Some Collingwood councillors want to make sure New Tecumseth can't re-sell water it buys from Collingwood for a profit.
During the council meeting Monday night, councillors debated for an hour the terms of a new water treatment agreement with New Tecumseth, specifically the ability of New Tecumseth sell the water from Collingwood to water bottling companies, and Collingwood's autonomy and decision-making power when it comes to water treatment facility expansion.
“The agreement, I think, provides certainty and predictability to both Collingwood and New Tecumseth,” said CAO Fareed Amin. “We’ll have a clearly worded agreement that spells out who pays for what and what triggers those payments. The town (of Collingwood) will be able to maintain its ability to supply and regulate water within its boundaries. Nothing in this agreement will take away from the town’s autonomy.”
Collingwood has been supplying water to New Tecumseth since 1997. The water is treated at the Raymond A. Barker Water Treatment Plant (Raglan Street), and is distributed to the Collingwood distribution system, the neighbouring municipalities of New Tecumseth, Essa and Clearview through a regional pipeline, as well as the Town of the Blue Mountains.
The current water treatment agreement with New Tecumseth expires May 3, 2020, so Collingwood's staff and elected representatives are working on an updated agreement. The discussion at council on March 11, was to receive council input on the draft agreement. The agreement includes provisions for items such as existing and future capacity needs, compensation for Collingwood's costs, and recognition the pipeline is a permanent water supply.
Both councillors Bob Madigan and Deb Doherty raised concerns about New Tecumseth potentially selling water to private companies outside the municipal boundaries.
“There is no provision in the agreement to allow New Tecumseth to sell water on a bottled basis. There’s nothing written that allows them to do that,” responded Amin.
“In the original agreement, there was very clear direction as to where the water could be sold geographically,” said Doherty. “It could only be sold to a municipality and couldn’t be sold to a private interest for the purposes of selling water at a profit. I would like to see those terms... brought into this agreement.”
Coun. Yvonne Hamlin brought seven suggestions for changes to the agreement, one of which was including a clause stating any water resold by New Tecumseth to other municipalities should be on a cost-recovery basis.
“My concern is that down the road... do we want New Tecumseth to be making a profit on our water that we would not be sharing in?” asked Hamlin. “If it’s appropriate for us to be selling it at cost-recovery, I wanted to enshrine that it would be appropriate for New Tecumseth to also sell it on that same basis.”
Amin said it was unlikely Collingwood could bind another corporation (New Tecumseth) as Hamlin suggested.
“I guess, I’m agreeing with you, Coun. Hamlin,” responded Amin. “The only caution that I’m putting in here is whether or not this is something we can legitimately do. I’m not disagreeing. It should be cost-recovery. My point is, is this enforceable?
Coun. Mariane McLeod said she wanted clear language in the agreement to outlaw the reselling of water.
“It’s not prohibited here, so let’s prohibit it,” she said.
“The water is not to be sold off to a reseller for commercial purposes, such as bottled water,” said Mayor Brian Saunderson. “Is that really what we’re aiming for here?”
While council did vote to add language to the agreement placing restrictions on New Tecumseth's ability to resell water purchased from Collingwood, Amin left them with a word of caution.
“I’d like to temper expectations of council so we don’t leave here thinking we can do it if, indeed, we cannot,” he said.
Coun. Hamlin also suggested the town include an amendment making it clear when the two towns would enter negotiations regarding necessary expansions of the water plant.
Amin said he would add a phrase stating discussions on daily limits and conservation should begin when the plant reaches 85 per cent capacity.
Council voted unanimously to adopt the original terms of reference, subject to Hamlin’s additions.
Staff anticipate it will be three or four months to develop the new agreement.
In the future, the Raymond A. Barker water plant will need an expansion to the tune of $44 million. The agreement states the costs will be shared proportionally by the parties benefiting from the plant. Staff estimate Collingwood's share of this expansion at $7.0 million, or 18 per cent. According to the staff report, these costs will be recovered mostly from future development charges and a small portion from the water reserves.
The history of the Collingwood-New Tecumseth Water Pipeline Agreement
The following timeline information is according to the staff report presented to council on March 11.
In October 1997, Collingwood entered into a water supply agreement with the Town of New Tecumseth.
In 1999, the water treatment plant was expanded at an approximate cost of $20 million. In June of 1999, the Town of Collingwood, through the Public Utilities Commission, entered into a Principles of Agreement with the Town of New Tecumseth. The primary purpose of this agreement was to establish the terms of a future agreement for the supply of water, to meet the current and long-term needs of Honda of Canada.
This agreement allowed New Tecumseth to purchase 6,000 m3/day of the total capacity of the primary system for $5.8 million. In addition, there was a benefit of use payment in the amount of $2 million that covered the use of the existing property and facilities. Future expansions were to be paid by the user requesting the additional capacity. Any costs to upgrade the primary system, in order to enhance or improve the system but not increase capacity, was to be shared proportional to use.
In 2004, Collingwood CPUC initiated the process for a plant expansion. At that time the industrial use of water in town was much greater than it is today and the treatment plant was approaching design capacity. Given the impending capacity issues, CPUC then approached the Town of New Tecumseth regarding their participation in expansion cost.
New Tecumseth felt the agreement entitled them certain capacity and that they were not obligated to pay for upgrades.
Another issue outlined in the staff report is with respect to payment of the initial 6,000 m3/day. Payment was to be through the 18.5% interest in the pipe and payment by third party users. This never materialized and there is an outstanding provincial debt on the pipeline.