Ottawa homeowners facing 5% increase in water bills a year over 10 years to fund infrastructure upgrades

A flowing water tap is pictured. (Source: CTV News Atlantic)

Ottawa residents will be paying $5 more a month on their water bill over the next 10 years, as the city turns on the financial taps to fix up and expand the city’s water, wastewater and stormwater infrastructure.

A report for the finance and corporate services committee shows the city’s water, wastewater and stormwater services need $4.8 billion in capital spending between 2026 and 2035. Of that amount, $4 billion will be spent to renew existing water and wastewater assets.

According to the plan, the city will fund $3 billion of the infrastructure work through water, wastewater and stormwater revenues, with $1.7 billion from new debt.

Staff told the finance and corporate services committee that the city will spend $450 million to $500 million each year over the next 10 years, with the capital assets expected to be in service for up to 100 years.

“The funding strategy addresses all the ‘priority needs’ in the first 10 years of the plan and leverages debt funding in order to advance these projects,” staff said Tuesday.

Currently, the city’s operating revenues provide capital funding of approximately $307 million a year. To fill a $169 million a year financial gap, the city will finance infrastructure upgrades to water, wastewater and stormwater services through rate increases and new debt.

“The recommended funding strategy aims to completely eliminate the funding gap for priority capital needs in every year of the ten-year planning period, by shifting a portion of the cash contributions annually to debt servicing to advance funding,” staff said. “The impact to the ratepayer is minimized since the overall revenue requirement remains stable but the debt servicing ratio does increase, but within affordable limits.”

Under the plan to cover operating and capital cost requirements, residential water bills will increase between 4.5 per cent and 5.6 per cent a year over the next 10 years, with a 4.5 per cent hike in 2026, a 4.9 per cent jump in 2027 and 5.6 per cent increases in 2031 and 2032. Staff say this is an estimated water rate increase, and the actual increase will be determined each year during the budget process.

“The estimated rate increases required to recover costs will differ by service with an overall estimated average of 5.0 per cent over the 10 years, which equates to $5.00 more per month for the average residential property,” the report says.

The city will also use debt servicing charges and reserve fund balances to fund the infrastructure renewal and expansion.

The City of Ottawa says the conditions of its assets range from “good” for drinking water services, to “good to fair” for wastewater and stormwater services.

According to the City of Ottawa’s Drinking Water Services Asset Management Plan, five per cent of Ottawa’s watermains for drinking water services are in poor condition, while seven per cent of water facilities are in poor condition.

The City of Ottawa’s water, wastewater and stormwater assets include 9,600 kilometres of water, wastewater and stormwater pipes, the Lemieux and Britannia water purification plans, the Robert O. Pickard Environment Centre, the city’s sewage treatment plant, 86 pump stations, and over 6,600 culverts.