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Room 400 - 330 Portage Avenue
Winnipeg, MB R3C 0C4
www.pubmanitoba.ca
330, avenue Portage, pièce 400
Winnipeg (Manitoba) Canada R3C 0C4
www.pubmanitoba.ca
Order No. 139/19
MUNICIPALITY OF SOURIS-GLENWOOD
SOURIS-GLENWOOD WATER & WASTEWATER UTILITY
WATER AND WASTEWATER RATES
September 24, 2019
BEFORE: Shawn McCutcheon, Panel Chair
Irene Hamilton, Q.C., Panel Member
Order No. 13919
September 24, 2019
Page 2 of 18
Table of Contents
1.0
Executive Summary ............................................................................................ 3
2.0
Background ......................................................................................................... 4
Water Supply and Distribution .............................................................................. 4
Wastewater Collection and Treatment .................................................................. 4
Unaccounted for Water ......................................................................................... 4
3.0
Application ........................................................................................................... 5
Contingency Allowance and Utility Reserves ........................................................ 8
Working Capital Surplus ....................................................................................... 8
Cost Allocation Methodology ................................................................................ 9
4.0
Board Findings .................................................................................................... 9
5.0
IT IS THEREFORE ORDERED THAT: ............................................................... 13
SCHEDULE "A" ........................................................................................................... 15
Order No. 13919
September 24, 2019
Page 3 of 18
1.0
Executive Summary
By this Order, the Manitoba Public Utilities Board (Board) grants approval for revised
water and wastewater rates applied for by the Municipality of Souris-Glenwood
(Municipality) for the Souris-Glenwood Water and Wastewater Utility (Utility) as shown
below.
The Board confirms as final the interim water and wastewater rates previously established
on an interim ex parte basis by Board Order No. 4/19.
The Board grants approval for the recovery of a cumulative operating deficit of $318,049.
This deficit is the sum of deficits from 2014 to 2017.
The revised rates are below:
Current
rates
Oct 1,
2019
Oct 1,
2020
Oct 1,
2021
Domestic Water Rate first 2,500 cu. ft ($/100 cu. ft)
7.50
$
10.26
$
12.57
$
12.65
$
Intermediate Water Rate next 22,500 cu. ft ($/100 cu. ft)
6.19
$
9.72
$
11.42
$
11.60
$
Wholesale Water Rate over 25,000 cu. ft ($/100 cu. ft)
5.08
$
9.12
$
10.30
$
10.49
$
Wastewater ($/100 cubic feet)
3.43
$
4.23
$
4.33
$
4.43
$
Quarterly Service Charge
16.53
$
12.93
$
14.18
$
14.63
$
Minimum Quarterly Charge*
71.18
$
85.38
$
98.68
$
100.03
$
Bulk Water Rates ($/1,000 gallons)
26.00
$
26.00
$
26.00
$
26.00
$
Deficit Recovery
Rate Rider ($/100 cubic feet)**
-
2.20
$
2.20
$
2.20
$
*Based on 500 cubic feet
**The rate rider will be for a period of three years - October 1, 2019 to September 30, 2022
Details of other rates are in the attached Schedule "A".
The reasons for the Board's decisions are found under "Board Findings".
Order No. 13919
September 24, 2019
Page 4 of 18
2.0
Background
The construction of the Souris-Glenwood water and wastewater utility took place between
the early 1900's to 2018.
The system provides water only or water and wastewater services to 873 customers.
Utility bills are mailed out quarterly separate from property tax bills. There are thirty-five
higher volume customers who are charged the second step rate and four customers at
the third step, namely the hospital, school, arena complex and swimming pool. The Utility
currently provides water only service to forty customers.
Prior to the interim ex parte rates set in January 2019 by Board Order No. 4/19, rates
were last approved in Board Order No. 76/07, going into effect in 2009.
Water Supply and Distribution
The Municipality has provided that the source of raw water for the plant is a well and the
treatment type is reverse osmosis. The waterlines are cast, duct tile iron and PVC.
Wastewater Collection and Treatment
The wastewater system is gravity fed with two lift stations, with the treatment type being
described as extended aeration.
Unaccounted for Water
The rate study received by the Board on April 11, 2018 indicated the Utility's unaccounted
for water is 13%. The volumes used to calculate this were from 2014 and included in
excess of 27% of water consumed "for internal uses".
Order No. 13919
September 24, 2019
Page 5 of 18
3.0
Application
On April 11, 2018, the Board received an application for revised rates from the Utility.
The application was accompanied by a rate study completed by the Municipality's
consultant and By-law 19/2018 read for the first time on April 9, 2018. The application
also included Council Resolution #2018-049 requesting that the Board grant approval of
the proposed Utility rates on an interim ex parte basis. The Board issued Board Order No.
4/19 granting interim rates. Rates had previously been set in Board Order 76/07, effective
2009.
The Municipality also requested approval of operating deficits for 2013 and 2014. The
Board noted the Utility had experienced deficits up to and including 2017. The Board
therefore reserved its approval of recovery of any deficit until the Utility submitted all
outstanding applications and supporting documents for approval. The Utility submitted
the last of the necessary information on June 3, 2019.
The Municipality filed information showing the Utility's annual operating information for
2009 to 2017. When calculated for regulatory purposes, the Utility experienced the
following operating deficits; $38,258 (2014), $5,337 (2015), $167,336 (2016) and
$107,118 (2017), for a total of $318,049. The Municipality requested permission to
recover the deficits with a rate rider of $2.20 per 100 cubic feet over a three year period.
The Board issued a Public Notice of Application with respect to the proposed rate July
29, 2019. No responses were received.
When reviewing an application, the Board has at its disposal two approaches, a paper
review process or a public hearing. After the publication of the Notice of Application, the
Board considers the application and responses, if any, and determines which method of
review is most appropriate. Whenever reasonable, the Board can review the application
using a paper review process, which saves the cost of a public hearing.
Order No. 13919
September 24, 2019
Page 6 of 18
Where there is an urgent need for a rate increase and the Board determines it to be in
the best interest of all parties, the Board may also establish interim ex parte rates. Interim
rates are typically approved as applied for, and are then subject to a Public Notice of
Application and the Board's review using one of the processes outlined above, before
being confirmed as final by Board Order.
The Board has reviewed this application and has chosen a paper review process.
Order No. 13919
September 24, 2019
Page 7 of 18
The rates were calculated using the following revenue requirement projections:
Rate Year 1 Rate Year 2 Rate Year 3
Administration (building, office, staff, etc)
42,032
43,293
44,592
Billing and collection
11,254
11,592
11,939
Total expenses general
53,286
54,885
56,531
Penalties
7,871
5,000
5,000
Total revenue general
7,871
5,000
5,000
Net revenue requirement - general
45,415
49,885
51,531
Water - production expenses
Staffing
89,810
92,504
95,279
Purification and treatment
179,280
184,659
190,198
Amortization
185,000
185,000
185,000
Reserves
0
45,500
45,500
Contingency
25,000
25,000
25,000
Subtotal - water production expenses
479,090
532,663
540,977
Water - distribution expenses
Staffing
1,910
1,967
2,026
Transmission and distribution
24,563
25,300
26,059
Amortization
60,000
60,000
60,000
Interest on long term debt
3,108
2,368
1,603
Reserves
0
45,500
45,500
Contingency
3,669
3,779
3,892
Subtotal - water distribution expenses
93,250
138,914
139,080
Total expenses water
572,340
671,577
680,057
Hydrant rentals
7,500
11,625
11,625
Amortization of capital grants - production
65,011
65,011
65,011
Amortization of capital grants - distribution
11,687
11,687
11,687
Taxation revenues - distribution
25,877
25,877
25,877
Other revenue - production
200
200
200
Total non rate revenue - production
65,211
65,211
65,211
Total non rate revenue - distribution
45,064
49,189
49,189
Total revenue water
110,275
114,400
114,400
Net revenue requirement - water production
413,879
467,452
475,766
Net revenue requirement - water distribution
48,186
89,725
89,891
Net revenue requirement - water
462,065
557,177
565,657
Order No. 13919
September 24, 2019
Page 8 of 18
Staffing
58,640
60,399
62,211
Wastewater collection system
16,268
16,756
17,259
Wastewater treatment and disposal
71,525
73,671
75,881
Amortization
50,136
50,136
50,136
Contingency
14,379
14,810
15,255
Minor capital upgrades
10,621
10,190
9,745
Total expenses wastewater
221,569
225,962
230,487
Amortization of capital grants
31,765
31,765
31,765
Total revenue wastewater
31,765
31,765
31,765
Net revenue requirement - wastewater
189,804
194,197
198,722
Contingency Allowance and Utility Reserves
The Board's Water and Wastewater Rate Application Guidelines recommend an annual
contingency allowance equal to 10% of the variable operating costs.
The Municipality has included in the projections a contingency allowance of approximately
10% of variable operating expenses. The Municipality also included a $91,000 annual
provision for reserves in the rates for Year 2 and 3, in its final application.
Working Capital Surplus
Board Order No. 93/09 established utilities should maintain a minimum working capital
surplus, in an amount equal to 20% of annual expenses. The working capital surplus is
the Utility fund balance, excluding any capital-related items plus Utility reserves.
As per the 2017 audited financial statements, the working capital surplus at December
31, 2017 was:
Accumulated Fund Surplus
4,069,792
$
Deduct tangible capital assets
4,689,178
$
Add long term debt
87,576
$
Add utility reserves
557,990
$
Equals Working Capital Surplus
26,180
$
Operating costs
808,534
$
20% of operating costs (target)
161,707
$
Order No. 13919
September 24, 2019
Page 9 of 18
Cost Allocation Methodology
The Board requires all municipal governments to review the costs shared between
general operations and the Utility, and to allocate appropriate and reasonable costs to the
Utility,
based
on
a
policy
known
as
a
Cost
Allocation
Methodology
(CAM). This allocation must be submitted to the Board for approval and cannot be
changed without receiving approval from the Board. The Board's requirements regarding
cost allocation methodologies can be found in Board Order No. 93/09.
The Utility does not currently have a Board approved CAM, and the rate study did not
include a proposal for one.
4.0
Board Findings
The Board has reviewed the application and revenue projections presented by the
Municipality and finds the projections in the final submission, received July 14, 2019, to
be reasonable.
The Municipality's submission included an estimated volume of water for internal use,
estimated at 27% of total water produced. It is very unlikely this much water was used for
internal purposes, and if so, the unaccounted for water in the utility will be higher than the
figure presented. The Municipality has advised the Board they are now metering the
swimming pool volumes and charging the cost of water provided to the appropriate
department. This will help to determine the actual volume of unaccounted for water going
forward.
The rate study submitted was not prepared using the Board's guidelines or Minimum
Filing Requirements. The application required an inordinate number of follow up
questions to gather information necessary to allow the Board to make its decision.
The Board does encourage applicants to confer with Board staff where there is
uncertainty about Board recommended methodology and, where variation is proposed,
that the variation be clearly substantiated in the application.
Order No. 13919
September 24, 2019
Page 10 of 18
The rate study did not include a provision to rebuild the working capital position of the
Utility, as required by the Board's guidelines. Given the significance of the rate increases,
as well as the deficit rate rider, the Board will allow the rate as calculated. Future rate
applications should include this, if necessary.
The initial submission did not include an electronic copy of the Board's rate application
working papers in Excel. The Board requested this information, and the Municipality's
consultant advised it would not be made available, despite the fact that the working
papers were templates provided by the Board at no cost. The consultant did eventually
send the working papers; however by this time the Board had already used resources to
recreate them from hard copies. This was unfortunate and the lack of cooperation resulted
in delays in processing the application.
The Board's information requests dated December 31, 2018 included a request to provide
the full details of the Utility systems, including age. The Municipality's consultant
responded that the systems were constructed "early 1900's to 2018". This response was
unhelpful to the Board in its decision; however, there was no further information provided
by the consultant.
The rate application was prepared using information that was unreasonably out of date.
The expenses, water volumes and working capital calculation were prepared using
figures from 2014. This rendered the information unusable to the Board, and required the
Municipality to revise and resubmit its application.
The Board would like to commend the Municipality for working diligently through the
shortcomings of the rate study. This allowed the Board to produce a final decision instead
of rejecting the application.
The Municipality did not include a Cost Allocation Methodology (CAM) with its application,
which has been a requirement of rate applications since 2009 and forms part of the
Minimum Filing Requirements. The Board will direct the Municipality to submit an
appropriate CAM for review before December 31, 2019.
Order No. 13919
September 24, 2019
Page 11 of 18
The Board is concerned with the lengthy history of operating deficits, and the
Municipality's apparent lack of urgency in correcting the financial course of the Utility.
Interim rates were set in Board Order No. 4/19, and included a directive that the
Municipality file outstanding deficit applications by no later than January 31, 2019. The
required applications were filed in June 2019. This has also delayed the Board's ability to
issue a decision on this application.
The Board will approve the deficits to be recovered through a rate rider of $2.20 per 100
cubic feet, effective October 1, 2019 to September 30, 2022.
In the case of Souris-Glenwood, it has been ten years since a rate change has taken
place. Rates were approved in Board Order No. 76/07, which was issued June 1, 2007,
with rates effective July 1, 2007, January 1, 2008 and January 1, 2009. The approved
rates did not reflect an annual provision for amortization of the plant and equipment, which
became a requirement with the implementation of Public Sector Accounting Board
(PSAB) rules in 2009. The Board is concerned that the Municipality has not applied to
adjust the utility rates to include amortization. The Municipality has had more than enough
time to comply with the requirements of PSAB standards.
The Municipality's audited financial statements present the Utility revenue as "Water
Fees", rather than allocating the revenues between water and wastewater. Expenses are
properly distributed, but the revenue is all shown as water fees, including the bulk water
revenue. This is an unusual presentation and the Board recommends the Municipality
work with its auditor to align the statements to a more typical format. This includes the
presentation of Note 14, which shows the balance of unamortized capital grants and the
annual portion to be amortized. This information is important for rate setting purposes.
The Municipality's neglect in updating the rates for such a lengthy period of time will now
result in significant increases to ratepayers. Consumers are generally more tolerant of
regular, smaller increases. The Municipality needs to be more diligent in conducting
regular reviews of its revenue requirements.
Order No. 13919
September 24, 2019
Page 12 of 18
The Board reminds the Municipality regular reviews are important for a financially sound
utility and encourages the Municipality to review Board Order No. 86/17 for future rate
applications. The Order outlines the Simplified Rate Application Process for municipally
owned public utilities. If, after its rate review, the Municipality finds it meets the designated
criteria for a simplified rate application, it should apply for future rates using the Simplified
Rate Application Process.
The Board requires the Municipality to review its water and wastewater rates for adequacy
and file a report with the Board, as well as an application for revised rates if required, on
or before December 31, 2022.
Order No. 13919
September 24, 2019
Page 13 of 18
5.0
IT IS THEREFORE ORDERED THAT:
1. The water and wastewater rates for the Municipality of Souris-Glenwood - Souris-
Glenwood Utility, BE AND ARE HEREBY APPROVED in accordance with the
attached Schedule "A" to this Order, effective October 1, 2019, October 1, 2020
and October 1, 2021.
2. The water and wastewater rates for the Municipality of Souris-Glenwood Utility, as
approved on an interim ex parte basis in Board Order No. 4/19, BE AND ARE
HEREBY APPROVED AS FINAL.
3. The 2014 to 2017 operating deficits totalling $318,049, when calculated for
regulatory purposes, incurred in the Municipality of Souris-Glenwood - Souris-
Glenwood Utility, BE AND ARE HEREBY APPROVED to be recovered by a rate
rider of $2.20 per 100 cubic feet effective October 1, 2019 to September 30, 2022.
4. The Municipality of Souris-Glenwood submit an application for a Cost Allocation
Methodology for shared services to the Public Utilities Board on or before
December 31, 2019.
5. The Municipality of Souris-Glenwood is to provide notice of the decisions found in
this Order to its customers as soon as possible, with a copy submitted to the Public
Utilities Board.
6. The Municipality of Souris-Glenwood amend its Utility rate By-law to reflect the
decisions in this Order, and submit a copy to the Board once it has received third
and final reading.
7. The Municipality of Souris-Glenwood review the Souris-Glenwood Wastewater
Utility rates for adequacy and file a report with the Public Utilities Board, as well as
an application for revised rates (if applicable), on or before December 31, 2022.
Order No. 13919
September 24, 2019
Page 14 of 18
Fees payable upon this Order - $500.00
Board decisions may be appealed in accordance with the provisions of Section 58 of The
Public Utilities Board Act, or reviewed in accordance with Section 36 of the Board's Rules
of Practice and Procedure. The Board's Rules may be viewed on the Board's website at
www.pubmanitoba.ca.
THE PUBLIC UTILITIES BOARD
"Shawn McCutcheon"
Panel Chair
"Jennifer Dubois, CPA, CMA"
Assistant Associate Secretary
Certified a true copy of Order No. 139/19
issued by The Public Utilities Board
________
Assistant Associate Secretary
Order No. 13919
September 24, 2019
Page 15 of 18
SCHEDULE "A"
MUNICIPALITY OF SOURIS-GLENWOOD
WATER AND SEWER RATES
BY-LAW No. 25-2019
SCHEDULE OF QUARTERLY RATE
1. (a) Effective October 1, 2019 Commodity Rates per 100 cubic feet
Water Sewer Water & Sewer
First 2,500 cu. ft per quarter (Domestic Rate) $10.26 $4.23 $14.49
Next 22,500 cu. ft. per quarter (Intermediate Rate) $ 9.72 $4.23 $13.95
Over 25,000 cu. ft. per quarter (Wholesale Rate) $ 9.12 $4.23 $13.35
1. (b) Effective October 1st, 2020, Commodity Rates per 100 cubic feet
First 2,500 cu. ft. per quarter (Domestic Rate) $12.57 $4.33 $16.90
Next 22,500 cu. ft. per quarter (Intermediate Rate) $11.42 $4.33 $15.75
Over 25,000 cu. ft. per quarter (Wholesale Rate) $10.30 $4.33 $10.63
1. (c) Effective October 1st, 2021, Commodity Rates per 100 cubic feet
First 2,500 cu. ft. per quarter (Domestic Rate) $12.65 $4.43 $17.08
Next 22,500 cu. ft. per quarter (Intermediate Rate) $11.60 $4.43 $16.03
Over 25,000 cu. ft. per quarter (Wholesale Rate) $10.49 $4.43 $14.92
2.
Minimum Quarterly Rates for Water and Sewer Customers
Not withstanding the Commodity Rates set for in Paragraph 1(a), (b) and (c) hereof, all customers
will pay the applicable minimum charges set out below, which will include the water allowances
indicated;
2. (a) Effective October 1st, 2019 the Minimum Quarterly Charges shall be as follows:
Group Minimum Water Quarterly Quarterly Minimum
Meter Capacity Allowance Service Commodity Quarterly Bill
Size Ratio Quarterly in cu. ft. Charges Charges _____________
Water Sewer
5/8" & ¾" 1 500 $12.93 $51.33 $21.14 $ 85.40
1" 4 2,000 $12.93 $205.33 $84.55 $ 302.81
1 ½" 10 5,000 $12.93 $499.76 $211.40 $ 724.09
2" 25 12,500 $12.93 $1,229.09 $528.49 $ 1,770.50
Order No. 13919
September 24, 2019
Page 16 of 18
2. (b) Effective October 1, 2020, the Minimum Quarterly Charges shall be as follows:
Group Minimum Water Quarterly Quarterly Minimum
Meter Capacity Allowance Service Commodity Quarterly Bill
Size Ratio Quarterly in cu. ft. Charges Charges _____________
Water Sewer
5/8" & ¾" 1 500 $14.18 $ 62.87 $ 21.64 $ 98.68
1" 4 2,000 $14.18 $251.48 $ 86.54 $ 352.20
1 ½" 10 5,000 $14.18 $599.77 $216.36 $ 830.31
2" 25 12,500 $14.18 $1,456.04 $540.91 $2,011.13
2. (c) Effective October 1, 2021 the Minimum Quarterly Charges shall be as follows:
Group Minimum Water Quarterly Quarterly Minimum
Meter Capacity Allowance Service Commodity Quarterly Bill
Size Ratio Quarterly in cu. ft. Charges Charges ____________
Water Sewer
5/8" & ¾" 1 500 $14.63 $ 63.22 $ 22.14 $ 100.00
1" 4 2,000 $14.63 $252.90 $ 88.58 $ 356.11
1 ½" 10 5,000 $14.63 $606.13 $221.44 $ 842.21
2" 25 12,500 $14.63 $1,476.17 $553.62 $2,044.42
2. (d) Rate Rider for the purpose of Deficit Recovery
Rate rider through a deficit recovery surcharge collected over three (3) years at a rate of $ 2.20
per 100 cubic feet for metered services, effective October 1, 2019 to September 30, 2022.
3. Minimum Quarterly Rates for Water Only Customers
Customers with water only services shall be charged the minimum quarterly rate applicable to the
customer's meter size less the sewer charge.
4. Minimum Quarterly Rates for Sewer Only Customers
Customers with sewer only shall be charged the minimum applicable quarterly rate together with
applicable administration fee.
5. Bulk Water
All water sold in bulk by the MUNICIPALITY OF SOURIS-GLENWOOD shall be charged at the
rate of $26.00 per 1,000 gallons including rate rider 2.(d).
6. Hydrant Rentals
The MUNICIPALITY OF SOURIS-GLENWOOD will pay to the Utility an annual rental of $125.00
for each hydrant connected to the system which includes the cost of water for firefighting.
7. Prompt Payment Discounts
The aforementioned rates are net and no prompt payment discount shall be allowed.
Order No. 13919
September 24, 2019
Page 17 of 18
8. Billings and Penalties
Meters are to be read at the end of each quarter. Accounts are billed at the first of the following
month, minimum charges being billed in advance, together with any excess water used in the
preceding quarter. Bills are due and payable by the end of the month in which they are presented.
A late payment charge of 1¼% shall be charged on the dollar amount owing after the billing due
date. The due date will be at least fourteen days after the mailing of the bills.
9. Outstanding Bills
Pursuant to Section 252(2) of The Municipal Act, the amount of all outstanding charges for water
and sewer service are a lien and charge upon the land serviced, and shall be collected in the
same manner in which ordinary taxes upon the land are collectible, and with like remedies. Where
charges and penalties pursuant to this by-law are not paid within sixty (60) days from the date
when they were incurred, the CAO may add said charges and penalties to the taxes of the
property and collect them in the same manner as other taxes.
10. Service to Customers outside the Municipal Boundaries
The Council for the MUNICIPALITY OF SOURIS-GLENWOOD may sign agreements with
customers for the provision of water and sewer services to properties located outside the legal
boundaries of the Town. Such agreements shall provide for payment of the appropriate rates set
out in paragraph 2(a), (b) and (c), as well as a surcharge, set by resolution of Council, which shall
be equivalent to the frontage levy, general taxes and special taxes for the utility purposes in effect
at the time or may be in effect from time to time, and which would be levied on the property
concerned if it were within the Town boundaries. In addition, all costs of connecting to the utility's
mains and installing and maintaining service connections will be paid by the customer.
11. Disconnection
The Public Utilities Board has approved the Conditions Precedent to be followed by the
municipality with respect to the disconnection of service for non-payment including, such matters,
as notice and the right to appeal such action to the Public Utilities Board.
12. Reconnection
Any service disconnected due to non-payment of account shall not be reconnected until all
arrears, penalties and a reconnection fee $50.00 have been paid.
13. Temporary/Seasonal Disconnection of Service
Any service disconnection for longer than 5 days by request of owner/occupant due to the building
being vacant by way of vacation, or non-occupancy shall be charge a reconnection fee of $50.00
which shall be added to the utility account and collected along with the next scheduled billing.
14. Water Allowance Due to Line Freezing
That in any case where, at the request of the Council, a customer allows water to run continuously
for any period of time to prevent the water lines in the water system from freezing, the charge to
that customer for the current quarter shall be the average of the billings for the last two previous
quarters to the same customer, or to the same premises if the occupant has changed.
15. Temporary Water Service
That in any case where at the request of the Public Works Department, a customer is provided
with a temporary water service from another utility customer, the charge to both customers for the
Order No. 13919
September 24, 2019
Page 18 of 18
current quarter shall be the average of the billings for the last four previous quarters to each
customer, or the same premises if the occupant has changed.
16. Meter Replacement
Where the meter requires replacement due to damage or freezing, the cost of the meter plus 20%
and a labour fee of $75.00, shall be added to the utility account and collected along with the next
scheduled billing.