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Salt Box Coulee Water Supply Company Ltd. Decision on Preliminary Question Application for Review and Variance of Decision 24295-D02-2020 2020 Final Rates, AUC Decision 25842-D01-2021

Link to Decision Summarized

Rates


In this decision, the AUC denied the application by Salt Box Coulee Water Supply Company Ltd. (“Salt Box”) for review and variance of findings in AUC Decision 24295-D02-2020 (the “Decision”). The Review Panel upheld the Decision on all grounds of review, including (i) the setting of fixed and variable rates of Salt Box; (ii) the denial of master meter installation costs; (iii) the setting of the amount of well inspection costs; (iv) the denial of the costs of fencing; and (v) the denial of a request for legal fees.

Introduction

Following the filing of the review application from Salt Box, nine statements of intent to participate were received from individual Salt Box customers and from representatives of the two water cooperatives served by Salt Box: Calling Horse Estates Co-operative Association Ltd. (“CHECAL”); and Windmill Water Co-op Ltd. (“Windmill”).

In this decision, the members of the AUC panel who authored the Decision were referred to as the “Hearing Panel”, and the members of the AUC panel who considered the review application were referred to as the “Review Panel.

The Review Panel addressed the first stage of the two-step review process in which it decided if there were grounds to review the Decision.

Grounds for Review and the Original Decision

Did the Hearing Panel Err in Setting the Fixed and Variable Rates of Salt Box

Salt Box argued that the Hearing Panel had erred in setting the variable water rate from $1.62 m3 without consultation with the utility and in not reviewing plant and license capacity issues. Salt Box argued that it could not function properly at the rates set by the AUC in the Decision. It added that the variable rate would have negative implications on water usage.

Review Panel Findings

In the original proceeding, Salt Box had proposed fixed monthly rates of $120.00/month for all customers and use (variable) charges of $5.50/m3 for residential customers and Windmill Water Co-op, and $5.22/m3 for CHECAL. Salt Box argued that it did not have a large enough fixed fee.

The Hearing Panel found that the fixed fee of $120/month would provide greater revenue stability to Salt Box and minimize monthly billing variations for residential customers. Accordingly, it accepted the fixed monthly fee.

Based on a revenue requirement of $137,482, a total of 74 end-use customers, and a fixed charge of $120/month, the Hearing Panel found that the revenue requirement not otherwise recovered through the fixed charge, which amounted to $30,922, would be recovered through a variable water charge. The Hearing Panel used the annual consumption information available in the original proceeding of 19,175 m3. As a result, it approved the resulting variable charge of $1.62/m3.

The Review Panel found no error on the face of the Decision in setting the fixed and variable water charges. The Decision showed that the Hearing Panel considered the request of Salt Box for proposed fixed and variable rates and it set just and reasonable rates based on the evidence before it. Salt Box’s request to review the Decision with respect to the fixed and variable rates was denied.

Did the Hearing Panel Err in Denying Master Meter Installation Costs

Salt Box argued that the Hearing Panel erred in law by failing to approve the costs associated with installing a master meter to measure Windmill’s consumption. Salt Box stated that it needed the master meter to correctly bill Windmill. Salt Box requested that the master meter be installed and that the costs associated with construction be paid by Windmill or through the funds that Windmill needed to pay for outstanding usage.

Review Panel Findings

The Review Panel reiterated the Hearing Panel’s finding that there was competing information on the issue of metering inaccuracies.

The Review Panel noted that Salt Box’s ability to bill Windmill was not contingent on the installation of a master meter, as the bills were based on a calculation of the consumption of water. While the Hearing Panel accepted the benefits of installing a master meter, it was not convinced that there was a metering issue to justify the capital expense at the time.

Salt Box’s request to review the original findings in relation to costs for the installation of a master meter was denied.

Did the Hearing Panel Err in Setting the Amount of Well Inspection Costs

In the Decision, the Hearing Panel had stated that it considered ongoing inspections necessary to understand and forecast future maintenance expenses. Salt Box had provided two different quotes in relation to well inspection costs. The Hearing Panel only approved one of the quotes for well inspection, in part to avoid an apparent duplication of services.

In this proceeding, Salt Box submitted that the Hearing Panel had erred in limiting its approval to well inspection costs to the one quote. It submitted that additional amounts should have been approved for expected work.

The Review Panel could not conclude that there had been an error in fact, law or jurisdiction in the Hearing Panel’s finding that ongoing inspections were necessary to understand and forecast Salt Box’s future maintenance expenses. The Review Panel stated that Salt Box’s desire to have other work completed at the same time as the inspections did not result in an error in the Decision.

The Review Panel denied Salt Box’s request to review or vary the Hearing Panel’s finding on the approval of well inspection costs.

Did the Hearing Panel Err in Denying Costs of Fencing

Salt Box argued that the Hearing Panel had made an error in denying costs of fencing around Salt Box’s water distribution plant. It argued that, because fencing was a required safety measure, the AUC did not have the authority to deny these costs. Salt Box submitted it required the fencing to prevent obstacles to its operation of the plant.

The Review Panel found that this issue had been addressed in the Decision, that Salt Box did not provide or rely on any new evidence, and that it was not the role of the Review Panel to rehear evidence that had been properly considered by the Hearing Panel.

The Review Panel explained that, under the Public Utilities Act, the AUC’s authority extended to determining the just and reasonable rates for a public utility. This included capital requirements, such as costs for fences, that are included in a public utility’s rate base. The AUC noted it does not adjudicate disputes over access to property. It noted that future access disputes should be resolved among the parties or through the courts.

The Review Panel found that Salt Box had not demonstrated the existence of an error of fact, law or jurisdiction that could lead the AUC to materially vary or rescind the Decision. The request for review on this basis was denied.

Did the Hearing Panel Err in Denying a Request for Legal Fees

Salt Box noted that it incurs legal costs during its operations, including defence costs for third-party actions and regulatory costs. CHECAL stated that customers should not be responsible for legal defence costs for third-party damages.

The Hearing Panel had weighed the recovery of $12,000 in legal fees requested by Salt Box. In the Decision, it had determined that while legal fees could be included as part of a utility’s revenue requirement, however the information provided in the original proceeding showed, significant uncertainty related to the amounts.

The Review Panel found that Salt Box did not clarify the information related to the legal fees. Accordingly, the request for review of the findings related to legal fees was denied.

Decision

The Review Panel found that the requirements for a review of the findings in Decision 24295-D02-2020 had not been met and, accordingly, dismissed the application for review.

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