Surprises at Shelburne URB Water Rate Hearing

Major accounting change proposed, cuts hearing short

Greg Bennett
Published on January 15, 2014

By Greg Bennett

 The Town of Shelburne’s financially struggling water utility could be climbing out of “shallower hole” thanks to an accounting change that will be considered by the Utility and Review Board.

The surprise development came out of a water rate hearing held Wednesday, Jan. 15 at the Shelburne Fire Hall.

The Utility and Review Board was considering major water rate hikes for the Town of Shelburne in the wake of a water rate study that showed that without major changes, the Town’s utility would be almost $1-million in debt within two years.

The increase would have seen the annual charge for an average household rise more than 70 per cent …from $820 to $1400 a year.

The new proposal by the URB will see the Town completely refile its request with new numbers and as a result are expected to at least “moderate” the needed increases.

All municipal utilities in Nova Scotia are expected to operate self sufficiently. But without a major increase in rates, the water study painted a bleak fiscal picture for Shelburne’s water utility. That study, commissioned earlier this year and prepared by G.A. Isenor Consulting, recommended a series of rate increases over the next three years.

Town representatives appeared surprised and pleased that the URB would consider the accounting change that would allow equipment costs for the past two years that normally come out of the capital budget to be paid for using the utility’s depreciation reserves.

Town CAO Dylan Heide said that accounting change would eliminate most of this year’s deficit.

“We still won’t know for sure if they will allow it but the fact they are willing to consider it is positive,” said Heide.

While there still are major financial strains on the utility, representatives said the change would allow for a complete rethink of the rate hike proposal.

Those financial strains are real. Water consumption has declined and the utility is still dealing with major debt servicing costs from the Water and Mowatt Street line extension project.

That 2011 water line extension could have potentially added 120 customers to the system. The project was initially launched based on projections that 84 new customers would hook up.

The tenders for the project came in far over budget, costs that were borne completely by the town utility.

Then, after the project was complete, efforts to convince new potential customers to hook up were a failure and as yet only 21 new users have been added due to the extension.

During the public comments portion of the hearing, town officials took a drubbing from several speakers over the operations of the water treatment plant and the decision to carry ahead with the water line extension without better evidence about how many users would be hooking up.

Former mayor PG Comeau had lots of questions and offered a lengthy statement about the utility’s operations.

Comeau said a $1-million overrun on the project should have “never been approved” by the provincial review board.

“There was no supporting evidence that the water line extension would generate the estimate of new customers,” he said. “The fault is shared by the Province of Nova Scotia in permitting the utility to incur such a debt load.”

Comeau argued that many people in the Town could not afford a large water rate increase.

Former Town Clerk Wilmot Hardy also questioned the reasoning behind the need for the 2011 water line extension suggesting that councillors wanted to finish a major project before the end of their elected term.