February 19, 2010

Yesterday, Ontario legislators debated a private member’s bill that would transform the way water and wastewater services are organized, financed, and regulated. Bill 237, the Sustainable Water and Waste Water Systems Improvement and Maintenance Act (SWIM), would require metering and full cost recovery, promote consolidation of smaller systems, encourage private sector involvement in service provision, and establish an economic regulator to oversee water and wastewater utilities across the province. The bill passed Second Reading and was referred to the Standing Committee on General Government for review.

In explaining the need for the bill that he sponsored, Liberal David Caplan pointed to decades of under-investment in our systems, many of which have surpassed their life expectancy and now threaten public health, the environment, and the economy. He noted that some systems (including parts of those in Toronto and Ottawa) are more than a century old, and that Toronto suffers from 1,500 water main breaks per year. Caplan should know of what he speaks: He was the Minister of Public Infrastructure Renewal between 2003 and 2008.

SWIM would help put water and wastewater utilities on a sustainable financial footing. It would require municipalities to establish corporations to provide water and wastewater services. The corporations would prepare business plans that assess the full cost of providing services and describe the means of paying this cost. They would also have to implement full metering.

SWIM would promote the consolidation of smaller water and wastewater systems. One of bill’s stated purposes is “to encourage an increase in scale and capacity in the provision of water services and waste water services to minimize costs to the public.” It proposes that providers serving fewer than 10,000 customers be required to amalgamate their services with others’ if they determine that it is possible to do so, or if the government directs them to do so.

SWIM would establish an independent economic regulator, the Ontario Water Board. The Water Board would review and approve the business plans of municipal water and wastewater providers and monitor charges for services.

SWIM would also encourage greater private sector involvement in the provision of water and wastewater services. Service providers’ business plans would have to take into account “efficient provision of services, including existing or revised contracting possibilities.” Furthermore, the Water Board’s duties would include “establishing and publishing contract templates for the provision of water services and waste water services.”

During yesterday’s debate, several opposition members pointed out that many of SWIM’s provisions echo those found in the Sustainable Water and Sewage Systems Act, which was passed in 2002 but has not yet been proclaimed. (It cannot come into force until regulations regarding municipal cost reports and cost recovery plans have been developed, and the province has shown no signs of developing such regulations.) Progressive Conservative Toby Barrett wondered what had happened. “Where are the regulations?… Why do we have to go through all of this all over again, close to eight years later?”

Although these are legitimate questions that rightly call attention to the government’s failure to implement a crucial act, they overlook the fact that SWIM goes further than the earlier legislation, most importantly in proposing an independent economic regulator. This is something that Probe argued for in a Submission to the Walkerton Inquiry in 2001, and that Ontario’s Expert Panel on Water and Wastewater Strategy recommended in 2005. It’s good to finally see economic regulation on the political agenda.

UPDATE: Although Bill 237 died when the Ontario legislative session ended, David Caplan has re-introduced the bill in the current session. Now called Bill 13, the Sustainable Water and Waste Water Systems Improvement and Maintenance Act passed first reading on March 23, 2010.