Interveners pile up in Halifax Water rate case

There is mounting interest from public and private entities to have their say in a proposal from Halifax Water to hike rates for customers in the coming years.

Oland Brewery, Halifax Regional Municipality, Killam Apartment REIT — one of the province's largest landlords — and others have added their names to the list of participants in a regulatory review of Halifax Water's proposed rate hikes.

Last week a group of landlords and the provincial government indicated they would intervene in the case, too, to raise concerns about affordability.

The utility is asking the regulator to approve two rate hikes over two years. It wants to raise residential rates by an average of 16.2 per cent this fiscal year and 17.6 per cent next fiscal year.

In a letter to the Nova Scotia Regulatory and Appeals Board, Killam's chief financial officer, Dale Noseworthy, said the proposed rate increase is "unreasonable," and highlighted the significance of water in the company's budget.

Noseworthy said Killam paid $3 million to Halifax Water last year, representing nine per cent of its operating costs.

She declined an interview request.

Oland also declined to comment and its application to the regulatory board provided no details about its position. The Labatt-owned brewery fought a similar Halifax Water rate increase more than a decade ago, saying it was bad for business.

Halifax Water is owned by Halifax Regional Municipality, which noted in its letter to the regulatory board that it acts as a guarantor of any Halifax Water debt. The utility, in turn, is obligated to provide a grant or dividend to HRM in lieu of taxes.

"The outcome of Halifax Water's rate application therefore has the potential to financially impact the Halifax Regional Municipality, and, by extension, municipal taxpayers," a lawyer for the municipality wrote.

Halifax Water not alone

Halifax Water says it needs to raise rates to deal with a financial shortfall — the result of deferring rate increases during the pandemic, inflation, population growth and aging infrastructure.

National industry groups say the pressures on Halifax Water that are driving up rates are being felt by water utilities across the country, and while large rate hikes can be hard to bear, they are necessary.

"Yes, water rate hikes are a bit painful, and I'm sure there are people who really can't afford them," said Nicola Crawhall, CEO of the Canadian Water Network, in an interview.

"But if you think of the inverse of what happens when you don't invest — you will have a main break, you will have backed-up sewage. [These] are much more expensive to deal with and much more disruptive."

Crawhall said subsidies for low-income households are a good solution for bridging the affordability gap. Halifax Water has a financial assistance program that's run by the Salvation Army.

Nova Scotia's minister of opportunities and social development said recently that his department will monitor the impact of any Halifax Water rate increases and introduce new support programs as needed.

Maintenance cheaper than repair

Crawhall said she would be concerned if a water utility was not increasing rates more than usual "in the current fiscal climate." She said it would be an "under investment" that would only lead to more expensive repairs further down the road.

Robert Haller, executive director of the Canadian Water and Wastewater Association, said he believes Halifax Water is just getting into "a proper rate range" to ensure service reliability.

"We have a critical commodity and it needs to be priced accordingly," Haller said in an interview.

Halifax Water is a member of Haller's group.

According to the utility, Halifax Water rates in 2024-25 were below the average of 14 benchmark Canadian cities.

Haller said recent examples of water systems failures across the country are evidence of the need for more investment in water infrastructure. He pointed to a catastrophic water main break in Calgary last summer that resulted in months of water restrictions and another dramatic case in Montreal, among others.

Haller said reacting to a system failure is four to five times more expensive than properly maintaining infrastructure.

Haller and Crawhall both said provincial and federal governments play an integral role in financing water utilities.

Halifax Water told the regulatory board in its rate application that it will "continue to engage all levels of government on all available funding opportunities … to reduce the burden on customers."