The Agenda with Steve Paikin (Audio) - Ontario's Water Pressures

Episode Date: October 3, 2024

Water infrastructure – that is, water mains, sewer systems and treatment plants – are usually out of sight and out of mind. That is, until something goes wrong. Calgary and Montreal experienced substantial water main failures this year. In Ontario, Hamilton has redoubled it efforts to evaluate and improve its very old, very complex system to prevent more sewage spills. And there are many more examples of systems in the province that need upgrades or expansions. And what does all of this have to do with aggressive housing targets Ontario has introduced? See omnystudio.com/listener for privacy information.

Water infrastructure, we're talking water mains, sewer systems and treatment plants, are usually out of sight and out of mind. That is, until something goes wrong. Calgary and Montreal experienced substantial water main failures this year. Here in Ontario, Hamilton has redoubled its efforts to evaluate and improve its very old, very complex system to prevent more sewage spills. And there are many more examples of systems in the province that need upgrades or expansions. And what does all of this have to do with aggressive housing targets Ontario has introduced?

Let's find out. We welcome in Brampton, Ontario, Keely Dedman, Commissioner of Public Works for the Region of Peel. And with us here in studio, Barbara Robinson, President of Norton Engineering Inc, also known as The Sewer Lady. Nick Winters, Director of Hamilton Water, and Michelle Grenier, Manager of Operations for the Ontario Water Works Association.

And it's good to have you three here in our studio. And Keely, thanks for joining us from Brampton today in the region of Peel. Can I just do a fact check with you off the top? Are you the sewer lady or the sewer goddess? Which is it? You check. You choose.

I decide? Okay. We'll see how well you do on the show and then we'll make a decision on that. This is without question the sexiest topic we have ever done on this program. Water infrastructure. Here we go. We're going to make it sizzle. Michelle, start us off here.

What are the chances that a community in Ontario could experience the same kind of large water main failures that were all over the news in places like Calgary and Montreal earlier this year? Certainly the possibility exists. We have, you know, lots of aging infrastructure in the province. The one advantage we do have here in Ontario is the drinking water quality management system, which involves a very comprehensive risk assessment process that each municipality has to undertake on a routine basis. And as a result of those risk assessments, they do have to develop emergency plans and

emergency response strategies to ensure that the catastrophic failures that we see can be mitigated or prevented. Keeley, let's do some real water management 101 here. How does a water main fail? How does a water main fail? Typically it's a break in a water main where you have, our water mains are encased in fill to protect them. They can be either plastic or they

can be concrete and when that fails you get a break and when that break happens our water mains are under pressure because you're pushing a lot of water through them at obviously a high pressure and when that break happens it can be catastrophic. Nick is it simply a case of old age most of the time? it can be catastrophic. Nick, is it simply a case of old age most of the time? It can be, but not always. Corrosion plays a factor. Underground metallic pipes, certainly there's pressure spikes less frequently that can cause damage

to water infrastructure. And in some cases, it is absolutely old age. And Barbara, how big a deal is leakage in water mains across our province? Yeah, so whenever we have leakage in our engineering systems, whether sewer or water main, residents are paying to treat that water and try to convey it. And so it's very, very costly to have water main breaks.

And also, I estimate about 60% of the water, when a water main fails, 60% of the water is getting down into the sanitary sewer and showing up as leakage into the sewer. And if the water doesn't go up, it goes down and the right-of-way is all built at the same time. So there are favorable flow paths. So it costs us double. Now we're doing a program on this. So obviously we think this is a bit of a big deal. Is this a bit of a big deal?

Yeah, absolutely. Because? Certainly. Well, because I guess I would say Canadians, we've come to expect that we're going to have 100% water at our house 100% of the time, the morning, noon, night, no matter the temperature or the weather. We take it for granted, don't we? It's called level of service. I think it's reasonable.

I think we need to start thinking about perhaps the level of service we come to expect from our infrastructure cannot meet these beautiful ideals or whatever. Maybe the odd break where you have to use bottled water for a few days, maybe we need to learn to tolerate that because we certainly are way behind on funding our infrastructure, way, way behind. Okay, let me go to Keely on that. You are in a part of the province that has been growing by leaps and bounds over the last, well, let's say 10, 25 years or so.

What's a bigger priority for you in Peel? Is it fixing what you've got right now or building new stuff to accommodate all the new development that's happening? Wow, that's a good question. I would say historically the focus has been on maintaining our existing infrastructure system. We've got over $28 billion in assets in just the water and wastewater infrastructure. So that's a massive program just to maintain it. But more recently,

it's the growth infrastructure that's really become priority for us. In our upcoming budget for 2025, we're looking at 80% of our capital budget is going to be for growth infrastructure, that new infrastructure. If you don't mind, Steve, you have to do both. And this is the really difficult balancing act for municipalities is given our limited resources, financial resources, and people too. I mean, there's only so many people in the industry. How do you do both?

How do you deal with your areas of largest risk while you're making sure that you're still providing the ability for the community to grow as well? Because both are important. Well, you've got an even bigger problem, I would suspect, in Hamilton than Brampton in as much as, Hamilton's a city that's more than 200 years old. You've got some real old stuff there, presumably.

We absolutely do. And I would say it's a different challenge. We have, in Hamilton, the second oldest water system in Canada, the third oldest wastewater system. And when you think of relying, in some cases, on infrastructure that is as much as 120 years old, ironically, sometimes that's your most robust infrastructure because there were different manufacturing practices and things historically. But it does carry an element of risk and, you know, as I said to our own City Council just this past Monday,

when you're in the water business running a utility, it is very much about risk management and where can you tolerate risk? Where do you have operational programs in place that allow you to mitigate things and where do you absolutely have to move forward with a fast-tracked or Preferably a planned capital intervention Michelle We have our shouldn't say we the province of Ontario has set a very ambitious goal to build a million and a half homes by the year 2031. And that means all of you are sort of on the hook to make sure that we've got water systems that can accommodate that kind of growth.

Talk to us about the biggest challenges that people who do for a living what you folks do for a living have in order to accommodate that future growth. It's multifaceted in terms of how the municipalities are being tasked to approach this. We tend to forecast out 20 to 30 years with the master plans and the capital plans and when those targets are moving very quickly there's not always enough money in the bank to do it and so we need to look at other funding tools or financing tools to

allow municipalities to quickly deliver the infrastructure that's needed to support that growth. I think there's an opportunity for better alignment with developers and timing of when those expansions are actually needed and when the municipality is able to start collecting on those rates, water user rates and property taxes, and also better alignment with some of the other water users, big business, the province itself in terms of education and healthcare, because those can all pose significant demands on a water and wastewater system in terms of supporting that growth.

Keely, what would you add to that in terms of what you've got to do to be ready for the kind of growth anticipated? Yeah, I would agree with to that in terms of what you've got to do to be ready for the kind of growth anticipated? Yeah, I would agree with all of what Michelle has just said. One of the big challenges with growth infrastructure is finding that delicate balance between having the infrastructure ready in advance of the growth coming on because when we're talking about water and wastewater, those take years, because when we're talking about water and wastewater, those take years, can take a decade to construct and it needs to be in the ground and ready before the development happens, before the homes are built. So you need to anticipate and work with the industry to understand when it's coming forward because it's debt financed as well. Municipalities issue debt

and in our case, this is significant debt that we're looking at over the next 20 years to accommodate the the massive growth that's coming and there's a risk to municipalities that if we build that infrastructure and they don't come then we're carrying those costs until it's eventually paid back through the development charges. Let me do a quick follow-up. You got any idea how much money you're spending over the next 20 years on all this? We are estimating at this point about $17 billion in water and wastewater infrastructure over the next 20 years to accommodate the new housing pledges. That's real money. That's big money.

That is big money. Barbara, what would you add? Yeah, I would add that another way to find this capacity in our infrastructure, pardon me, sewers and water, would be to use the infrastructure we have better. So to reduce leakages in water systems, average water leakage across Ontario is 13%, 14%. That means 14% of the water that we treat and pump from the water treatment station doesn't arrive at people's homes, it gets lost in the ground. So if we could reduce that water loss,

we have ways of reducing water loss. It's not easy, but there are municipalities sitting at 40%, 50% water loss. It could be very high. And equally in sewers, as you know, our sewers are practically full of clean water that should not be there. That's rainwater and groundwater getting into sewers.

Well, getting that water out of sewers would free up the capacity, some of the capacity. It's not going to cover all our development, but it's a much more inexpensive way and I would encourage municipalities to get back to basics and maintaining our infrastructure and freeing up this capacity that's being used for inappropriate uses. Can I do a follow-up with you on this? The 13% leakage you said on average. Do municipalities know that that's happening? Oh yes. They all know they're leaking water. Oh absolutely, yeah. Are they doing

anything about it? Yes, oh yes, I would say, but most places have a leak detection program and fixing and all that, but another issue that I'm seeing is that municipalities are adverse, are very risk averse of course, So they're not always forthcoming about how their systems are performing. It used to be that municipalities would report water loss every year at budget time and sewer leakage every year at budget time but I'm not seeing that being reported anymore because it makes the municipality look bad if the leakages are high. But I would just mention to Nick's point, when our infrastructure was built the materials,

the ground, proximity to water, all of these things affect leakage in our infrastructure. So if a leakage is high somewhere, it doesn't mean the municipality hasn't done its due diligence. I would just like to see municipalities know what their leakage is this year and say, look, we're gonna reduce it by 1% till next year,

and then next year at budget time, we're gonna report again how much we spent and how much we reduced the leakage by. Like to actually share with the public some of this information so the public understand what they're doing. Do you have any idea what the leakages in Hamilton right now?

We're sitting at 24%. Yikes, that seems high. And just speaking to Barbara's point about being open to share that, I think it's flawed thinking if you're not willing to share that information. We're talking about the fact that water and wastewater infrastructure is out of sight and out of mind.

So how do our community members, how do our customers, how do our municipal councils know what's going on with this infrastructure if we're not the ones to tell the story? And just speaking to the Hamilton experience, we have a very aggressive leak detection and repair program in place. We brought that number down by almost 5% over the past few years. Awesome. But it does take focused inspection,

and it does take focused resources in order to do the work. But you can also tell the benefit from a expense perspective on what you are saving by making those investments. And that's an important part of the picture, too. I recognize the city pin on your left lapel. What does the other pin say? Oh, this is me being on brand. This says I love Hamilton tap water. I absolutely do. Toronto is nice as well.

But I selfishly think we have the best water in Ontario and Hamilton. But do you really? I absolutely do. Okay, very good. What can you do about if you've got almost a quarter of all the water going through the pipes in Hamilton leaking somewhere, which is obviously a complete waste, when do you think you can get that number down to zero? It's unrealistic for it ever to be zero.

So industry standard is generally 13 to 15 percent. And when you're thinking of that leaking water, it's not all just water coming out of pipes. That's water that's being used to fight fires. That's water that's being used operationally in the system to make sure that water quality is maintained. So there's a lot of areas where we call it non-revenue water, where you have water that is not being delivered to a customer and billed at a meter for revenue back to the utility.

But getting from 24% down to 15% in a system as old as Hamilton, that is going to be a challenge. We haven't set a target to it. But if we can do 5% in just a few years, it's not unrealistic to think that we could be lower than 20% before 2030. Let's follow the money here, shall we? Keely, I'll come to you first on this one, because you mentioned 17 billion dollars is

That's the cost over the next 20 years that you're looking at to pay for all this stuff Who pays and how? Again because the infrastructure goes in in advance of the development coming online It is debt financed by the municipality. So the region of Peel in this case would go out to capital markets to issue debt for us to proceed with the work and then we carry that debt, which is eventually paid back through development charges. When you hear about development charges in the news,

that's the fees that are paid back by the developers that are bringing that online. And it's to pay for those hard services like the pipes and the treatment facilities as well. We always think just of the pipes, but the treatment facilities for our water and wastewater require enormous expansion in order to accommodate the growth as well. But some of that ends up on the property tax bill too, does it not? as well. But some of that ends up on the property tax bill too, does it not? It does not. We separate out the water wastewater rates from the tax bill. So if there is any outstanding amounts that are not collected through development charges, that would actually land on the rates. So the amount

that you're paying, the fees that you're paying for your water on a monthly basis or on a quarterly basis, depending on where you are. Barbara, what's your view on who should pay? Yeah, so it's clear by now that municipalities do not have sufficient funds to fund our infrastructure. We already know our infrastructure is aging. We're way behind.

Like, we're in a tough spot here. And by the way, the first thing I thought when I saw that Calgary Water Main break, I thought, man, sewers are going to get it in the shorts again. Because we... Is that a technical term? Very much so, yes, yes, yes. Because we, after Walkerton, regulations in Ontario became much more stringent with respect to water, and many municipalities really focus on their water systems and don't pay enough

attention to their sewer systems. And with this new, you know, I can see municipalities running out there, oh my gosh, we need money for water and the government's talking about it. But municipalities do not have enough money through user fees and the tax base to fund this infrastructure. It's not there. We need stable sources of funding from the provincial and the federal governments. Not one-off announcements with criteria because in my experience and you guys probably have the same experience when there's

criteria around a funding program the municipality looks the criteria and they pick a project that best meets those criteria because they want to get the funding they want to achieve the funding but it's frequently not the highest and best use of those dollars it's the it's the project that will is most likely to get the funding. And if there were stable funding available to municipalities from, and I don't know which federal or like I don't know enough about which government, maybe both, politicians wouldn't be able to make those fancy announcements they make all the time during election season which we're seeing right

now. There's all these funding announcements going on. If instead of doing that we had stable funding municipalities could plan ahead and plan their infrastructure replacement programs there's all these funding announcements going on. If instead of doing that, we had stable funding, municipalities could plan ahead and plan their infrastructure replacement programs much more readily. Michelle, who should pay for all this? Well, Steve, I agree to some extent with Barbara, but the bottom line is there is only one taxpayer.

And at the end of the day, people don't understand what it actually costs them for those services. As we mentioned, we've got development charges are part of it. We've got provincial and federal infrastructure funding are part of it. We them for those services. As we mentioned, we've got development charges are part of it, we've got provincial and federal infrastructure funding are part of it, we've got property taxes, we've got rates. If it was clear in the rate structure and people understood the value of water,

it would be an easier business case to say, we need to maintain, operate, improve and expand the system. But outside of the City of Toronto, most residents or most customers don't get a water bill. They get a hydro bill that has a water component on it. And so it can easily get buried and it can easily get dwarfed by the cost of electricity. And so it becomes much more challenging for the municipality to really explain what the cost of providing that service is. In which case if we don't see how much it actually costs,

we probably waste a lot more than we need to. Absolutely. It's hard to drive conservation when you're either sitting on the shores of Lake Ontario and thinking that the supply is infinite, or when you really don't see that changing your behavior is going to have an impact on your wallet. So at the end of the day, I do agree

that particularly for rural and remote systems there is a need for predictable funding outside of the tax base particularly where the user base could be shrinking but the value of the assets isn't decreasing. What's Hamilton's view on how that should be achieved? It's a really interesting time in the water wastewater infrastructure and. And I mean, I'll say, I think the province did a really good thing when they introduced Ontario regulation 588 several years ago. This is asset management.

Oh yeah. Regulation 588. I read about it every night. Just before going to bed, I always read about it. It'll definitely help you go to sleep. I'm a big fan of 589 too, just so you know. So regulation 588, it requires municipalities to complete and report on the states of their assets.

And there's a reason why we're having these types of conversations more frequently here in 2024. These conversations weren't necessarily happening 10 years ago. And it's because a report to city council, but also reports to the ministry, municipal affairs and housing. And everyone's reporting using similar language, similar methodology, and everyone's done the work now to say, you know, here is what our infrastructure deficits are.

And I know very clearly in Hamilton now that we were under-investing by more than $100 billion every single year across our water, wastewater, and stormwater infrastructure portfolio. Five years ago, I couldn't have given that number out, right? But where it's gotten interesting is now that all the utilities and all the municipalities are able to report the same numbers.

And there's a reason why you're seeing a reaction from the provincial and federal governments on this. It speaks to the fact that they are listening. But that regulation and requirements for municipalities has really been a game changer in how we tell our stories. The 100 billion figure refers to what?

Sorry, the 100 million. 100 million, excuse me. Yes, in Hamilton. That's your city alone. That's what we should have been spending every single year into our water, wastewater, stormwater infrastructure prior to 2022 that we weren't. So $100 million a year we should have been spending and we were not doing so. And the result and consequences are what?

The result is aging and failing infrastructure. I talked earlier about managing risk. And if you're not investing at the right time with the right intervention, then you're increasing that risk. It's way more expensive to deal with an emergency than it is to take a planned proactive approach to repair something the right way in advance. Keely, you don't have to name names here if you don't want to, but I presume in the course

of your job you are having conversations with politicians that go something like this. Hey, you know, Councillor Phil in the blank, we sure need to spend X number of dollars doing X, Y, and Z, or else your constituents are going to be coming to you screaming bloody murder because they turned the tap on and nothing comes out. And I presume Councillor X comes back to you and says, yeah, but I got 50 other priorities that they're also yelling at me about. So I don't know if I can give you the money you need. A, does that conversation happen?

And B, if it does, how do you handle it? Steve, I'm happy to say that conversation doesn't happen in Peel. Similar to what Nick was referring to, we have a really strong asset management program that's been developed over a number of years. It certainly was a challenge, I think, at one point in time prior to the words asset management evolving when it comes to infrastructure. And we're able to present on what our levels of service are. Council endorses what the level of service is going to be. And is it fair? Is it good? Is it excellent? We aim for good as our overall level of service that we're going to provide. And if we're going to maintain

that level of service, then there's a corresponding amount that we need to invest to achieve that. And council knows the importance, our council knows the importance of maintaining that infrastructure, of not having breaks that interrupt businesses or homes. And as a result of that, we've had similar to a lot of other municipalities as well, we've had a number of years of an infrastructure levy that's been on top of our base rate, what we would be charging if we just wanted to maintain service,

but we've got an infrastructure levy on top of that. And that's to make up the backlog of all of the work that wasn't done for many years. And Nick mentioned it's common across Canada. It just has to do with the timing for when much of our infrastructure in Canada was built. And it's all coming of age at the same point. And perhaps some of the people in the past

didn't have the foresight to start putting the money aside for replacement or rehabilitation of some of that infrastructure. And a quick follow-up, your rate payers and PEO don't squawk when you've got to put those costs higher? We've had some recent, we recently changed, it's interesting the conversation around the use and trying to reduce use to reduce your costs. We do have a separate bill that goes out to our rate pairs. It's not done through hydro, so they do see those numbers.

And we changed our rate structure recently because it used to just be based on the amount that you used. But there's a whole infrastructure system out there that we're still paying for regardless of how much is being used. So we shifted to a different rate structure and some of those lower users are now paying a little bit more. And we've heard from them and I think that we'll be reviewing that through our next budget cycle as a result. OK.

Michelle, I remember, now we're going back maybe 40 years here, when Margaret Thatcher was the prime minister of the United Kingdom, she privatized water delivery in the United Kingdom. And the jury was out on whether or not that was a good idea to do. What would you think about privatizing some of these water systems here in the province of Ontario? Well with the recent experience in the UK on the privatized water systems I'd say a lot of people are

reluctant to go down that road. There are a number of organizations exploring the municipal services corporation model or the public utility model because we do have several of them in existence in the province and the main advantages to Going down that road and that's not privatization, but it's more of a corporate structure is the access to debt financing that municipalities don't have so they can raise capital in different ways and they can also have different governance structures that allow for Unelected officials to be making decisions about the utility.

Is that a good idea? I think there's an opportunity there to make decisions on what's in the best interest of the infrastructure as opposed to being worried about getting re-elected. Right. In which case, Nick, has the City of Hamilton ever considered privatizing out the water services? There's conversations that are ongoing in the industry now. I can tell you we had an experience prior to me joining the city where we contracted out the operation of our water and wastewater treatment

facilities, as well as all of the outstations, pumping stations, our reservoirs. And we learned a very hard lesson in Hamilton about there not necessarily being value in that model. reservoirs and and we learned a very hard lesson in Hamilton about they're not necessarily being value in that model. The challenge with private operations and it's not exclusive but it is very common is that when you've got a private entity who's looking to derive a profit from the contract that they're in they may not look at the system the infrastructure with the same scrutiny

that municipal operations would. So I would say it's critically important that municipal water utilities remain owned, operated by public entities in a not-for-profit manner. You got a view on that? Yeah, I agree strongly with that. Because when you have a third party operating your treatment systems, so for example where I live in region Waterloo, a third party is operating the

sewage treatment plants, which means the regions become very hands-off about their sewage. They don't really pay attention to sewers and all because you know I think they're just thinking, well somebody else is operating it, we're not going to worry about leakage and all that. They certainly don't put any investment in improving the sewers. I think that's simply because somebody else is operating the system so it's just not on their radar screen and that's dangerous because sewers leak. Kayleigh, you wanted to add? Yeah, I was just going to add on to the conversation about the different structures,

potential structures for water, not private, but the current structure, talking about municipal services corporation, having non-elected officials on, one of the benefits of having Council as the owner and operator of the system is the transparency that comes through that process, because all of the decisions are brought to open Council, the rates are provided, full breakdown of all of that. And so there's certainly some benefits on that end to having it under municipal ownership. Not to mention the high value of the assets allows us to borrow at a very competitive rate

through the private markets. And I guess the fact is at the end of the day, if something goes wrong, people don't approach the private company, they approach their politicians, their elected people to resolve it. So they're accountable at the end of the day, if something goes wrong, people don't approach the private company. They approach their politicians. They're elected people to resolve it. So they're accountable at the end of the day anyway. Fair to say? I would agree.

You would agree. OK. Can we just, in our remaining few moments here, Barbara, I'll go to you first on this. People watching this or people listening to this obviously have a role. They can do things to either make things better or worse. What can they do to make things better?

Yeah, a couple of things residents can do. People, we've been telling people for years to have an emergency water supply at home. We really need to have that emergency water supply. So if what happens in Calgary happens here, you know, in my house I just have a couple of those big jugs from the water store, whatever. I never buy bottled water. But you need a couple of those in your basement, you know, depending on the size of your family, whatever.

So if the water system goes down for three or four days, you're covered, you've got access to clean water. Something else, residents, we're not telling residents, but these are very important things. In a water system, cities operate the valves every year. They operate the valves, like exercise the valves to make sure that they're operational, because when you need a valve shut off, you need to be able to shut it off. However, everyone has a valve in the basement, it's right beside your sewer clean out, it's your water shut off valve, your main water shut off valve. No one ever touches it

for years and if you get a leak in your house and you can't get the fixture turned off you could have a big flood. We want to make sure that water valve is operating. So spring and fall we check your smoke and CO detectors and you'll be down there looking at your sump pump anyway, Steve. Just exercise that valve and make sure that this is an emergency valve if you need it. You want to be able to turn it off. If it doesn't work, hire a plumber.

You don't want that thing snapping off, right? When you actually need to. No, well, mostly you won't be able to turn it. Yeah, and then if something's leaking in your house, you're going to have a major leak. See, that's why we have you on this program. Because you are always filled with great advice on these matters.

Thank you, Steve. OK, so in which case, remember we went full circle to the beginning? Sewer lady, sewer goddess? Sewer goddess. I think we can say that. OK, I think that's our time, everybody. And I'm really grateful to all of you

for coming onto our program today. Keely Dedman from the Region Appeal, Michelle Grenier, Ottawa Water, Ontario Water Works Association, Nick Winters from Hamilton Water in the Steel City, Breiber Robinson, Norton Engineering. Thanks so much everybody for joining us here on TVO tonight, and may all of your water remain clean.