Rates – Review and Variance
In this decision, the AUC determined whether to review and vary its calculation of the rate rider to recover the costs of the ultraviolet (“UV”) light system upgrade approved in Decision 24295-D01-2019. The decision addressed Salt Box Coulee Water Supply Company Ltd.’s (“Salt Box”) request for a rate rider to recover the costs associated with its UV system upgrade, which was filed as part of Salt Box’s 2019 final rate application. Mr. Robert Tupper applied for a review of Decision 24295-D01-2019, claiming that the AUC erred in calculating the ultraviolet system rate rider by basing it on the incorrect number of lots in Calling Horse Estates. The AUC denied the review application.
Introduction and Background
Salt Box is an investor-owned water utility that provides water transmission service to Calling Horse Estates Co-Operative Limited (“Calling Horse”). Salt Box provides a single monthly bill to Calling Horse for water transmission service and Calling Horse, in turn, bills each of its members for water service.
On December 16, 2019, the AUC issued Decision 24295-D01-2019 (the “Rate Rider Decision”), finding that all Salt Box customers would benefit from a proposal by Salt Box to construct and install a UV light system upgrade and should share equally in the costs. The AUC approved the UV system rate rider amounts to be recovered from Salt Box’s customers. In calculating the rate rider amount for the UV system upgrade, the AUC considered Salt Box’s monthly mortgage payment associated with the construction, commissioning, and financing of the UV system upgrade. The AUC ordered that the rate rider amount for Calling Horse, one of Salt Box’s customers, was to be set at $870.00/month based on 15 lots in Calling Horse Estates.
On January 15, 2020, the AUC received an application from Mr. Tupper requesting a review and variance of the Rate Rider Decision. The review application was filed under Section 10 of the Alberta Utilities Commission Act and Rule 016: Review of Commission Decisions. The AUC designated the review application as Proceeding 25276.
In this decision, the AUC member who authored the Rate Rider Decision was referred to as the “Hearing Panel” and the AUC member who considered the review application was referred to as the “Review Panel.”
AUC’s Review Process
The AUC’s authority to review its own decisions is discretionary and is found in Section 10 of the Alberta Utilities Commission Act. That act authorizes the AUC to make rules governing its review process and the AUC established Rule 016 under that authority. Rule 016 sets out the process for considering an application for review.
The review process has two stages. In the first stage, a review panel must decide whether there are grounds to review the Rate Rider Decision. This is sometimes referred to as the “preliminary question.” If the review panel decides that there are grounds to review the decision, it moves to the second stage of the review process where the AUC holds a hearing or other proceeding to decide whether to confirm, vary, or rescind the original decision. In this decision, the Review Panel decided the preliminary question.
Grounds for Review and Hearing Panel Findings
The Review Panel noted that the issue of the number of serviced lots for Calling Horse’s customers is a question of fact. For the Review Panel to grant a review, Mr. Tupper had to demonstrate that the Hearing Panel’s error is apparent on the face of the Rate Rider Decision, or otherwise exists on a balance of probabilities and that the error could lead the AUC to materially vary or rescind the Decision.
Section 4(d)(i) Grounds – Errors of Fact, Law or Jurisdiction
In the Rate Rider Decision and in Decision 21908-D01-2017 (which set interim rates for Salt Box, and approved the rate rider), the Hearing Panel and the AUC, respectively, based interim water rates for Salt Box on a total of 74 customers, which included 15 customers of Calling Horse.
In the application for review, Mr. Tupper noted that the Hearing Panel based the rate rider amount for Calling Horse on 15 customers. However, the evidence indicated there were a total of 17 lots in Calling Horse’s service area. Mr. Tupper stated that six members do not receive their water from Calling Horse and, “one of these lots has been off the system for nearly 40 years, the others since July 2018. The calculation the AUC has used based the rate rider on 15 lots, it should be 11 lots.”
Mr. Tupper’s submissions in the proceeding leading to the Rate Rider Decision are found in an exhibit in that proceeding and are quoted below:
Area 4 – Geographically, Calling Horse does have 17 lots but only 16 have been tied into the CHECAL [Calling Horse] distribution system for the last 35 years. Last summer we lost another 5 residents who drilled their own water wells due to uncertainties with AUC and Salt Box, in particular, AUC Proceeding 21908.
Another Calling Horse Estates resident stated that there are 17 households in Calling Horse Estates, but only 11 households are currently being serviced by Salt Box’s water source. The resident argued that the AUC should use the 11 households and the 31 people living in those households. He added that Calling Horse is invoiced once per month by Salt Box, and therefore in all respects, Calling Horse is one customer to Salt Box. In addition, the piping from the pumphouse to each individual resident is owned, maintained, and operated by Calling Horse.
The Review Panel was not persuaded that the Hearing Panel’s decision to base the UV system rate rider on 74 lots, including 15 lots for Calling Horse, results in, or constitutes, a reviewable error.
The evidence on the number of lots before the Hearing Panel and the response submissions of Salt Box were on the record that led to the Hearing Panel’s Rate Rider Decision. The Review Panel considered that the Hearing Panel was alive to the issue of the number of customers or serviced lots at issue when the Hearing Panel stated that “In Decision 21908-D01-2017, the AUC based the interim rates on 74 customers. The AUC will continue to take a conservative approach and base the monthly amount on 74 customers that, to date, are serviced by Salt Box.” (emphasis added) The Review Panel considered that the Hearing Panel’s reference to a conservative approach to calculating the UV system rate rider acknowledged that the number of lots serviced was reasonable for calculating the rate rider, based on the evidence and submissions by parties to the proceeding. There was no error in the absence of a specific reference to the submissions of parties in allocating the costs to customers in the Rate Rider Decision.
Another intervener (Mr. Magus) filed a February 10, 2020 statement of intent to participate and an attached letter disagreeing with charges under a previous contract and disputing amounts for Salt Box system upgrades between June 2015 and June 2017, including UV system upgrades. Mr. Magus alleged that these charges may result in potential duplication of UV system charges in the Rate Rider Decision. He submitted that Salt Box had not provided audited financial statements to support the UV system upgrade and that as a result, the Hearing Panel did not consider all of the relevant facts in setting the UV system rate rider. Neither the SIP nor the letter indicated disagreement with the number of customers that were used in the allocation of the UV system rate rider, which is the subject of this review application.
The AUC addressed the contractual agreement and the past system upgrade charges in Decision 23401-D01-2018. Given the findings in Decision 23401-D01-2018 and the Rate Rider Decision, the Review Panel found that the AUC has already substantively addressed the concerns raised by Mr. Magus in his submissions and there was an opportunity to present submissions on Salt Box’s UV system rate rider and on the relevance of audited financial statements for setting final rates in Proceeding 24295. As such, the Review Panel considered that it was not necessary to provide findings in response to Mr. Magus’s SIP and letter because he raised issues beyond the subject matter of the review and these were heard in earlier proceedings.
The Review Panel found that Mr. Tupper did not meet the requirements for a review of the findings of the Hearing Panel in Decision 24295-D01-2019 and the application for review was dismissed.