The Province's discussion paper Pricing B.C.'s Water has garnered a wide range of opinions since being released in March. As part of the public consultation effort regarding the new Water Sustainability Act (now at 2nd reading in the legislature), the public was given until April 8 to provide its views on water pricing and the Province's water pricing principles.
Although broad in scope, the water-pricing consultation excluded fees and rentals for hydroelectric purposes, by far the biggest source of water fees and rentals for the Province (although as part of its 10-Year Rate Plan for BC Hydro the Province has said it will eliminate the highest level of water rentals in 2019 in regard to annual energy output in excess of 3000 GWh). Also excluded, by implication, are water utility rates under the Water Utility Act.
The pricing principles in the Province's discussion paper are:
- simplicity
- fairness and equity
- implications for water users – costs distributed in a reasonable manner
- impact on water resources – e.g. consumptive uses to be assessed higher than non-consumptive uses
- cost recovery, where cost refers to the Province's cost of regulating water resources, including "a fair return to the Crown"
- efficiency
- food security and public health
Like the better-known utility rate design principles of James Bonbright, some of the Province's water pricing principles are in tension with each other (efficiency vs. implications for water users, for example), and internally (fairness in this context meaning non-discriminatory, and equity referring to the value of the particular water use). These and other issues were picked up on by various commentators on the discussion paper. Here are some quotes selected to reflect the wide range of views expressed:
"As an economist, I suggest that the BC government auction water extraction permits every year to agricultural, industrial and municipal (utility) users. Every one of these users will have a reason why they should not pay. That's not relevant, given their desire for the same resources." And from the same commentator: "Businesses ALL need to pay the same price [for water extraction]. Some businesses will NOT be competitive at these prices. The solution is NOT to sell them water more cheaply."
From Mister and Missus home owner: "A fair return to the crown: Mister and Missus home owner should not be burdened by a further tax increase which may happen with this proposal.... Will this bill see the individuals paying more than their fair share while the business sector laughs all the way to the bank?"
One commentator provided a detailed proposal for an independent agency to monitor water and groundwater use, and make the associated data available to the public: not a bad idea in principle thinks this blogger but why a new government agency would be required to perform this function given the existence of existing agencies whose mandate could be expanded is unclear (e.g. Water Comptroller, BC Utilities Commission, Environmental Assessment Office).
The substantive and process challenges for the Province in its development of a new water pricing regime will be daunting. The consultation principles and stakeholder feedback are all very high-level, yet will need to meaningfully reflected in a new schedule of fees and rentals under the Water Sustainability Act that will be as detailed and complex as the current scheme set out in Schedule A to the Water Regulation. It seems quite likely that some time will pass before we will see new enactments regarding water pricing in BC.
The Province's water pricing principles and stakeholder commentary can be found at: http://engage.gov.bc.ca/watersustainabilityact/2014/03/14/blog-post-10-pricing-bcs-water-what-do-you-think/
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