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Percentage split of new grant-in-lieu with school district up to council to decide, mayor clarifies

In his mayor’s report at the conclusion of the Jan.
water treatment plant
The City of Thompson and Vale are splitting the costs of operating the water treatment plant in 2018 under the terms of an agreement regarding the transfer of its ownership and operations to the city.

In his mayor’s report at the conclusion of the Jan. 15 council meeting, Mayor Dennis Fenske made some remarks concerning articles that recently appeared in the Thompson Citizen regarding the new grant-in-lieu agreement between Vale and the City of Thompson and the Public Utilities Board (PUB) approving the transfer of water treatment plant ownership from Vale to the city.

In an article on council approving the new grant-in-lieu, the Citizen reported that: “Under the agreement, the city, School District of Mystery Lake and Local Government District [LGD] of Mystery Lake will split $4.8 million in 2018, with about $3.36 million going to the city and $1.44 million to the school district, as the LGD receives only a tiny fraction. In 2019 through 2021, Vale will contribute $3 million per year – about $2.1 million to the city and $900,000 to SDML – though there is a chance another $1.2 million could be added to the 2019 amount if Vale’s Manitoba Operations have positive cash flow of $20 million at the end of 2018.” These estimates were based on the percentages allocated to each of the three entities over the course of the two prior grant-in-lieu agreements – one covering the years 2013 through 2017 and another covering the years from 2005 through 2012.

“I just wanted to affirm to the general public that the amounts of $4.8 million, $3 million, $3 million, $3 million, there is no wording within the grant-in-lieu under the ‘56 Agreement that dictates what the amounts shall be,” said Fenske. “The City of Thompson, through our own deliberations, shall determine what the amounts ... will be allocated to the School District of Mystery Lake and the LGD. It could be status quo. It could be zero. It could be anything in between. But that is the call of council to determine what the allocation will be.”

In an article on the transfer of the water treatment plant from Vale to the city, the Citizen reported that: “Vale will charge the city for the provision of raw water based on the total costs of operating the pump house and the percentage of water provided by it that the city uses.”

Another article on the approval of interim water rates for 2018 by the PUB, said that: “The Thompson water and sewage utility, which serves about 4,000 customers, will see an increase in utility operating costs of more than $1 million in 2018. This is a result of the transfer of ownership of Vale’s water treatment plant to the city, which will cover half the costs of operation this year, which is expected to be about $720,000. In addition, the city will be paying Vale Manitoba Operations about $51,000 for raw water from the pump house that Vale still owns and about $275,000 in costs associated with the construction of the new sewage treatment plant.”

This was based on information in the PUB order, which elsewhere states, contradictorily but accurately, that those pump house charges will be included in the water treatment plant costs that the city and Vale are splitting: “Vale will remain the owner and operator of the Pump House (raw water system). The WTP [water treatment plant] will be operated under a 50:50 cost share arrangement between the City and Vale [in 2018]. The City will charge Vale for 50% of the overall costs of operation of the WTP. Vale will charge the City a Process Water Charge which is its pro rata portion of the costs of operation of the Pump House based on the volume of raw water supplied to the WTP. The Process Water Charge would become part of the City’s overall WTP operating costs.”

“The amount of water that is then used to process and make potable water for city distribution is about 6.52 per cent of the total volume, and we will be charged 25 per cent of that cost for the operation of the pump house,” said Fenske.

Actually, in 2018, the city will pay 50 per cent of the $51,000 that Vale attributes to the pump house providing water for the city’s use as part of the overall water treatment plant operating costs of $1,445,652. In 2019 [when the cost of pump house operations for supplying water to the water treatment plant for the city water utility will account for about $79,000 of the total treatment plant operation costs of approximately $1.5 million] and beyond, the city and Vale will be splitting the costs of water treatment plant operations according to the actual percentage of potable water from it that each of them uses, which is estimated to be about 75 per cent for the city and 25 per cent for Vale.

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