Saint John residents should not expect any changes to their municipal water rates in 2021 for the third straight year.
The city’s finance committee heard this week that the utility plans to hold the line on rates for flat rate and metered customers.
That is despite what Brent McGovern, the commissioner of Saint John Water, described as a number of challenges faced by the utility.
“Revenue continues to decline and COVID-19 has had an impact on our metered revenue this year. We expect it will continue to do so,” McGovern told the committee.
Overall revenue is projected to be down by $1.2 million, or nearly three per cent, next year compared to 2020.
The number of flat-rate customers has declined by 415 accounts since 2017 but has slowed in 2020. According to a staff report, many relate to demolished buildings and a number of properties were bought and demolished following the Irving Oil butane leak.
The biggest reduction in revenue comes from metered customers, which is expected to fall by $980,000 in 2021. Metered customers are largely commercial, manufacturing, malls, schools, restaurants, hotels apartments.
Saint John Water will also lose around $225,000 in revenue due to the closure of the Saputo plant, which is expected to take place in January.
McGovern said the utility has been aggressive in reducing costs through staffing reductions and lower or no wage increases to offset the revenue losses and keep rates stable.
The utility has eliminated 10 positions and reduced salary and benefits by more than $1.05 million for 2021. This is also the first budget which includes the city’s wage escalation policy.
“It is critical that rate stabilization continues to be high priority in light of the global pandemic, COVID 19, and due to the fact that rates have increased significantly over several years due to mega projects – Safe Clean Drinking Water and Harbour Clean-up,” said the staff report.
It is also the first utility budget to include $625,000 for an operating reserve to mitigate impacts of COVID-19 and unforeseen financial events to help create more rate stability.
McGovern noted the utility has been able to repay nearly 25 per cent of its debt over the past few years. The debt balance is expected to be $81.9 million at the end of 2021, down from $107.4 million at the end of 2017.
But McGovern said Saint John Water continues to be straddled with an infrastructure deficit of more than $300 million.
“That is largely in our linear assets or underground piping that has reached the end of its life. That’s where we’re seeking funding from other levels of government to address that infrastructure deficit,” he said.
The utility has budgeted $4.8 million for capital projects next year but hopes to leverage other government funding to do $10 million worth of work.
Coun. David Merrithew, who chairs the finance committee, said described it as a great budget with no rate increases, more debt reduction, and the first to include funding for an operating reserve.
“There’s still a road in front of us with $300 million of infrastructure deficit, but great job this year,” he said.
The draft industrial water budgets will be presented to the committee on Nov. 18. All of the budgets will be voted on by Common Council in early December.
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