COLUMN: Raising rates not the answer

Opening a utility bill of late can be a harrowing experience. Ever increasing electricity rates, escalating water rates, delivery charges on delivery charges. All can make one wish Canada Post would cut service to three days a week just to get a break from the bad news.

Even when you do your best to lower your usage, it is not enough. Spend a couple of hundred dollars to change out your light bulbs, use less heat, or air conditioning. All lower what you use, but it’s not enough. The bill arrives and surprise, your hard work has netted you a higher bill.

While Cornwall has seen users have a two-year freeze on electricity rates, the rest of Ontario has had dramatic increases year-over-year. Water systems that are consumption-based continue to increase, look at the 10 per cent increase in South Dundas passed in July.

To be clear, the consumption-based model is still the fairest method to bill people. If you use 20 cubic meters of water one month, and your neighbour uses 40, you should pay for what you use, not subsidize others. The issue with consumption-based billing is conservation doesn’t help your wallet. Use less, pay more.

Raising rates to deal with funding woes in utility systems is akin to plucking the low hanging fruit. It is easy to raise rates. Anyone can do that. In fact that is all politicians and administrators do. There are two keys to fix the escalating costs: control costs; and grow the user base.

The cost to operate utilities needs to be reigned in. Not just by a little, but a lot. Look at the Ontario electricity system. The government legislated itself to buy electricity from higher-priced sources first over less expensive ones. Why buy electricity from Hydro Quebec for cheap, when the government can subsidize solar farms and pay more? No where does this make sense. Whatever the utility, it has to operate doing the most it can, with the minimal expense to the user.

Cutting costs is harder than raising rates. Just as rates can only increase so much, there is only so far one can cut. This leads to the bigger need, growth.

Growing the user base requires effort to bring new business and people to a municipality, region or province. Not just plans, or making plans to plan, or consultants reports. Real action. Talk is cheap, but wasting time is not. If the cost to operate water infrastructure goes up by six per cent per year, then the user base of that system needs to grow by at least three per cent. This keeps increases to a minimum and spreads the cost of the utility across more users.

This doesn’t just apply to utilities, municipal taxation has the same issue, especially in rural areas.

Allowing costs to go up while not tackling costs and growth is a disservice to the users of the utility. It shows a lack of leadership and hard work by administrators and elected officials, who forgot what the role of a public utility or government is.

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