Water, Wastewater and Stormwater Billing Transition report 2024-376 dated October 1, 2024, be received.

13:31and I'll call on Mr. Crowder and Mr. Newman from our Finance Department for a presentation.

13:38Thanks very much, everyone.

13:46So today we're here to talk utility billing transition and provide an update to members of Council.

13:56We'll get going here.

13:58So our agenda for today is the purpose of the presentation, why are we here?

14:04Our strategic plan alignment, some key findings we've had to date, our timeline and progress to date and next steps.

14:13We're going to run through some options analysis for you to share what we've been doing in terms of due diligence, as well as some financial implications, and we'll wrap it up with some next steps.

14:28So why are we here?

14:30To really update members of Council on the work and progress that we've done to date on the water, wastewater and stormwater billing, we're calling utility billing collectively.

14:42We want to share a timeline and summary of the steps we've taken to get here today, as well as what we're looking at into the future.

14:49And ultimately, given the significance of this transition, we want to ensure that you members of Council are fully aware of the progress we've made to date and understand this change, ultimately.

15:06Strategic plan alignment is maintaining the City's healthy financial position under the Foundation's theme.

15:15And our objectives really are looking at the accelerating digital delivery services, which will support improving frontline customer service and communications.

15:26It will also strengthen our financial policies and practices to support a sustainable long-term financial position.

15:37So some key findings for some background. And as you're aware, we have been and shared some information on this utility billing transition to date.

15:46Revenues are forecasted to equal approximately $83.8 million.

15:51$71.4 of that is under the water and wastewater, and $12.4 of that is collected through stormwater.

16:00A cross-functional project team has worked with key stakeholders, including Elektra, who is currently executing our utility billing, as well as the municipalities of Hamilton, Markham and Vaughn, who are also given notice that this is no longer in Elektra's business future.

16:18We've narrowed down three options that were explored in depth to ensure due diligence and confidence in identifying solutions that are best for the City and its customers.

16:31Work continues with Elektra on an ongoing basis to extend the current service agreement and work through this transition collectively.

16:44From a timeline perspective, we're going back to 2023 in quarter one, where staff undertook a RFP for a utility billing software in which results were analyzed and understood.

16:58And during that time, staff also received a turnkey solution option presented through an affiliate of Elektra, a non-regulated affiliate of Elektra.

17:11And staff took time to do the due diligence and understand is this a viable option, as well as the option of what we brought to council back in January of 2023 to share that we are moving to an in-house billing option where we think is the best place forward.

17:31We've also looked at an in-house filed software that has some synergies with our tax billing software that we're currently using and really wanting to highlight there's been a lot of due diligence here that's gone into where we're at today.

17:45Currently, if you look to where we're at now, we're working through an extension agreement with Elektra to share that we currently have a contract with them that expires at the end of 2025 and working through them to make sure that this transition works for both parties and ultimately customers of Guelph.

18:05Towards the end of the quarter here in 2023, we're looking to identify and land on and make sure that we are solid in the direction that we want to head and ultimately kick off that transition process, which begins with a customer engagement campaign in early 2025.

18:23We will also be bringing a bylaw update to the customer service or the customer accounts bylaw in between Q2 and Q3 of 2025.

18:34And right now, as you can see on the slide, we do have an end date of 2025, but we are in communication and negotiations with Elektra to look at an extension with them.

18:47At this point, I'll hand it over to James who can get into some of the more financial options.

18:53Thanks Matt. I'm just going to jump forward a couple slides here and then we'll go back.

19:04As we went through this process, we were looking at what would the benefits be from a transition perspective.

19:11And we always kept the customer at the core center of those discussions.

19:17So we want to look at, as Matt mentioned, the alignment to our strategic plan.

19:21So that's ensuring customer service through digital service offerings and digital experience.

19:26We want to align our business needs and data ownership.

19:29We want to ensure fairness for the customer base.

19:32And we also want to leverage the synergies with existing business processes to maximize the value for the city and the customer.

19:41So just go back to our options analysis.

19:46Our current state with Elektra costs approximately $2.4 million a year.

19:55That current state has reduced postage costs because postage is shared.

20:01It has other built-in factors that actually are less than market value.

20:08And we need to keep that in mind as we look at these other options.

20:11Option one was to take the software that Elektra is currently using and the hardware, bring that in-house,

20:19and continuing to use that as a billing platform.

20:23That wasn't a viable solution.

20:25The hardware was end of life.

20:27The software was an older version.

20:30It had been significantly modified for converge billing with Hydro and the utilities, water, wastewater, and storm.

20:39One of the other options, as Matt mentioned, a non-regulated entity of Elektra had approached us.

20:46We went through a full eight-month due diligence process with them.

20:51That pricing came in significantly higher at $4.5 million on an annual basis.

20:59And then the third option was bringing utility billing in-house.

21:03And that's creating a completely new department within our city,

21:07bringing that software and taking over that billing function going forward.

21:12So financial implications start up in transition costs to bring utility billing in-house,

21:21approximately $3.5 million.

21:24Some of those expenditures have already occurred.

21:27The remaining will occur over the next year and a half until we fully go live.

21:34The reality is there'll be an increased operational cost estimated approximately $700,000 on an annual basis,

21:41starting in 2026 when we go live.

21:45And that's due to escalated costs, lack of postage sharing, as I mentioned, full costs for media reading, bill presentment, etc.

21:55That was where we were not paying full market rates with Elektra.

22:01So staff will be working on a model to mitigate some of these additional costs also.

22:06That will be done through e-billing opportunities.

22:11It'll be done through implementation of user fees, streamlining the existing data and platforms that we have at the city currently,

22:18and ensuring efficiencies on the collection side as well.

22:22So some of our next steps, we continue to work with Elektra in conjunction with the other municipalities, Mark and Vaughn and Hamilton,

22:36to ensure the synergies as we work through that transition agreement.

22:42We will be updating and revising the bylaw required to align with the administration changes, user fees, efficiency measures,

22:49and as Matt mentioned, that'll be coming in Q2, Q3 of 2025.

22:55And we're going to be developing and rolling out a customer service engagement platform.

23:00And that will be the key from the perspective of ensuring everybody knows what is going to be happening.

23:07Additionally, through this process, staff continues to review all options,

23:12and we've had a number of changes that have occurred since the writing of this report even.

23:20So Elektra continues to ensure that the utmost importance is the customer through these conversations.

23:30And there may be some flexibility on that Elektra side for different options,

23:36as well as we've received revised pricing from a turnkey perspective as well.

23:42So we'll be continuing to review those, ensure that we do our due diligence,

23:46and investigate all possible options.

23:49And if there's any material change in what we're presenting today, we'll be back in front of you, providing that update.

23:55Great, thank you. That was a very thorough presentation.

24:00We do have a recommendation to receive. Let's start with questions.

24:04I see Councillor Gibson.

24:08Yes, thank you through you, Chair Caron.

24:10Thanks to staff for the presentation.

24:13So I've read through the report and fully acknowledged the cost increase operationally.

24:19It is what it is. I accept that.

24:21And I was listening to your options for mitigation.

24:24I just, I have to ask just because when we went through budget last year,

24:29I remember seeing we significantly over underestimated the revenue that we'd be getting from the stormwater levy last year.

24:36So we had a, I think we had a fairly significant surplus in our estimation.

24:41So I didn't hear any of your options on the mitigation side for being just simply absorbing that $700,000 additional cost and using sort of this, using the,

24:52the levies, the levy revenue to sort of just absorb that $700,000 moving forward simply because I think we're ahead of schedule collecting those that stormwater levy.

25:02And I think, and to be fair to the customer, I think we are probably pretty healthy on our water wastewater billing as well.

25:11So I just wanted to ask, is that an option the staff are looking at? And if not, does staff are staff looking for direction to make that an option?

25:21So through you chair, Karan to counselor Gibson.

25:27I'll start off and then I'll probably let Shanna jump in from there.

25:31So from a purely billing perspective, what we're doing is we're wanting to ensure that we have the right billing model, regardless of the revenue that is collected from the different buckets,

25:43water, wastewater and stormwater.

25:45So we're wanting to ensure that we have the right administration, the right user fees in place to ensure that we have the most efficient and effective billing model.

25:56And that is the key piece of this part of the conversation.

26:00Now from a stormwater perspective over to Shanna.

26:03Oh, sorry.

26:05Go ahead.

26:08Okay, sure. Thank you through chair Caron to counselor Gibson.

26:12So we are in the process of bringing the 2025 budget update to council and through that process, we have adjusted the stormwater revenues to better align with the past experience and the expected in the future.

26:31ER use, I believe is the term and I somebody will help me with what that stands for.

26:37But that adjustment will be part of the 2025 update already.

26:43Okay, I appreciate that. Thank you. I just made me a follow up.

26:47So I, I agree. And I think looking at the most optimal way to bill is a is a good track to take. But I also heard staff mention how they're going to mitigate those costs that $700,000 gap.

27:01And I just, I just wanted to ensure that staff are considering from a, from a customer perspective simply absorbing that $700,000 into our into our already levy revenue.

27:14So that's just a cost increase.

27:15That's just a cost increase because I heard the word user additional user fee.

27:21That I would hope wouldn't be the first option to turn back to the rate payer and say, we have a $700,000 gap in our billing. So we're going to charge you more.

27:31I'd just like to know that that option to absorb the cost is on the table.

27:41Councillor Gibson. Yeah, we will be looking at that just from a user fee perspective.

27:47One of the options would be, for instance, an account setup fee that is currently being

27:52charged through ELECTRA but not charged through the city. So those would be sort of those

27:59very simple types of user fees that we'd be looking at and bringing back to council

28:04in that Q3 timeframe. And through the chair, if I could just build on that. So we would

28:12be looking to build in that revenue and expense adjustment as we build those into the budget,

28:19then the impact on the rate would be on that net basis.

28:27That's a great answer. I appreciate it. Thank you.

28:31We have Councillor Oroch next.

28:33Thank you, Chair Caron, through you to Mr. Crowder. I have a similar question to Councillor

28:39Gibson's. So the capital costs will be covered by the utility rate contingency reserves, right?

28:48So any overages over the years in these utilities, they go to the reserves to offset that. So

28:55we're looking at the $700,000 and the conversation is about utility fees to help, user fees rather,

29:04to help to offset that. So I am also wondering in the same vein as Councillor Gibson, these

29:11folks already have an account with us for water, wastewater. So I'm looking at what

29:19are other ways to not add new fees for water and wastewater when this isn't the residents

29:26doing it all. This is ELECTRA deciding to get out of this line of business.

29:32I really do share with Councillor Oroch. That's a great question. Maybe I wasn't clear from the start.

29:38So it's not about adding the user fee to every customer that is transitioned from ELECTRA to the

29:46city. It's about when properties change hands, the new account setup fee that would occur from

29:53that perspective, just as any other utility, whether it's cable or whatever else, would charge also.

30:01So that's sort of the concept of user fees. But it's not just about user fees to mitigate this

30:06difference. It's about e-billing saturation, reducing postage costs, synergies with existing

30:12systems, all of which will overall help mitigate that additional cost.

30:19Right. So through you, Chair Caron, to Mr. Grouder, again, just a reflection. I mean, we're not going

30:23to solve this today. $700,000 is a lot of postage. So clearly there's some people there who are

30:30a little going to be managing that. So I'll look forward to seeing what those

30:34the mechanisms are to offset that expenditure. My other question was, what are the other cities doing?

30:42Hamilton is one, I believe, but there are a number of cities that are in the same position.

30:47Yes, through Chair Caron to Councillor Oroch. Hamilton is bringing utility billing in-house,

30:54and they are currently working on and through that process. Mark and Vaughn have not yet made a

31:01decision from that perspective and are continuing to explore all options that they may have.

31:07Thanks. And then my last question was, was this billing function part of the 2017 agreement with

31:13Electrily? Did we go into that agreement expecting this to be an ongoing service that was being provided?

31:24So as part of the agreement that occurred in 2017, that took our billing process until I believe

31:34it was 2020, if I recall, and then we entered into a new agreement with Electrily and extended

31:43the billing cycle. When we went through that process, we from a safe perspective realized

31:51that there may be other alternatives to having Electrily continuing to do our billing process.

31:57So we embedded within that revised agreement some transition provisions that will assist us

32:03greatly going forward. Okay, thanks. Next on the speaker's list, we have Councillor

32:10Caighton. Are there any other questions for staff? Okay, Councillor Caighton. Thank you,

32:16through you, Chair. So I recently found out that I have one of the Wi-Fi water meters because it

32:23wasn't working and I was getting very large estimates on my bill from Electrily. Do we have

32:30something where we are going to be encouraging people or requiring those be on new bills so

32:36that we lessen the cost of people needing to go to read the meters? Through Chair Caron to

32:44Councillor Caighton. Certainly that's a technology that we are looking at. We call that smart metering

32:51where that doesn't require a physical meter reader to go out onto your property on a monthly basis,

33:00physically touch a what we call a touchpad to get a read from your water meter and start the

33:05billing process that way kind of thing. We do have units deployed in Guelph, obviously, you're

33:10aware of that, something that we are bringing through the budget process and understanding that

33:16in order to expand that from a city perspective, there's a significant capital outlay for that.

33:22So to date, the steps we have taken is to take small steps, try to implement this technology as

33:29best we can. It really is a win in our eyes where you do have the ability to enhance customer service.

33:36If you do have a leak on going inside your house, we're talking hours notification instead of months

33:42on a billing cycle where you see a bill and there's a bit of shock there. So we are trying to take

33:48steps toward that, but understanding there's significant capital there to get there from a

33:53perspective of citywide. Additionally, we do look at that from a customer service perspective and

33:59understand that as James mentioned, there are pieces there that can enhance that customer

34:05service level. So there are efficiencies and pieces like that that can take into consideration

34:11as we move forward here. Great. Thank you very much. Next, we have Councillor Billings followed

34:19by Mayor Guthrie. So through you, Madam Chair, it's just kind of ease of transition for the

34:27customer question. So we're bringing it in-house and a lecturer already has the information. So

34:34say they automatically take the money from my bank account. So moving forward, will that information

34:43be transferred to the city? So then the city will automatically take that money from my bank account

34:49for the water, wastewater and stormwater? Through you, Chair. Coran to you, Councillor Billings.

34:58That's a great question and one that we're working through. I can

35:02suggest that the answer to that question would be no. We would be through our full

35:10customer engagement process, we will be notifying customers such as yourself that may be on that

35:17pre-authorized payment, and we will be engaging in a new authorization between the customer and the

35:24city because the current agreement is between you, the customer and Electra. So we would be

35:31working through that as we go to customer engagement. Okay. Thanks, James.

35:38Mayor Guthrie. I'm just wondering, Markham and the other city that has not yet made a decision yet,

35:48is the city of Guelph still contacting the embassy if there's sort of buying power or synergies that

35:54were can be a common platform between all the cities to try to find some efficiencies or

36:02maybe there's a third party vendor that can make a better deal if all three cities get

36:07involved on something and then the overall costs are lower? Through Chair Caron to Mayor Guthrie.

36:15Absolutely. That's what we've been doing right since day one. And you know, the four of us,

36:22Hamilton, Markman, Vaughn, have been very much involved with in the process, communicating on a

36:29regular basis, looking for synergies where synergies exist and that buying power as well. So absolutely.

36:38Okay. So that will still continue as we move forward a bit. I understand. Okay.

36:43And then my final question is, is there a potential business case that could be made? And maybe you

36:50could review this where the capital outlay for the smart metering over a phased approach over a few

36:58years would actually be cheaper in the end and provide better service by then eliminating the

37:08postage costs and the labor costs to go out to residents and businesses to check on their water

37:17metering? Like is there a business case that you could look into there that maybe it is worthwhile

37:24to actually do the capital outlay of the smart metering first?

37:29And I'll start and then let Matt continue. So through Chair Caron to Mayor Guthrie.

37:33Absolutely. We have been working through that sort of business case process for a number of years.

37:39We presented something back about five or six years ago. I know they're looking at that again,

37:46but it's really about, as you mentioned, saving that meter reading costs, providing two customers

37:52real-time data with regards to usage and that customer service piece. So, or do you?

37:58Yeah. Sorry. Through Chair Caron to Mayor Guthrie. Certainly, there is a business case to be made

38:06there. There's a fine balance of customer service enhancements and that capital outlay

38:14and what that runway is in terms of cost recovery. The industry is certainly going that way and there's

38:22a lot more business case and data and information on that. So that's certainly something staffed

38:28continue to look at. All right. Appreciate those answers. Thank you very much.

38:36Great. Lots of great questions. Seeing no further questions, we do have a motion to receive. I'll

38:40need a mover and a seconder moved by Councillor Billings, seconded by Councillor Allt. Are there

38:50any opposed to receiving this report? Seeing none, that motion is carried.