Pay for use or flat rates? Flat rates are often popular, but they are poor public policy. Flat rates encourage waste. Flat rates discourage conservation of water and energy, and devalue their importance. Flat rates make conscientious citizens pay for the bad habits of wasteful neighbours. And flat rates are generally too low to pay for the full cost of the resources consumed. So flat water rates are on their way out in Canada.
One of the key recommendations of the Walkerton water inquiry was for full cost pricing of water. In 2009, the C.D. Howe Institute also called for reform of municipal water pricing, including the expanded use of water meters.1 Municipal water agencies need billions of dollars in repairs to their infrastructure. Worse, they severely underestimate how much it costs to provide water services, earning only 70% of what they spend. Full cost pricing should ensure that sufficient resources are available for good facilities for water treatment and distribution, and for source water protection. Full cost pricing is also indispensable to reduce pressure on water resources, so that we do not take, and spoil, what we do not need. And water meters are essential element in making full cost pricing fair.
More than 10 years after the Walkerton tragedy, Canadians remain among the most wasteful water users in the world. Few of us even know how much water our households or businesses use. Environment Canada exhorts consumers to keep a log of their water use, and provides average volumes used for common activities: e.g., 18 litres per toilet flush, 100 litres for a shower, 225 litres for a washing machine load and around 400 litres to wash the car.2
Unfortunately, this type of pious exhortation has almost no impact on behaviour, because our water is incredibly cheap: an average of 86 cents per thousand litres.3 In contrast, an astounding volume of water can be saved through use of water meters. Fort St. John, B.C. introduced water meters in 2006 and reported a decrease in water usage of nearly 826.5 million cubic metres for 2010 as compared with 2006.4 In 1994, Canadian households paying a flat rate for water used 450 litres per person per day, while those paying by volume used only 263 litres: more than 40% less.5 6 Those living in homes with water meters have an incentive to use water-saving devices like low-flow showerheads and toilets, and front loading washing machines.7 And perhaps they do not leave the water running when they are not using it.
Thus, water meters are spreading across the country. In 1991, about half of Canadian households had water meters; this increased to 63% by 20048, and is steadily rising, though it remains relatively low in Newfoundland & Labrador, Prince Edward Island and Québec. In 2009, the C.D. Howe Institute estimated that only 25% of residential customers remain unmetered.9
The City of Toronto is now rolling out a mandatory water metering program. Under the new system, all customers will pay for the water they actually use. The City will provide meters to those who were previously on a flat rate system and replace existing meters with new, automated ones. The new meters will send their serial number and consumption information data regularly to collection units then to a central server.10
The new system will help to keep better track of water consumption across the city, detect water loss more quickly and eliminate the need for City staff to go to homes to obtain water meter readings.
It will also provide environmental benefits. Accurate data on base and peak use should help focus conservation and peak shaving strategies. Treating and pumping drinking water to Toronto customers uses a lot of energy – in fact, Toronto Water is the largest energy user of any City operation. Treating less water also allows Toronto Water to use and transport fewer chemicals, and to reduce the wear and tear on water and sewer infrastructure (pipes). Together, these help to reduce both the financial and the environmental footprint of water treatment and distribution.
Despite the many benefits, water meters can be unpopular. Dryden, Ontario – population 8200 – had to promise to install water meters in order to receive a $30 million grant for its new sewage treatment plant. Water metering (at a cost of $1.8 million) was far cheaper than building new infrastructure to meet "business as usual" demand, because it would decrease water consumption by 30%.11 However, 400 people signed a petition against the initiative. Some argue that not much money will be saved, that bills will be inaccurate12 and will skyrocket.
Dryden passed its Water Meters by-law anyway in November 201013. To assuage public opposition, Dryden continued to send its flat rate invoices for a few months, accompanied by a shadow invoice that permits the homeowner to get used to the new system; usage billing will kick in after a few months.14 Let's hope Dryden gets the 30% reduction that they're counting on.
1. Renzetti S. Waver of the future: the case for smarter water policy. CD Howe Institute Commentary No 281, February 2009. At http://www.cdhowe.org/pdf/commentary_281.pdf
2. Environment Canada. Water audit. http://www.ec.gc.ca/eau-water/default.asp?lang=En&n=FF94FEEB-1
3. City of Toronto. Is water free? http://www.toronto.ca/water/kids/story_of_water/html/costs.htm
4. CWWA Bulletin, January-February 2011 at 11
5. Canadian water use – a wretched excess? Canadian Geographic May June 2000. At http://www.canadiangeographic.ca/magazine/mj00/water_use.asp
6. Renzetti S. Waver of the future: the case for smarter water policy. CD Howe Institute Commentary No 281, February 2009. At http://www.cdhowe.org/pdf/commentary_281.pdf
7. Babooram A & Hurst M. Uptake of water- and energy-conservation devices in the home. Statistics Canada 2010 December 7. At http://www.statcan.gc.ca/pub/11-008-x/2011001/article/11365-eng.pdf
8. Renzetti S. Waver of the future: the case for smarter water policy. CD Howe Institute Commentary No 281, February 2009. At http://www.cdhowe.org/pdf/commentary_281.pdf
9. Renzetti S. Waver of the future: the case for smarter water policy. CD Howe Institute Commentary No 281, February 2009. At http://www.cdhowe.org/pdf/commentary_281.pdf
10. City of Toronto. Water meter program. The new automated system. http://torontowatermeterprogram.ca/about-the-program/more-about-the-new-automated-system
11. FCM. Green municipal fund case study – City of Dryden water meter implementation business plan and water rate study (GMF 9293). Available at http://gmf.fcm.ca/Search/PDF/GMEF9293_CS_e.pdf
12. Though water meters typically must meet or exceed American Water Works Association accuracy standards. For example, the City of Toronto's by-law includes detailed provisions regarding water meter accuracy. Municipal Code, ch. 851 – Water supply. At § 851-7(C) http://www.toronto.ca/legdocs/municode/1184_851.pdf
13. City of Dryden. By-law No. 3835-2010 – Water meters. Municipal Code ch. 260 (November 15 2010). http://ecode360.com/?custId=DR1806
14. Dunham A. Water meter installation to begin immediately, says City. November 16 2010. Dryden Observer. http://thedrydenobserver.ca/2010/11/water-meter-installation-to-begin-immediately-says-city/
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