Water Rates – Appeal
In this decision, the AUC considered whether the Village of Wabamun (“Wabamun”)’s water rates were discriminatory because Mr. Tan’s apartment was placed in a rate class with a higher rate as opposed to other rate classes that had similar characteristics and offered a lower rate. The AUC found that the rate charged to Mr. Teik Tan’s apartment was not discriminatory.
Pursuant to the Municipal Government Act (“MGA”), Wabamun has the power to pass bylaws to regulate and control water and wastewater services and usage within the village. From 2014 to 2019, Wabamun refined its water and wastewater bylaws to include new rate class definitions in addition to splitting the residential rate class into several subcategories.
Bylaw No. 11-2014, effective June 17, 2014, established a single rate class for residential customers where single family or multi-residential customers paid a rate of $40 (per residential unit) in addition to the water consumption fee of $2.30 per cubic metre. The bylaw defined a residential unit as:
… separate dwelling units which are designed and used exclusively for living accommodations and have separate outside entrances. Without restricting the generality of the foregoing, this includes but is not limited to apartments, condominiums, each half of a duplex, basement suites. For reference a four-plex has four residential units, a duplex has two residential units and a building with 12 apartments has 12 residential units.
Bylaw No. 15-2014, effective August 19, 2014, split the residential rate class into single family and multi-residential categories. In addition to the water consumption fee, single family residential customers were charged a rate of $58, while the multi-residential customers were charged a rate of $40 per residential unit.
In Bylaw No. 03-2017, effective July 18, 2017, the multi-residential rate class was further divided into small multi-residential (1 to 4 units), medium multi-residential (5 to 10 units) and large multi-residential (11 to 30 units), with rates of $40 per unit, $30 per unit and $25 per unit, respectively. In addition to the water consumption fee of $4.30 per cubic metre, Bylaw No. 03-2017 also included definitions for apartment building, hotel and motel as follows:
Apartment building: a group of rooms in one building, designed for use as a dwelling, furnished or unfurnished, for stays longer than one night, ie monthly or annually. For purposes of billing these are considered multi-residential units.
Hotel and motel: a temporary sleeping place for people traveling, usually furnished and has daily rates for unit rates.
Bylaw No. 06-2019, passed on March 19, 2019, increased all rates by $25 effective April 1, 2019, with the water consumption fee remaining unchanged at $4.30 per cubic metre, resulting in the following rates:
Under the current rate structure, Wabamun considers Mr. Tan’s 17-suite apartment as a residential customer and classifies it as part of the multi-residential (11 to 30 units) rate class.
Mr. Tan submitted a complaint to the AUC, arguing that the rate for his apartment was higher than the rate charged to customers in other rate classes, such as hotels and motels after Bylaw 06-2019 was passed. The AUC determined that this matter would proceed as a formal appeal.
AUC Jurisdiction Under Section 43 of the MGA
The AUC’s jurisdiction over Wabamun’s water rates arises from section 43 of the MGA, which states:
43(1) A person who uses, receives or pays for a municipal utility service may appeal a service charge, rate or toll made in respect of it to the Alberta Utilities Commission, but may not challenge the public utility rate structure itself.
(2) If the Alberta Utilities Commission is satisfied that the person’s service charge, rate or toll
(a) does not conform to the public utility rate structure established by the municipality,
(b) has been improperly imposed, or
(c) is discriminatory,
the Commission may order the charge, rate or toll to be wholly or partly varied, adjusted or disallowed.
The AUC has authority pursuant to section 43 of the MGA to determine whether rates, tolls or charges themselves are discriminatory, as opposed to assessing a rate structure.
The AUC found in Decision 2010-462 that discrimination may exist where there is “… a failure to treat all persons equally where no reasonable distinction can be found between those favored and those not favored.”.
In assessing whether any service charge, rate or toll is sufficiently discriminatory so as to cause the AUC to act pursuant to section 43 of the MGA, the AUC found it important to assess the presence or absence of any rationale or logic underlying the charges applied by a municipality to a customer and found it important to understand the whole context by which rates, tolls and charges are being imposed. Effectively, the AUC indicated it must determine whether the appellant has been placed in the correct rate class, and further determine whether reasonable distinctions may exist between customers in different rate classes to support any inconsistent treatment.
The AUC noted that since the passing Bylaw No. 11-2014, Wabamun has considered residential units to include apartments. When the concept of residential units was further refined in Bylaw No. 15-2014 and then defined in Bylaw No. 03-2017, apartments continued to remain under the residential category.
The AUC noted that Bylaw No. 03-2017 defined an apartment to be a group of rooms in one building for stays longer than one night (i.e., monthly or annually). In contrast, a hotel or motel is a temporary sleeping place where daily unit rates are charged. The AUC, therefore, found that Wabamun took sufficient consideration in creating distinct and easily understandable rate classes.
The AUC found that, given that the rate classes are clearly defined and distinguishable, and pursuant to Mr. Tan’s description of his apartment building, the apartment properly fell under the rate class for large multi-residential (11 to 30 units). Further, the AUC found that there was a reasonable distinction between hotels and motels and the multi-residential rate class, such that differences in rates are justified. On this basis, the AUC found that the rates charged by Wabamun to Mr. Tan were not discriminatory.
The AUC found that the rate charged to Mr. Teik Tan’s apartment was not discriminatory and dismissed Mr. Tan’s appeal.