Hemlock Utility Services Water Rate Application 2025 – 2027
First, the Summary
Hemlock Utility Services is seeking approval for substantial rate increases. The company explains that this is to achieve financial sustainability for the Utility and its private ownership, and to support necessary infrastructure upgrades. The application marks a significant upward shift from the current rate structure, with a focus on:
- Addressing Accumulated Losses: The existing rates have not covered the cost of service to date, leading to operating losses. The Utility’s proposed increases aim to rectify this and ensure financial stability.
- Funding Critical Infrastructure Projects: The application outlines two major projects in the works:
- Water Meter Project: To improve water management, billing accuracy, and conservation efforts.
- Water Distribution System Replacement Project: While not part of this application, it’s highlighted as a future need.
- Introducing New Rate Components: The application proposes a revised rate structure with:
- Utility Service Rate: Covering operational and maintenance costs.
- Replacement Reserve Fund (RRF) Contribution Rate: Dedicated funding for asset replacement.
- Shareholder Loan Repayment Rate: Recovering a previously approved loan.
- Meter Project Rate: Dedicated funding for the water meter project.
- Updating Terms and Conditions: Key changes include:
- Liability Protection: Adding new terms to limit the utility’s liability for service interruptions.
- Monthly Billing: Transitioning from the current billing cycle.
Next, the Key Facts and Proposals
- Rate Increases: The Utility’s proposed rate structure will result in significant increases for residential customers, with the total annual bill for many reaching $2,143 by F2027. This represents a 38% increase in F2025, followed by 38% in F2026, and another 20% in F2027 (Table 24 from water rate application document with link below). Over the course of three years, from now until F2027, rates are expected to rise 129% in total.
- Water Meter Project: Hemlock seeks approval for a $230,000 water meter project. The project will be funded through a bank loan and recovered from customers via a levelized Meter Project Rate over 10 years starting in F2026. The estimated cost per meter is $1,400, including hardware and installation (Section 2.2.4 from water rate application document with link below).
- Sensitivity Analysis: The application acknowledges the significant impact of the proposed rate changes and includes sensitivity analyses for key rate components. These analyses explore alternative rate structures and amortization periods to potentially moderate customer bill impacts (Sections 3.4.1-3.4.4 from below document).
- Shareholder Loan: The application outlines the recovery of a $722,000 shareholder loan over a 15-year amortization period, with a levelized rate structure (Table 22 from document below).
- Replacement Reserve Fund (RRF): The Depreciation Study highlights the need for consistent RRF contributions to ensure sufficient funds for future asset replacement (Appendix 3 from document below).
Finally, the Justification and Rationale
- Hemlock Utility Services emphasizes the need for these rate increases to ensure the provision of safe, reliable, and cost-effective water service, stating: “This Application is notable in requesting a step change increase in rates to forestall continued under-recovery of the cost of service and accumulating operating losses” (Section 1.1 from document below).
- The Water Meter Project is deemed crucial for promoting responsible water use, improving billing accuracy, and supporting long-term water management: “The installation of water meters will provide for accurate measurement of water consumption, which will enable both Hemlock and its customers to monitor usage data and patterns and to build awareness of individual customer consumption” (Section 2.2.4 from document below).
Supporting Documents
- The application includes detailed schedules and appendices providing a comprehensive breakdown of revenue requirements, operating and maintenance costs, proposed rates, customer count projections, and details on the Depreciation Study.
- The proposed updated Water Tariff is presented in Appendix 2-A (clean version) and Appendix 2-B (blackline version).
Key Quotes
- Need for rate increase: “This Application is notable in requesting a step change increase in rates to forestall continued under-recovery of the cost of service and accumulating operating losses.” (Section 1.1)
- Water meter project rationale: “Water meters encourage responsible water use, and complementary rate designs may then support overall water conservation efforts and provide for more fair and equitable billing and practices.” (Section 2.2.4)
- Liability protection: “The Utility will endeavor to provide a regular and uninterrupted supply of Water but does not guarantee a constant supply of Water or the maintenance of unvaried frequency and will not be responsible or liable for any loss, injury, damage or expense caused by or resulting from any interruption, termination, failure or defect in the provision of Water…” (Section 4.1)
Next Steps
- Review the application by the BC Comptroller of Water Rights.
- Public consultation process.
- Issuance of a decision by the Comptroller.
This brief summary to Hemlock Valley homeowners serves as your HVHA’s starting point for helping you understand Hemlock Utility Service’s Water Rate Application. A thorough review of the complete application document and supporting materials is highly recommended for a better understanding of the proposed changes and their implications.
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