Water – Rates
Application
Corix Utilities (Foothills Water) Inc. (“CUI”) applied to the AUC for approval of its 2023-2025 revenue requirement and rates related to its water utility, serving customers in Heritage Point, Alberta.
CUI requested a 2023 rate increase for its typical residential and commercial customers of 18.6 percent and smaller increases for 2024 and 2025.
CUI requested that the proposed residential and commercial customer rates be made effective on an interim basis as of January 1, 2023. CUI proposed that the increased interim rates would be reflected on February bills and that if the request to implement an interim rate increase were approved, the interim rates would be adjusted as required.
Decision
The AUC denied the application from CUI to charge customers interim rates that would reflect CUI’s proposed 2023 customer rates.
The AUC directed a continuation of the existing rates charged by CUI, as approved in Decision 2013-082, on an interim basis, for the period starting on January 1, 2023, until the 2023-2025 revenue requirement and rates are approved.
Applicable Legislation
Electric Utilities Act, SA 2003, c E-5.1
Pertinent Issues
The AUC denied the request for an interim rate increase as it found it would not be in the public interest.
The AUC stated that one of the purposes of interim rates is to provide a smooth rate transition for customers to new rates to minimize rate shock. Another purpose of interim rates is to provide additional cash flow to the utility to cover increased costs while its rate case is being tested. In approving interim rate increases, the AUC considers, inter alia, the impact of the proposed rates and the consequences of any shortfall in revenue to the utility.
CUI did not suggest that the interim rate increase is necessary to preserve the utility’s financial integrity or avoid financial hardship. CUI also did not suggest that it will be unable to continue providing safe and reliable service without the interim rate increase. The AUC found that CUI did not sufficiently demonstrate the need for the interim rate increase.
The AUC also considered approving a portion of CUI’s proposed interim rate increase. However, given that CUI last applied to increase rates in 2014 and that a final decision in this application is anticipated to occur in a matter of months, the AUC did not consider that an interim rate increase was necessary to avoid undue harm to CUI. If collecting increased rates as of February 2023 was imperative for CUI, its application could have been filed earlier in 2022 to provide adequate time to test the application and render a decision.
Because CUI’s application was filed in December of 2022 and was preceded by consultation between CUI and stakeholders, the AUC determined that ratepayers were aware, or ought to have been aware, that a regulatory proceeding had been initiated that may result in rates changing effective January 1, 2023. As a result, collecting or refunding any rate difference at a later date would not violate the rule against retroactive and retrospective ratemaking.
