Financially Sustainable Water Utilities

In 2015 BC Water & Waste Association (BCWWA), with Urban Systems, completed an assessment of the financial sustainability of Water and Wastewater Utilities in British Columbia. The assessment uses 4 financial indicators based on data from the 2013 audited financial statements for municipal governments in BC. The indicators were selected based on a review of best practices in other jurisdictions, available information, and advice from knowledgeable professionals in the asset management field.

The report addresses the following questions:

  • Are BC municipalities financially well positioned to meet their existing water and wastewater infrastructure investment needs to maintain current levels of service?
  • Are water and wastewater rates recovering the full cost of service, including infrastructure renewal and replacement?
  • How much investment is needed to sustain BC’s water and wastewater infrastructure?
  • Are municipalities financially resilient to withstand sudden or unexpected changes in revenues or costs for water and wastewater systems?

For Revelstoke, these are questions that we are reviewing on an annual basis, and particularly as we begin detailing asset management plans for all assets.

The results from the study point to 4 concerns about the financial sustainability of BC’s water and wastewater systems:

  1. Water and sewer fees are not covering the full cost of service delivery in many communities; in the worst cases, rates would need to nearly double in order to reach financial sustainability.
  2. Many communities are vulnerable, as they have not set aside sufficient reserves to buffer against unexpected changes in operating costs or revenues.
  3. Smaller communities have greater financial gaps than larger communities, as costs are shared across a small base of users.
  4. $13 Billion of additional investment will be required in BC to renew and replace water and wastewater infrastructure when it comes to the end of its useful life.

The report outlines the following steps that communities can take to strengthen their financial capacity to meet current and future water and wastewater infrastructure needs:

  1. Adjust water and wastewater rates to cover the full cost of service, including the cost to renew and replace systems.
  2. Develop and implement integrated asset management processes that assess the state of infrastructure, evaluate risks, and set priorities for investment in renewal and replacement of water and wastewater assets.
  3. Rank water and wastewater renewal and replacement projects as top priorities for capital investment.
  4. Adopt “smart growth” principles.
  5. Foster collaboration among all levels of government to support communities to become fiscally self-reliant.

Revelstoke’s asset management planning is ramping up this year with the purchase of AssetFinda software, and budgeting for a Pavement Management Plan and Water Supply report. These efforts will produce the information necessary to allow City Council to make informed decisions on asset funding and renewals.

View the full report below, or at this link: Are Our Water Systems at Risk – Full Report.

[viewerjs /wp-content/uploads/2015/03/Are-Our-Water-Systems-at-Risk-Full-Report.pdf]

In related news, New Zealand’s Auditor General wrote a report on water and road infrastructure funding in November 2014 that shows a perspective from a country that is about a decade in front of Canada and the US on Asset Management programming – some interesting reading, and parallels to the situation in Canada.

[viewerjs /wp-content/uploads/2015/03/water-and-roads.pdf]


Published by Mike Thomas

Mike Thomas P.Eng. ENV SP, is the author of and Director of Engineering at the City of Revelstoke in the Interior of British Columbia, Canada.