Utilities represent one of the largest part of any Condominium’s budget and is the most difficult to project due to the relatively little control management or the Board have over these costs.  They are affected mostly by weather, economic conditions, government regulation and demographics.  An overrun in this cost areas can have a significant effect on the bottom line of any operating budget and by extension on what the increase will be on future monthly fees.

Natural Gas

Natural gas prices spiked last winter causing many Condominiums to overrun budgets.  The below chart shows the movement in natural gas prices over the last two years demonstrating the effect of the increase last winter.

While the rate increased recently for the upcoming winter, it is still far less than the rates last year and forward contracts for bulk purchases indicated that prices should remain relatively stable for the next twelve months.

It should be noted that Enbridge does not make a profit on the commodity but from the distribution of natural gas and thus this must also be factored in, along with what has been an annual (and significant) increase in the federal carbon tax.

*Does not include the gas rate and consumption 

Hydro

Electricity is a commodity which is highly regulated by the province and thus many of the increases are other than economically motivated.

Over the last twenty years electricity and electricity pricing has become more complicated.  With the move to ‘greener’ solutions the cost has increased largely due to the GLOBAL ADJUSTMENT which pays providers for green electricity.

Throughout the pandemic and over the last two years, the individual rates for electricity have been reduced or held for various periods of time but other components which affect total electricity pricing such as the Ontario Electricity Rebate (OER) have been reduced, implicitly increasing the cost of electricity.

As a result, an allowance for increases in this commodity in a conservative manner is recommended when budgeting

Water

It is anticipated that the rates for water and sewage will exceed current inflation rates and continue due to the City of Toronto’s current financial situation and debt position which is requiring a consideration of increases in all revenue sources, including water and sewage. 

While not all clients fall with the City of Toronto, many municipalities are tied to the City of Toronto’s water facilities at Lake Ontario and thus actions at this level also have similar impact on outlying municipalities.