Backgrounder: UVic Promotes Municipal Water Security Through Price Reform

Worth Every Penny: A Primer on Conservation-Oriented Water Pricing, published by the University of Victoria’s POLIS Water Sustainability Project, provides an overview of conservation-oriented water pricing for water utilities in Canada. It explains how water pricing works, what the benefits are, and how water utilities can implement conservation-oriented water pricing structures as a key tool in the water manager's toolkit. As well, it offers advice on how to address implementation challenges, including how to avoid penalizing low-income families and how to maintain revenue stability for water utilities.

Why should we care about water under-pricing and over-consumption?
 ◦ Excess water treatment requires significant energy inputs, thereby increasing greenhouse gas emissions.
 ◦ Wastewater flows become higher resulting in unnecessary treatment and disposal costs.
 ◦ Costly, new bulk supplies such as water from dams or groundwater wells may need to be constructed sooner or larger than necessary.

Water Use and Pricing in Canada
 • International comparisons of unit prices for water and wastewater services show that water is cheap in Canada - too cheap.
 • Canadians pay significantly less for water than countries with comparable lifestyles.  Germany, for example, charges residents 3 - 5 times as much.
 • Around 25 per cent of customers in single-family homes in Canada still receive flat rate water bills and therefore have no incentive to conserve.
 • While three-quarters of Canadians do pay for water used in the home based on volumetric-based charging, the prices are not high enough to  significantly affect their behaviour.
 • Canada’s water prices are the lowest, according to a 2010 study by the Organisation for Economic Co-operation and Development (OECD) that compares average per unit prices for water and wastewater services, including taxes, for household across 20 OECD and non-OECD countries (including South Korea, Poland and Hungary).
 • Canadian water utilities do not collect enough from water bills to cover cost of providing water services. In 2007, Canadian water agency revenue was just 70 per cent of what was spent on providing water services.
 • Under-pricing is causing a major infrastructure deficit (estimated across Canada at $31 billion for upgrading the existing deteriorated assets and another $56.6 billion for new needs) and a dependency on senior government programs such as federal stimulus funding.
 • Metering is a key component to measuring water consumption but as of 2006; only 63.1 per cent of customers living in single-family dwellings in Canada were metered. One-third of Canadians are not.
 • In British Columbia, 32.6 per cent of residential customers are metered. In Quebec, 16.5 per cent or residential customers are metered. In Newfoundland, only a fraction of one per cent of residential customers has meters.
  • Yet, universal metering is commonplace and expected in all other utility sectors such as electricity or natural gas.
      • Comparatively, two-thirds of OECD member countries meter more than 90 per cent of single-family houses.

Examples of Conservation-Oriented Water Pricing

• The Halifax Water Utility in Halifax, NS is a self-financed utility. In 2007 the utility services merged making it the first regulated water, wastewater and stormwater utility in Canada. While the total cost for a typical residential water bill is not particularly high the utility integrates the management of all aspects of the urban water cycle and is working towards full costs accounting.
 • In Seattle, Washington, the public utility introduced volumetric charging decades ago and in 1989 were the first in North America to introduce seasonal surcharge. A drought surcharge was added to bills in 1992, and included a strong rate penalty for excessive water use. In 2001, the utility introduced an increasing block rate tiers for single family residential customers. Since introducing peak usage charges there have been significant and sustained reductions in water use and while rates have gone up the average customer bill is not increasing because less water is being used.
  • Further examples:
           o City of Guelph, Ontario p.30 of report.
           o District of Tofino p. 35 of report.
           o Regional District of Nanaimo p 35 of report.
           o Capital Regional District p. 35 of report.
           o San Antonio Water System, Texas p.26 of report.

Worth Every Penny: A Primer on Conservation-Oriented Water Pricing, can be viewed at www.poliswaterproject.org.