Financing and Implementation
The recommended projects will be implemented over the next 30 years and come at considerable cost, but they are deemed critical to improve the resiliency of the Regional Water Supply Treatment and Transmission System and will be necessary in the longer term in order to provide enough drinking water to support the growing Region.
For each of the projects, present and future conceptual inflated capital costs to mid-construction year have been developed for budgeting and financial planning purposes. In total, the recommended projects are valued at $1.53 billion in 2022 dollars and $2.05 billion in inflated dollars to 2050 to account for future design and construction costs. A 2% per year inflationary factor has been used to derive future costs from 2022 estimates. There will also be new operating costs associated with the new infrastructure. All of the existing and new capital and operating costs have been conceptually forecast to 2050. To fund the capital program, it would be necessary to debt finance a significant portion.
Capital spending is projected to begin increasing in 2024, and peak and stabilize in the late 2030s. The CRD considers water rate implications and an equitable allocation of capital costs between current and future ratepayers.
In order to forecast the revenue requirements to fund the long term capital program, the wholesale water rate was conceptually modeled. In order to balance the annual budgets to 2050, the rate would have to substantially increase on a year over basis at least until the late 2030s, when it is forecast that growth related demand and revenue would begin to mitigate larger year over year increases. Through the mid to late 2020s, into the 2030s, the rate could increase in the 10% to 20% range on a year over year basis, based on projected water demand with increasing population.
The funding and water rate implications noted above are based on 100% of the required funding being derived from the service ratepayers. There has been no allowance for senior government grant funding or allowance for a portion of the capital funding that is expected to be provided through RWS development cost charges in the near future (CRD staff are currently advancing this initiative). CRD staff will actively seek grant opportunities where the eligibility criteria align with the recommended projects and make application for funding. Grant funding would help offset the debt burden and help mitigate water rate increases. Although development cost charges will increase the cost of development, these funds would also help mitigate the cost of water for the average ratepayer over time.
The 2022 Master Plan recommendations and proposed infrastructure will continue to be reassessed, on a five to 10 year cycle, to consider new information and latest trends in population growth and water demand, and evaluate risks to the service, including climate change and water quality. Current technology and construction costs will also be evaluated. As a result of this continuous and adaptive process, the 2022 Master Plan implementation will be adjusted moving forward, to reflect any changes in assumptions or conditions.
The public feedback period is now complete.