St. Peter's water utility says minister's intervention in rate hike application 'alarming'

A Richmond County utility says a 19.5 per cent increase in water rates is needed to cover costs, but Nova Scotia's municipal affairs minister has taken the rare step of intervening in a rate application, saying the hike could amount to an "unmanageable burden" for people already facing affordability issues.

The St. Peter's, Samsonville and Area Water Utility has a public hearing on Wednesday to review proposed water rate increases in each of the next three years.

Barry Culligan, a St. Peter's village commissioner and chair of the water utility, said a four-page letter from Municipal Affairs Minister John Lohr that was filed with the Regulatory and Appeals Board was more than just a surprise.

"It just seems really odd on their behalf to have stepped into something that's all regulated," Culligan said. "This communication from the minister of municipal affairs is alarming to us, because it's a user-pay system. If they were successful in intervening and to have that stalled or reduced, well, that doesn't bode well for the utility."

Lohr declined multiple requests for an interview.

In the letter, he said the proposed St. Peter's water rates, if approved, "will result in a significant residential rate increase of $168.15 (19.5%) … at a time of heightened concern around affordability and cost of living for Nova Scotians, including for residents of the St. Peter's, Samsonville area."

Despite efforts, affordability a challenge: minister

According to the utility's study posted on the regulator's website, the St. Peter's increase would not be $168.15 — it would be an increase of $27.48 on a $140.67 bill, which would then make the bill $168.15.

A hike of $27.48 represents 19.5 per cent of $140.67.

Also in the letter, Lohr said the province has taken several steps to make life more affordable for Nova Scotians, but despite that, "significant affordability challenges remain."

He also cited recent Nova Scotia Power rate increases.

"An increase in water service rates will serve to exacerbate this strain and has the potential to place an unmanageable burden on some of the province's most economically vulnerable citizens," Lohr said.

'Advocate for Nova Scotians'

In an email, a department spokesperson said the letter was written out of concern for ratepayers.

"We don't often intervene, but where utilities in Nova Scotia are raising rates by large amounts, we will make our position known and we will advocate in the best interests of Nova Scotians," the email said.

The department did not address the inaccurate increase cited by the minister.

Instead, it said the minister simply wants the cost of living taken into account whenever high rate hikes are proposed.

Public hearing on Wednesday

The Regulatory and Appeals Board has scheduled a hearing on the utility's proposed water rate increases for 1 p.m. Wednesday at the United Church Hall in St. Peter's.

Utilities usually conduct rate studies once every three to five years, but many skipped the cycle during the pandemic.

Culligan said the St. Peter's water utility has not had a study done since 2017 and it has been running deficits for a number of years.

It has also not been accounting for the full depreciation costs of its infrastructure, but the regulator now requires the utility to set aside enough money to replace the treatment plant and pipes in the future.

'We understand money's tight'

Culligan said all those things mean water rates have to increase to cover the costs of operation and future capital spending.

"We understand that money's tight. I mean, we cringe at the whole conversation of doing this," he said.

"Nobody wants to see the rates go up, but the other thing I also cringe at is not doing what we're responsible for doing, which is running a utility that is running in the black."

Culligan said if the province would revert to the previous policy of allowing for less depreciation, the St. Peter's utility could lower its rates.

"If the Department of Municipal Affairs is doing this, I'd like to think that they also have part of a solution for us, because otherwise, they're basically sinking the utility."

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