Water – Rates
Application
Properties of Northern Bear Inc. (“Northern Bear”) applied for approval of its current water rates on an interim basis, effective January 1, 2024, until the AUC approves the water rates on a final basis. Northern Bear also indicated that, effective January 1, 2024, it will add a monthly fee of $40 to every residential and commercial customer. This fee is mandated by Strathcona County and is associated with the capital recovery of costs incurred for a pipeline extension to the Northern Bear community that supplies the reservoir.
Decision
The AUC approved that application from Northern Bear and the following interim water rates:
- for residential customers $20 per month fixed fee; $10 per cubic meter usage fee; and
- for commercial customers $0 per month fixed fee; $12.50 per cubic meter usage fee.
The AUC approved the additional monthly $40 per customer fee, on an interim basis.
Pertinent Issues
A number of residential and commercial customers raised concerns with the AUC regarding the application. The concerns related to the significant increase in the water bills, the need for more detailed information, including a general rate application, the rate structure, the $40 capital recovery charge and the franchise agreement between Northern Bear and Strathcona County.
AUC Findings Regarding Customers Submissions
In this proceeding, Northern Bear applied for interim rates for 2024, but will subsequently file a general rate application (“GRA”). According to the AUC, in its upcoming GRA, Northern Bear will be required to provide financial information, including details about the historical costs to run the utility, estimated costs it expects to incur to run the business in subsequent years, and details about the costs of its property, plant and equipment in historic and future estimates. As part of its GRA, Northern Bear will be required to justify the proposed fixed monthly fees and the proposed variable water rates. In the assessment of the GRA, the AUC will consider issues and concerns raised following the notice of application for that proceeding.
Interim Rate Setting
The AUC noted that this was the first rate application from Northern Bear filed with the AUC. Without a full examination of the costs that backstop the current rates, the AUC is unable to determine whether the current rates are just and reasonable. That examination will be undertaken by the AUC when Northern Bear files its GRA for final rates. Until the final rates are approved, the AUC found that it was logical to approve, as interim rates, the current fixed monthly fee and variable water charges for residential and commercial customers, which have been in place since July 2018. The AUC also approved the additional monthly $40 per customer fee, on an interim basis. As Northern Bear is required to pay this fee to Strathcona County for the supply of water, the AUC determined that collecting this fee from customers was reasonable.
