What will 2023 look like for Canadian water utilities?

Sixteen Canadian water utilities came together in the Fall of 2022 to reflect on shared water utility trends. During the conversation hosted by Canadian Water Network’s (CWN) Canadian Municipal Water Consortium, senior water utility leaders discussed how challenges related to topics like affordability, capital delivery costs, and talent acquisition are driving them to develop new strategies.

Emerging from the COVID-19 pandemic

Over the past three years, utilities staff performed daily miracles to ensure there were no service interruptions, while continuing to adapt to trends and work towards their pre-pandemic goals. Leaders spoke of steering their organizations towards an integrated One Water approach and working towards a net-zero target in wastewater, adapting to climate change impacts, considering their role in the circular economy, and engaging in reconciliation with Indigenous peoples.

The difference in 2023 is that delivering on these long terms goals is running up against the changed landscape coming out of the COVID-19 pandemic, which has affected fundamental areas of business. Utility customers are struggling with a loss of income and a higher cost of living. High inflation and the economic downturn are impacting capital budgets, while the Great Resignation and the lack of new skilled recruits are creating labour shortages.

Equity is a priority to ensure that all customers have affordable water rates and receive the same level of service. CWN’s municipal leaders shared how they are dealing with COVID-era constraints to realize long-term goals.

Affordability and equity

Concern over the affordability of water rates for utility customers has been heightened due to COVID-19—a trend that is set to continue if the forecasted global recession in 2023 is any indicator. In response to this, leaders are exploring new rate designs and financial structures.

“We are exploring the concept of water equity as a lens to guide business decisions,” says Heather Zarski, manager of integrated planning at EPCOR. “In 2022, EPCOR established a working group with members from the water and drainage business units to gather and assess socio-economic datasets, understand equity initiatives past and present, as well as to document future opportunities.”

Other communities are moving forward with affordability and equity programs. In 2022, City of Regina Council passed a motion to develop property tax and water affordability programs for low-income senior citizens and people living with disabilities. “By approving an affordability program for our water utility, the city is able to maintain a financially sustainable utility model while providing an increased benefit to those residents experiencing the highest need,” says Kurtis Doney, director of water, waste and environment at the City of Regina.

Reconciliation with Indigenous peoples

There is also an interest in increasing community engagement, particularly as it relates to reconciliation with Indigenous peoples. “We are engaging closely with the Tsleil Waututh First Nation and other local First Nations in our work,” says Jimmy Zammar, director of the urban watersheds, sewers and drainage division at the City of Vancouver. “Partners are watching what water commitments and rights are being acknowledged by the city.”

In October 2022, with recommendations from a task force led by local First Nations communities, Vancouver City Council passed the City of Vancouver’s United Nations Declaration on the Rights of Indigenous Peoples Strategy. The strategy includes acknowledgement of specific water commitments and rights.

“Indigenous communities want to know what’s happening and have rights to be consulted, which is a learning curve for project managers,” adds John Presta, commissioner of works for The Regional Municipality of Durham. “We are working to develop an umbrella agreement with the local Indigenous communities.”

Capital delivery costs

Municipalities are struggling to keep to the scheduled implementation of their capital plans. As we head into a recession, municipalities are experiencing limited capacity to deliver capital projects and this is prompting some leaders to re-evaluate how to finance and deliver their capital plans.

“We simply can’t deliver what is being asked of us within the current utility decision-making model,” says Marie-France Witty, director of strategy and performance in the City of Montreal’s water department. “We must change the way we make decisions, given high operational costs, inflation, the magnitude of infrastructure projects, and tight budgets.”

The scope and the price of current capital projects reflect their increased complexity and the greater uncertainties involved compared to 50 years ago. This is running up against citizens’ ability to pay. Leaders are interested in exploring different decision-making models, financial tools, and increased citizen involvement.

Part of what municipalities can consider is rethinking how procurement is undertaken. Canadian municipal leaders heard from Aarhus Vand, the water utility serving the City of Aarhus in Denmark, at a Leaders Roundtable recently hosted by CWN. Aarhus Vand staff shared information about their reimagined procurement approach. Rethinking traditional procurement may provide innovative solutions to implementing major infrastructure projects in a way that shares risk more equitably.

Workplace shortages

Municipalities across the country are facing staffing shortages. Attracting and retaining talent is a significant concern, especially as municipal work is not always attractive to those with relevant IT skillsets to support digital transformation in utilities.

“It is really challenging to attract talent right now, particularly when it comes to advancing data and technology,” says Shannon Abbott, water utility manager at The City of Calgary. “Municipal government is at a significant disadvantage when competing with exciting and innovative tech start-ups and other industries. We can’t entirely depend on externally recruiting for these types of roles; we also have to support our current staff with building new skills for the future.”

Frank Quarisa, director of wastewater treatment at the City of Toronto agrees. “Many engineering students go the high-tech route,” says Quarisa. “They are not remaining in traditional engineering positions.”

To address this challenge, the City of Toronto is recruiting students and recent graduates from post-secondary institutions through its co-op engineering, operator training, and engineering-in-training programs. The City of Toronto also runs an instrumentation training program and a millwright apprenticeship program.

What’s in store for 2023?

As municipalities and utilities work to serve their communities today and to achieve the strategic goals of tomorrow, leaders are exploring innovative ways of overcoming post-COVID challenges. Demand for affordable and equitable rate structures will continue to be present, along with an increasing need to engage communities with lived experience in decision-making processes. The anticipated recession will exacerbate already high capital costs, putting pressure on capital project delivery. Finally, municipalities are struggling to recruit and retain staff amongst competing industries.

Looking ahead into 2023, CWN is committed to supporting municipalities and utility leaders as they work to address their shared challenges. CWN is currently bringing them together through strategic sharing groups on topics like affordability and accelerating net-zero actions in municipal water management. We have also scheduled the 2023 Blue Cities conference on October 23-25 in Toronto, which will discuss trends and challenges identified by municipal and utility leaders.

About Canadian Water Network (CWN): CWN is an independent non-profit with a mandate to help communities achieve a resilient, equitable and healthy future through water. Through our Canadian Municipal Water Consortium, we convene water utility leaders who share a common goal of advancing excellence in municipal water management. For more information about the Consortium, visit www.cwn-rce.ca

Nicola Crawhall is the CEO of Canadian Water Network.

Katina Tam is a senior program advisor at Canadian Water Network.