REPORT RECOMMENDATIONS

RECOMMANDATIONS DU RAPPORT

ENVIRONMENTAL IMPLICATIONS

RURAL IMPLICATIONS

COMMENTS BY THE WARD COUNCILLOR(S)

CITY STRATEGIC PLAN

TECHNICAL IMPLICATIONS

EXECUTIVE SUMMARY

RÉSUMÉ

Cost, Revenue and Rate Study

Source: Municipal websites

Generally, the proposed rate increases for Ottawa are consistent with rate increases in similar sized municipalities in Ontario.

CONCLUSION

CONSULTATION

LEGAL/RISK MANAGEMENT IMPLICATIONS

This report supports the Corporate Strategy to close the gap on sanitary and storm sewer and water line replacement by 2015.

FINANCIAL IMPLICATIONS

SUPPORTING DOCUMENTATION

9 February 2010 / le 4 février 2010

/ Services d’infrastructure et Viabilité des collectivités

City Treasurer / trésorière municipale

Contact Person / Personne ressource: Dixon Weir, General Manager / Directeur général
Environmental Services Department / Services environnementaux

613-580-2424, x22002 Dixon.Weir@ottawa.ca

Comparison with Other Ontario Municipalities

DISPOSITION

5. 2010 WATER AND WASTEWATER RATE-SUPPORTED RECOMMENDED OPERATING AND CAPITAL BUDGETS

ProjetS de budget de fonctionnement et d’immobilisations 2010 SOUTENUS par les tarifs d’eau et d’eaux usées RECOMMANDÉS

Committee recommendation

That Council approve the 2010 Rate Operating and Capital Budget Estimates.

Recommandation DU Comité

Que le conseil approuve les budgets de fonctionnement et d’immobilisations préliminaires de 2010 soutenus par les tarifs.

Documentation

1. Deputy City Manager's report, Infrastructure Services and Community Sustainability, dated 9 February 2010 (ACS2010-ICS-ESD-0004).

2. Extract of Draft Minute, 23 February 2010.

Report to / Rapport au:

Planning and Environment Committee

Comité de l'urbanisme et de l'environnement

and Council / et au Conseil

Submitted by / Soumis par: Nancy Schepers and Marian Simulik,

Infrastructure Services and Community Sustainability

City-Wide / À l’échelle de la Ville

Ref N°: ACS2010-ICS-ESD-0004

SUBJECT: 2010 WATER AND WASTEWATER RATE-SUPPORTED RECOMMENDED OPERATING AND CAPITAL BUDGETS

OBJET: ProjetS de budget de fonctionnement et d’immobilisations 2010 SOUTENUS par les tarifs d’eau et d’eaux usées RECOMMANDÉS

That the 2010 Rate Operating and Capital Budget Estimates:

1. Be tabled at Planning and Environment Committee on February 9, 2010;

2. Be considered by the Planning and Environment Committee February 23, 2010; and

3. Be forwarded to Council thereafter for final approval.

Que les budgets de fonctionnement et d’immobilisations préliminaires de 2010 soutenus par les tarifs :

1. Soient reçus et déposés à la réunion du Comité de l’urbanisme et de l’environnement devant avoir lieu le 9 février 2010;

2. Soient étudiés par le Comité de l’urbanisme et de l’environnement au cours d’une réunion devant avoir lieu le 23 février 2010;

3. Soient soumis par la suite au Conseil pour approbation finale.

The total recommended rate drinking water and wastewater net operating budget for 2010 is $244.7 million, which provides the necessary resources to support a total gross capital budget of $189.4 million. The budget provides for implementation of several Council approved strategic projects and service upgrades.

These increased capital investments will provide higher service levels to residents, increase flood protection measures, and better protect the health of the Ottawa River. These include:

· $4 million to reduce flood risks in the City’s west end;

· Almost $24 million to improve the health of the Ottawa River;

· An additional $5 million to improve the efficiency of water billing;

· $127.2 million for maintaining and expanding infrastructure renewal; and,

· $10.1 million to meet legislative requirements.

A major component of the 2010 Rate Budget is the implementation of capital projects that will target issues surrounding West End Flooding. The first phase of these proposed projects focuses on delivering performance improvements to existing drainage systems in 2010.

The 2010 budget continues to support the City’s Ottawa River Action Plan (ORAP), which is the subject of a separate report (ACS2010-ICS-ESD-0007). The report describes a series of short-term projects to be undertaken in the 2009-2013 period, with a value of $251.64 million. The bulk of this spending is on the City’s Combined Sewer Overflow Strategy, which is designed to further improve the water quality in the Ottawa River. ORAP identifies 17 projects that contribute to the environmental sustainability of the Ottawa River watershed. It also outlines further planning and initiatives directed towards the development of a long-term Water Environment Strategy. A major component of the 2009 budget was the creation of the Ottawa River Fund. That $139 million dollar Fund enabled the acceleration of the City’s improvement of the water quality in the Ottawa River in partnership with the provincial and federal governments. The total ORAP funding of $251.64 million is comprised of the $139-million Ottawa River Fund approved in 2009, $34.38 million in Other Works in Progress, and a further $78.26 million in costs not previously budgeted.

The costs for wastewater services are recovered primarily from the water rate and corresponding sewer surcharge paid only by those Ottawa residents receiving the service. In order to provide these services in a financially sustainable manner, Council in 2009, approved a high-level forecasted net 9% rate increase for 2010 as part of its multi-year budget forecasts. With the adjustment of the transfer charges agreed to as part of the 2010 tax-based budget, this increase becomes 10%. In anticipation of the major capital spending involved in both the Ottawa River Action Plan and West End Flooding prevention, both of which will draw primarily from the Wastewater Fund and Reserve, the overall 10% rate increase will be achieved with a 2% increase to Water Rates and an 18% increase in the Wastewater rate. Other less significant sources of revenue, such as cost recovery services on hauled liquid waste charges, will increase as per CPI or previously approved increases. For an average household receiving both water and wastewater services, this rate increase represents a cost increase of approximately $1 per week.

The 2010 drinking water services gross operating resource requirements are comprised of $51.2 million in direct net operating expenditures and $70.0 million in non-departmental services of which $49.1 million is a contribution directed to a dedicated Water Capital Reserve Fund. In 2010, the total resource net operating requirement to provide drinking water services will be $121.2 million.

Similarly, in wastewater services, the 2010 gross operating resource requirement is comprised of $44.0 million in direct net operating costs and $79.5 million in non-departmental services. Of the latter, $42.2 million is a contribution directed to a dedicated Wastewater Capital Reserve Fund. In 2010, the total draft resource net operating requirement to provide wastewater and drainage services is proposed at $123.5 million.

With respect to addressing long-term funding needs, there is a requirement under the Safe Drinking Water Act for the Ottawa Drinking Water Operating Authority to prepare and submit formal Financial Plans covering the long-term financial requirements for Ottawa’s drinking water system by July 1, 2010. This is the final element of the Municipal Drinking Water Licensing scheme required by the Province. While drinking water is the subject of the new regulations, due to the synergism between water, wastewater and stormwater, staff has included all elements in its conduct of the Cost, Revenue and Rate Study. The results of the study will become the subject of two reports: a report related to the water and wastewater rate structure scheduled for consideration by the Planning and Environment Committee and the Agriculture and Rural Affairs Committee in March; and a subsequent report, providing for the long-term financial requirements for consideration by Council in the late spring. Together, this one-year budget, and the long-term funding provisions, will place these services on a fiscally sustainable course.

The Ontario Municipal Benchmarking Initiative (OMBI) exists to allow municipalities to improve service through comparison with other municipal service providers. The most recent results from the OMBI Annual Report confirm that the City of Ottawa compares very favourably with similar sized and aged municipalities in terms of the cost to treat and distribute drinking water as well as the cost of wastewater collection, treatment and disposal of biosolids. The OMBI benchmarks indicate that Ottawa is demonstrating service excellence through the continued provision of a water and wastewater services in a cost effective manner.

In March 2009, Council approved the Planning and Environment Committee Strategic Priorities for 2009-2010 outlined in report ACS2009-ICS-DCM-0001. These key initiatives, which align with the strategic priorities of the Environmental Services Department, include “rebuilding the brand,” “rebuilding public trust” and “source water protection/supply.” As part of the service excellence imperative, the Draft 2010 Operating and Capital Budgets, continue to reflect those priorities.

Le budget préliminaire de fonctionnement net soutenu par les redevances d'eau et d'eaux usées de 2010 s’élève à 244,7 M$, ce qui donne les ressources nécessaires pour appuyer un budget d’immobilisations brut total de 189,4 M$. Ce budget prévoit la mise en œuvre de plusieurs projets stratégiques et des améliorations aux services approuvés par le Conseil municipal.

Ces dépenses accrues en immobilisations permettront de fournir de meilleurs niveaux de service aux résidents, d’améliorer les mesures de protection contre les inondations et de mieux protéger la santé de la rivière des Outaouais. Ces dépenses comprennent :

· 4 millions de dollars pour réduire les risques d’inondation dans la partie ouest de la ville;

· presque 24 millions de dollars pour améliorer la santé de la rivière des Outaouais;

· un supplément de 5 M$ afin d’assurer un relevé des compteurs d’eau plus exact;

· 127.2 millions de dollars pour le maintien et l’expansion du renouvellement des infrastructures;

· 10.1 millions de dollars pour répondre aux exigences législatives.

Un des grands volets du budget de 2010 soutenu par les tarifs concerne la mise en œuvre de projets d’immobilisations ciblant les problèmes d’inondations dans la partie ouest de la ville. La première étape de ces projets consiste à améliorer le rendement des systèmes de drainage existants en 2010.

Le budget de 2010 continue d’appuyer le Plan d’action de la rivière des Outaouais, qui fait l’objet d’un autre rapport (ACS2010-ISC-ESD-0007). Ce rapport décrit une série de projets à court terme, d’une valeur de 251,64 millions de dollars, qui doivent être réalisés entre 2009 et 2013. La plus grande partie de ces fonds sera attribuée à la Stratégie de contrôle des débordements d’égout unitaire, visant l’amélioration continue de la qualité de l’eau de la rivière des Outaouais. Le Plan d’action souligne 17 projets qui contribuent à la durabilité écologique du bassin hydrographique de la rivière des Outaouais. On y présente aussi un aperçu d’autres plans et initiatives portant sur l’élaboration d’une Stratégie sur le milieu aquatique à long terme. Un élément important du budget de 2009 était la création du fonds pour la rivière des Outaouais. Ce fonds de 139 millions de dollars a permis à la Ville d’accélérer l’amélioration de la qualité de l’eau de la rivière des Outaouais, en partenariat avec les gouvernements provincial et fédéral. Le financement de 251,64 millions de dollars du Plan d’action de la rivière des Outaouais comprend les 139 millions du fonds pour la rivière des Outaouais approuvés en 2009, 34,38 millions pour d’autres travaux en cours et 78,26 millions en dépenses qui n’ont pas encore été inscrites au budget.

Le coût des services de traitement des eaux usées est principalement recouvré par la redevance d’eau et la surtaxe d’égouts correspondante, payées seulement par les résidents d’Ottawa qui bénéficient de ces services. Afin d’offrir ces services d’une façon viable financièrement, le Conseil a approuvé, dans le cadre de ses prévisions budgétaires pluriannelles, une augmentation nette prévue des redevances de 9 % en 2010. En tenant compte de l’ajustement des frais de transfert approuvé pour le budget de 2010 soutenu par les recettes fiscales, cette augmentation s’élève à 10 %. En prévision des grosses dépenses en immobilisations qui s’annoncent relativement au Plan d’action de la rivière des Outaouais et à la prévention des inondations dans l’ouest de la ville, dont les fonds proviendront en grande partie du Fonds de réserve pour les eaux usées, l’augmentation générale de 10 p. 100 des tarifs sera réalisée en augmentant de 2 p. 100 la taxe d’eau et de 18 p. 100 la taxe d’eaux usées. D’autres sources de revenu moins importantes, comme les frais de services contre remboursement des déchets liquides transportés, augmenteront au même rythme que l’IPC ou selon les augmentations préalablement déterminées. Pour un ménage de taille moyenne qui reçoit les services d’eau et d’eaux usées, cette modification des tarifs représente une augmentation des coûts d’environ 1 $ par semaine.

Les exigences pour 2010 comprennent 51,2 M$ en dépenses nettes de fonctionnement directes et 70,0 M$ en postes non rattachés aux services dont 49,1 M$ constituent une contribution à un Fonds de réserve pour immobilisations de l’eau. En 2010, le besoin net total en ressources de fonctionnement pour fournir les services d’eau potable sera de 121.2 millions de dollars.

La situation est la même pour le service de traitement des eaux usées : le montant brut des besoins en ressources de fonctionnement comprend 44,0 millions de dollars en coûts nets directs d’exploitation et 79,5 millions de dollars en services non‑liés aux Services. De ce dernier montant, 42.2 millions de dollars sont versés au Fonds de réserve pour immobilisations de l’eau. En 2010, le besoin net total provisoire en ressources de fonctionnement pour les services de traitement des eaux usées et de drainage s’élèverait à 123.5 millions de dollars, ce qui représente une augmentation de 9 % par rapport à 2009, essentiellement pour les dépenses en immobilisations susmentionnées.

En ce qui concerne les besoins de financement à long terme, une disposition de la Loi de 2002 sur la salubrité de l’eau potable oblige l’organisme responsable de l’exploitation du réseau de distribution de l’eau potable d’Ottawa à préparer et à présenter avant le 1^er juillet 2010 des plans financiers prévoyant les besoins financiers à long terme du réseau de distribution de l’eau potable d’Ottawa. Ces plans reflètent la dernière exigence du Programme de délivrance des permis de réseaux municipaux d’eau potable de la Province. Bien que l’eau potable fasse l’objet de nouveaux règlements, à cause de la synergie entre l’eau potable, les eaux usées et l’eau pluviale, le personnel a considéré tous ces éléments dans son étude du coût, des recettes et des redevances. Les conclusions de cette étude feront l’objet de deux rapports. Le premier, qui portera sur le barème de redevances, doit être présenté au mois de mars pour étude par le Comité de l’urbanisme et de l’environnement et le Comité de l’agriculture et des affaires rurales. Le deuxième, qui portera sur les besoins financiers à long terme, doit être présenté vers la fin du printemps pour étude par le Conseil. Ce budget d’un an et ces données sur le financement à long terme placeront ces services sur une voie durable financièrement.

L’Initiative d’analyse comparative des services municipaux de l’Ontario (IACSM) a été mise en œuvre pour permettre aux municipalités d’améliorer leur service en les comparant à ceux d’autres fournisseurs de services municipaux. Les conclusions du dernier rapport annuel de l’IACSM confirment que la Ville d’Ottawa se compare très avantageusement avec d’autres municipalités de taille et d’âge comparables au chapitre du coût du traitement et de la distribution de l’eau potable et du coût de la collecte et du traitement des eaux usées et de l’élimination des biosolides. Ces résultats indiquent qu’Ottawa fait preuve d’excellence dans le domaine des services en fournissant des services rentables d’alimentation en eau potable et de traitement des eaux usées.

En mars 2009, le Conseil municipal a approuvé les priorités stratégiques du Comité de l’urbanisme et de l’environnement pour l’année 2009‑2010, présentées dans le rapport ACS2009-ICS-DCM-0001. Parmi ces grandes initiatives, conformes aux priorités stratégiques des Services environnementaux, on trouve « reconstruire notre image », « regagner la confiance du public » et « protéger les sources d’eau et l’approvisionnement en eau ». Conformément à l’exigence d’excellence du service, les budgets préliminaires de fonctionnement et d’immobilisations continuent à témoigner de ces priorités.

BACKGROUND

The Environmental Services Department is comprised of five branches: Drinking Water Operations, Wastewater and Drainage Operations, Solid Waste Operations, Customer Services and Strategic and Environmental Services. Solid Waste Operations presented a separate tax-based budget to Committee in the fall of 2009 and was subsequently approved by Council on January 28, 2010. The Drinking Water and Wastewater and Drainage Operations Branches provide direct services, while the Customer Services and Strategic and Environmental Services Branches provide those services that are common across the Department.

Note: *Includes $ .258 M for General Manager’s Office, 2 FTE for GMO, 3FTE Quality Management Branch and 3 FTE in the Business Services Branch

**Not included in this budget

All references to Net Operating Expenditure

The Department is proceeding on a number of initiatives intended to determine and confirm that the appropriate combination of services and authorities exist. These include:

(1) A strategic alignment review with an external consultant to assess the Department’s ability to meet its fundamental service delivery criteria.

(2) A departmental commitment to work with all service providers to ensure a compatible, complementary and effective combination of services.

(3) The development of a Departmental Service Excellence Plan that includes those corporate initiatives related to service excellence, accessibility, French language services planning, and equity and inclusion.

Strategic Alignment / Operational Overview

The Auditor General recommended that the City review the organizational structure of Wastewater and Drainage Operations Branch to ensure that adequate communication and operational oversight is maintained. A full departmental review (Strategic Alignment Initiative) was initiated with SP3 Consulting Ltd. The consultant completed all of the on-site interview work in April and reporting was completed in September 2009. This report outlines current and recommended changes in roles and responsibilities of all branches and divisions, an organizational model, strategic alignment goals and principles as well as a transition strategy.

The Department continues to work on the second phase of this realignment initiative. This work will transition the Department towards a customer-centric environmental leadership role that engages staff directly in the process. Transition will take place over a number of months commencing this year and will include developing a service excellence culture through greater employee engagement and operational effectiveness.

While it is recognized that the Department is often the City’s ‘public face’ with respect to the delivery of many of these services, it is also acknowledged that the delivery of these services is largely dependent upon the combined knowledge and expertise of a number of other supporting departments and branches. Among the primary contributors are:

· Infrastructure Services – through Asset Management and Construction Services;

· Planning and Growth Management – through Development Approvals, Infrastructure Approvals, Policy Development and Urban Design;

· Community Sustainability through sustainability planning and risk management;

· Financial Services – through Revenue, Corporate Finance and Supply; and,

· City Operations – through Human Resources, Corporate Communications and Customer Service and Information Technology.

The contributions of the Environmental Services Department to the City of Ottawa and its residents rest within the fields of public health protection, environmental protection and economic development. The major service contributions in these fields are:

Public health protection:

· Delivers safe, reliable and high quality drinking water to the community;

· Collects and transports sanitary and storm wastes from homes, businesses and properties across the City; and,

· Provides an adequate and reliable supply of drinking water and associated infrastructure for fire protection and suppression purposes.

Environmental protection:

· Treats and discharges combined and separated sanitary and hauled liquid wastes at the R. O. Pickard Environmental Centre;

· Treats and oversees the beneficial reuse of biosolids;

· Treats and discharges collected stormwater at stormwater treatment facilities across the City; and,

· Monitors the general water quality in rivers and streams in Ottawa.

Economic development:

· Provides adequate water, wastewater and storm services in order to meet the current and future requirements of the community;

· Provides a Municipal Drain program in support of Agri-business; and,

· Manages a stable and consistent rate structure.

These services are provided in a reliable, cost-effective and customer-focused manner.

DISCUSSION

Drinking Water Operations

The City of Ottawa’s Drinking Water Operations Branch ranks among the top producers and distributors of safe, high quality drinking water in the world and over the past four years the City’s drinking water has been rated exceptional by the Ontario Ministry of the Environment’s Chief Drinking Water Inspector, having achieved perfect water quality scores at four of the City’s six municipal drinking water systems.

The Branch treats and distributes 292 million litres of high quality drinking water per day to approximately 810,000 customers through the operation and maintenance of two water purification plants, 14 pumping stations, 9 reservoirs and over 2,822 kilometres of watermains, 39,989 valves, 18,275 hydrants and 203,415 water meters. Over 300,000 water quality analyses are conducted every year through a combination of laboratory services, the bulk of which are performed at the R.O. Pickard Environmental Centre Laboratory.

The major strategic directions for the Department in regard to the provision of Drinking Water Operations in 2010 are to:

· Complete a Cost, Revenue and Rate Study and submit a Financial Plan by July 1, 2010 in accordance with the City’s Municipal Drinking Water Licence;

· Participate in an external third party accreditation of the City’s Drinking Water Services Operational Plan as a regulatory requirement under the Province’s new Municipal Drinking Water Services licensing scheme, and achieve full accreditation as an Operating Authority in accordance with the City’s Municipal Drinking Water Licence;

· Participate in a Department-wide strategic alignment/organizational development initiative;

· Continue to contribute to the Rideau River/Mississippi River and South Nation/Raison Region Source Protection Authorities’ development of Source Water Protection planning initiative;

· Maintain participation in the development of a comprehensive asset management strategy;

· Renew and upgrade the existing Supervisory Control and Data Acquisition (SCADA) system serving both water plants, the communal well systems, the pump stations and storage facilities;

· Update the Water Development Master Plan for the water purification plants;

· Initiate a long-term replacement strategy for the backbone transmission watermain (large diameter);

· Commence a multi-year review of disinfection processes through a microbial risk assessment;

· Develop initiatives to increase the public trust and confidence in the services provided by the Department through a more aggressive public information and education program;

· Begin the implementation of an Advanced Metering Infrastructure (AMI) system to reduce the cost of meter reading, improve customer service by eliminating water and wastewater bills based upon estimates, and monitor customer consumption patterns in order to improve system management;

· Continue to demonstrate the City’s commitment to water conservation through implementation of the three-year Water Efficiency Plan; and,

· Develop and implement a Council-approved Cross Connection Control program and Private Fire Hydrant Maintenance program in response to Council’s direction and the Auditor General’s recommendations.

Operating Budget Pressures – Drinking Water

The total 2010 net operating requirement associated with the delivery of drinking water services (inclusive of the customer services and strategic and environmental services net expenditures) is

$121.2 million.

The associated operating pressures are captured in the following Table:

Table 1: 2010 Budget Pressures – Drinking Water

	2009 Adjustments To Base Budget $000	Maintain Existing $000	Provincial Legislated $000	Growth $000	New Operating Needs $000		User Fees & Charges

OPERATING BUDGET PRESSURES
General Manager’s /Manager’s Offices	5	37	-	-	-		-
Production	(234)	1,428	96	-	39		-
Distribution	115	757	109	-	-		(8)
Water Quality Assurance	30	144	-	-	-		-
Customer Services/ Strategic & Environmental Services	80	704	-	46	180		-
Productivity Improvements	-	-	-	-	-		-
OPERATING SUB-TOTAL (a)	(4)	3,070	205	46	219		(8)
SUB-TOTAL							3,527

NON-DEPARTMENTAL BUDGET PRESSURES
Water Billing Revenues	7,700	-	-	-	-		(304)
Capital Formation	(7,700)	(3,536)	-	-	-		-
Cost Transfers	-	312	-	-	-		(304)
NON-DEPARTMENTAL SUB-TOTAL (b)	-	(3,224)	-	-	-
SUB-TOTAL							(3,528)

TOTAL by CATEGORY (a + b)	(4)	(154)	205	46		219	(312)
OVERALL WATER FUND BUDGET PRESSURES TOTAL							0

A more detailed explanation of these budget pressures is explained below. Details related to additional staffing requirements are included in Document 3 of this report.

Adjustments to Base Budget: ($4,000)

The volume of water consumed and billed has declined by 6.3 % since the second half of 2008, which has resulted in a revenue shortfall. The 2009 budget has been adjusted by $7.7 million to reflect this deficit.

· Adjustment for Collective Agreement provisions.

· Reduction to reflect lower than projected Water Treatment Waste Residuals.

Maintain Existing Services: ($154,000)

Collective Agreement settlements, increments and benefit adjustments.
Inflationary allowances for chemicals, gases and miscellaneous services - $1.6M.
Increases to Administrative allocation.
Adjustment to base PAYG contribution.
Reduction in Debt Servicing costs.
Respond to increased customer demand in Customer Services and in maintaining City facilities through the addition of 3 additional FTEs.

Provincial/Legislated: $205,000

· Provide personal protective equipment materials and supplies.

· Provide continual improvement support to Drinking Water Quality Management System through the addition of 2 additional FTEs.

Growth: $46,000

· Compensation for 1 additional FTE in support of Maintenance Management.

New Operating Needs Services Requirements: $219,000

· Provide additional support to implementation of Advanced Metering Infrastructure (2 term positions) and expanded Public Outreach and Promotion Program (1 Officer and 6 Summer Students) in support of Council Strategic Direction through 5.98 additional FTEs.

User Fees and Charges: (312,000)

· An increase in the Water Rate of 2%, as proposed, generates this additional revenue.

2009 Drinking Water Operating Budget Year-end Variances

In 2009, the Drinking Water Operations approved net budget was under spent by a total of $1.620 million. This under-expenditure, by service area, was principally in the following categories:

Drinking Water Services: $465,000

· Lower than anticipated waste discharges to sewage collection system.

· Higher than anticipated repairs and maintenance.

Customer Services/Strategic and Environmental Services: $1.2 million

· Increased recoveries.

· Lower than anticipated use of materials and supplies.

· Compensation surplus due to vacancies.

· Internal charges from other departments.

In 2009, the Drinking Water Non-Department Cost and Revenues were under spent by a total of $5.6 million. This deficit was principally in the following categories:

Non-Department Costs and Revenues: $5.6 million

· Lower than anticipated Water Billing Revenues.

· Surplus in reduced debt servicing costs.

2009 Productivity/Efficiency Savings

The 2009 target in Productivity/Efficiency for the Drinking Water Fund is $2.342 million. The Branch has met the target in efficiency savings.

In those areas that these assumptions are expected to affect future year budgeting, reductions have been made in the baseline budget and listed in Table #1 as 2009 Adjustments To Base Budget.

As per Council policy, year-end surpluses or deficits in the water rate-supported service areas are settled to the Capital Reserve Fund. However, due to the significant shortfall in water revenues, the 2009 year end deficit will be funded by a combination of reduced Works in Progress funding of existing capital projects and the refinancing of others. A separate report regarding the disposition of the 2009 rate supported deficits will come forward to the Planning and Environment Committee at a later date.

2010 Capital Budget

The infrastructure required to provide a highly reliable level of service and a high quality product delivered to each home and business is extensive. For the City of Ottawa, the asset replacement value for all drinking water facilities and infrastructure is currently estimated to be approximately $6.8 billion.

A key component of being able to continue to provide this service in a reliable manner is to continually re-invest in this critical infrastructure. The Capital Budget is the City’s means of accomplishing that task. The following table represents the breakdown of water facility and infrastructure valuations and the value of this year’s capital works programs by category. The total 2010 gross Capital Budget associated with drinking water (inclusive of customer services and strategic and environmental services requirements) is $94.7 million.

Table 2 – Asset Values and 2010 Capital Program

	Estimated Asset Replacement Value (2009$) ($1,000s)	Renewal Projects ($1,000s)	Regulatory ($1,000s)	Growth ($1,000s)	Strategic Initiative ($1,000s)	Total ($1,000s)
Water Systems -General	N/A	2,048	1,330	2,165	882	6,425
Water Treatment Facilities	$ 530,000	7,270	-	1,000	-	8,270
Water Pumping Stations	$90,000	2,480	-	3,300	-	5,780
Water Distribution	$6,100,000	24,255 + 22,207*	-	27,344	-	51,599 + 22,207*
Water Reservoirs	$70,000	88	-	-	-	88
Communal Well Systems	$20,000	339	-	-	-	339
Sub-Total by Category	$6,810,000	58,687	1,330	33,809	882	94,708

* Water Fund contribution towards City-wide Integrated Renewal program

Wastewater and Drainage Operations

The Branch maintains 2,621 kilometres of sanitary sewers, 145 kilometres of combined sewers, 2,350 kilometres of storm sewers, 198,532 service connections and 69,260 catch basins. In addition, it operates and maintains 77 wastewater and stormwater pumping stations and 194 stormwater management facilities.

The Branch operates and maintains the Robert O. Pickard Environmental Centre (ROPEC) in the treatment of an average of 455,000 m³/day, and in 2009, oversaw the beneficial re-use of over 52,000 tonnes of biosolids.

Largely in support of the rural community, the Branch also manages a Municipal Drain program that includes the maintenance of 1,200 kilometres of drains.

The major strategic directions for the Department in regard to wastewater, stormwater and drainage services in 2010, which are largely associated with ORAP, include:

· Leading in the development of a comprehensive, integrated hydraulic model of the Ottawa River;

· Preparing and submitting the first Annual Wastewater Compliance report;

· Participating in a Department-wide strategic alignment/organizational development initiative;

· Developing an Environmental Quality Management System (ISO 14001) for Wastewater Operations;

· Completing a Cost, Revenue and Rate Study;

· Continuing to develop a comprehensive asset management strategy;

· Implementing new flow monitoring at critical wastewater collection system manholes and outflow structures;

· Continuing reinvestment in treatment plant, pumping station and stormwater management facilities;

· Continuing to work closely with local Conservation Authorities and other regulatory bodies to improve the delivery of municipal drain maintenance and construction;

· Developing and implementing a new sewer cleaning notification process;

· Updating and improving the Sewer Collection program business processes in order to strengthen the planning, delivery and monitoring of maintenance activities;

· Updating the Collection System operating philosophy from an event-based response to a continuous (24/7) monitoring;

· Developing a comprehensive Operation Manual for the Collection System;

· Creating and leading an Urban Drainage Management Office with all corporate partners;

· Developing research partnerships with universities and research foundations;

· Building upon initiatives to increase the public trust and confidence in the services provided by the Branch through a more aggressive public information and education program; and,

· Working with the Office of Emergency Management to implement the emergency response to significant rain event recommendations.

Operating Budget Pressures – Wastewater

The total 2010 net Operating Budget requirement associated with the delivery of wastewater services (inclusive of the customer services and strategic and environmental services expenditures) is $123.5 million.

A more detailed explanation of these budget pressures is explained below. Details related to additional staffing requirements are included in Document 4 of this report.

Adjustments to Base Budget: $1.6 million

· The reduction in the volume of water billed and subsequent impact on water revenues also has an impact on the sewer surcharge revenues. As a result, the 2009 budget has been adjusted by $7.5 million to reflect this deficit.

· Transfer of the Sewer Lateral program funding to capital of $1.38 million.

· Decrease in hauled liquid waste disposal volumes and revenues as received at ROPEC.

· Decrease in Sewer Surcharge revenues due to decreased water treatment facility waste residuals.

· Adjustment for 2009 budget shortfall in Collective Agreement provision.

Maintain Existing Services: $7.63 million

· Various inflationary increases - $1.5 million:

o Biosolids disposal;

o Wastewater treatment chemicals, hydro, natural gas etc; and,

o Miscellaneous other services and contracts.

· Increase in Administrative allocation.

· Adjustment to base PAYG contribution.

· Increases to sewer inspection and maintenance, wastewater treatment and branch management programs and services with the addition of 7 FTEs.

Provincial/Legislated: $540,000

· addition to sewer maintenance, wastewater treatment and stormwater management programs and services with the addition of 11 FTEs.

Growth: $330,000 million

· Increased sewer cleaning costs due to system growth.

· Increased stormwater facility monitoring costs due to system growth – 18 new facilities.

· Increased Stormwater Facility monitoring as a result of system growth, 1 additional FTE.

New Services/Needs: $1.495 million

· Increase to the Industrial Waste, Environmental Monitoring, Laboratory Sewer Maintenance, Stormwater Management, Wastewater Treatment and Facility Maintenance programs and services with the addition of 10 FTEs.

User Fees and Charges: $11.6 million

· Increase in revenues due to increase in Sewer Surcharge to 116% of Water Rate.

2010 Productivity/Efficiency Savings: ($2.7) million – Not achieved

The original 2009 efficiency target for Wastewater was $3.3 million. Throughout the year, only $637,000 of the efficiencies were identified. However, the remaining efficiencies target of $2.7 million has been carried forward to 2010.

The associated operating pressures are captured in the following Table:

Table 3: 2010 Budget Pressures – Wastewater

	2009 Adjustments To Base Budget $000		Maintain Existing $000		Provincial Legislated $000		Growth $000	New Services $000		User Fees and Charges
OPERATING BUDGET PRESSURES
Manager’s Office	5		6		-		-	-		-
Wastewater Treatment	213		1,447		213		-	572		-
Wastewater Collection	58		549		266		95	758		-
Stormwater Management	6		37		61		235	65		-
Drainage	11		13		-		-	-		-
Customer Services/ Strategic & Environmental Services	134		328		-		-	100		(10)
Productivity Improvements	-		-		-		-	-		-
OPERATING SUB-TOTAL (a)	427		2,380		540		330	1,495		(10)
SUB-TOTAL										5,162
NON-DEPARTMENTAL BUDGET PRESSURES
Sewer Surcharge Revenues	7,500		-		-		-	-		(11,607)-
Capital Formation	(7,500)		4,696		-		-	-		-
Cost Transfers	-		559		-		-	-		-
NON-DEPARTMENTAL SUB-TOTAL (b)	1,200		5,245		-		-	-		(5,162)
	SUB-TOTAL
TOTAL by CATEGORY (a + b)	1,627	7,625		540		330			1,495	(11,617)
OVERALL WASTEWATER FUND BUDGET PRESSURES TOTAL										0

2009 Wastewater Operating Budget Year-end Variances

The 2009 wastewater services approved net budget was over spent by a total of $999,000. The most significant areas of variance were in the following categories:

Wastewater and Drainage Services: Surplus of approximately $2.0 million

· Lower than anticipated spending on materials and services.

· Lower than anticipated internal charges from other departments

· Vacancies within the Branch.

Customer Services and Environmental Programs: Surplus of $0.3 million

· Lower than anticipated volume of Water Treatment Plant Waste Residuals.

· Lower than anticipated liquid hauled waste revenues.

· Vacancies within the two Branches.

Non-Department Costs and Recoveries: ($10.2) million

· Lower than anticipated Water Billing Revenues.

· Deficit due to increased recoveries by Surface Operations.

· Lower than anticipated investment revenues.

2009 Productivity/Efficiency Savings

The remaining 2009 target in Productivity/Efficiency savings for the Sewer Fund is $2.694M. As per Council policy, year-end surpluses or deficits in the wastewater rate-supported service areas are settled to the Sewer Capital Reserve Fund. However, due to the significant revenue shortfall, the 2009 year end deficit will be funded by a combination of reduced Works in Progress funding of existing capital projects and the refinancing of others. A separate report regarding the disposition of the 2009 rate supported deficits will come forward to the Planning and Environment Committee at a later date.

2010 Capital Budget

Maintaining existing infrastructure is key to continuing to deliver wastewater, stormwater and municipal drain services. Overall, the asset value for all City-owned wastewater facilities and infrastructure is estimated at approximately $10.4 billion. Continued re-investment into this infrastructure ensures that these services can be delivered in an appropriate manner.

For asset management purposes, the 2010 Capital Budget has been developed into five (5) different service areas, each representing a separate class of facility or infrastructure, each with its own renewal and reinvestment strategy. The total 2010 gross Capital Budget associated with wastewater (inclusive of customer services and strategic and environmental services requirements) is $94.7 million. The following table represents the breakdown of wastewater facility and infrastructure valuations and the value of this year’s capital works programs by category:

Table 4 – Asset Values and 2010 Capital Program

	Estimated Asset Replacement Value (2009$) ($1,000s)	Renewal Projects ($1,000s)	Regulatory ($1,000s)	Growth ($1,000s)	Strategic Initiative ($1,000s)	Total ($1,000s)
Wastewater General	N/A	2,040	1,470	360	825	4,695
Wastewater Treatment and Pumping Facilities	$1,175,,000	5,025	5,500	-	-	10,525
Wastewater and Stormwater Collection	8,875,000	35,527 + 38,152*	-	3,438	500-	39,475 + 38,152*
Stormwater Treatment Facilities	234,000
Municipal Drains	N/A	-	1,830	-	-	1,830
Sub-total by Category	$10,284,000	$80,754	$8,800	$3,798	1,325	$94,677

*Wastewater Fund contribution towards City-wide Integrated Program

Ottawa River Action Plan and Combined Sewer Overflow (CSO) Control

The Ottawa River Action Plan (ORAP) is the subject of a separate Report (ACS2010-ICS-ESD-0007) which describes in detail the City’s proposed Plan to protect and improve water quality within the Ottawa River. A major component of the Plan is the consideration of three options, A, B or C, which will allow the City to achieve regulatory compliance with combined sewer overflow criteria.

Later this year, staff will initiate the development of a longer term strategy associated with protection the Ottawa River, the results of which are the subject of a separate report for consideration by Committee.

Staff, the community, the Ontario Environmental Commissioner and the Ottawa Riverkeeper endorse moving to a higher level of CSO control through Option B. Option B provides for greater storage and the capture and conveyance towards treatment of combined sewage from within the Ultimate Combined Sewer Area in an average year, at an estimated cost of $251.64M over the next 5 years, as well as the implementation of a public education program.

Ottawa River Fund (ORF)

In 2009, Council approved the creation of the Ottawa River Fund (ORF) with projected spending of $139 million over five years, including $19.75 million in 2009.

The Ottawa River Fund attracted equal $33 million commitments from both federal and provincial governments to support this important initiative. Several ORAP projects are enhancements of previous projects and thus have higher capital costs from what was previously projected; or have accelerated timelines from those anticipated in Long Range Financial Plan (LRFP) III and in the 2009-2018 Capital Budgets.

In 2009, $19.75M in capital projects was identified, through the Ottawa River Fund. Major projects included the west end regulators, the final phase of the City’s Real Time Control program, Critical Manhole Monitoring program and the installation of Inlet Control Devices within the Combined Sewer Area.

Table 5 describes the financial requirements and overall program costs of $251.64 million over the next five years.

Table 5 - ORAP Financial Requirements

	5-year ORAP ($ Million)				2014 and beyond¹
	2009	2010	2011-13	TOTAL	2014 and beyond¹
Total ORAP per Document 2	54.13	23.86	173.65	251.64	11M/yr
Less
Ottawa River Fund Approved in 2009	19.75	31.25	88.0	139.0
Other Works in Progress (WIPs)	34.38			34.38
Costs not previously budgeted		(7.39)	85.65	78.26	11M/yr

¹This does not include the cost of the sewer separation program, which sees significant annual variations in expenditures.

Staff will pursue opportunities for cost sharing with other government bodies.

West end Flooding

On July 24, 2009, the City of Ottawa experienced a significant rainfall event, resulting in the backup of sanitary and storm sewers. At the August 25, 2009 meeting of Committee, it was recognized that some of the required immediate solutions to the problems identified as a result of the flooding could be addressed through existing reserve funds, while others should be included in the 2010 Rate-supported Capital Budget.

Committee directed staff:

1. To develop the 2010 sewer capital budget with a specific financial allocation to address basement flooding in the west end of Ottawa, specifically, but not limited to, Kanata and Stittsville; and to focus on including specific project based solutions.

2. Should it not be possible to identify specific projects, staff was directed to include a generic financial allocation in the 2010 budget.

3. To implement any measures deemed appropriate and reasonable to prevent basement flooding in affected areas.

The following table represents a list of proposed improvement projects to be undertaken in phases. Projects and funding requirements for 2011 and 2012 will be refined in Phase 4. Depending on the scope of work, funding requirements could extend beyond 2012.

Table 6 – West End Flooding – Proposed Improvement Projects

Projects (to be refined as part of Phase 3)	2010 ($ Million)	2011 ($ Million)	2012 ($ Million)
Installation of Inlet Control Devices, sealing of Maintenance Hole covers and other flow removal measures	2.0	1.0
Improvements to major system/overland drainage (design in 2010)	0.5	1.0	1.0
Improvements to Hazeldean Pumping Station*	0.5	2.0
Modifications to Monahan Drain	0.2
Sewer capacity and hydraulic improvements** (design initiated in 2010)	0.8	7.5	3.5

Total	4.0	11.5	4.5

* Improvements to be undertaken in 2 phases. First phase focused on performance improvements that can be carried within the existing station and the second on those that require more extensive modifications. Does not include funding related to Front-ending Agreement.

** Specific projects will be defined as part of Phase 3. These may extend beyond 2012.

Revenues

The City’s water, sanitary and storm sewer systems are primarily funded through a combination of Development Charges and Water Rate and corresponding Sewer Surcharge. On occasion, more senior levels of government direct funds toward municipalities for certain programs. The Ottawa River Fund is one of those initiatives.

In accordance with the requirements of the Safe Drinking Water Act, the Department is in the process of conducting a Cost, Revenue and Rate Study. This Study includes the review of the City’s long-term funding strategies, including the Water Rate, the Sewer Surcharge, the structure and current and forecast trends in consumer consumption. The results of this study will be brought forward in two separate reports, one addressing rate structure and a second addressing long term funding requirements.

A preliminary Rate Structure Report has been taken to the community for public consultation with four separate rate structures. The results of those consultations are being compiled and final recommendations will become the subject of a Water and Wastewater Rate Structure Report scheduled for consideration by the Planning and Environment Committee and the Agriculture and Rural Affairs Committee in March.

With respect to the long-term financial requirements for the City’s $17 billion investment in drinking water, wastewater and stormwater assets, a second report will be prepared for consideration by Council in late spring. This Financial Plan Report will provide a six-year funding strategy, in accordance with the regulatory requirements, taking into consideration the asset investment requirements of the next fifty years. Following the receipt of Council’s approval, the drinking water services aspect of the Financial Plan will be provided to the Ministries of the Environment and Municipal Affairs and Housing as the final required element of the Municipal Drinking Water Licensing program. This submission is due prior to July 1, 2010 in order to comply with the Financial Plan Regulation.

An important part of ensuring sustainable water service delivery is protecting water sources. The important Source Protection Planning work being lead by the Rideau River/Mississippi and South Nation/Raison Region Source Protection Authorities is not likely to be incorporated into this first Financial Plan. The development of these Plans will not be completed by July 2010, which is the regulated date of the first submission of the City’s Financial Plan. However, staff will develop the City’s Financial Plan with this in mind, and with the intent of being able to incorporate any eventually identified source protection plan implementation costs within the Plan, when they become known (likely in 2012).

Revenue Projection for 2010

Similar to the experience of many Ontario municipalities, due to increased efficiencies, weather fluctuations and increased environmental awareness, there has been a steady decline in drinking water consumption over the past six years. In Ottawa, this 6.3% decline in billed water demand over the period 2008 - 2009 has resulted in a $16.0M shortfall in water and wastewater revenues in 2009.

Reduced water consumption has a direct impact on revenues for both water and wastewater. Average water production and average billing has declined steadily over the 2003 to 2009 period. The average daily water production has dropped by 20% since 2003, and average daily water consumption has dropped by almost 12%.

It is understood that the water production rate has declined mainly due to:

· Reduced water consumption by customers;

· Successful implementation of the Water Loss Control Strategy (reduced leakage); and,

· On-going Capital programs that target infrastructure renewal and rehabilitation.

As the significance in the decline in demand became known, the Department initiated a trend analysis of the water billing information in order to better understand the drop in our customers’ water consumption. It was found that all customer categories saw a reduction in water consumption from 2001 to 2008:

Table 7 – Drinking Water Consumption Reduction 2001- 2008

Customer Category	% Reduction 2001 to 2008	Consumption Reduction (m³) 2001 - 2008
Single Family Residential	7%	2,800,000
Multi Family Residential	8%	2,300,000
Industrial, Commercial, Institutional (ICI)	6%	1,700,000
Total Consumption Reduction 2001-2008		6,800,000

The trend analysis also revealed that weather patterns have an effect on outdoor water usage, and that from 2001 to 2008 there have been higher precipitation and lower mean temperatures during the summer months.

In summary, the trend analysis identified the following factors that may have contributed to the reduction in water consumption by our customers:

· An increasing awareness and adoption of environmentally-friendly habits that result in lower water consumption (shorter showers, washing full loads of laundry or dishes, etc.)

· Installation of more efficient plumbing fixtures and appliances, such as low flow toilets, front-loading clothes washing machines, water efficient dishwashers, etc

· Weather patterns that have discouraged outdoor water usage (higher rainfall, lower temperatures, fewer consecutive dry day periods), and,

· City of Ottawa Water Efficiency Strategy (public education, retrofit program, toilet rebate program, etc.)

While in the short-term, these water demand reductions create revenue shortfalls and difficulties in projecting future year projections, in the longer term those reductions that can be relied upon as being permanent effectively expand the servicing capacity of the City’s existing infrastructure. This increase in servicing capacity will in turn aid with the City’s goal of both increased intensification and reduced capital spending for further infrastructure expansion.

Based on a review of past consumption, the 2010 revenue projections have been developed through the projected billed drinking water amount of 86 million cubic metres (235 ml/day). This is equal to the 2009 billed total.

The implications of this trend in declining water demand is being taken into consideration by the work of the Cost, Revenue and Rate Study mentioned previously. This trend is expected to affect the recommendations of both subsequent reports, namely the Rate Structure report and the long term Financial Plan report.

Operating Cost Comparison

The Ontario Municipal Benchmarking Initiative (OMBI) exists to allow municipalities to improve service through comparison with other municipal service providers. Annually, the organization publishes a report made available to all participants, of which the City is one.

Described below are the results taken from the most recent version of OMBI’s Annual Report.

In the drinking water service area, the OMBI performance measures included:

The cost to treat a megalitre of drinking water:

· Ottawa 2008 Result - $195

· Ontario Median - $228

Discussion: Ottawa compares very favourably with similar sized and aged municipalities.

2. The cost to distribute drinking water per kilometre of distribution pipe:

· Ottawa 2008 Result - $8,477

· Ontario Median - $8,477

Discussion: Ottawa meets the Ontario Median, and compares closely with similar sized and aged municipalities, such as Hamilton and London.

In the wastewater service area, similar OMBI performance measures included:

The annual cost of wastewater treatment and disposal of biosolids per megalitre:

· Ottawa 2008 Result - $130

· Ontario Median - $278

Discussion: Ottawa sits well below the Ontario Median, and compares very favourably with municipalities of similar size and age of infrastructure. This is in large part due to the efficiency of the R.O. Pickard Environmental Centre. This Centre has a sophisticated SCADA system, optimized unit processes, highly skilled and trained staff and a best-in-class energy management system.

The annual cost of wastewater collection and conveyance per kilometre of pipe:

· Ottawa 2008 Result - $5,920

· Ontario Median - $5,920

Discussion: Ottawa meets the Ontario Median, and compares fairly closely with similar sized and aged municipalities, such as Halton and London.

Generally, the OMBI benchmarks indicate that services are provided to Ottawa residents in a cost effective manner when compared with similar sized service providers in Ontario.

Rate Increase Comparison

Municipalities across Ontario, Canada and North America are struggling to continue to provide a high-level of service in the face of increased customer expectation, enhanced government regulation and oversight and the difficulty of maintaining an extensive and aging infrastructure. All municipalities have to increase revenue in order to meet these demands.

Unfortunately, a diverse system of rates, fees and charges across the province make it difficult to compare actual charges across municipalities. Therefore, the best alternative is to compare based upon charge or rate increases.

Listed below is a review of the 2010 water and/or combined sewer rate increases proposed or accepted in similar sized municipalities across Ontario.

Table 8 - Comparative Water Sewer Rates for 2010

	Drinking Water	Wastewater	Overall
Ottawa	2%	18%	10%
Toronto	9%		9%
Durham	8.2%	6.6%
London	8%	9%
York	10%	10%	10%

Approval of the 2010 Water and Wastewater Rate-supported draft Operating and Capital Budget will provide the funding necessary for the City to make significant capital investments to reduce the impact of City operations on the environment. Contained with the funding provisions of this budget are many operational and capital projects that will contribute towards this objective, the key program that will be funded through this budget in the Ottawa River Action Plan.

The 2010 Water and Wastewater Rate Budget is of significance for all those residents who receive drinking water and wastewater services. As all city residents are charged the same, this report has no separate rural implications. The issue of the sewer charge for the Richmond/Carp areas will be contained in the tax policy report.

The purpose of this report is to seek the approval of Committee and Council of the Rate-supported Draft 2010 Operating and Capital Budget Estimates for Water and Wastewater Services.

Public notifications of this report will occur through normal notification processes. Consultation will occur through tabling of the report and any delegations received at the Planning and Environment Committee meeting on February 23, 2010.

N/A

There are no legal/risk management impediments to implementing any of the recommendations in this report.

N/A

Financial implications are identified within the report.

It is important to understand how the proposed rate increases affect service delivery costs of customers. To develop this forecast, staff reviewed the records for individual residential customers receiving both water and wastewater services. The City’s billing records indicate that, on average, residential customers use 0.60 m³/day or 220 m³of drinking water per year. Based on the rates as recommended in this report, the annual costs to an average residential homeowner will be:

Table 9 – Annual Costs to an Average Residential Homeowner

	2009	2010
Volume (m³/yr)	220	220
% Increase	9%	10%
Cost	$556.61	$612.27
$ Increase	$45.96	$55.66

Document 1 – 2010 Draft Operating and Capital Budgets – Rate Supported Programs

(previously distributed and held on file with the City Clerk)

Document 2 – Short-term ORAP Project Descriptions, Status, Budgets and Timelines

Document 3 – 2010 Additional Staffing Requirements by Pressure Type – Water Fund

Document 4 – 2010 Additional Staffing Requirements by Pressure Type – Wastewater Fund

Growth

Maintenance Planner

Electrical Maintenance Area - There is currently a high level of work order backlog. The position will support Maintenance Optimization - Phase 2 work that was stalled due to lack of resources.

Maintenance Management

Regulatory

Operational Engineers

Provide direct support for the Drinking Water Quality Management System. Continual improvement has become a core activity in the Production Program. The DWQMS and Municipal Drinking Water Licenses require regular review of operations manuals, procedures and drawings.

Production

Total FTEs 11.98

Budgets will be amended as per Council deliberation and adoption.

DOCUMENT 3

Water Fund

2010 Additional Staffing Requirements by Pressure Type
Maintain Existing Services				Section
	1	Customer Services Person	The additional customer service person is needed to meet increasing requests for utility locates, meter servicing and to maintain the service delivery standard response times.	Customer Services
	1	Communications Officer	A communication officer is required to meet the additional demands from all branches of the Environmental Services Department in order to increase public confidence in the products and services offered to residents.	Customer Services
	1	Technical Assistant	Provide technical support to building facilities management in the areas of Life Safety, Building Code, Fire Code, Hoisting/Lifting , Elevating devices, Boilers and Pressure Vessels Codes & associated Regulatory compliance.	Facilities Management
New Services
	1	Project Coordinator	AMR project. This is a term position, and the funds are recovered from the Capital Program	Revenue
	1	Inspector	A field inspector is necessary to provide the field inspection for quality control of the installation contracted. This is a term position, and the funds are recovered from the Capital Account.	Customer Services
	1	Public Outreach Officer	Promoting City Water program. Program will involve one Public Outreach Officer and six (6) summer students	Customer Services
	1.98	Office Assistants
	1	Network Analyst	Provide support to the Production Program's new network communication systems and security network of the upgraded SCADA (supervisory control and data acquisition) system. The analyst will perform the lead role in the maintenance of network standards and documentation, and assist in the administration of databases and regulatory reporting requirements.	Production

DOCUMENT 4

2010 Additional Staffing Requirements by Pressure Type
Maintain Existing Services					Section
	1		Coordinator	Utilize CCTV inspection for condition assessment in a timely manner. Quickly identify and tag defects for immediate repair.	Inspection
	1		Sewer Coordinator	Work planning and scheduling for the Collection supervisors. Free up clerical staff for data entry (AG report, Wastewater Audit, art. 3.2, find. 26)	Sewer Maintenance
	1		Project Manager	Non-technical project managers to work on business cases, business processes improvements, new service levels, benchmarking, performance management, corporate initiatives, strategic planning support, etc.	Branch Mgt
	1		Utility Clerks I	To address backlog in data entry and field dispatching. (AG report, Wastewater Audit, art. 3.2, find. 32)	Branch Mgt
	1		Process Operator Mechanic	Proactive maintenance plan has not been achieved in many years. Excessive backlog of corrective work. Aging plant.	Treatment
	1		Operational Data Analyst	Analysis of data points and trends generated by hundreds of monitoring equipment in the plant, pumping stations, regulators and flow monitoring equipment, on behalf of OROs and OICs. (O.Reg 129/04, art. 18)	Treatment
				This position is required to address the backlog of electrical work orders.	Maintenance Management
	1		Coordinator	Process Technologists scope doubling to include Collection system oversight. Additional liaison and coordination required between process staff and O&M staff.	Treatment
New Services
	1	Notification Clerk		In anticipation of new sewer cleaning notification process. Coordinate and communicate the sewer cleaning schedule to residents. (Directed to Report to PEC in 2010-Q1).	Inspection
	1	Foreperson		Maintenance requirements for new infrastructure installed as part of the Ottawa River Action Plan. Critical manholes, new instrumentation, (ACS2010-ICS-ESD-0007, projects 1 and 2)	Sewer Maintenance
	1	Maintenance Worker			Sewer Maintenance
	1	Operators - Inspectors		Pre-commissioning inspections of new infrastructure. Reduce transfer of defective infrastructure from developers and contractors. (AG report, 2006 Wastewater audit, rec. #12)	Sewer Maintenance
	1	Program Manager		Increased leadership and coordination in stormwater management. Integration between departments. Current connections between municipal drains, ponds, overland drainage, etc. are weak.	Stormwater
	1	Coordinator		ORAP calls for continued monitoring and source control programs and activities; acceleration of SWM Strategy in subwatershed affecting beaches. The Eastern sub-watersheds have significant industrial impacts to the storm systems and will require monitoring, inspections & enforcement not currently in our scope of work,	Industrial Waste Program
	1	Field Technician		ORAP calls for continued monitoring and source control programs and activities; acceleration of SWM Strategy in subwatershed affecting beaches. This will result in an increased requirement for Priority Outfall Monitoring, flow monitoring and stream assessments. Expansion of the Baseline Program (part of ORAP) will require additional oversight off group activities on a city-wide basis.	Environmental Program
	1	MMS Coordinator		Pumping stations currently do not have a complete MMS inventory and associated maintenance plan. A new coordinator is required to review and keep current maintenance & operation manuals, flow diagrams and electrical single line diagrams. The quantity of equipment, potential efficiency gains, equipment replacement costs and consequences of failure call for a higher level of maintenance. The level of maintenance management support should be in proportion to or similar to the plant.	Maintenance Management
	1	Maintenance Planner		This position is to address the backlog of electrical work orders.	Maintenance Management
	1	Laboratory Technician		The Lab will be taking on 400,000 of analysis from Realty Services Branch that is currently subcontracted to a commercial laboratory. The laboratory will be doing about 200,000 of the work in house, 160,000 of which is volatile analysis. The FTE will help to perform some of this analysis in-house using a Gas Chromatograph/Mass Spectrometer equipped with a purge & trap.	Laboratory Services
GrowtGrowthwth
	1	Field Technician		Supporting 12 new stormwater treatment facilities in 2010.	Stormwater
Regulatory
	2		Operators - Inspectors	O.Reg 129/04. Construction on live sewer system must be under the supervision of a Licensed Operator. ( AG 2006 Sewage Spill Audit (ref. in 5.2.1) and the Price Audit report, recs #14 and 15)	Sewer Maintenance
	1		Supervisor		Sewer Maintenance
	1		Foreperson	Implementation of Ottawa River Action Plan project #4 and 14. Management of cross-connection and inter-connections. (ACS2010-ICS-ESD-0007)	Sewer Maintenance
	1		Maintenance Worker		Sewer Maintenance
	1		Coordinator - Facility Ops	Four new stormwater facilities with extensive monitoring requirements in 2010. (Monitoring conditions, certificate of approval of facilities)	Stormwater
	4		Process Technologists	These four FTEs will provide for 1 continuous full time 24/7 FTE to monitor, oversee and control the entire wastewater collection system (RTC, Pumping Stations, critical manholes, flow monitoring sites, etc.). The oversight of regulators is required under the CofA. (See Rec. #3 of AG 2006 Sewage Spill Audit)	Treatment
	1		Technologist	Biosolids Management System requires site supervision of biosolids land application. Program expanded from 30% to 100% land application. This function was previously performed by a consultant.	Treatment
TOTAL FTEs 29

2010 WATER AND WASTEWATER RATE-SUPPORTED DRAFT OPERATING AND CAPITAL BUDGETS

PROJETS DE BUDGET DE FONCTIONNEMENT ET D’IMMOBILISATIONS 2010 SOUTENUS PAR LES TARIFS D’EAU ET D’EAUX USÉES

ACS2010-ICS-ESD-0004 CITY WIDE/ À L’ECHELLE DE LA VILLE

Dixon Weir, General Manager of Environmental Services provided a comprehensive PowerPoint presentation, which is held on file with City Clerk.

Mr. Weir was accompanied by Felice Petti, Manager of Strategic and Environmental Services; Tammy Rose, Manager of Drinking Water Services; Michel Chevalier, Manager of Waste Water and Drainage Operations; and Michael Burt Acting Manager of Customer Services. Also in attendance from the Finance department were Marian Simulik, City Treasurer; Mona Monkman, Deputy City Treasurer, Corporate Finance, and Claudio Colaiacovo, Manager of Business and Technical Services. Mr. Weir also acknowledged the Infrastructure Services Department, noting that Wayne Newell, Director of Infrastructure Services, and Alain Gonthier, Manager of Asset, Management were also present.

In response to questions on the presentation from members of Committee, staff provided the following points of clarification:

New Full Time Equivalent Positions (FTEs)

· Staff believes the requested FTEs are required, and staff has endeavoured to break them out to clearly show where they are needed.

· A significant number of the new FTEs are needed to assist the municipality in meeting its regulatory obligations.

· Some of the new FTEs are in areas related to maintaining existing infrastructure, and only two FTEs are associated with growth.

· The implementation of the Ottawa River Action Plan will also require staff.

· Many of the additional staff requested in wastewater is in the wastewater collection area, a need identified in the review by Mike Price and Associates and confirmed by staff.

· While the budget shows half year compensation costs, it shows the full impacts of a full time FTE. Within the budget development process, there is a policy that when a request is made for an additional staff person, it must be for a full FTE, even if there will only be a part year cost. The following year there would be no request for another FTE, just a request for the additional annualized costs.

Noting that the half year compensation costs for some of the FTEs seemed high, Councillor Hunter put forward the following direction to staff:

That staff provide an explanation of the breakdown of compensation cost for new positions that are being hired on an average half year basis but seem to be funded in the budget on a full year basis

Staff agreed to provide this information prior to Council’s consideration of the rate budget.

Water Production and Billing Trends/ Automated Meter Initiative

· There are 56 milliliters per of water per day that are not billed for, which is not to say this water is not delivered. There are a variety of end-uses for this water, including fire hydrant flushing and other processes. The City has a well-developed water loss control program. Per the 2009 report, reduction targets have been achieved and the infrastructure leakage index has been brought down below the long-range target of 4.0. Staff is in the process of reviewing 2009 operations and will be reporting back in spring 2010.

· The gap between that water which is billed and that which is produced has been decreasing steadily year to year. The continued emphasis on infrastructure renewal is contributing to the reduction.

· The budget is asking for an additional $5 million for the automated meter initiative, which will allow for consumption information in real time, which could offer an advantage in terms of reduced leakage and better awareness of the operation of the distribution system.

· The only piece of the meter infrastructure that needs replacement is the “black boxes” on the outside of homes. With the advanced metering initiative, the City will be able to gain a customer service advantage by eliminating estimated bills. The ability to predict the revenue will be an advantage to the City.

Declining Water Consumption

· The three consecutive nine per cent rate increases were intended to generate the revenues necessary to enhance the City’s infrastructure renewal capacity.

· While there is a trend to reduced consumption, the infrastructure requirements and demands are not taking the same line. The City relies almost solely on the sale of the commodity for revenue. To address these issues, staff will be coming back to Committee and Council with a report on the rate structure, and also the longer-term financial plan.

· The need for a rate increase is partly to run the current system, as there is a cost to maintaining the infrastructure regardless of whether there is high or low consumption, and there is also increasing pressure on the wastewater side.

· By way of example, the total budget for wastewater is $123.5 million, while the variable costs (those costs directly affected by demand) total only approximately $9.5 million. Even if overall consumption declines, the variable costs decrease only a small amount in relation to the overall cost of providing the service.

· All utilities face a challenge in terms of encouraging conservation, as this reduces revenue. Many have gone to a system that combines both a fixed and commodity component to the service.

· Any proposals to have a portion of the water bill be a flat fee will be brought forward to Committee and Council in a separate report in the second quarter of 2010.

· Staff would be pleased to attend Councillors’ ward meetings to assist in explaining the water rate increases to residents and how this relates to their consumption.

Overall Rate Increase

· Staff originally intended to come forward with a combined nine per cent rate increase, evenly split between water and wastewater. The projected spending requirements of the Ottawa River Action Plan and the 2009 west-end flooding have caused staff to begin generating the revenues necessary to support these programs. These were not capital programs that had been identified in the near term and staff felt that it was an appropriate time to address them.

· The long range financial plan will take the longer term view and provide direction in terms of an ongoing sustainable service in both water and wastewater areas.

· In advance of the rate review, staff is not in a position to comment on what rate increases will be required over the next few years; however, many of the drivers of those increases (i.e. capital renewal, capital investment) are likely to continue.

· Regarding the 18 per cent increase on the wastewater side, there is not a one to one relationship between the revenue generation and projects that come out of it. The revenues generated cover both the operating costs and the pay-as-you-go contribution to capital reserves. The money is deposited into the capital revenues and staff determines yearly what the capital draw on those reserves will be for various projects and then determines a funding strategy for them depending on the nature of the projects.

· The breakdown between operating requirements and contributions to capital is approximately 8.7 per cent to 1.3 per cent. Existing reserves are drawn from in order to develop the capital program.

· Contributions to capital and infrastructure results in improvements to service; however it does not always result in efficiency savings for the City. Adding infrastructure and devices onto a complex system results in renewal costs and/or increased operating and maintenance costs. It is inherent with infrastructure that as soon as it is installed, it becomes a liability that will require replacement at some point in the future.

Councillor Bellemare put forward the following direction to staff:

That staff provide to Council a detailed breakdown of the 18 per cent wastewater rate increase as it relates to major expenditure type, such as:

· Ottawa River Action Plan

· Any other source water protection measures

· Maintaining and renewing existing assets

· Growth projects

· Other major expenditures and initiatives

Staff indicated that they would provide this information prior to Council’s consideration of the rate budget.

Rate Budget Process

· The rate-supported budget has its own process that differs from that of the tax-supported budget, and the process being undertaken is the one approved by Council.

· There will be the opportunity to make suggestions for changing that process during the review of procedures prior to the new term of Council in 2010.

Noting that as part of the tax-supported budget approvals, Council had charged back enough to the rate budget to augment the rate increase from 9 per cent to 10 per cent, Councillor Wilkinson put forward the following direction to staff:

That staff provide information to Council on what cuts could be made to reduce the rate impact from 10 per cent to 9 per cent.

Staff indicated that they would do so prior to Council’s consideration of the rate budget.

Committee then heard from the following public delegations:

Bill Toms spoke on behalf of the Environmental Advisory Committee (EAC). He spoke to a PowerPoint presentation, which is held on file with the City Clerk along with EAC’s detailed written submission. In his presentation, he made the following recommendations:

· Water rates should reflect the full environmental cost of water consumption, including the consumption and disposal of wastewater including storm water runoff and combed sewer overflow incidents.

· It is recommended that a review and clarification be done of the principles whereby capital and operating costs are allocated between property tax-supported budget and the water and waste water rate-supported budget

· It is recommended that demand management programs directed towards water and wastewater be monitored and have well articulated measureable objectives

· It is recommended that there be improved monitoring water and sewage flows to better improve overall efficiency and support the proposed acquisition of new metering equipment and technologies

· It is recommend that the City take additional effort in dealing with ongoing public concerns about the use of biosolids

· It is recommended that the City adopt a new pricing structure for water and waste water that is more sustainable and provides greater revenue certainty. There should also be some form of economic instrument developed to encourage greater water efficiency and conservation by industrial and commercial users.

In conclusion, Mr. Toms expressed that EAC feels there are many environmentally positive proposals in the Water and Wastewater Rate-Supported budget, adding that there might be additional work that could be done to communicate these achievements and to produce improved environmental results.

Lyall Steele and Dale Harley spoke on behalf of the National Capital Heavy Construction Association, by means of a PowerPoint presentation that is held on file with the City Clerk. An overview of Mr. Steele’s presentation is listed below:

· A major consequence of not investing in asset renewal today is significantly increased replacement costs tomorrow.

· There are many potential negative consequences if an investment is not made in water and waste water assets, as listed in the presentation.

· It is recommended that the City move towards financial sustainability and adopting a long-term plan to increase the rate of life-cycle management.

· Further recommendations include ensuring the funding for the Ottawa River Action Plan does not have a negative impact on renewal funding and ensuring the rate supported bill does not subsidize the tax bill through the administration allocation.

In conclusion, Mr. Steele stated that his association would like to see the City adopt on both the rate supported and tax supported sides of the tax bill the philosophy of re-investing in infrastructure today to save taxpayers money tomorrow.

In response to comments from Chair Hume, Mr. Steele agreed that the City was doing a tremendous job with regards to infrastructure renewal; however, the association believes a life-cycle management investment of 1.2 to 1.3 per cent would be more appropriate than the current level of about 0.8 per cent.

Responding to further questions from the Chair, Mr. Harley suggested that if the two per cent capital tax levy had seen its way through completion, in the long-term there would be more money available from the tax-supported side to pay for integrated works. He noted the capital levy was intended to raise $120 million over the previous three years and through combined debt financing with the tax levy, it came in at $111 million. He stated that presently there is a three per cent tax increase from a core basis as opposed to a six per cent increase, and suggested if the additional $30 million per year were available, they would better be able to use that money for integrated projects.

Jim Pouchinsky, Ottawa Citizens Against Pollution By Sewage (OCAPS), began by proposing that the City delay any funding decisions with respect to the spreading of biosolids on farmland, until there has been an opportunity to review alternative proposals from staff for disposal of those bio-solids. He challenged the stated benefits of spreading biosolids on farm fields, suggesting it to be harmful and more costly. He suggested, based on information OCAPS had acquired regarding funding, that the City could landfill biosolids for half the cost of spreading them. He indicated that 51 thousands tonnes of biosolids were spread the previous year, costing $4.3 million. He suggested sending such materials to the landfill would save the City approximately $2 million per year. He surmised that this savings would enable the City to obtain the efficiencies they have otherwise been unable to obtain. He concluded by asking Committee to request staff come forward with a cost comparison.

A copy of detailed written comments from Mr. Pouchinsky is held on file with the City Clerk.

Dana Silk, EnviroCentre, began by speaking to the City’s Water Efficiency Strategy, specifically the toilet replacement program. He noted the federal and provincial ecoENERGY programs, include a toilet replacement component, and suggested that when that the City’s program reviewed by Committee, the issue of “double dipping” be examined. He suggested any savings be invested in programs applicable to social housing.

Mr. Silk acknowledged that the projected rate increases were probably necessary. He suggested that staff be asked to provide figures comparing the City of Ottawa with other more progressive jurisdictions, for example those in France and Australia, rather than just other Ontario municipalities. He encouraged staff to plan on higher rates and perhaps rates that are better adapted.

With respect to storm water runoff, Mr. Silk indicated that he was unaware of anything in the current plan to deal with the issue in a proactive way, apart from continuing with the old technologies. He felt part of the problem was that there was no thinking of separated systems and little discussion about permeable parking lots. He encouraged members to seek direction from staff to inquire how much such means as permeable parking lots would cost and how much they would reduce storm water runoff in the City. He also noted that there were technologies being developed, such as grey water systems, that the City would be in a position to consider in the future.

Chair Hume commented on the issue of porous concrete and storm water runoff. He noted the City is committed to do a pilot program on the use of porous concrete, which would be in place the upcoming construction season in the storm water area that feeds to Westboro Beach.

Addressing the comments made by the delegation regarding possible duplication between the City’s programs with those of other levels of government, Councillor Monette put forward the following direction to staff:

That staff provide Council with information on federal and provincial programs that overlap with the City of Ottawa’s Toilet Replacement Program

Chair Hume noted that that after the review of the Water Efficiency Strategy, the toilet replacement program might not be one of the recommended strategies; the resources could be allocated to other matters. He wanted to ensure that the overall envelope of resources was not reduced as a result of not having to provide one particular program.

In response to questions from Councillor Cullen, Mr. Silk elaborated on his earlier comments with respect to social housing. He suggested Ottawa’s social housing agencies could benefit from a re-orientation of the toilet replacement program or the water efficiency program, which are presently designed for individual homeowners. He suggested this change would make it easier for the social housing agencies to get some money to replace the toilets, and also reduce the amount the City has to pay on behalf of the tenants. Mr. Weir clarified that there were already funds dedicated to social housing and retrofit as part of the existing water efficiency program. Councillor Cullen suggested that if the City were able to establish this program in the social housing agencies, there would be fewer requirements for subsidy or better ability to reallocate that subsidy for more effective uses within the envelope. He also noted that the 10 per cent rate increase would impact Ottawa Community Housing. He suggested that, even with the existing funds, these were insufficient and the other programs could be useful.

Committee then proceeded to review, discuss, and approve the Draft Operating and Capital Budget – Rate Supported Programs, as outlined in Document 1 of the staff report.

Drinking Water Services Operating and Capital Budget:

Councillor Bellemare had questions with regards to the Automated Meter Reading capital project listed on page 37 of Document 1, and whether the full cost would be incurred in 2010. Mr. Weir explained that, while the Automated Meter Reading project was a multi-year program, staff required the full $5 million authority in order to award a contract and secure a supplier. He confirmed the $5 million was rate supported pay-as you go money.

With regards to the overall project, it will cost close to $30 million, with the installation and spending plan anticipated take place over 2.5 years. Finance would take the spending plan into consideration in determining how to finance the project. Staff is at the proposal review stage, and has been working to secure a city-wide supplier to ensure consistent technology across the city.

In response to questions from Councillor Bellemare regarding the Stittsville Pumping Station capital project listed on page 41 of Document 1, Mr. Weir confirmed that a single contract was being issued, with expenditures over several years. He also indicated that it would not be possible to split it into different contracts and fund them over different years, as the complications of such an arrangement would outstrip the potential gains.

Councillor Bellemare inquired as to whether the project listed on Pg. 45 of Document 1 (2C/2W Feedermain Link) could be phased over several and the overall authority adjusted by $11 million to reflect the spending plan, and whether there would be any benefit to doing so. Ms. Simulik noted that the debt would likely not be issued for another two years, so there were no debt servicing costs built into the 2010 budget. She also noted that little of the project was funded from the rate, with most coming from Development Charges (DCs), and the majority of the debt being self-funding DC debt.

The Drinking Water Services operating and Capital budget was then approved as presented

Wastewater Services Operating and Capital Budget:

Councillor Bellemare, referencing Wastewater Services general request for authority in the amount of $1,470 million as listed on page 108 of Document 1, inquired into the possibility of reducing the rate-supported authority by $297,000 in order to reflect the spending plan. Mr. Weir noted that the subsequent page specified what is represented by that spending plan, namely the Protective Plumbing Program and the ongoing development of the quality management system. He suggested the former is an annual requirement and is very well, and often oversubscribed. The latter intended to assist in 2010 with developing the quality management system.

Wastewater Services operating and Capital budget was then approved as presented

Integrated Roads, Water and Wastewater Capital Program:

In response to questions from the Chair, Mr. Weir confirmed that the integrated budget takes into consideration the changes made with respect to the Bank Street Project.

The integrated Roads, Water and Wastewater Capital program was approved as presented.

Supplementary Items:

In response to questions from Councillor Bellemare with regards to Capital Works in Progress (WIPS), Ms. Simulik confirmed that staff had been reviewing the WIPS to identify those that can be closed or situations where the authority can be reduced. To date staff had observed that, of the projects listed, there was approximately $6 million that could be returned to the reserves. Staff will bring forward a report to Committee in April 2010 dealing with all capital closings and adjustments that relate to these works in progress.

Committee received the supplementary items listed on pages 137-161 of Document 1.

General Questions on the Staff Report and Miscellaneous Policy Motions and Directions:

In response to questions from Councillor Monette with regard to where the $127.2 million in capital investments for maintaining and expanding infrastructural renewal would be allocated, Mr. Weir noted that the investment would go towards numerous projects throughout Ottawa, listing the following as examples:

· Carling Avenue integrated works;

· Cave Creek collector reconstruction;

· integrated works for King Edward Avenue from Besserer Street to Laurier Avenue;

· cathodic protection in Drinking Water Services;

· Automated Meter Initiative;

· replacement of the Britannia backwash pump;

· sluice gate repair at Robert O. Pickard Environmental Centre (ROPEC);

· west end flood mitigation and Orléans flood mitigation; and

· commencement of the combined sewer overflow storage structure environmental assessment and functional design.

In response to further questions from Councillor Monette, Mr. Weir noted it was Council’s strategic goal to eliminate the backlog in wastewater and sewer spending by 2015. He suggested continued emphasis on capital renewal would help achieve that goal, and assist in accommodating new requirements such as the Ottawa River Action Plan.

Councillor Monette inquired as to whether the City could phase these projects over a longer period of time in an attempt to mitigate the rate increase, and what the consequences of that would be. Mr. Weir suggested Infrastructure Services already phases capital projects in such a way as to take advantage of economies of scale and obtain the best possible contracts. Mr. Newell confirmed that staff tries to break down major infrastructure projects into phases that can be achieved over a single construction season; however, there are some projects that cannot be split up, such as the ROPEC expansion. He emphasized that when staff is prioritizing spending, they put the money in the budget when they need the money.

With regards to where the almost $24 million allocated towards improving the health of the Ottawa River, Mr. Weir highlighted the following major projects:

· ROPEC disinfection improvements to bring the City into compliance with new regulations;

· the commencement of the combined sewer overflow storage structure;

· sewer separation work outside the ultimate combined sewer area;

· inlet and floatables control within the ultimate combined sewer area;

· eliminating problems with interconnections within the wastewater collections area; and

· projects to use passive controls to reduce the amount of storm water collected during a rain event.

Councillor Monette inquired as to the efficiency benefits of the $5 million investment in the Automated Meter Reading project. Mr. Weir explained that, from a customer service point of view, the initiative would end the ongoing difficulties in the existing system of estimated readings and actual readings as customers’ bills will reflect actual use. There will also be some business efficiencies, as it will allow the City after full implementation to eliminate the demand for manual meter readings. More real-time water demand information would also help the City reduce leakage and better understand demand on a time of use basis.

In response to questions from Councillor Monette with regards to the efficiencies achieved by the department, Mr. Chevalier noted that the department had achieved their 2008 efficiency target of $1.1 million, and had achieved all but $0.9 million of the $3.6 million target for 2009. He noted that wastewater services achieved efficiency gains of $1.9 million in 2007, the year prior to the commencement of the program.

With regards to 2009 shortfall, Mr. Chevalier explained staff spent much time and energy stabilizing the wastewater organization as well as building the environmental quality management system and were still able to achieve over $1 million in efficiencies. He expressed his confidence that the remaining $0.9 million this was achievable in 2010, and suggested staff had a few ideas how it would be achieved, based on business cases that would be done for the department’s programs. He suggested one strategy could be addressing the City’s list of “hot spots,” which are those locations in the City has to clean cleaned every few months for various reasons. He expressed his intention to examine that area in an attempt to reduce the list of hot spots with more monitoring and finding and fixing the problems, and agreed this could include investing capital to achieve operational savings.

In response to questions from Councillor Monette with regards to the funding directed towards meeting provincially legislative requirements, Mr. Weir explained noted that this was largely due to pressures on the wastewater side, and attributable to the cost of employees in the legislated areas. By way of example, he noted that operating and monitoring the real time control system, the capital works for which are nearing completion, requires four FTEs on shift work to ensure that monitoring at all times of the day. Also, when wastewater is redirected from the storm system, it must be done in the presence of a certified operator; as the City has not been in strict compliance with that rule, a greater degree of attention and presence is now required to ensure regulatory oversight responsibilities are met. He noted there was also the requirement for additional personnel in the maintenance area, in order to achieve the operational and environmental gain from resolving and eliminating cross connections and interconnections.

Councillor Monette raised the issue of how to address the concerns of residents who would now be charged more even though they had lowered their water consumption. Mr. Weir confirmed that residents who had lowered their consumption rate were still better off than if they had not done so, and it would continue to be in the personal financial interest of residents to reduce their consumption. Also, the City would benefit in the long run if it could extend the life of existing infrastructure by reducing consumption and demand. There is also an environmental gain from those activities that reduce the amount of water being drawn out of the river and treated.

Councillor Qadri noted there had been some very good improvements to the budget document in terms of the overall budget process, and wished to put forward a suggestion for future budgets. Referencing page 36 of Document 1, he noted that the 2010 request, previous authority, and spending plan were listed; however, the numbers did not add up because the amount of previously unspent authority was not reflected.

Councillor Qadri put forward the following direction to staff:

That for future budgets, previously unspent authority be reflected on the budget page

Ms. Simulik indicated staff was in agreement, and would take this as direction.

Councillor Doucet introduced the following motion:

WHEREAS the passive collection of storm water on site is the key to reducing storm water run-off into the municipal piped system, storage and treatment facilities;

BE IT RESOLVED that as part of the water and waste water rate review, the department investigate the advantages to be gained by introducing a storm water passive collection “carrot” program which will encourage land owners to reduce un-permeable surfaces and increase permeable surfaces such as gravel, interlock and permeable corridors.

Councillor Doucet noted water is broken down municipally into three constituent parts: clean water, dirty water and storm water, and suggested the storm water issue had not been sufficiently dealt with in the budget report. He stated that storm water generated major costs for the city. He proposed asking staff to examine, as part of the water rate review process, the possibility of introducing an incentive program to encourage people to reduce the flow of water from commercial and residential properties by reducing impermeable surfaces and increasing permeable surfaces. He suggested there could be a reduction on the water rate for residents who prove they have minimal storm water effect on the system; however, he would leave it to staff to determine which incentives were most feasible

Mr. Weir indicated that staff was prepared to take this as direction.

That the 2010 Operating and Capital Budget Estimates:

1. Be received and tabled at the meeting of the Planning and Environment Committee to be held on February 9, 2010;

2. Be considered by the Planning and Environment Committee at a Meeting to be held on February 23, 2010; and

3. Be forwarded to Council thereafter for final approval.

CARRIED

DIRECTIONS TO STAFF

1. That staff provide information to Council on what cuts could be made to reduce the rate impact from 10 per cent to 9 per cent.

2. That staff provide an explanation of the breakdown of compensation cost for new positions that are being hired on an average half year basis but seem to be funded in the budget on a full year basis.

3. That staff provide Council with information on federal and provincial programs that overlap with the City of Ottawa’s Toilet Replacement Program

4. That staff provide to Council a detailed breakdown of the 18 per cent wastewater rate increase as it relates to major expenditure type, such as:

Ottawa River Action Plan
Any other source water protection measures
Maintaining and renewing existing assets
Growth projects
Other major expenditures and initiatives

5. That for future budgets, previously unspent authority be reflected on the budget page

6. That as part of the water and wastewater rate review, staff investigate the advantages to be gained by introducing a storm water passive collection “carrot” program, which will encourage land owners to reduce un-permeable surfaces and increase permeable surfaces such as gravel, interlock and permeable corridors.

DOCUMENT 2 - ORAP Cost Estimates & Project Schedule/Status
ID No.	Project	*5-year Budget ($Million)**	Schedule/Status
1	Implementation of Real Time Control (RTC)	$30.0	Over 90% complete. To be completed 2010.
2	Critical CSO and Storm Outfall Monitoring	$5.0	Feasibility assessment has commenced. New monitoring stations to be installed by 2012-13.
3	CSO Storage for Ultimate Combined Sewer Area (UCSA)	$140.0	EA has commenced. To be commissioned 2013-15 depending upon design solution.
4	Review & Implement Sewer Interconnection Program	$4.0	Commenced. To be completed 2013.
5	Sewer Separation Outside the UCSA	$47.0	On-going initiative that will continue until program is complete (estm. 20-25 yrs.)
6	Development of a Wet Weather Infrastructure Management Plan	$0.14	Commenced. To be completed 2010.
7	Implementation of a Wet Weather Infrastructure Management Plan	$7.325	To commence 2011 and take several years to complete at an estm. cost of $2M/year.
8	Installation of Floatable Traps in Combined Sewer Area Catch Basins	$3.55	Over 30% complete. To be completed 2011.
9	Pinecrest Creek / Westboro Stormwater Management Retrofit Plan	$0.25	Commenced. To be completed 2010.
10	Eastern Subwatersheds Stormwater Management Retrofit Plan	$0.75	To be carried out 2011-2012.
11	Implementation of Stormwater Retrofit Plans	$4.0	To commence 2012 and take several years to complete. Long-term costs commencing 2014 are estm. at $9M/year.
12	R.O. Pickard Environnmental Centre Effluent Dechlorination	$7.44	To be carried out in 2010.
13	Develop & Implement a Water Environment Strategy	$1.0	Strategy to be developed 2010-2011.
14	Monitoring and Source Control Programs	$0.26	On-going initiative that will continue over the life of ORAP.
15	Wastewater & Drainage Environmental Quality Management System	$0.15	To be developed in 2010.
16	Updates to the Ottawa R. Bacterial Water Quality Computer Model	$0.40	To be carried out in 2010.
17	Public Outreach and Education (NEW)	$0.375	To be carried out over the period 2010-2013.
	TOTAL	$251.64	*2009-2013. Additional costs may be incurred in subsequent years.