Reflections is a monthly blog series by Canadian Water Network’s (CWN) CEO Nicola Crawhall. This series is designed for decision-makers navigating complex water-related challenges. It helps leaders stay ahead of change and make informed decisions that shape the future of water in Canada.

It’s budget development time in municipalities, and I am imagining what it would be like to be the head of a large municipal water utility, managing multiple pressures that are pushing costs up and deciding what to propose in response in the middle of an affordability crisis.

Spoiler alert, there is no silver bullet.

Note: Anything in italics is me pretending to be in the head of a big water utility decision-maker. It’s informed conjecture, based on conversations with utility leaders from across the country, but not to be attributed to anyone else, and may reflect regional differences.

I need to support housing

Large municipalities are under intense pressure to deliver housing faster and cheaper. This has prompted some significant changes in authority, immigration policy, and financing to drive this forward.

Development charges (DC) have come under fire for being a key driver of exorbitant housing costs. In some regions, they can account for 25 to 30 percent of a new home’s cost. In March, the federal and Ontario governments announced the Canada-Ontario Development Charge Reduction Program (ODCRP). It aims to reduce DCs by 50 percent for up to three years and in return, provide funding to offset some, but not all, of the lost revenue. Should I go for the ODCRP, or will the revenue loss be too much for our ratepayers to bear? Even with the ODCRP, I’m looking at double-digit rate increases. I think I’d better pump the brakes on my capital delivery.

In late 2024, the federal government announced reductions in the country’s immigration levels by over 20 percent to alleviate pressures on housing, employment, and education. My infrastructure capital plan was based on anticipating steady growth year-over-year, and now we may see negative growth. Should I press the stop button on some growth-related infrastructure projects? Can someone let me know when immigration will increase again?

I need to contain costs in the face of double-digit inflation

The COVID-19 pandemic drove Canada’s consumer price index up to eight percent. This has subsided to about three percent in mid-2026. However, utility leaders have been reporting anywhere from 50 to 200 percent increases in bidding costs for multi-year construction project RFPs. This is due to a combination of inflation, bidders factoring in a hefty contingency for future risk, and, in some markets, a lack of competition due to a consolidation in the sector. How do I explain a 200 percent cost escalation of this project to council? The drivers are beyond my control. Should I break down this big project into smaller ones, or shelve it for now?

I need to pivot procurement due to trade wars

The Middle East war has made oil and diesel prices volatile. Utilities rely on diesel for back up power and some of their fleet. At the same time, 50 percent counter tariffs imposed by the federal government in late August are increasing the cost of select construction materials, including steel and aluminum. So far, the direct impact does not appear to be significant for the water sector. However, the uncertainty about where tariffs may be headed in the future is driving up contract bids (see above). Also, Buy Canadian policies could drive prices up for select materials like PVC pipes that are purchased from the U.S. in some Canadian jurisdictions. How much contingency should I build into my budget if the trade war worsens or I have to pivot away from US supply chains?

I need to replace aging infrastructure before it fails

Reliability of existing infrastructure has moved front and centre since the Bearspaw South Feedermain failures. It sent a clear signal to municipal water utilities across the country that while failures happen, no one wants to be in the headlines for a major infrastructure failure with significant economic and servicing consequences, without any redundancy. How can I use the spectre of a Bearspaw-type failure to convince my Council to invest more in State of Good Repair, replacement, and redundancy in our system?

I need to raise rates, and keep them affordable at the same time

Cost escalation and demands to reduce development charges put direct pressure to raise rates and/or property taxes. This is at a time of great concern over affordability. Particularly in an election year, no municipal councillor wants to advocate for double-digit rate increases. However, cities like Toronto that did raise rates consistently (nine percent over nine years), now sit on comfortable reserves that will allow them to continue to build and repair their system over the next 20 years. I could consider borrowing more. But whether I borrow publicly or privately, it all must be paid back. Is raising rates the only option? What happened to the idea of giving municipalities a share of sales or income tax revenue?

Difficult trade-offs

The dramatic increase in costs and changes in financing options, along with the pressure to keep rates affordable, is creating a fiscally strained and uncertain situation going into budget time. Typical levers are to raise rates, borrow more, and/or slow capital delivery. All these decisions have trade-offs that could affect the current and future reliability of the water and wastewater systems that underpin our cities, and ultimately the housing and growth that they support.

Public utility leaders need to have frank discussions with their ratepayers and elected officials about the need and rationale for increasing rates, while acknowledging and addressing affordability concerns.

Come to Blue Cities—from April 27-28, 2027 in Montreal, Quebec—where these and other challenges facing water utility leaders will be explored, and strategies and solutions will be shared.