Value of Water: Current billing structure

For the past two decades under the current rate structure, London residents and businesses have been paying for our water and sewer systems based entirely on the volume of water they use. As a result of this method of charging for services, as shown below, our customers contribute different amounts to the total revenue required to run the publicly owned and municipally operated water and sewer systems. One of the issues with this style of revenue recovery is that the cost for the City to provide and maintain all of the pipes, is the same regardless of how much water is used. In fact, approximately 70% of the total revenue collected is used to pay for maintenance and operations, repairing pipes and providing fire protection to all customers. The remaining portion covers the cost of the water purchased from the Joint Boards and the treatment plants in Grand Bend and Port Stanley.

The intent of the new model is to be revenue neutral, which would mean that the approximate $130 million in annual revenue required to safely and reliably operate the water and sewer systems would still be recovered, but it would be redistributed amongst all different rate payers (residential, commercial, institutional, and industrial customers) more equitably based on the cost to service their home or business.

Click on the poster to see an enlarged image or for a printable version download the pdf The Value of Water to ICI (Customers.

In the example here, we have two different types of businesses. One a heavy water user and one a warehousing style of operation. Even though the warehouse uses significantly less water than the large industry, it actually has higher needs for fire protection as mandated by the Fire Underwriters and insurance companies in Ontario. In the current model, the large water user ends up covering the costs of fire protection and system renewal as part of their rates and charges when their fire protection needs are actually less.