
-
-
-
-
-
-
-
Inflow and Infiltration Study
-
318,000
318,000
-
-
-
-
-
-
-
-
-
Optimizing capacity of the combined sewer trunks / interceptors
2,500,000
34,930,000
2,650,000
2,809,000
2,978,000
3,156,000
3,346,000
3,546,000
3,759,000
3,985,000
4,224,000
4,477,000
Continuing Sewer Separation Program for Chatham Targeting largest Downstream
Sewers Feeding the Trunk / Interceptor
5,000,000
69,857,000
5,300,000
5,618,000
5,955,000
6,312,000
6,691,000
7,093,000
7,518,000
7,969,000
8,447,000
8,954,000
Rate Study and Financial Plan (split with water and wastewater)
20,000
63,000
-
-
-
-
27,000
-
-
-
-
36,000
Chatham WPCP - Plant#1 Concrete repairs to elevated walkways- access to gears
and scimmers
-
2,146,000
-
-
-
2,146,000
-
-
-
-
-
-
Lynwood Subdivision PS#14 (formerly 9A)
-
13,382,000
-
-
-
-
13,382,000
-
-
-
-
-
PS#7 -John Street Chatham - complete rebuild
-
4,015,000
-
-
-
-
4,015,000
-
-
-
-
-
New South Hub PS - Chatham
-
44,528,000
3,180,000
15,169,000
16,079,000
10,100,000
-
-
-
-
-
-
S9- Chatham- North Area Intermediate Sewer Servicing, Pumping Stations,
Forcemains
-
17,469,000
8,480,000
8,989,000
-
-
-
-
-
-
-
-
Annual Sewermain Lifecycle Replacement
4,250,000
80,700,000
5,650,000
7,050,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
8,500,000
Total Capital Expenditures
12,070,000
305,528,000
25,896,000
46,938,000
49,234,000
30,214,000
35,961,000
19,139,000
19,777,000
27,308,000
21,931,000
29,130,000
Capital Financing
Provincial/Federal Grants
-
Development Charges Reserve Fund
-
16,345,200
-
3,651,500
11,243,500
-
-
-
-
1,450,200
-
-
Non-Growth Related Debenture Requirements
-
37,461,500
-
3,466,000
18,490,500
4,968,000
10,537,000
-
-
-
-
-
Growth Related Debenture Requirements
-
-
-
-
-
-
-
-
-
-
-
-
Operating Contributions
-
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Fund
300,000
61,567,100
3,180,000
18,820,500
7,500,000
12,246,000
17,397,000
-
-
2,423,600
-
-
Lifecycle Sewers Reserve Fund
11,750,000
177,375,200
15,000,000
16,000,000
12,000,000
13,000,000
8,000,000
19,139,000
19,777,000
23,434,200
21,931,000
29,094,000
Wastewater Reserve
20,000
12,779,000
7,716,000
5,000,000
-
-
27,000
-
-
-
-
36,000
Total Capital Financing
12,070,000
305,528,000
25,896,000
46,938,000
49,234,000
30,214,000
35,961,000
19,139,000
19,777,000
27,308,000
21,931,000
29,130,000
Forecast
Description
Total
Watson & Associates Economists Ltd.
PAGE B-4
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table B-3
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Wastewater Debt Forecast
Inflated $
Table B-4
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Wastewater Capital Reserve Continuity
Inflated $
Table B-5
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Wastewater Development Charges Reserve Fund Continuity
Inflated $
Debenture
Principal
Year
(Inflated)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2025
-
-
-
-
-
-
-
-
-
-
2026
3,466,000
243,871
243,871
243,871
243,871
243,871
243,871
243,871
243,871
2027
18,490,500
1,301,011
1,301,011
1,301,011
1,301,011
1,301,011
1,301,011
1,301,011
2028
4,968,000
349,554
349,554
349,554
349,554
349,554
349,554
2029
10,537,000
741,395
741,395
741,395
741,395
741,395
2030
-
-
-
-
-
2031
-
-
-
-
2032
-
-
-
2033
-
-
2034
-
Total Annual Debt Charges
-
37,461,500
-
-
243,871
1,544,883
1,894,437
2,635,831
2,635,831
2,635,831
2,635,831
2,635,831
Forecast
2024
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
11,281,851
13,968,706
6,440,287
1,483,496
1,528,001
1,573,841
1,593,246
1,641,043
1,690,275
1,740,983
1,793,212
Transfer from Operating
2,300,000
-
-
-
-
-
-
-
-
-
-
Transfer to Capital
20,000
7,716,000
5,000,000
-
-
27,000
-
-
-
-
36,000
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
13,561,851
6,252,706
1,440,287
1,483,496
1,528,001
1,546,841
1,593,246
1,641,043
1,690,275
1,740,983
1,757,212
Interest
406,856
187,581
43,209
44,505
45,840
46,405
47,797
49,231
50,708
52,229
52,716
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
-
895,645
1,871,945
(826,480)
(11,365,172)
(10,575,184)
(4,975,365)
1,147,518
2,529,050
2,539,130
4,128,847
Development Charge Proceeds
869,558
921,778
977,147
1,035,833
1,098,003
5,744,733
6,089,460
1,307,870
1,386,325
1,469,459
1,557,614
Transfer to Capital
-
-
3,651,500
11,243,500
-
-
-
-
1,450,200
-
-
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
869,558
1,817,423
(802,408)
(11,034,148)
(10,267,169)
(4,830,451)
1,114,096
2,455,388
2,465,175
4,008,589
5,686,461
Interest
26,087
54,523
(24,072)
(331,024)
(308,015)
(144,914)
33,423
73,662
73,955
120,258
170,594
Required from Development Charges
-
-
3,651,500
11,243,500
-
-
-
-
1,450,200
-
-
Watson & Associates Economists Ltd.
PAGE B-5
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table B-6
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Wastewater Lifecycle Facilities Reserve Continuity
Inflated $
Table B-7
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Wastewater Lifecycle Sewers Reserve Continuity
Inflated $
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
13,366,329
18,042,592
20,826,139
4,276,065
4,919,347
2,753,548
1,845,830
10,141,205
18,685,441
24,989,696
33,979,387
Transfer from Operating
4,450,751
5,356,960
2,145,881
8,000,000
10,000,000
16,435,520
8,000,000
8,000,000
8,000,000
8,000,000
8,000,000
Transfer to Capital
300,000
3,180,000
18,820,500
7,500,000
12,246,000
17,397,000
-
-
2,423,600
-
-
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
17,517,080
20,219,552
4,151,520
4,776,065
2,673,347
1,792,068
9,845,830
18,141,205
24,261,841
32,989,696
41,979,387
Interest
525,512
606,587
124,546
143,282
80,200
53,762
295,375
544,236
727,855
989,691
1,259,382
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Opening Balance
13,197,397
5,868,319
894,369
921,200
1,964,625
1,156,989
1,191,698
1,270,483
3,241,962
3,416,004
7,159,088
Transfer from Operating
4,250,000
10,000,000
16,000,000
12,986,203
12,158,665
8,000,000
19,180,780
21,654,053
23,508,746
25,465,567
27,529,635
Transfer to Capital
11,750,000
15,000,000
16,000,000
12,000,000
13,000,000
8,000,000
19,139,000
19,777,000
23,434,200
21,931,000
29,094,000
Transfer to Operating
-
-
-
-
-
-
-
-
-
-
-
Closing Balance
5,697,397
868,319
894,369
1,907,403
1,123,290
1,156,989
1,233,479
3,147,536
3,316,508
6,950,571
5,594,723
Interest
170,922
26,050
26,831
57,222
33,699
34,710
37,004
94,426
99,495
208,517
167,842
Watson & Associates Economists Ltd.
PAGE B-6
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table B-8
Municipality of Chatham-Kent P.U.C.
Wastewater Service
Operating Budget Forecast - Inflated $
Inflated $
Budget
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Expenditures
Operating Costs
Operations and Maintenance
4,862,695
5,057,200
5,259,500
5,469,900
5,688,700
5,916,200
6,152,800
6,398,900
6,654,900
6,921,100
7,197,900
Compliance and Enforcement
312,920
325,400
338,400
351,900
366,000
380,600
395,800
411,600
428,100
445,200
463,000
Plant, ground and equipment
1,397,570
1,453,500
1,511,600
1,572,100
1,635,000
1,700,400
1,768,400
1,839,100
1,912,700
1,989,200
2,068,800
Pumping Stations
741,966
771,600
802,500
834,600
868,000
902,700
938,800
976,400
1,015,500
1,056,100
1,098,300
Sanitary Maintenance
906,340
942,600
980,300
1,019,500
1,060,300
1,102,700
1,146,800
1,192,700
1,240,400
1,290,000
1,341,600
Administration
1,300,165
1,352,200
1,406,300
1,462,600
1,521,100
1,581,900
1,645,200
1,711,000
1,779,400
1,850,600
1,924,600
Meter Reading/Billing & Collection
694,730
722,500
751,400
781,500
812,800
845,300
879,100
914,300
950,900
988,900
1,028,500
AM/FM
90,971
94,600
98,400
102,300
106,400
110,700
115,100
119,700
124,500
129,500
134,700
Engineering
507,132
527,400
548,500
570,400
593,200
616,900
641,600
667,300
694,000
721,800
750,700
Sub Total Operating
10,814,489
11,247,000
11,696,900
12,164,800
12,651,500
13,157,400
13,683,600
14,231,000
14,800,400
15,392,400
16,008,100
Capital-Related
Existing Debt (Principal) - Growth Related
Existing Debt (Interest) - Growth Related
New Growth Related Debt (Principal)
-
-
-
-
-
-
-
-
-
-
New Growth Related Debt (Interest)
-
-
-
-
-
-
-
-
-
-
Existing Debt (Principal) - Non-Growth Related
2,966,495
1,379,875
1,251,197
1,216,035
1,179,985
1,234,897
699,167
-
-
-
-
Existing Debt (Interest) - Non-Growth Related
379,549
291,691
236,276
181,892
128,395
73,483
15,933
-
-
-
-
New Non-Growth Related Debt (Principal)
-
-
122,561
780,695
983,693
1,390,722
1,439,398
1,489,776
1,541,919
1,595,886
New Non-Growth Related Debt (Interest)
-
-
121,310
764,188
910,744
1,245,109
1,196,434
1,146,055
1,093,913
1,039,946
Transfer to Capital
-
-
-
-
-
-
-
-
-
-
-
Lifecycle Facilities Reserve Contribution ($)
4,450,751
5,356,960
2,145,881
8,000,000
10,000,000
16,435,520
8,000,000
8,000,000
8,000,000
8,000,000
8,000,000
Lifecycle Sewers Reserve Contribution ($)
4,250,000
10,000,000
16,000,000
12,986,203
12,158,665
8,000,000
19,180,780
21,654,053
23,508,746
25,465,567
27,529,635
Transfer to Capital Reserve
2,300,000
Sub Total Capital Related
14,346,795
17,028,526
19,633,354
22,628,001
25,011,928
27,638,336
30,531,712
32,289,885
34,144,577
36,101,399
38,165,467
Total Expenditures
25,161,283
28,275,526
31,330,254
34,792,801
37,663,428
40,795,736
44,215,312
46,520,885
48,944,977
51,493,799
54,173,567
Revenues
Base Charge
11,355,036
11,893,175
12,456,197
13,045,232
13,661,460
14,306,113
14,980,480
15,685,907
16,423,799
17,195,626
18,002,920
Leachate Revenue
908,960
945,300
983,100
1,022,400
1,063,300
1,105,800
1,150,000
1,196,000
1,243,800
1,293,600
1,345,300
Rent
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
Other
431,751
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
431,800
Contributions from Development Charges Reserve Fund
-
-
-
-
-
-
-
-
-
-
-
Contributions from Reserves / Reserve Funds
-
-
-
-
-
-
-
-
-
-
-
Total Operating Revenue
12,758,747
13,333,275
13,934,097
14,562,432
15,219,560
15,906,713
16,625,280
17,376,707
18,162,399
18,984,026
19,843,020
Wastewater Billing Recovery - Operating
12,402,536
14,942,251
17,396,156
20,230,369
22,443,868
24,889,024
27,590,032
29,144,178
30,782,578
32,509,773
34,330,547
Forecast
Watson & Associates Economists Ltd.
PAGE B-7
H:\Chatham-Kent PUC\2024 W WW Rate Study\Reports\Chatham-Kent PUC Rate Study.docx
Table B-9
Municipality of Chatham-Kent P.U.C.
Wastewater Rate Forecast
Inflated $
Description
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Total Wastewater Billing Recovery
12,402,536
14,942,251
17,396,156
20,230,369
22,443,868
24,889,024
27,590,032
29,144,178
30,782,578
32,509,773
34,330,547
Total Volume (m3)
9,442,488
9,484,976
9,527,464
9,569,952
9,612,440
9,654,928
9,697,416
9,739,904
9,782,392
9,824,880
9,867,368
Declining Block Structure
Volume Forecast By Block (m 3)
Block 1
7,257,621
7,300,109
7,342,597
7,385,085
7,427,573
7,470,061
7,512,549
7,555,037
7,597,525
7,640,013
7,682,501
Block 2
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
2,184,867
Check Total Volume
9,442,488
9,484,976
9,527,464
9,569,952
9,612,440
9,654,928
9,697,416
9,739,904
9,782,392
9,824,880
9,867,368
Declining Block Rates ($/m 3)
Step 1 (<67 m3 per day)
1.45
1.67
1.92
2.21
2.43
2.67
2.94
3.08
3.24
3.40
3.57
Step 2 (Balance)
0.86
1.27
1.52
1.81
2.03
2.27
2.54
2.68
2.84
3.00
3.17
Check Revenue
Block 1
10,523,550
12,172,932
14,080,348
16,286,097
18,017,774
19,932,925
22,050,929
23,284,423
24,586,138
25,959,814
27,409,392
Block 2
1,878,986
2,769,319
3,315,809
3,944,272
4,426,094
4,956,098
5,539,103
5,859,755
6,196,440
6,549,959
6,921,155
Check Total Revenue
12,402,536
14,942,251
17,396,156
20,230,369
22,443,868
24,889,024
27,590,032
29,144,178
30,782,578
32,509,773
34,330,547
Annual % Change
15.0%
15.0%
15.0%
10.0%
10.0%
10.0%
5.0%
5.0%
5.0%
5.0%