Inflation has Fredericton councillors looking at a pause on higher water bills

Fredericton councillors have agreed in principle to hold off on a rate increase to residents' water bills next year, despite concerns that doing so will put the city behind on needed infrastructure upgrades.

City treasurer Alicia Keating, who laid out the proposed 2023 water and sewer budget during a meeting Tuesday night, recommended the move. 

The city has in recent years been hiking water rates annually by about five per cent to help replace underground pipes and other aging infrastructure.

For 2023, Keating said residents are already feeling the pressures of higher property tax bills, inflation and other increased costs of living.

"We see that costs are going up everywhere," she said after the meeting. "They're talking about utility increases going up potentially 8.9 per cent, property tax numbers are still coming in — inflationary costs surrounding that.

"We do understand that our customers are the ones that pay for all of these different items and it's important that the services that they receive, they can afford."

If a five per-cent rate hike had to go ahead next year, it would see the average user pay roughly an additional $40 for the entire year. In 2022, an average family of four can expect to pay about $882 for the year.

Keating said the city can make do without hiking rates next year, as its water and sewer fund had a surplus in 2021.

However, she acknowledged that it will also mean less money to invest in the ongoing effort to replace aging and failing infrastructure.

She said the city needs to spend about $15 million annually if it wants to keep on track with needed upgrades, even though only about $10 million can be budgeted for that purpose next year.

"So by not investing the full $15 million means that each and every year we are adding $5 million to our infrastructure deficit — that does just push costs further down the road."

Deputy Mayor Greg Ericson said he acknowledges the need to offer rate-payers some relief, but noted increases will have to come eventually.

"One of the things council thinks about when we think about our rate plans... is the concept of intergenerational equity — make sure the users of the day are paying their fair share of costs and things don't get pushed off into the future onto generations that can't really come and comment on it right now," Ericson told the meeting.

Keating said while her department is recommending against a rate hike for 2023, it will review its rate strategy next year to come up with a new long-term plan for the water and sewer fund.

She said it's too early to say by how much water rates could be set to increase following that review.

Councillors adopted the 2023 water and sewer budget in principle Tuesday night. The move will not be formally adopted until the city budget is finalized next month.