Water Supply – Terms and Conditions
In this decision, the AUC approved Salt Box Coulee Water Supply Company Ltd.’s (“Salt Box”) terms and conditions (“T&Cs”) of service for Calling Horse Estates Co-operative Association Limited (“CHECAL”), effective January 1, 2021.
Background
Pursuant to directives issued by the AUC, Salt Box filed a water supply agreement dated February 1, 1994, between Salt Box, Calling Horse Estates Limited and Windmill Water Co-op Ltd. (“Windmill”) and proposed T&Cs for CHECAL. In its proposed T&Cs, Salt Box requested the following:
(a) Salt Box’s permission be required before adding or removing homes serviced by CHECAL;
(b) a fixed charge of $120.00 per month and a commodity charge of $5.00/m3;
(c) a water connection charge of $500.00 or $300.00 and a water availability charge of $120.00/month for newly serviced homes;
(d) a two-year notice for termination of service;
(e) a water reconnection charge of $3,000.00; and
(f) disconnection for non-payment within 10 days.
The AUC found that the CHECAL water supply agreement filed, was the best available information for the AUC to establish T&Cs for CHECAL, and certain specific sections of the CHECAL water supply agreement should serve as the basis for Salt Box’s T&Cs with CHECAL. The AUC compiled the relevant sections together with additional sections related to meter accuracy, the goods and services tax and interest and called for comments.
Salt Box provided its comments on the compiled T&Cs stating:
(a) the Commission should ensure that CHECAL has T&Cs for its customers;
(b) a term should be added regarding disconnections with sufficient notice to Saltbox;
(c) if service was to be shut-off for non-payment, this would not occur on an individual customer basis;
(d) Saltbox cannot keep water on hold for a customer of CHECAL in the event of disconnection; and
(e) currently, CHECAL pays its invoices within 10 days and not the 30 days proposed by the Commission.
Findings
In its comments, Salt Box submitted that the AUC should ensure CHECAL has T&Cs for its customers if Saltbox does not have T&Cs directly to CHECAL’s customers. The AUC found that, whilst is appreciated the need for oversight of T&Cs for utility service to end-use customers of the system, CHECAL is organized as a cooperative. The T&Cs between CHECAL and its customers are therefore not within the AUC’s jurisdiction. Water cooperatives and its T&Cs are governed under the Rural Utilities Act, which is governed under the Minister of Alberta Agriculture and Forestry. However, the AUC has the authority to set T&Cs for Salt Box’s public utility service to CHECAL pursuant to the Public Utilities Act, as Salt Box was declared to be a public utility under the AUC’s jurisdiction. In terms of Salt Box’s public utility service, CHECAL is a customer who receives distribution service directly from Salt Box. The T&Cs for distribution service provided to CHECAL is therefore appropriately decided by the AUC.
With respect to the notice required for disconnection of service, Salt Box requested that a term be added to the CHECAL T&Cs to include more notice as this was a problem Salt Box experienced in the past and CHECAL did not have the needed T&Cs to disallow its customers from disconnecting. The agreement with CHECAL was for the full group of houses to connect and not to come and go. In addition, Alberta Environment wanted confirmation that if the customers did disconnect, they would have no ability to connect without Salt Box’s knowledge and possibly contaminate the water system. Salt Box proposed that CHECAL may terminate service at any time upon giving at least two-years notice.
Regarding the increase in the notice period for termination of service to two-years from seven days, CHECAL stated: “I do not know of any agreement (apart from a lease on a vehicle), and especially with a utility, where the customer cannot cancel the service with at least a 30 days notice. This clause appears to create a utility monopoly within the area for Salt Box. There are many other suppliers in the area that can service CHECAL with a call and a connection fee (see Emerald Bay or North Springbank Water).”
The AUC noted that if CHECAL was to terminate service with Salt Box based on a short notice period, this may have unintended consequences for the ongoing viability of Salt Box. With a small customer base, termination of service would likely result in a negative impact on Salt Box’s remaining customers. This potential effect of a termination of service by CHECAL supports a longer notice period. There should be sufficient time for Salt Box, as a monopoly water service provider to make arrangements for its remaining customers. In the event of termination of service, Salt Box may also have to make operational changes, which would likely take longer than 30 days.
The AUC found the two-year notice period proposed by Salt Box to be excessive. Such a length of time does not result in an appropriate balance of costs and risks considering the interests of the exiting customer, remaining customers and Salt Box. Given the ongoing obligations of Salt Box to serve CHECAL during the notice period and Salt Box’s overall small customer base, the AUC found that a notice period of 180 days effectively balances the interests of both Salt Box and customers.
In its comments, Salt Box also identified its concerns with the need to include a clause regarding disconnection fees. The AUC acknowledged that there should be a reconnection fee after a disconnection of service occurs.
The AUC found the reconnection fee of $2,500 to be reasonable, as it provides consistency between the two cooperatives served by Salt Box, CHECAL and Windmill. In addition, there should be a section in the T&Cs that sets out a reconnection fee because, without such a provision, there would be no certainty to Salt Box or CHECAL on the terms governing reconnection of service.
Regarding payment deadlines for CHECAL invoices, Salt Box stated: “invoices are paid [within] 10 days on our current agreements not 30 days.” The T&Cs circulated by the AUC contained a 30-day period, which was consistent with the payment of invoices by Windmill to Salt Box.
The AUC noted under the current practice CHECAL pays its invoices within 10 days, and that time period does not appear to be contentious. On this basis, the AUC amended Section 2 – Invoices, to a 10-day payment deadline for invoices to reflect the current practice.
The balance of the T&C’s were not contentious and the AUC approved the T&Cs as amended.
