Updated Water Rate Design

The City of Medicine Hat is proposing a new water rate design to better reflect industry best practice and incentivize water conservation.

The new rate design aims to: 

  • more equitably distribute fixed charges between customer classes (residential, irrigation, external and commercial) based on the size of the water service to the property (‘meter size’), 
  • introduce a seasonal tiered rate structure for residential customers to encourage water conservation; and 
  • introduce an Environmental Conservation Charge to fund a sustainable water conservation program to supplement the existing HAT Smart program. 

Understanding water rates

The pricing structure for your water utility uses a combination of fixed charges (or ‘base’ rate) and usage charges (or ‘variable’ charges). Fixed charges and variable charges combine to cover the City's cost to provide the service to you, including treatment plants, infrastructure, pipes, maintenance, staff, equipment, vehicles, and planned capital costs. Learn more at medicinehat.ca/utilitybill.

Go to page

What is changing?

Current water rate structure
  • Base rate is the same for all customers (high residential rate compared to other municipalities)
  • Variable rate is the same for all customers (low compared to other municipalities)
Updated water rate design
  • Base rate determined by water meter size (align with other municipalities)
  • Variable rate:
    • Seasonal tiered rate structure for residential customers
    • Higher irrigation rate
    • Flat rate structure for commercial customers
  • Environmental Conservation Charge to fund water conservation initiatives

Two pie charts. One shows five unequal pieces. The other shows five equal piecesIt is important to note that the water utility operates on cost-recovery basis. So, the total amount of money collected from ratepayers doesn’t change with this new structure. If you think of it as a pie where each customer class gets a certain-sized piece; we’re not changing the size of the pie, we’re adjusting the size of each piece.

Tiered rate structure

Graph showing water volumes by customer classResidential customers use the most water in Medicine Hat, particularly in the summer months.

From April 1 to October 31, residential customers will be charged more as their water use increases.

  • Tier 1: 0-20 cubic metres
  • Tier 2: 21-40 cubic metres
  • Tier 3: 41+ cubic metres

Each tier will have a different rate, T1 will have the lowest rate and T3 the highest rate. For examples, refer to the Frequently Asked Questions below.

There will be one single usage rate for residential customers in the low season (November 1 – March 31).

Environmental Conservation Charge

Residential customers who use a lot of water will have an additional Environmental Conservation Charge on every cubic metre past a 40-cubic-metre threshold per billing cycle.  

This will be used to fund water conservation efforts for residential customers through the City’s Hat Smart program. Examples include low flow irrigation, smart irrigation control systems, xeriscape, low flow toilets, etc. Learn more.

Phased in over time

Some of our customers would be heavily impacted by this change if it was implemented all at once for the 2025 budget year. That’s why we’re phasing in these changes over a ten-year period before the desired outcomes (equity, conservation, and industry best practices) of the restructure are fully realized.

Benefits 

  1. More control: Shifting water rates to be more reliant on variable revenue provides customers with greater flexibility to impact their water bills through adjusting consumption habits.  
  2. Equity: Modifying the way fixed charges are distributed more equitably reflects the cost of providing the service. Currently, for example, a condo building or hotel with a single meter large enough to service hundreds of units is charged the same fixed rate each month as a single residential house. Changing the methodology to charge more based on meter size more accurately reflects the cost to install and maintain the infrastructure to service that location. 

Expected impacts

Residential
Low-usage and typical-usage residential customers are likely to benefit from the new rate design and may see a reduction on their water bill.
Commercial/Industrial/Multi-unit
Fixed charges may increase. Usage charge is lower than other customer classes. Net impact may increase dependent on water meter size and water usage.

Frequently asked questions

 Why is the water rate design changing?

Over time, the way the City of Medicine Hat charged different customers for water service led to inequity among the various customer classes and was not aligned with other comparable cities* in Alberta.

  • The fixed residential water rates are currently subsidizing other customer classes
    • Medicine Hat’s fixed rate was twice as much than other comparable cities and about three times higher than Lethbridge
    • Medicine Hat’s variable rate is the lowest among other municipalities, nearly half the amount charged in Edmonton

Furthermore, analysts recognized that modifications to the rate structure can be effective in encouraging water conservation to reduce strain on limited water resources.

* Analysts compared Medicine Hat, Red Deer, Lethbridge, Calgary and Edmonton
Why is water conservation important in this rate design? 

Water conservation is important in both the City’s Environmental Framework and Water Shortage Management Plan.

Data indicates that Medicine Hat uses much more water per capita than other Alberta municipalities.

Graph of Alberta Residential Water Consumption per Capita

Source: City of Lethbridge

Residential customers consume the vast majority of our water. 

Graph showing water volumes by customer class

In the warmer months, the volume of treated water used far exceeds the volume at the sewer plant, which indicates water is being absorbed or evaporated rather than going down pipes. 

Graph showing Water and Wastewater Treatment Volumes

The tiered summer rates and the Environmental Conservation Charge are intended to incentivize using less water.
What are the different customer classes? 

There are five different customer classes for the water utility:

  1. Commercial/Industrial Consumer includes Agricultural (Greenhouse), Commercial, Institutional facilities (Hospital, Assisted Living / Long Term Care), Manufacturing and Schools.
  2. Apartments/Multi Unit Dwelling Consumers includes
    1. condominiums, apartments, row housing, 5-plexes and greater, townhouses with individual meters or one or more house meters, and
    2. mobile home parks that do not have individual meters.
  3. Residential Consumer includes residential dwellings, duplexes, 4-plexes and mobile homes with individual water meters.
  4. Seasonal Service (Non-residential Irrigation Consumers) includes irrigation meters used for metering water usage with irrigation/sprinklers whether installed year-round or installed and removed on a yearly basis.
  5. Regional Consumer includes Cypress County, the Green Valley Water Association and the Roytal Water Users’ Association, regardless of whether the water purchased by these Consumers is used inside or outside the corporate boundaries of the City of Medicine Hat, and any other Consumer purchasing water for use outside the corporate boundaries of the City of Medicine Hat.
What is a base rate? 

A base rate refers to the fixed charge to provide water service. Even if you never turn on your tap, you still have infrastructure supplying your property (pipes, water treatment plant, booster stations, etc.) that will need to be maintained or replaced over time.

It shows up on your utility bill as a daily service charge.

Understanding your utility bill
What is a variable rate? 

The variable rate for water is your consumption (usage) charge. This is how much you pay per cubic metre of water you use. It shows up on your utility bill as a consumption charge per cubic metre.

This is where the tiered structure comes into play. The new Environmental Conservation Charge is also a variable rate based on the amount of water you consume.

Understanding your utility bill
What is meter size and how do I know how big my meter is? 

A water meter is a device used to measure the volume of water usage. It records the amount of water that flows through a pipe, typically in cubic meters or gallons.

The size of a water meter is determined by several factors, like:

  1. the amount of water that needs to pass through the meter
  2. the diameter of the pipe where the meter will be installed
  3. the desired water pressure
  4. the total number of water fixtures (like faucets, showers, etc.) in the building

In Medicine Hat, water meters range in size from 15 mm (5/8 inch) to 250 mm (10 inch).
How does the tiered rate structure work? 

The tiered rates apply to residential customers only and are effective from April 1 to October 31 each year.

Example:

  • Customer 1 uses 15 cubic metres of water in a month. Because their usage remains within the Tier 1 threshold, they are charged the Tier 1 rate.
  • Customer 2 uses 35 cubic metres of water in a month. They will pay the Tier 1 rate for the first 20 cubic metres, and the Tier 2 rate for the remaining 15 cubic metres.
  • Customer 3 uses 50 cubic metres of water in a month. They will pay the Tier 1 rate for the first 20 cubic metres, the Tier 2 rate for the next 20 cubic metres, and the Tier 3 rate for the remaining 10 cubic metres.

 

 Consumption
(m3)		Tier 1
0-20 m3		Tier 2
21-40 m3		Tier 3
>40 m3
Customer 1 15 15 - -
Customer 2 35 20 15 -
Customer 3 50 20 20 10

A single rate will be in effect from November 1 to March 31 annually.