'Honour system' reporting allows contractors to steal Ottawa city water

'Honour system' reporting allows contractors to steal Ottawa city water
Posted on July 29, 2014 | Knoxdale-Merivale Council | Written on July 24, 2014
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Author's Note:

Author's Note:

Since writting this letter, it was officially confirmed Monday that our written requests regarding the usage of flusher hydrants and hydrants in general was forwarded to the Auditor General.

It will be up to him to decide whether or not to engage in a full scale audit.

Councilor Rick Chiarelli
Chair, City of Ottawa Audit Committee

Dear Mr. Chiarelli,

A few weeks ago a member of KM Council approached Councilor Keith Egli’s office to establish whether Water Contractors are indeed observing the terms of their permits to take water from various hydrants throughout the city.  The idea for this experiment evolved from a conversation with City Staff that pointed to an “honor system” used for billing purposes. Contractors with valid permit are obliged to report water usage within 24 hours or face fines.  In a five minute period two transports were observed and photographed at the intersection of Hunt Club and Knoxdale.

After roughly ten days we were told that, in fact, only one of the contractors had abided by the “ honor system” and properly reported their usage of the water. Taken directly from the correspondence is the following quote:

"I have spoken to staff with regards to the monitoring of the water usage at the Knoxdale/Hunt Club fire hydrant, and according to their records, one out of the two private companies reported their usage with the City. The other has been sent a witness warning letter, advising them to report their usage or be faced with a fine.”

We have researched the "flusher permits" issue and would like to share our concerns with you.  City of Ottawa is constantly working on improving water loss control,  “unaccounted for water” (UFW) and lowering Infrastructure leakage index. Those numbers are improving albeit too slowly in view of increasing cost of water to Ottawa consumers. UFW ratio was lowered from 25% between 1984-2000 to around 16% in 2009. While we have no data after 09 we hope it has dropped even further in the recent years. At the same time, the cost of water to residents increased by 14.5% in 2014 (with additional increases planned). It seems that residents did their duty to decrease water consumption much faster than the city was able to decrease UFW due to leakage from pipes, and/or due to illegal connections, under registration of water meters or non-reporting.

City of Ottawa has 19,071 fire hydrants (Budget 2014). Some of those are designated as so-called flusher hydrant (not sure how many).  Hydrants are not monitored or equipped to log and track individual use.

As per Ottawa By-law (2013-360) hydrants shall not be used for any purpose other than fire fighting purposes unless approved by the Deputy City Manager. A 2005 audit document recommended improved compliance (reporting and payment) by flusher hydrant users including the cost-effectiveness of creating dispensing stations and the use of stronger By-Law enforcement.  The Flusher Hydrant Program is an honour-based system, relying on the user to self-report water usage. It is seemingly expected that some users will not report some of their usage. Staff was to quantify theft and conduct assessment of cost/benefit of constructing bulk water dispensing stations through the City to ensure full metering, regulated water withdrawal flow rates, surge protection and backflow safety features.

The dispute around water hydrant reported in media (2009) indicated that the City can see the levels for the whole area, but can't see it by (each hydrant) and doesn't know who's using which hydrants. We could not find references or the follow up to the bulk water strategy currently being implemented in other cities that involves restricting hydrant use by introduction of bulk water stations with swipe card system. Interestingly the fees for using flusher hydrants were decreased from $282 (2012), $288 (2013) to $248 in 2014. Was it done to increase compliance? Naturally we are curious what motivated the decrease.

Our members and their respective community associations are deeply troubled by the lack of oversight and non-compliance. Considering the rapid rise in water rates that members of council have approved over the last few years we can only imagine how annoyed you must feel with the knowledge that the rate increases were actually subsidizing the theft of water by some municipal contractors.

The potential magnitude of this problem is overwhelming; two contractors, within a five minute span, at one hydrant and only one of them reported usage and paid.  Not knowing the extent of this problem we cannot possibly extrapolate what the ratio would be when all flusher hydrants and all contractors are taken into account. Environmental Services have access to Flusher Hydrant Database including location,  billing,  amount of water used, customers etc. Was the theft rate ever quantified as recommended?

Furthermore, we cannot understand how this has fallen off city staffs radar ? Considering the potential revenue involved it seems reasonable to assume that these hydrants would be observed, monitored or possibly metered.  There are technologies available.

KMC respectfully requests that you forward our concerns to the attention of Auditor General office for investigative purposes. In a meantime, we would ask that our councillors contact city management in order to quickly impose stricter conditions on contractors. We also anticipate that you will follow up with us with respect to a fine imposed on the contractor observed in this case and that the firm be red flagged for future city tenders. We firmly believe that this behaviour contradicts the willingness of taxpayers to pay their share of what it costs to produce and distribute water in this fine city, and we expect our councillors to share our position.

 Sincerely,

Agnes Warda, Chair
Knoxdale-Merivale Council of Community Associations (KMC)

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The Knoxdale-Merivale Council of Community Associations (KMC) is a community driven ward council in Ward 9 (Nepean) in the City of Ottawa. Moving West to East the community association members of the KMC are: Trend-... More

Comments

Who is running our city? Why is no one ever held accountable for its poor management? This would be funny if it weren't so sad and true...

Bill Toms

Where there is water theft taking place it costs everyone who pays their water bills. Perhaps the City should only allow a few hydrants to be used in this manner and post some cheap surveillance cameras nearby that are motion activated so there will be proof of who is doing what? With the digital images then police can be called in to do their job and prosecute?

kevin

Prosecute ? It was remarkably difficult to get any kind of emotion from my councilor on this issue, I would have preferred him to be as upset as I was. Clearly city staff pulls the strings and council hangs around for the ride....anybody want a green bin with their glass of water? Bill, appreciate if you emailed a complaint into your councilor. thanks

Another point is that water in fire hydrants is treated. This is water that already has a cost associated with it, yet is being used free of charge by some unscrupulous water contractors.

Erwin

Thank you Agnes and all others involved in this for a thoroughly researched issue. To me, the most damning aspect is: "A 2005 audit document recommended improved compliance (reporting and payment)" -- i.e., this problem has been known for a decade or more and staff and Council have nothing to show for. Council's frugality is selective, it seems.

Ron Benn

At the risk of sounding like I am supporting staff on what looks like a poorly handled situation, it may be that the cost of increasing scrutiny exceeds the expected increase in collections. For example, a motion detector activated camera would have to feed the data to a server, which in turn would have to be viewed by a city employee.

So, in addition to the initial cost of installing the camera, the City would have to pay for an internet connection (wireless vs. hard wire). Let's not forget the recurring cost of repairing the system (for a city that can barely be bothered with fixing potholes). Finally, how many employees would be required to view the video feed, and at what cost/employee? The initial cost of installing the system would be prohibitive. ~19,000 hydrants @ ~$150/unit = ~$2.8 million. The annual cost of running this system is likely over $75K/year, after taking into account the fully loaded cost of an employee, the internet connection costs and the repair costs. Based on these estimated costs, the new employee would have to identify 300 unreported events to cover the operating costs (~$75,000/$250). In order to recover the initial capital cost over 10 years, the system would have to capture another >1,000 unreported events. So, the city would need to identify ~1,400 unreported events per year to come even close to covering the cost of the program. Are there enough UFW events in a year to generate 1,400 unreported events?

We can debate the quantification of the variables, but I doubt that any reasonable sensitivity analysis would generate a business case for the initial capital cost of the system, and the resultant operating costs.

In fact it does appear you are supporting staff. Why shouldn't you? They have a decent track record of sound decision making don't they? I studied your comments and cannot find a single alternative to the current status quo...Could it be that you may be tapped into your neighborhood hydrant too??? I know how tempting it must be considering the water bills folks are getting these days

And here I thought the "Moral Imperative" would be sufficient to bring about change.

Simply put, access to water must be the same for everyone. Anyone who uses city water, whether they be residents, taxpayers, contractors, private and/or public organizations, all MUST be treated equally. This shouldn't be a difficult concept to grasp, but it seems to be for Staff and senior non-management at City Hall.

Here's an idea I put forward on Facebook... Why not build water stations in 3-4 easily accessible locations around the City. I doubt they will cost the $100 Million+ it cost the City to build an oversized bus garage to house the unsafe 'double decker' buses. But, if cost is a concern, then apply a surge charge for commercial users in order to pay for the stations, because these waters stations will be solely for commercial water contractor use.

Is that simple enough for Staff to grasp or would you like me to draw a picture for you as well?

Ron Benn

Insults are cheap when you hide behind an anonymous pseudonym. Rather than debate your non-points, I will merely state that I do not tap into a local hydrant, and that you have not actually refuted the points I made.

The reality is that sometimes the cost of a solution exceeds the benefits achieved. It may be that the status quo is the right decision. Whether staff arrived at that conclusion by accident (broken clock is right twice a day) or by analysis, is a topic for debate.

mike

I can tell you as fact that although there are 19000+ hydrants in the city , there are only 36 Flusher hydrants....

Lorne Cutler

It also appears from Page 135 of the 2014 Ottawa budget that the permit for Flusher Hydrant usage went from $282 in 2012 to $288 in 2013 and then dropped to $248 in 2014. Interesting that while water rates are increasing by about 7% a year, the rate for this has dropped. While there appear to be some new fees charged for water hookup, this seems to be the only change to hydrant fees.

Agnes

The issue was presented to Auditor General and he will proceed with the appropriate action. Perhaps this time something will be done. Just to correct Ron assumptions. There are not that many flusher hydrants in the city (one reference stated 36 having such designation), so the cost of surveillance will not be that prohibitive. Assuming that compliance hovers around 50%, in 2009 savings were estimated at $150,000, with the water rates doubled, it will be near $300,000 every year.

It should also be remembered that hydrants are a line of defense against local fires. Should never be used to dispense water. Relying on automated bulk water dispensing stations can prevent theft. Many smaller cities in Ontario have implemented this idea.