EPCOR’s rate hikes create unrest


Corporate takeoverIt seems EPCOR isn’t the most beloved utility service out there, despite the glowing comments the interim CAO made to staff recently. I was given a recording of his hour-long talk (aka sales pitch) for EPCOR and I can only say I hope no one listening fell for it (I’ll review his talk in another post).

Despite his stumbling blandishments, EPCOR’s management style isn’t all that popular. And if you do some searching for unflattering news stories about the corporation, you can find the following online:

Global News had this one on Feb. 2, 2017: Tabor took back their water from EPCOR after a 68% increase in water rates:

Taber Town Council has decided to end its 20-year utilities contract with EPCOR just nine years into the agreement.
EPCOR was under contract to provide Taber with its water and sewage services.
The move to end the working relationship comes after the company proposed to increase utility rates by 68 per cent. All 10 EPCOR employees will now work for the Town of Taber to ease the transition.

Sixty eight per cent increase in water rates in one year! There’s a customer-friendly business model for you. I have no doubt we can expect that sort of increase here once The Block privatizes our water to EPCOR. And yes, it will be privatization, not simply management and a disaster for the town.

Closer to home, Adjala-Tosorontio is also considering outside management for its water and wastewater services. According to a story on Simcoe.Com, dated Feb. 3, 2017,

Two companies, EPCOR and Clearford Water Systems, have submitted bids through a request for proposals (RFP) process to design, build, finance, operate and maintain the system.
In one scenario, where no developer’s contributions are assumed, the wastewater user rate would cost about $2,800 a year if the project was financed by Clearford, or $3,350 a year if it were financed by EPCOR. The figures in the financial analysis were presented in 2019 dollars, which is assumed to be Year 1 of operation for the system. Council said the current rate is a flat charge of $1,313.

A little calculation reveals that under EPCOR’s management, residents’ water rates would go up annually by $2,037! That’s a 155% increase in a single year!

These are just two recent Canadian scenarios, but imagine how YOU, dear reader, will react when The Block sells our water services to EPCOR and YOUR bill jumps by 68% Or worse, 155%! Or more!

And you don’t think it will happen here? Well, read on…

Down south, EPCOR is trying to amalgamate the water services it manages in several Arizona municipalities. And it has encouraged residents to speak out about how their water services is handled. Here’s a quote from a Feb. 3 story from the MV Telegraph, titled, ‘Stupidity’ plagues Edgewood Wastewater Plant:

“I came to the conclusion that the problems were so epidemic that it almost had to have been intentional — either that or stupidity on a scale so off the chart I’ve never seen,” Robert De Buck of Buck Electric said. “I think the Town of Edgewood got screwed.”
DeBuck was a contract electrician that was brought in to help fix some electrical problems with the plant a few years ago before EPCOR took over, Edgewood Town Clerk Juan Torres said.

Hardly a flattering assessment. EPCOR’s move to consolidate water services in Arizona’s “Sun cities” has residents fuming because it means significant rate increases for most, according to this story:

If the water districts are consolidated all customers in the combined district would pay $41.02 per month for wastewater. That would be a significant increase for Sun Cities residents, but residents in the other district areas would see a reduction on their bills…
In addition to district consolidation, EPCOR officials want a rate increase. Their proposal was for slightly over $25 monthly. But a settlement agreement would bring that down to just more than $23.

So if I calculate that correctly, EPCOR wants a 128% monthly increase. And in 2014, residents in nearby Fountain Hills complained about a 22% rate increase on their EPCOR-supplied water.

But here’s another quote from that previous story that should be more worrying:

Lloyd Maple, SCHOA board member, said one woman asked during the hearing how much EPCOR spent on infrastructure in Sun City and how much they get back in rates. However, EPCOR officials did not answer. Greg Eisert, SCHOA Governmental Affairs Committee chairman said what the water company has spent in infrastructure improvements in the last four years is small compared to the financial return its officials are requesting.

So much for the vaunted improvements in openness and transparency. It seems EPCOR is LESS open and accountable to its end users than what we get from our own municipal water service. And even in Edmonton, this lack of transparency is worrisome. As the Edmonton Journal noted in January of this year:

But according to Epcor officials, the city-owned corporation is not subject to the city auditor or provincially-regulated Freedom of Information requests, such as the one Postmedia filed to win access to Edmonton’s neighbourhood flood maps this year.
The company is run by an executive team and arm’s-length board of directors appointed by the City of Edmonton. City council is kept up to date through private quarterly shareholders meetings. It also sets performance-based rates for the company at council’s public utility meeting every five years. The city is the company’s sole shareholder.

So The Block would sell our open and transparent, public water utility to a secretive organization not subject to public scrutiny – well, given this is The Most Secretive Council Ever, you can understand their logic, twisted and perverse as it may be.

Meanwhile, EPCOR wants to expand its control over Edmonton’s stormwater system, a move that will lead to even higher utility rates, according to a piece on Global News, which opens: “Edmonton city council may vote to transfer the drainage branch to EPCOR, which could result in higher utility rates for city residents.”

Sun Cities residents (USA) have been vocal about EPCOR’s rates before this. In July, 2016 they gathered to protest the increases. In a story titled, “EPCOR rates to surge for Sun Cities customers...” the reported laid out what EPCOR wanted:

The utility is also seeking:
• $5.15 million in new revenues
• A 10.65 percent return on equity
• Low income assistance program
• Capital investments costs recovery

Hardly the same model of a public asset that works for the residents, not for its own profits or equity. And EPCOR is VERY profitable, according to its own financial reports:

Higher approved water and electricity rates, as well as an increase in water use, translated to bigger revenues for Edmonton-owned utility company Epcor last year…
Revenues in 2015 were $1.996 billion, $260 million of which was net income. That’s up from $1.9 billion in revenues and $191-million net income in 2014. Core operations constituted $247 million of the net income, up from $166 million a year prior. The company increased its investment in capital projects as well in 2015 to $463 million, compared to $385 million in 2014.

But this is just a few of the stories you can find online about EPCOR’s rates and business tactics. There are more. Here’s one from 2015:

French Creek residents facing 38 per cent increase in water bills
A representative of the French Creek Residents’ Association is upset with a 38 per cent increase to water bills and wants his neighbours to consider other options… Epcor applied in February to increase water rates 46 per cent over three years. After a review by the comptroller, the average monthly water bill will increase from $45.30 to $62.42, or $3.75 less than proposed.

And one from 2014:

White Rock water bills to surge $5.77 a month
Epcor spokesman Tim LeRiche said Friday that bills bearing the interim water rates – which are climbing by an estimated 21 per cent over 2013 – should be arriving in customers’ mailboxes at anytime.
To the average homeowner, it’s a boost of $5.77 per month, to $25.29.
LeRiche acknowledged the increase is dramatically higher than that of previous years – for example, rates rose by 14 cents per month in 2011 and $0.72 per month in 2013.

And in 2016, a Fort Saskatchewan resident launched a petition asking for an audit of the EPCOR-run water system over her bills. While nothing new is residents protesting high utility rates, the article notes that:

“If the resident still feels that their meter is reading incorrectly, then we can take it off and have it tested externally,” Kloss said.
The cost for that service is $250, which covers the cost of retrieving the meter. sending it to EPCOR and getting it back.

So EPCOR charges residents $250 to replace a meter that might be faulty and they have to send it out of town. A municipally-run utility would just send someone over in a truck to replace it, probably at no cost to the resident. How much more would it cost for us in Collingwood to send meters out of province?

By the way, if you’re an electrician, you might not like EPCOR’s approach to your trade. Last spring, EPCOR started replacing electricity meters in Edmonton – actually a good thing – but using a US-based contractor, not local electricians or even a Canadian firm. A story in the Edmonton Journal tells the tale:

The utility has contracted Grid One Solutions to perform the conversions… Mike Thomas, an electrical contractor and owner of a solar energy business SolarNinjas whose northeast Edmonton neighbourhood is scheduled for meter conversions this summer, is troubled that the work is not being performed by electricians.

Ah well, why should a big corporation care about local jobs anyway, right? They can even sole-source their contracts – a procurement practice beloved of The Block. Selling our water services to EPCOR will only be one of the many sole-sourced deals they have connived this term.

Over in Bruce County, EPCOR is planning to build natural gas pipelines to expand the service to communities that don’t have it. A good idea, but apparently they’re getting $100 million in government subsidies to do it – YOUR taxes – and they will make a profit from users. The Owen Sound Times noted, in January, 2017:

The new OEB framework allows companies to recover the cost of expansion projects by charging higher distribution rates in communities that are to receive natural gas for the first time.
EPCOR is proposing to set rates for the southern Bruce County communities that are higher than a typical Ontario customer pays for natural gas, but about 10 to 15 per cent lower than the current average cost to heat a home in the region with propane.

So EPCOR’s rates will be higher than usual despite the taxpayer-funded boost. Are you sensing a trend here? Even in EPCOR’s home city of Edmonton, it has raised its water rates, according to the Edmonton Journal, in June, 2016:

Epcor proposed a new, five-year water and waste water plan Friday that would see residential costs rise as the city grows, and it retrofits the Gold Bar treatment plant.
The typical homeowner would pay $39.84 a month for drinking water by 2021, up from $36.43 now, including a 44-cent surcharge for green energy and a river monitoring plan.
Waste water would increase to $19.29 a month, up from $15.99 now.

So no user seems safe from EPCOR’s rising rates. Nor will we be, once our utility is privatized. Expect the worse. But after two years under The Block’s mismanagement, you probably already do.

Collingwood deserves better.

PS. Remember Innisfil? Last year it contemplated selling its electrical utility to EPCOR but baulked when the corporation wanted to take over water and wastewater, too. Well, it seems InnPower, its utility service, went back to the books and figured out it could lower the rates to its customers, and still stay a public utility. A story on Simcoe.com notes:

InnPower CEO says reduced rates are coming to Innisfil
“We are on the path to reduce our total cost per customer. It will be a slow process, but it will be in the right direction,” he said. “In the past few years, we’ve been going in the wrong direction. With the program in place this year, we’ll see a better improvement in our overall results.”

It seems that after they looked at EPCOR, they wisely changed their business model to a more customer-friendly one, instead of selling. The very opposite of what Collingwood is doing.

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One comment

  1. Adjala-Tosorontio cancels Everett wastewater system bidding process

    Adjala-Tosorontio council has cancelled a bidding process to build a wastewater system for the settlement of Everett, saying the costs proposed by the proponents are too high. Adjala-Tosorontio council will be looking elsewhere to find a wastewater system solution for the settlement of Everett after cancelling a process that sought out companies to design, build, finance, operate and maintain the system.

    EPCOR was one of those bidders.

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