Accountability for all utility rates

The Manitoba Seniors Equity Action Coalition, Consumers Association of Canada (Manitoba), Canadian Association of Retired Persons (Manitoba Chapter) and Harvest Manitoba are sponsoring the “This PUB’s For You Pledge” during the upcoming municipal election to call upon candidates to make a public commitment to support evidenced-based rather than politically-based decision-making for our water and sewer rates.

The Public Utilities Board (PUB) was established as an overseer of public utilities in our province for hydro electricity, natural gas, auto insurance, and water and sewer services.

The rationale behind a regulator like the PUB is simple — while in the free market competitive market pressures are expected to keep prices under control and prevent undue profiteering, monopoly utilities face no competitive pressure as consumers have no other choice to use the services of the monopoly utility provider.

Utility regulators like the PUB have been created to provide oversight, accountability, transparency, opportunities for public participation to scrutinize utility expenditures (both capital and operating), and rate setting approval.

The PUB’s general objectives are to ensure utility rates are just and reasonable, and to ensure ratepayers receive fair value for rates paid for utility services.

Presently, Winnipeg’s water and sewer rate decisions are made by politicians and not regulated by the PUB. It’s interesting to note that the water and sewer rates in all other municipalities in Manitoba are currently regulated by the PUB and not set by local governments.

This legislated exemption by the provincial government does not serve the citizens of Winnipeg well when it comes to accountability, transparency, sustainability and affordability of our water and sewer utilities.

For many years, the mayor and city council has transferred funds from the Water and Wastewater Department to the City of Winnipeg’s general revenues budget. This amounts to a “hidden” rather than transparent form of taxation. The City of Winnipeg calls this transfer of funds a “dividend transfer to general revenues.”

The average annual cost of this “dividend transfer” is about 10 per cent of the water and sewer department’s budget. In 2022, this annual transfer was $38 million and is projected to be $48 million in 2027, an increase of 26 per cent.

During the current term of this city council (2022 to 2026), rate payers paid an additional $166 million in water and waste services fees in order to fund the annual “dividend transfer to general revenues.”

As well, greater public scrutiny and accountability is needed for major water and waste infrastructure projects. A recent 2024 City of Winnipeg report indicated that the upgrade costs for the North End Wastewater Treatment Plant, the largest infrastructure project in the history of the City of Winnipeg, surged from $2.4 billion to $3.1 billion, an increase of 30 per cent.

Given the scale of these water and wastewater infrastructure projects and the resulting impact on rates and taxes, additional levels of accountability of these public investments are required by established regulatory bodies such as the PUB, along with legislated requirements for community-based intervenors.

The recent PUB hearings regarding Manitoba Hydro’s Integrated Resource Plan, a ten-year strategic plan to guide future hydro development, highlights the important role of community intervenors to hold public monopolies more accountable.

Community intervenors identified that Manitoba Hydro underestimated the costs of the proposed $3 billion gas-turbine generating plant in Brandon and overestimated the costs of alternative sources of energy such as battery storage.

During the course of these PUB public hearings, Manitoba Hydro acknowledged their error and agreed to revise its estimations on both battery storage (less than what Hydro initially suggested) and the cost of the gas turbines (more than initial estimates).

City of Winnipeg infrastructure projects such as the North End Wastewater Treatment Plant would benefit from this type of further accountability and public scrutiny that takes into consideration not only immediate costs, but also longer-term sustainability factors.

Candidates for mayor and city council who believe in greater accountability and transparency should sign the “This PUB’s For You Pledge” to demonstrate their public commitment to support a motion, to call upon the Government of Manitoba to include the City of Winnipeg’s water and sewer rates under the regulatory authority of the PUB.

Lucille Bruce is co-chair of the Manitoba Seniors Equity Action Coalition and Peggy Barker is a member of the Canadian Association of Consumers (Manitoba).