An eight per cent decrease in utility rates is on the way for Chestermere residents, after City council passed the reduction July 16.
Council's vote followed June 18 decision to take back control of utility service delivery from Chestermere Utilities Inc. (CUI) – the arms-length company that served as the city's previous utility services provider.
“[The current council has] been working hard to untangle our utilities issue since the first day we took oath of office,” Mayor Marshall Chalmers said. “Quite frankly, I’m very proud to announce we’ve found a new path forward for our community.”
As per council’s decision CUI will exist only as a shell corporation until the $35-million debt it incurred is paid off. According to the a release from the City, the debt was a result of CUI's business model, which included pursuing new capital projects.
"Instead, the City is looking into having future projects built by the development community," read the release.
Moving forward, CUI will be given a new name, will have a single employee and will not be authorized to incur new debt.
“The utility company will now contract the City to deliver all the services,” Chalmers said. “So, all the services, effectively, are coming back in-house.”
According to Chalmers, paying off the debt will likely take 13 to 15 years, and will be done through the general collection of utility rates. The majority of the debt repayment, however, will come from off-site levies – paid for by private developers as the number of development projects continues to increase in Chestermere.
“Where you find savings is, you don’t have this middle management anymore – this middle company – performing the operations,” he said. “Before we took control, [the debt] was destined to reach north of $55 million. We got that stopped and, again, took control from a governance and operations perspective.”
Formed by the City in 2012, CUI was responsible for providing water, sewer, waste, recycling and other utility-related services to Chestermere’s approximately 20,000 residents.
Complaints emerged after citizens experienced multiple rate increases. In February 2016, the previous City council unanimously approved a 25 per cent hike for waste services and 15 per cent for water services. CUI’s then-chief executive officer, Leigh-Anne Palter, said rate spikes were necessary to cover the costs of CUI’s service delivery, after the company found residents were not being charged enough in years prior.
“Specific to utility rates, [residents] had gone through two major rate shocks and they were not happy,” Chalmers said. “The utility rates were among the highest around, and they wanted a change.”
Residents submitted a petition with more than 5,400 signatures to Alberta’s Ministry of Municipal Affairs, calling for an investigation into the issue.
In September 2018, Chalmers said, council agreed the status quo was not viable and a new direction had to be taken. After hiring an external consulting firm to audit CUI’s service and management model, Palter was released and a transition manager facilitated the transfer of utility management back to the municipality.
“[Forming CUI] obviously didn’t work out, and we took steps – people wanted relief – [to] a better path forward,” Chalmers said.
According to the City, the decrease is the "cumulative impact of making utility rate changes to the fees for water, sewage and stormwater management." The new rates will go into effect Aug. 1, and will be visible September bills.
“This new council took the bull by the horns, and we’re...ready to bring substantial rate reductions for utilities,” Chalmers said.