PUB should set Winnipeg water, sewer rates; that doesn’t necessarily mean they’ll be lower

There are good arguments for putting Winnipeg’s water and sewer rates under the control of Manitoba’s Public Utilities Board.

The strongest is that residents shouldn’t have to rely entirely on city politicians to decide how much they pay for an essential service they have no choice but to use.

But there’s another important reason to support PUB oversight: it would force an independent regulator to look at both sides of the equation.

It would have to consider what ratepayers can afford, but also what the utility needs to remain financially and operationally healthy.

That’s particularly important now, with Winnipeg facing billions of dollars in water and sewer infrastructure costs.

PUB oversight of water and sewer rates has become a municipal election issue, which is a good thing. Several organizations representing seniors, consumers and people living in poverty are calling on municipal candidates to support transferring responsibility for setting Winnipeg’s water and sewer rates to the PUB.

Mayoral candidate Kevin Klein has gone further. He has made an election pledge to freeze water and sewer rates and, if elected, call on the provincial government to give the PUB authority to regulate them.

Incumbent mayoral candidate Scott Gillingham says he is open to discussions about PUB oversight, but argues his immediate priority is securing senior-government funding for the final phase of the North End sewage-treatment plant upgrade project.

Winnipeg is the only municipality in Manitoba where water and sewer rates aren’t regulated by the PUB. There’s a reasonable argument for extending that same oversight inside the Perimeter Highway.

Water and sewer services are a monopoly. Residents can’t switch providers when their bills become too expensive. That makes independent oversight worthwhile.

And the concern about affordability is real. Water and sewer prices have been increasing well above the rate of inflation in recent years.

For households already struggling with higher grocery, housing and other costs, those increases are significant.

The Manitoba Seniors Equity Action Coalition, Harvest Manitoba and the Manitoba branches of the Canadian Association of Retired Persons and Consumers Association of Canada want the PUB to provide a more independent assessment of those increases.

That makes sense.

But there’s an important warning that should accompany the call for PUB regulation. The board isn’t simply a consumer watchdog. Its job isn’t just to keep rates as low as possible.

Its mandate is to balance the interests of consumers with the financial and operational needs of the utility. Sometimes that means ordering higher rates than what the utility requested.

Manitoba Hydro provides a good example. Effective Jan. 1 this year, the PUB ordered a four per cent increase in electricity rates. That was higher than the proposed 3.5 per cent increase the utility asked for. The PUB was concerned about prolonged droughts and what impact those were having on the Crown corporation’s bottom line.

It wasn’t the first time the PUB ordered a rate increase higher than what Hydro requested.

In 2008, the PUB ordered a five per cent Hydro rate increase, almost double the requested 2.9 per cent increase. The regulator was concerned about Hydro’s debt load and its financial condition.

That’s something Winnipeggers need to understand.

If the PUB takes over responsibility for water and sewer rates, there’s no guarantee it would produce lower rates than what city council approved. There could be times when the PUB decides the city is asking for too much, but there could also be times when it decides the city isn’t asking enough.

The latter possibility is particularly important, given what’s coming.

Winnipeg’s water and sewer system is facing billions of dollars in infrastructure work. The final phase of the North End sewage treatment plant upgrade alone is expected to cost $1.57 billion.

That money has to come from somewhere.

There’s another important point to having the PUB regulate water and sewer rates: it could examine the city’s controversial practice of taking money from the utility for general revenues, a back-door tax, as many see it.

Winnipeg expects to transfer $45.2 million from the utility to its operational budget in 2026. That so-called dividend deserves scrutiny.

It may be entirely justified (some other Canadian cities do it), but it may not. If ratepayers are being told their utility bills have to rise because the water and sewer system needs more money, they’re entitled to know why tens of millions of dollars are being taken out of that system for other municipal purposes.

PUB oversight isn’t a promise of cheap water. It’s a promise of independent scrutiny.

That’s a pretty good argument for letting the PUB have a seat at the table.

tom.brodbeck@freepress.mb.ca