Key governance recommendations from a 2015 water system review were “consciously excluded” from a city council summary, ones that could have influenced Calgary’s utility decisions in the decade before the Bearspaw South feeder main ruptures, a new provincial inspection concluded.

Inspector David Goldie’s 125-page report was made public Thursday, and with it were 20 recommendations covering governance, asset management, financial management, response to outside reviews, and the structure of the utility.

On the final point, the report author recommends creating an arm’s-length corporation owned by the City of Calgary, with a preference for evaluating folding it into Enmax, the city’s wholly owned electricity subsidiary.

The report bears similarity to the Bearspaw Independent Review Panel report, which outlined a systemic issue over the past 20 years of poor water utility oversight and asset management.

It dug deeper into the disconnect in the transfer of information between city administration, under then-city manager Jeff Fielding, and city council, which it deemed the appropriate oversight body.

The report’s author, David Goldie, said that his central finding was that failures went beyond the weakness in the Bearspaw South Feeder Main.

“The city had experienced staff, plans, and risk assessments, but known risks did not consistently lead to timely inspections, funded actions, or clear accountability,” he said.

“Council did not consistently receive a complete picture of those risks and the consequences of delaying work over many years; weaknesses in the utility’s planning led it to seek less capital investment than was needed to maintain reliability and build adequate redundancy.”

One of the key findings was that five of nine recommendations from a 2015 report from utility consultant Raftelis were kept from Calgary city council. Among those excluded recommendations were clearer financial accountability inside the utility, the creation of a utility commission, ending the return-on-equity transfer to the City of Calgary, publishing financial statements, and providing long-term projections.

The report called the handling of that review, “irregular, improper and improvident,” the most significant descriptions allowed under the Municipal Government Act.

“Administration was entitled to disagree with Raftelis, but not to prevent Council from considering major governance choices,” the report reads.

“A decade later, the Independent Review Panel and this Inspection independently identified many of the same institutional safeguards, underscoring the continuing significance of the governance and financial-accountability issues Raftelis had identified.”

The report also mentions that former mayor, now Alberta NDP leader, Naheed Nenshi, and his Chief of Staff Chima Nkemdirim, received a copy of the Raftelis report and were included in advanced briefings. There was no evidence to establish that Nenshi directed the exclusion of report material sent to council, according to the report.

Alberta Municipal Affairs Minister Dan Williams said that he wouldn’t speculate on future corrective action.

“I have reviewed the report initially, but I have not made any final decisions on whether or not further action is appropriate. And I will take a matter of months to consider the report in its full,” he said.

“I am committed to a fair and transparent process when it comes to the independent inspection and any future directives that may or may not come from it.”

Omissions at the ‘heart of council’s role’: Report

The altered report that eventually made its way to Calgary city council at that time “materially changed the character of the Raftelis review.” According to the Inspector’s report, the report to council on the Raftelis review didn’t fairly disclose that Raftelis examined the water utility’s governance and management structure – and it originally listed those structural reforms as first and second.

It outlined the process under the Municipal Government Act that describes the flow of information from city administration to council, and that they don’t require administration to provide every consultant recommendation without analysis.

“Administration must exercise judgment about what information Council needs,” the report states.

“In this case, however, the omitted material went to the heart of Council’s oversight role. The recommendations should have been disclosed and debated, with Administration free to explain why it agreed or disagreed.”

Goldie’s report also highlights a similar finding from the independent review panel, which is the significant underspending on capital upgrades to Calgary’s water infrastructure between 2006 and 2024. Over those 18 years, the report said that capital spending averaged about 35 per cent below approved budgets.

“Such underinvestment may have been a contributing factor to high water leakage rates and successive critical failures,” the report reads.

“Underinvestment in capital infrastructure can result in reduced service levels and low reliability. Underinvestment can also result in significant rate escalation when the Utility needs to address urgent repairs and catch up on its capital maintenance program. This can negatively impact the affordability of utility services.”

It also notes that the spending wasn’t limited by available capital; it was a problem of getting the work done.

Consequently, Calgary city council recently approved a proposal to hike water rates by nearly 75 per cent over the next four years to help catch up to the projected water infrastructure deficit.

The contracted cost of the report was $1.2 million.

More to come…