(ID 171739479 © Arthon Meekodong | Dreamstime.com)

By Ashley Lavallee-Koenig

ANTICIPATED TO BE EFFECTIVE JAN. 1

Updated financial profile prompts utility rate increases by city council

Oct 2, 2024 | 10:42 AM

The average Red Deer household can expect to see their utility bills increase by about $15.32 per month in the new year, as city council has opted to increase Municipal Consent and Access Fees (MCAF) and utility rates for electricity, water, and waste management.

The decision comes on the heels of an updated financial profile presented to council in the October 1 regular meeting as one of the next steps in an updated process for Budget 2025.

The report was accepted for information and marks a slight decrease in the deficit needing to be balanced, which now sits at an estimated $17-19 million.

“When we look at our $20 million deficit target that we need to meet, as we’ve gone through process, we’ve only identified $3 million. We need to think critically then about what we are willing to tolerate to close that gap, because we have to,” said Mike Olesen, Growth and Finance General Manager. “In normal years, that gap can be managed a little bit more as we maybe have more free cash flow, or maybe as our reserves are a lot more healthy, but when I combine where we are there in relation to the forecast for capital — which is the essence of this report — I’m signalling that that forecast has our capital program being tight and underfunded, and that considers all factors, including debt.”

That number includes increased revenue expected from the five per cent increase to MCAF, which brought the fee from 10 per cent to 15 per cent and was unanimously approved in the same meeting. It also includes increased revenue expected from utility rate increases, which were also unanimously approved.

making a difference

Thurber student to sit on Minister's Youth Council for second year

1h ago

Starting Oct. 15, 2024

Fire Safety Plans now required for construction, renovation, or demolition sites in Blackfalds

2h ago

THREE PER CENT WAGE INCREASE

Red Deer ratifies CUPE agreement

2h ago

MCAF is a type of franchise fee charged to utility operators by municipalities for the use of land for pipe and wire alignments, and other utility infrastructure. These fees get applied to the total delivery cost for electric, water, and natural gas utilities, which impacts user bill totals, explained Jim Jorgensen, Utility Manager.

Both the operating and capital budgets were passed for the electric, water and waste management utilities. This involved a rate increase 6.5 per cent, six per cent, and again six per cent, respectively. This increase addresses budget demands as well as the need to upgrade utility infrastructure.

Councillor Vesna Higham commented that upgrading infrastructure is as important as ever given the situation that Calgary faced when a major water main broke this summer.

Calgary pipe woes flag ‘dire need’ for infrastructure upgrades: municipalities group

“For me, this shift in approach from our administration whereby we are both addressing the lagging reserves in each of our utilities because we keep drawing on reserves, as well as addressing the backed up, deferred maintenance — that’s the biggest thing. This reflects that shift in approach, which I think is a very wise and reasonable way to go. Yes, it’s going to mean an increase to our utility rates but we certainly can see the alternative of not addressing that,” she said.

Provided that council does not revisit the changes made on Tuesday, they will be put into bylaw with the goal to have the increases in effect as of January 1, 2025, said Jorgensen.

The following table outlines how much each change will impact the average household, with the total impact expected to be a $15.32 monthly increase.

(City of Red Deer)

The number of levers council has left to pull to address the deficit is getting smaller; This year’s updated budget process split the utility, capital, and operating budgets into three separate debates so they could be evaluated in greater detail and with more clarity for council, and one is now completed.

—

For local news delivered daily to your email inbox, subscribe for free to the rdnewsNOW newsletter by visiting rdnewsNOW.com. You can also download the rdnewsNOW mobile app on Google Play and the Apple App Store for all the latest updates on this and other stories.