The city of Lloydminster’s deputy CAO Kirk Morrison found himself in several scrums during the latest Your Voice forum, answering questions about the proposed Lloydminster Utility Corporation (LUC).
“We’ve put together some panels that show the history of the project and really bring the focus to the need to construct the wastewater treatment facility and talk a little bit about our proposed solution,” said Morrison.
The LUC in partnership with Epcor would fund and operate a new wastewater treatment facility needed to meet new effluent standards from the Saskatchewan Water Security Agency by 2017.
Morrison came to the event at College Park School Thursday knowing he would be asked to defend what some say is sacrificing the value of water and wastewater existing assets for the LUC.
The city’s own documents show the book value of existing assets is $113 million that would be vended to the LUC for just $26 million, net of $10 million of debt.
Epcor being a 50/50 partner would invest $13.
Morrison said by putting $36 million of gross rate based assets that generate revenue into the LUC, the city is able to keep utility rates low.
“If you want to increase the transaction for a rate base higher than $36 million, we could do that,” said Morrison.
“The impact of that would be that utility rates would increase further to cover the cost of the return on those assets, so it’s a balancing act.”
Morrison’s graphs indicated if the city put up to $60 million of rate base or revenue generating assets into the LUC, utility rates would rise by 4.3 per cent from the current rate of three per cent a year.
“We are keeping rates reasonable and we will have access to a new facility without incurring any additional debt on the city’s books,” said Morrison with this plan.
He also noted the non earning assets still have an instrinsic value and are in the ground.
“We are tying to capture the value and ownership of those assets within the structure of the LUC to recognize the city has contributed considerably more assets than the rate base asset,” said Morrison.
One of the posted questions asked: “Has the city reached out to other firms other than Epcor for solutions? If so, who?”
Alternative solutions were on the mind of councillor Ken Baker who said the concern he’s hearing on the street is what is the LUC going to cost us.
“The other concern is the equity in the business” said Baker.
He thinks there are other ways to have an LUC as a solution to an upgraded wastewater system.
“‘For one, you can have a utility corporation with the storm water, wastewater and potable water all under one utility and a 100 per cent Lloydminster owned utility, and possibly we can sell debentures,” said Baker.
He said that’s another way of doing it.
“We can still hire the necessary expertise to build the plant, but those are things that are under investigation and should come to the surface before we make any decisions,” he said.
Despite the low attendance at Your Voice, Baker said the forums are a good way for people to ask questions on certain issues.
“Is it the perfect system, probably not, but what is the perfect system?” he asked.
“It’s the responsibility of council and the administration to make everything as available as we can and then people have a choice whether they want spend time investigating or looking or asking, or not.”
Issues at Your Voice included the city’s 2015 report to the community, land divisions, the municipal development plan and details about how the city collaborates with the Lloydminster Construction Association on projects.
Taxpayer Jonathan Torresan came to the event wanting to have a good idea of what’s going on in the city, not just the wastewater treatment project.
“So I am around here asking questions and trying to figure out if there is anything else that interests me,” he said.
“Specifically, the wastewater treatment facility is of great interest because it’s going to affect our community for now and the next 20 to 30 years.”
Torresan said he also came to ask questions about the LUC following his one on one session with Morrison two weeks ago.
“I have other questions that come to mind that I would like to follow up on at this time,” he said.