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

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)