The Price is Right … in Canada

When it comes to water for homes and businesses, Canada’s public water rates are among the lowest in the world.

Canada remains the country with the lowest commercial water rates of fifteen countries in Europe, North America, South Africa and Australia, according to the latest National Utility Services International Price Survey. Canadian businesses paid only 39.73 cents per cubic meter of water in 1998. German-based businesses paid the most with French and British-based businesses paying the fifth and sixth highest rates.

The average Canadian household gets even cheaper water. According to Environment Canada, the average household paid between $243 and $390 per year for water and sewage services. (This cost is based on 25 cubic metres per month, which is considered to be low average use.)

Privatized water prices are not as reasonable. The average household in England and Wales spends over $600 per year on water, double what most Canadians pay. After water privatization a decade ago in Britain, prices rose dramatically, as did the number of disconnections and quality problems. Water rates for British businesses have exceeded the rate of inflation six years in a row.

Indeed the situation has become so bad and public outrage is so high, the British minister of water recently acted to end disconnections for customers who couldn’t pay the rates, banning pay-as-you-go meters that had been installed in many homes. The minister also urged the companies to do more to protect their most vulnerable water users from hefty bills.

That urging has now become a requirement. In November the British water regulator OFWAT announced an average 12 per cent price cut effective April 2000. A decade into water privatization in the UK, it is clear it will take years, perhaps decades, of intensive regulation and price cuts to make up for the destruction that privatization has caused — a situation that could have been avoided if the water system had remained in public hands.

Even so, regulation has its limits — and its price. British water company Severn Trent is cutting 1,100 jobs over the next few years, in response to the mandatory price cuts. Other companies have followed suit. And when Yorkshire Water left a large region of Britain without water for almost a year, all the regulator could do was order water prices to be reduced. The regulators, political appointees who take their cues from the government of the day and are heavily lobbied by the water companies, can’t deliver a system that comes close to matching the accountability and transparency of publicly owned and operated water services.

The relief from soaring water prices is a tribute to the resistance of British people who pressured the Labour government and regulatory bodies to provide better service and stop water profiteering. The UK's independent consumer watchdog, the National Consumer Council (NCC), has said a bigger price cut was possible by cutting shareholder dividends from £9 billion to £5 billion, passing efficiency dividends on to customers.

Recent statistics from France, where most water services are privatized, show that water prices in that country continue to rise dramatically. Water and district heating prices have increased by 70.1 per cent between 1990 and 1998.

Where Canadian water rates have increased, it has been to replace aging and outdated water systems. Winnipeg and London both raised water rates to fund water infrastructure construction and renewal. In each case, the moderate rate increases are for a set number of years, after which rates will stabilize. And the money is funding improved water services, not padding profit margins

London’s sewer improvement surcharge increases rates by 7.4 per cent for the next five years — an increase of $16.56 next year for the average household — to pay for $500 million of the most extensive and expensive sewer upgrades in city history. Winnipeg’s rates go up 2.6 per cent in 2000, costing the average family an additional $12 per year. Rates have risen steadily over the last 10 years, going to aqueduct upgrades and a reserve fund to build a water treatment plant. The rate increase is expected to be the last one for a decade.

In these cases, cities have chosen not to make the short-sighted decision of handing away their water systems for a financial quick fix, realizing the long term dangers of privatization. A renewed federal infrastructure program would allow cities and towns to renovate and build new water infrastructure without relying so much on rate increases or entering into so-called partnerships that benefit corporations at taxpayers’ expense.