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Halifax Water has not been hard hit by the pandemic, and while it cancelled a rate hike planned for this year, the utility’s general manager says hikes are coming.
The Nova Scotia Utility and Review Board (UARB) heard Halifax Water’s rate application on Monday. In February, that application included rate hikes of 5.8% for the average residential ratepayer effective Sep. 1 and another 5.8% effective April 1, 2021.
After COVID-19 hit Nova Scotia, Halifax Water changed its application. It’s proposing not to raise any rates this fiscal year, and next year it wants to raise only its wastewater treatment charge by 32 cents per 1,000 litres. Halifax Water says that will result in an annual increase of 4.9% on the average residential bill in 2021-2022, equal to $37.60.
To offset the flatter rates, Halifax Water is cutting costs by about $1.9 million and dipping into accumulated surplus money from previous years — accounts that total about $32 million as of Mar. 31.
UARB member Stephen McGrath pressed Halifax Water general manager Cathie O’Toole on why the utility was raising rates in the first place if it had that kind of money saved up.
“Why wouldn’t you have used any of the accumulated surplus to offset any of the 5.8(%) increases you were seeing at that time?” he asked.
O’Toole said the utility was trying “to get into a cycle of regular, periodic, smaller rate increases,” which she thinks “would be beneficial to our customers versus waiting four or five years and then doing a rate increase that’s larger and more difficult for the customer base to absorb.”
“The reason we didn’t choose to use the accumulated operating surplus this year is we wanted to start increasing the rates because we hadn’t done so since April 1, 2016,” she said.
“So you viewed a 5.8% increase in September and then another 5.8% increase in April as gradual increases?” McGrath asked.
“They were not as gradual as I would like,” O’Toole said.
“Right now the only thing we can say with certainty is that there is not a smooth increase in rates. We need to continue working on a strategy for gradualism if we want to deliver the integrated resource plan without significantly impacting customers.”
But while it will miss the increased revenue, the pandemic hasn’t been an issue for the utility’s finances.
“What I took from the evidence concerning cash receipts and bank balances was that there had been a surprisingly modest impact, if any, as a result of COVID-19 on your cash flow and corrections,” UARB chair Peter Gurnham said.
O’Toole agreed.
“The fluctuations we’re seeing in cash receipts and bank balance are within the normal range of fluctuations we would see from month to month,” said O’Toole.
The utility is budgeting for more bad debt this year — $45,000 — and it’s extended its assistance measures, including a moratorium on shutoffs for nonpayment, to Aug. 31.
The UARB reserved its decision on Monday and is expected to rule on Halifax Water’s application, which also includes its lead pipe removal plan, this summer.
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