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White Paper: Creating Water Infrastructure Sustainability Through a Provincial Rate Setting Authority

There are significant costs associated with providing clean drinking water and making our rivers and lakes swimmable, fishable, and drinkable. For decades, municipalities have been deferring the costs of water infrastructure renewal across the province in order to maintain artificially low rates. Even with provincial and federal subsidization, Ontario has, historically, underinvested in its water infrastructure assets. While these practices are changing, a more sustainable and accountable approach is required.
 
There are significant costs associated with providing clean drinking water and making our rivers and lakes swimmable, fishable, and drinkable. For decades, municipalities have been deferring the costs of water infrastructure renewal across the province in order to maintain artificially low rates. Even with provincial and federal subsidization, Ontario has, historically, underinvested in its water infrastructure assets. While these practices are changing, a more sustainable and accountable approach is required.

The Walkerton water crisis in 2000 and subsequent expert panel reviews of municipal water system management uncovered common problems across the province that will have negative long-term public health effects if they are not properly remedied. Full-cost accounting and recovery for water was identified as the primary fix for these problems by three separate government commissions. In response to these recommendations, successive provincial governments have attempted to mandate the use of full-cost accounting and recovery in two pieces of legislation and in the Ministry of Environment's (MOE) financial plan guidance document, however each attempt has failed.

While it is often agreed that a sustainable financial model for municipal water systems is necessary, past failures demonstrate that an agreement on how to achieve this is elusive. Nevertheless, a sustainable solution is necessary. OSWCA recommends revisiting existing recommendations and best practices around the creation of a provincial rate setting authority with a limited mandate of implementing province-wide full-cost accounting and recovery. This approach will ensure the long-term financial sustainability of local water systems, source water protection, and encourage water conservation, while largely avoiding intrusion on municipal water system management.


 

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