Wastewater Financial Plans

Background

As identified in the Ontario Ministry of the Environment (MOE) guidelines for financial planning; achieving financial sustainability in Ontario’s municipal water sector is a long-term goal of the province. The purpose of a Financial Plan is to provide municipalities with a flexible, locally-driven approach to achieving financial sustainability. One of the requirements for licensing of water supply systems under Ontario Regulation 453/07 of the Safe Drinking Water Act, 2002, is the development of a Financial Plan covering a period of at least 6 years.

In view of the benefit of having a high level of knowledge, and the interconnection between water and wastewater billing, many municipalities have also incorporated the development of a Financial Plan for sewage works into the process.

As a result of ongoing consulting services related to water and sewage works, BMROSS has an understanding of the components which make up the Water and Wastewater Systems servicing municipalities. This includes the costs for both capital and operations. Over many years of completing rate studies, we have gained expertise in the development of rate structures including capital surcharges, reserve contributions and usage charges for metered and un-metered customers. Our experience includes dealing with multiple systems under a single municipal owner and structures designed to meet both residential and commercial considerations.

BMROSS is proud of its long tradition of being a partner in the communities we work in. We take a personal consultative approach and use our experience and common sense to develop solutions which work for our clients. Our philosophy in financial planning has been to provide clients with the information and tools they need to work towards full financial sustainability in a way which is, as the MOE intended, flexible and locally-driven.

Approach

Our approach to financial planning is based on the principles and practices presented in the MOE document, “Toward Financially Sustainable Drinking Water and Wastewater Systems”, August 2007 and on the series of best practices for sustainable municipal infrastructure developed jointly by the Federation of Canadian Municipalities, the National Research Council and Infrastructure Canada.

We work closely with clients to understand their objectives. This includes incorporating PSAB inventory information and existing capital expenditure plans into the process. In order to make decisions about rate re-structuring, one must first understand the existing rate structure’s strengths, deficiencies and the impact on various customers; then compare it with the effects of proposed rate structures. All of this information is provided in a way which is easy to understand and evaluate.

Services

Services provided as part of the financial planning process have typically included:

• Evaluation and summarization of current financial information, needs and practices
• Establishment of an operational cost model to be used for future projections
• Development of a long and short term capital expenditure schedule
• An Analysis of all Costs over the entire life of the systems
• Development of an alternative rate structure for Cost Recovery
• Development of a Financial Plan meeting the requirements of O.Reg. 453/07

Deliverables normally provided as part of the Wastewater Financial Plan include:

• 6-Year Capital Expenditure Plan and Long-Term Asset Replacement Schedule
• Study Background and Full Cost Memo
• Rate Structure Technical Memo
• Cost Recovery and Financial Plan Final Report

Experience

Some related projects with which we are involved, or have completed, are highlighted below.