The City of Lloydminster has entered into an amending raw water supply agreement with Cenovus Energy.
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Specific details surrounding the agreement were not provided at the Jan. 19 regular council meeting when the item was presented. The city, however, says discussions between the two parties have led to amendments being made to the agreement.
“Through discussions, city administration and Cenovus Energy Inc. representatives completed a review of the current agreement and are recommending amendments to the Raw Water Supply Agreement,” said Don Stang, executive manager of operations, City of Lloydminster.
“Cenovus and the city have reached a mutual agreement, which upon council approval and final execution, shall result in a stable operating rate per cubic meter of water and slight changes on how sustaining capital projects are funded. Contract value over the term of the contract remains unchanged and alignment for a long-term continuation of water supply to the upgrader site.”
Stang says the original agreement was complicated, creating difficulties in calculating its rate per cubic metre of water.
“There’s about 15 different factors that get taken into consideration when coming up with that rate,” Stang explained. “Part of that amendment is to get something more simplified where it is a base rate per cubic metre. Through the duration of the contract, there’s inflation tied to that. It really is to simplify something that takes our finance team a significant amount of time to try and go through; all the calculations and put a rate together.”
The new rate has also taken into consideration the cost of sustainable capital under $250,000.
“All sustainable capital under $250 (thousand) would be included in that rate. Any sustainable capital on the infrastructure that services the raw water to Cenovus under that $250K would be paid by the city. Funds collected through the cubic metre rate will be taken in to use to pay for those,” he said.
The city says the money collected through the rate will be enough to cover capital costs.
“We’re confident the amount, the additional amount we’re going to collect in the per cubic metre rate, will more than suffice. It’s a fair agreement for both parties,” said city manager Dion Pollard.
Within the agreement, capital above $250K remain paid for by both the city and Cenovus.
“There is a percentage of cost that gets allocated to Cenovus and to the city. That’s based on volume of cubic metres used by each of those parties in the year, for each calendar year,” said Stang.
The city is working on a new long-term water agreement with Cenovus.
“Within the amending agreement, we do have verbiage in there that both the city and Cenovus will commit to a long-term new agreement by 2030 so we get some long-term security for both their water supply and the city’s,” said Stang.
Council approved entering into an amended raw water supply agreement with Cenovus Energy.
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