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27th October 2017
White Rock reveals it paid $13.4 million to purchase water utility


Published on: October 23, 2017 Last Updated: October 23, 2017 3:00 AM PDT

t took four years of difficult, secretive and sometimes acrimonious negotiations, but the City of White Rock has finally agreed to pay $13.4 million for its water utility.

That’s $1.6 million less than the price estimate outlined in a confidential corporate report from 2013 that will be released today.

“It was pretty frustrating,” Mayor Wayne Baldwin said of the negotiation process. “In the end, I know we’ve done the right thing so I’m happy about that, and I’m happy our numbers turned out to be correct and we were actually able to bargain a good price and a fair price for the residents.”

White Rock is one of three municipalities in Metro Vancouver that don’t receive their water from the regional district. The city’s water comes from seven wells that dip into the Sunnyside Uplands Aquifer.

In 2010, E. coli was detected in one of White Rock’s wells and a boil-water advisory was issued. EPCOR White Rock Water Inc., the water utility owner at the time, added chlorine to the well to rectify the problem, however Fraser Health ordered that the utility begin treating all of the city’s water.

Three years later, in early 2013, the city began exploring where it should be getting its water and whether it would be worthwhile to buy the water utility.

“We just felt something like water should have been in the hands of the public as opposed to a private enterprise,” said Baldwin. “They were oriented toward the business as opposed to us being oriented to the public health.”

City staff prepared a business case that outlined the expenses associated with the status quo, buying the utility and using the existing water source or buying the utility and moving to Metro Vancouver water.

If EPCOR kept running the utility, residents were expected to see a spike in their water bills thanks to upgrades, chlorination and arsenic filtration, which were budgeted to cost $21 million.

It was estimated that it would cost, at minimum, $15 million to buy the utility, plus $500,000 in legal and other one-time startup costs. If the aquifer was used, chlorination, arsenic filtration and upgrades would still have to be done and debt expenses would be $500,000, making the total cost $37 million. The goal was to pay that off at $2.3 million per year.

Council decided that it would move ahead with buying the utility from EPCOR and would stick with its aquifer because the cost of moving to Metro water was prohibitive.

Negotiations began in early 2013, and did not go well. Baldwin described the process as “rancorous” and said that after a year the city threatened to expropriate the utility, but was urged by EPCOR’s CEO to continue negotiating.

“We thought, foolishly, OK, that seems like a good idea and it will take some of the legal problems off our plate. That turned out not to be the case,” Baldwin said.

The city took over the utility on Oct. 30, 2015 and made an advance payment of $14 million, though the final purchase price took two more years to finalize. Arbitration was set for this fall, but a deal was worked out within the last couple of weeks.

The city has already received the $600,000 refund from its advance payment, and that money will go back into the utility’s capital expenses.

Baldwin said the city couldn’t release information about the negotiations, including the purchase price, until everything was finished or else it would have compromised the process. The city also signed a confidentiality agreement.

“It was very frustrating. We wanted to get the information out because we knew we were doing the right thing. There was a concerted effort out there to make statements that we were doing the wrong thing and hiding the numbers on purpose,” he said. “We couldn’t really say anything about it because of the gag order.”

When asked if the confidentiality agreement applied for three years after the 2015 purchase, as previously reported by the Peace Arch News, Baldwin said, “It’s public information as far as we’re concerned. They can take us to court on that if they want.”

The city will abandon the judicial review it sought of the Office of the Information and Privacy Commissioner’s decision earlier this year ordering the city to release the documents, Baldwin said.

He did not know how much the city ran up in legal fees negotiating the sale.

A spokesperson for Epcor said in an email “because this is a commercial transaction and we are bound by confidentiality, we are not able to discuss details at this point.”

The utility takeover was not a smooth process either.

A fire in May 2016 resulted in a boil-water advisory and depleted the reservoir. Earlier this year the city completed construction on a second reservoir, expanding the amount of water the municipality can store.

Since early last year, a group of White Rock residents has actively protested the city’s decision to use chloramine for secondary water treatment.

The residents have advocated for the use of chlorine, which the city tried last fall. According to the city, the chlorine reacted with the manganese that naturally occur in the water and caused discolouration that ranged from slightly yellow to the same hue as coffee or strong tea.

This spring, the city backtracked and decided to go with chloramine. Water issues continued for a couple of months after the change, but complaints are now practically non-existent and the water is clear again.

Some residents are still expressing concern about the use of chloramine, which they believe can have negative effects on health, the environment and water system infrastructure.

Next on the list for the water utility is to build an arsenic and manganese treatment plant by 2019.

In March, White Rock received federal and provincial grants totalling $11.8 million. Treating the city’s water is expected to cost $14.2 million, meaning White Rock will pick up the remaining $2.8 million.

Council will soon receive a report on the preferred treatment method, after which the project will go to tender.