Rates – Water – True-Up of Interim and Final Rates
In this decision the AUC considered an application from Blazer Water Systems Ltd. (“Blazer”) concerning the true-up of interim and final rates for the period January 1, 2019, to October 31, 2019. The AUC approved Blazer’s application. However, the AUC directed Blazer to recalculate the monthly true-up riders, and implement the true-up over an 18-month period instead of Blazer’s proposed 12-month period.
On November 22, 2018, the AUC issued Decision 22319-D01-2018, in which the AUC approved Blazer’s existing rates as interim rates beginning January 1, 2019. On October 9, 2019, the AUC issued Decision 24418-D01-2019, approving Blazer’s final rates for 2019 and 2020, and directing Blazer to file an application with the AUC concerning the true-up of interim and final rates for the period January 1, 2019, to October 31, 2019.
The total amount owing from Blazer to 103 Lynx Ridge Estates potable water customers, and three additional customers who were on the same interim rates as Lynx Ridge, was $11,152.93. The amount owed by 109 potable water customers in the Bearspaw Village and Blue Ridge Rise co-ops to Blazer was $16,850.30. The amount owed by the remaining 307 potable water customers to Blazer was $161,655.31.
With the exception of customers who moved from their service address, Blazer proposed to collect amounts owing from customers and refund amounts owed to customers over a 12-month period on a per service address basis by dividing the amount owing or owed for each customer by 12.
Given that Blazer filed the true-up amount owing to the Lynx Ridge condominiums in this proceeding, and confirmed that this amount was refunded, the AUC found that Blazer complied with its true-up requirements as it concerned the Lynx Ridge condominiums.
Individual True-Up Riders
Given Blazer’s relatively small customer base, the fact that Blazer had already done the necessary work to calculate individual true-up riders, and the disparity in consumption amounts and subsequent amounts owing for refund or collection, the AUC agreed that individual true-up riders were just and reasonable. While this meant that some customers would face significantly larger collections than others, the AUC acknowledged that these collection amounts were directly tied to the volume of customers’ water consumption. It would be unreasonable in this circumstance to ask customers who consume lower volumes to pay more than their calculated share of the true-up amounts, effectively cross-subsidizing higher consumption customers. For these reasons, the AUC approved Blazer’s proposal to apply the true-up riders on an individual, customer by customer basis.
Rate Shock and Term of True-Up Collection
Blazer also acknowledged that the proposed individual rate riders would result in an increase to the average monthly interim rates greater than 10 percent. However, Blazer noted that the individual rate riders would represent an average monthly rider of $13 for Bearspaw Village and Blue Ridge Rise customers, and $35 for other potable water customers and submitted that these amounts would not represent an undue hardship for Blazer’s customers. Blazer added that it operated on interim rates since at least January 2019 and that to prolong true-up collection would mean Blazer would not be paid its approved rates in full for a period exceeding three to four years.
The AUC noted that it typically considers any rate increase greater than 10 percent to constitute rate shock. Although no customers objected to Blazer’s application or even filed statements of intent to participate on the record of this proceeding, the AUC indicated it must still consider the rate shock implications of Blazer’s proposed true-up period. The AUC acknowledged that Blazer operated, and continues to operate, under a revenue shortfall. However, the AUC also noted that Blazer was already granted a significant rate increase in 2019, which itself could have been considered to constitute rate shock. Further, the rates approved in Decision 24418-D01-2019 were for a test period ending on December 31, 2020. The AUC stated that Blazer may request new rates at that time. For these reasons, and in light of the current economic climate in Alberta due to the COVID-19 pandemic, the AUC indicated it is not prepared to approve another rate increase of the magnitude proposed by Blazer. Accordingly, the AUC directed Blazer to recalculate the monthly true-up riders, and implement the true-up over an 18-month period.