Monday, 26 June 2017

WHITE ROCK WATER FACTS

                    WATER UTILITY PURCHASE 


WHY WAS IT PURCHASED ?

THERE WERE 2 PREVIOUS OPPORTUNITIES TO PURCHASE THE UTILITY.
IN THE LATE 1980’S IT WAS OFFERED TO THE CITY FOR PURCHASE, BUT DESPITE THE RECOMMENDATION FROM STAFF TO ACQUIRE IT, THE COUNCIL OF THE DAY DECIDED AGAINST THE PURCHASE.
IN 2005, ALTHOUGH THE UTILITY WAS NOT ON THE MARKET, EPCOR APPROACHED THE OWNERS WITH AN OFFER TO PURCHASE. THE CITY DID NOT KNOW ABOUT THE OPPORTUNITY UNTIL AFTER EPCOR HAD AN ACCEPTED OFFER.
IN JANUARY , 2013, AS PART OF THEIR RATE APPLICATION TO THE COMPTROLLER OF WATER RIGHTS FOR 2014 -2017,  EPCOR ANNOUNCED A $12M TWQMP. THIS INCLUDED CHLORINATION OF THE CITY WATER (AS DIRECTED BY FRASER HEALTH) AND UPGRADES TO THE DISTRIBUTION SYSTEM INCLUDING AN INCREASE TO THE STORAGE CAPACITY AND A REPLACEMENT OF THE SEISMICALLY CHALLENGED MERKLIN WATER TOWER.
THE RESULTANT RATE STRUCTURE WOULD CAUSE THE WATER RATES TO INCREASE BY 80% OVER THE 3 YEARS.
THIS ANNOUNCEMENT CAUSED CITY COUNCIL IN  FEBRUARY, 2013 TO DIRECT STAFF TO EXAMINE THE RATE APPLICATION AND REPORT BACK. THE CONCLUSION OF STAFF WAS THAT BY THE END OF 2017, EPCOR WOULD BE REALIZING A PROFIT OF $1M ANNUALLY FROM OUR RESIDENTS AND BUSINESSES.
COUNCIL DECIDED THAT RATHER THAN SEND THAT MUCH MONEY TO EDMONTON, IT COULD BE PUT TO BETTER USE BY BUYING THE UTILITY AND APPLYING THE PROFIT MARGIN TO: PAYING OFF THE LOAN NEEDED TO PURCHASE IT, IMPROVING THE SYSTEM, AND REDUCING THE WATER BILLS TO BELOW THE LEVELS APPROVED FOR EPCOR.
IN JUNE,2013 STAFF WERE DIRECTED TO COMMENCE NEGOTIATIONS WITH EPCOR TO PURCHASE THE UTILITY. NEGOTIATIONS PROCEEDED VERY SLOWLY , THROUGH THE TERM OF OFFICE OF THE PREVIOUS COUNCIL, AND INTO THE TERM OF THE CURRENT COUNCIL. EPCOR KNEW THEY HAD A CASH COW IN WHITE ROCK AND WERE RELUCTANT TO GIVE IT UP.
FINALLY, AFTER THREATENING EPCOR WITH  EXPROPRIATION, THE LOG JAM WAS OPENED UP AND IN OCTOBER, 2015 , MORE THAN 2 YRS AFTER COMMENCING NEGOTIATIONS, THE CITY TOOK POSSESSION OF THE UTILITY WITH A PAYMENT OF $14 M.
THIS IS NOT THE FINAL PRICE , BUT IT IS BELIEVED TO BE CLOSE TO THE FINAL PRICE, AND NEGOTIATIONS ARE STILL ONGOING TO ARRIVE AT THE FINAL FIGURE.
IT HAS BEEN A FRUSTRATINGLY SLOW PROCESS FOR COUNCIL AND STAFF. IT IS SAFE TO SAY, EPCOR HAS NOT BEEN IN ANY HURRY TO FINALIZE THIS MATTER. NONETHELESS, IT IS OUR EXPECTATION THAT THE NEGOTIATION ( AND ARBITRATION IF NECESSARY) SHOULD BE CONCLUDED IN THE NEAR FUTURE. ONCE IT IS KNOWN THE FINAL NUMBER WILL BE IMMEDIATELY MADE PUBLIC.


ARSENIC AND MANGANESE REMOVAL

IT MUST BE FIRST NOTED THAT WHITE ROCK’S WATER EXCEEDS THE CANADIAN DRINKING WATER STANDARD IN ALL RESPECTS. TO THE CITY’S KNOWLEDGE THE WATER QUALITY HAS NOT MATERIALLY CHANGED FOR MANY DECADES, BUT THE DRINKING WATER STANDARDS HAVE GOTTEN STRICTER, AND THE REQUIREMENT TO CHLORINATE THE WATER WAS DIRECTED BY FRASER HEALTH IN RESPONSE TO THE 2010 BOIL WATER ORDER.
THERE ARE 2 FUNDAMENTAL OPTIONS TO DEAL WITH THIS MATTER AND IMPROVE THE WATER QUALITY BY REDUCING THE MANGANESE AND THE ARSENIC CONTENT.
THE FIRST WOULD BE TO ABANDON THE USE OF THE AQUIFER AND SEEK TO JOIN METRO VANCOUVER.
JOINING METRO WAS NEVER AN OPTION OPEN TO EPCOR, SO THEY NEVER LOOKED AT IT. THE CITY INQUIRED OF METRO THE COST OF JOINING IN 2013 AND WERE TOLD IT WOULD COST $28M AND WOULD TAKE AN ESTIMATED 4 YEARS. GIVEN THE NUMBERS ARE FROM 2013, IT WOULD BE SAFE TO SAY IT IS NOW MORE LIKE $30M.
ALTERNATIVELY , THE CITY COULD LOOK AT TREATING THE WATER ITSELF. THIS WAS ESTIMATED TO COST $14M , AND WOULD TAKE ABOUT 2 YEARS TO COMPLETE. AS A RESULT OF RECEIVING THE FEDERAL/PROVINCIAL WATER QUALITY GRANT THAT AMOUNT WAS REDUCED TO $2M.
THE CHOICE SEEMS OBVIOUS.



SUPPOSE THE UTILITY WAS STILL OWNED BY EPCOR

THE RESIDENTS WOULD BE PAYING  FOREVER FOR THE IMPROVEMENTS TO IN THE TWQMP. $1M WOULD BE LEAVING THE CITY IN PERPETUITY FOR EDMONTON.
EPCOR WERE NOT PLANNING ON LOOKING AT WATER QUALITY IMPROVEMENT BY REDUCING ARSENIC AND MANGANESE UNTIL AFTER 2017, AND UNTIL DIRECTED TO DO SO BY FHA.
THE WATER PROBLEMS WOULD BE NO DIFFERENT. THE CITY’S WATER STAFF ARE THE FORMER EPCOR EMPLOYEES.
INFORMATION ON WATER QUALITY WOULD NOT BE AS FORTHCOMING.


WHY IS THE CITY WITHHOLDING INFORMATION ON THE BUSINESS CASE?

THE CITY’S BUSINESS CASE HAS BEEN REQUESTED VIA A FOI REQUEST, AND HAS BEEN DENIED BY THE CITY.
PROVIDING THE BUSINESS CASE PUBLICLY WOULD GIVE EPCOR HELPFUL INFORMATION IN THE NEGOTIATING PROCESS AND WOULD NOT BE IN THE PUBLIC’S BEST INTEREST AT THIS TIME.
AN ANALOGY WOULD BE TO MAKE AN OFFER TO PURCHASE A HOUSE AT LOWER THAN THE ASKING PRICE (SAY $800,000), BUT THEN TELL YOUR REALTOR TO LET THE VENDOR KNOW YOU ARE WILLING TO GO TO $850,000.
WHAT NUMBER DO YOU THINK THE VENDOR WOULD GO FOR?
THE BUSINESS CASE WILL BE PUBLICLY AVAILABLE AFTER THE NEGOTIATIONS ARE CONCLUDED, BUT NOT BEFORE.


I TRUST THIS CLARIFIES THE WATER UTILITY SITUATION AND CORRECTS THE MISINFORMATION CIRCULATING IN THE COMMUNITY IN SOCIAL MEDIA AND THE PRESS.

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