Saint John Water customers should see their rates hold steady once again next year.
But staff warn they might not be able to hold the line going forward without revenue growth.
The utility’s draft 2022 operating and capital budget was presented to the finance committee on Thursday.
Commissioner Brent McGovern said they have managed to stabilize rates for the last few years through “significant cost reductions.”
“Wages and benefits in the utility have reduced by over $1.277 million or 12 per cent in just over two years, so we are working through the effects of that, but we’re a leaner operation,” said McGovern.
The utility has also looked for other ways to cut costs, find efficiencies, and manage assets in order to keep rates stable.
But the problem is that the utility can only reduce expenses so much without impacting the level of service it provides.
McGovern said they have seen a steady decline in flat rate accounts in recent years due to customers having to switch to a meter per by-law requirements. A large number relate to demolished buildings and several properties were bought and demolished as a result of the Irving Oil butane leak or industrial expansion activities.
Meter consumption from commercial, manufacturing, malls, schools, restaurants, hotels, and apartment buildings also continues to be impacted by COVID-19, he said.
“We need to start reversing this trend through growth to increase revenue and further stabilize rates,” said McGovern.
New tax base growth in the city does not translate into the same level of revenue, he pointed out. The Wentworth project uptown, for example, is expected to bring in around $230,000 in new property tax revenue annually for the city, but only $30,000 to $32,000 in revenue for Saint John Water.
McGovern said it is especially critical to infill vacant lots to generate new revenue from existing infrastructure without adding new expense or expanding infrastructure.
He said the utility will continue to look for ways to hold or lower costs, find more savings, look for revenue opportunities, and focus on asset replacement as opposed to new assets, among other things.
Council will vote on the 2022 budgets in December.
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