Dauphin’s Utility Fund is trending toward a deficit in 2024.
City manager Sharla Griffiths informered councillors of the situation at their regular meeting Nov. 18.
“One of the reasons that we’re looking at a possible deficit is that the City of Dauphin last September, so over a year ago now, applied for a rate study with the Public Utilities Board (PUB) and we anticipated, we knew that it was going to take a long time. So we gave them basically a year and anticipated that we would have received approval of the increased utility rates by Oct. 1,” Griffiths said, adding they have been told the review will start soon.
“We’re well into November, so fingers crossed for January 1. But that’s the primary reason that we may be running a deficit for 2024.”
Griffiths added there was some capital work that was not completed this year which might help the situation, but on the flip side there was extra capital when they were doing the Lagoon sludging.
“So we are really kind of waiting for the numbers to come in as to where are we are,” she said.
“We’re going to evaluate at the end of November and probably there’s not a lot of room to cancel things in December, all of our projects are done. So we’ll know in a couple of weeks where we’re at.”
The City requested the water rate review as a result of inflationary pressures. While the last review included a built-in inflation factor, it only covered a set number of years.
“After that we can’t inflate the rates, so we just have to keep them stagnant,” Griffiths said,
“So there was at least one year where there, 2023 I believe, did not see an increase and neither did 2024. We were hoping that three-quarters of the way through 2024 we would see an increase and then continue on from there.”
In its application, the City was seeking an 11.7 per cent increase in 2024, along with a 4.2 per cent in 2025 and 2.3 per cent in 2026.
When the new rates will kick in depends on when the PUB decision comes down as the City prefers not to change rates in the middle of a billing cycle.
“It would be great if we could get it started for Jan. 1, but if we can’t then it won’t be until Apr. 1,” Griffiths said.
“It’s tougher to get the kind of messaging out for people to understand that their rate changed halfway through. It’s a cleaner process when it’s at the beginning of a quarter.”
The request before the PUB is for a short term, Griffiths said, acting as a bridge with the lagoon expansion project looming. Once construction costs are firmed up and operating estimates are determined, the City will ask for another rate review to ensure the utility is a strong position to finance the project.
“We have had hugely fluctuating estimates for the project. When we applied for the grant way back in 2019 it was $13 million. During the pandemic, when we got awarded the grant, it was thought that the project could be upwards of $17 million,” Griffiths said adding the grant requirements were that any expenditures over the original $13 million had to be covered by the municipality.
“But as we’re coming out of that high inflation time, we’re finding that the costs are coming down, not quite down to $13 million, but it’s not as high as $17 million. Once we have a more solid idea of what those costs are, then we can determine if (the project will be covered) 100 per cent by water rates or if there’s some on taxation, as well.”
