This is the exact embedded text of the captured official document.
Snapshot 383f341bfe0b · verified 2026-06-09 ·
original document ·
archived snapshot ·
unofficial consolidation, the official version is held by the municipal clerk.
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. 45/20
RURAL MUNICIPALITY OF ROSEDALE
EDEN WATER UTILITY
WATER RATES EFFECTIVE APRIL 1, 2020
March 27, 2020
BEFORE: Marilyn Kapitany, BSc. (Hon), MSc., Panel Chair
Mike Watson, Panel Member
Order No. xx/20
March xx, 2020
Page 2 of 17
Table of Contents
1.0
Executive Summary ............................................................................................ 4
2.0
Background ......................................................................................................... 5
Water Supply/Distribution ..................................................................................... 5
3.0
Board Methodology ............................................................................................. 6
Review Process .................................................................................................... 6
Interim ex parte Approval ...................................................................................... 6
Contingency Allowance and Utility Reserves ........................................................ 6
Working Capital .................................................................................................... 7
Operating Deficits ................................................................................................. 7
Cost Allocation Methodology ................................................................................ 7
Unaccounted for Water ......................................................................................... 7
4.0
Application ........................................................................................................... 8
Contingency Allowance and Utility Reserves ........................................................ 9
Working Capital .................................................................................................. 10
Operating Deficits ............................................................................................... 10
Cost Allocation Methodology .............................................................................. 10
Unaccounted for Water ....................................................................................... 11
5.0
Board Findings .................................................................................................. 11
Order No. xx/20
March xx, 2020
Page 3 of 17
6.0
IT IS THEREFORE ORDERED THAT: ............................................................... 13
SCHEDULE "A" ........................................................................................................... 15
Order No. xx/20
March xx, 2020
Page 4 of 17
1.0
Executive Summary
By this Order, the Manitoba Public Utilities Board (Board) varies the application made by
the Rural Municipality of Rosedale (RM), Eden Water Utility (Utility) and grants approval
of revised water rates as shown below.
The Board also confirms as final the interim water rates previously established on an
interim ex parte basis by Board Order No. 128/19.
The Board notes prior to the approval of interim rates, the RM billed Utility ratepayers
based on residential equivalency units (REUs). The Utility has installed meters and
customers are now billed in cubic meters (m3) based on actual consumption.
The current and revised rates are below:
July 2019
April 2020
Quarterly service charge
17.71
$
19.21
$
Water $/cubic meter
4.80
$
3.15
$
Minimum quarterly charge*
84.91
$
63.31
$
Bulk water fee
6.76
$
4.43
$
*based on 14m3
Details of other rates can be found in Schedule A.
The reasons for the Board's decisions are under Board Findings.
Order No. xx/20
March xx, 2020
Page 5 of 17
2.0
Background
The RM currently owns and operates two water utilities. They are Eden Water Utility and
Kelwood Water Utility (Kelwood). This Board Order relates to an application for the Eden
Utility.
The Utility provides water only service to approximately 100 customers, two of which are
serviced with a larger supply line.
Water Supply/Distribution
The Utility formerly operated a water treatment plant constructed in 1977 and a two cell
concrete reservoir with a total storage of approximately 54,000 litres. Treatment consisted
of chlorination and the system provided treated water to 35 unmetered residences and a
coin operated truck fill. In the 2009 engineering system assessment, the Eden WTP had
treated water arsenic concentrations which exceeded health based limits. It was
recommended a compliance plan be developed to meet standards and water meters be
installed at all service connections.
The Utility installed water meters, and a new distribution line to allow the Utility to
purchase water from the Town of Neepawa. The new line goes from Neepawa to Eden,
passing through a new booster station approximately midway between the two
communities. The Utility began purchasing and distributing water from the Neepawa
Utility in January 2018. The old concrete reservoir is still in use, and an operator regularly
tests the water and chlorine levels there.
Order No. xx/20
March xx, 2020
Page 6 of 17
3.0
Board Methodology
Review Process
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.
Where there is an urgent need for initial or revised rates and the Board determines it to
be in the best interest of all parties, the Board may establish interim ex parte rates.
Interim ex parte Approval
Interim ex parte rates are typically approved as applied for and are then subject to a
standard Board review process, including a Public Notice of Application, before being
confirmed as final by Board Order.
Since this process allows a municipality to charge ratepayers revised rates in advance of
the Board's comprehensive review, it is reserved for instances where a municipality can
show a compelling argument to allow it.
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.
Order No. xx/20
March xx, 2020
Page 7 of 17
Working Capital
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.
Operating Deficits
By law, Manitoba utilities are not allowed to incur deficits. In the event that a deficit does
occur, the Utility is required by The Municipal Act to obtain Board approval for both the
deficit and recovery methodology. The Board is therefore duty bound to approve
reasonable rates based on reasonable expense projections.
Cost Allocation Methodology
The Board requires all municipalities to review the costs shared between the general
operations of the municipality and the Utility, and to allocate appropriate and reasonable
costs to the Utility, based on a policy known as a Cost Allocation Methodology. This policy
must be submitted to the Board for approval and cannot be changed without approval by
the Board. The Board's requirements regarding cost allocation methodologies can be
found in Board Order No. 93/09.
Unaccounted for Water
Water losses may be caused by such events as distribution line losses, service leaks,
water used for fire fighting or line flushing, and under-registration of water meters. The
Board Guidelines require utilities to compare the volume of water produced or purchased
against the volume of water sold, to determine the percentage of unaccounted for water.
Unaccounted for water volumes of approximately 10% are considered industry standard.
The Board expects any utility experiencing a greater volume of unaccounted for water to
provide an explanation and plan to address the water losses.
Order No. xx/20
March xx, 2020
Page 8 of 17
4.0
Application
On May 30, 2019 the Board received the RM's application for revised water rates.
The application was accompanied by a rate study completed by the RM, By-law 10-2018,
read for the first time on September 14, 2018 and Council Resolution No. 19/100, dated
April 10, 2019, requesting the Board approve interim ex parte rates for the Eden Utility.
The RM advised the interim ex parte rates were required because the existing rates were
previously set using residential equivalency units (REUs). One REU is the estimate of the
volume of wastewater produced by the average single family residence. Units allocated
to non-residential customers are based on estimated consumption, as compared with a
residence. REUs are used in communities with unmetered distribution and collection
systems, where information regarding actual consumption is unavailable. The RM
identified the need to revise the water rates to a volumetric charge, given the Utility had
connected to the Neepawa Utility and was purchasing the water on a per cubic meter
basis.
The Board issued a Public Notice of Application on September 17, 2019 affording
customers the opportunity to comment to both the Board and the RM with respect to the
proposed rate changes. The Board received two responses to the Notice, which the RM
replied to, copying the Board.
The RM submitted an amendment to the application on February 20, 2020, and provided
revised rate calculations for the Board's consideration.
Order No. xx/20
March xx, 2020
Page 9 of 17
The rates were calculated using the following revenue requirement projections:
2020
2021
Administration (building, office, staff, etc)
5,228
5,228
Working capital surcharge (1% of water expenses)
1,423
1,423
Billing and collection
1,276
1,276
Total expenses general
7,927
7,927
Penalties
243
243
Total revenue general
243
243
Net revenue requirement - general
7,684
7,684
Water expenses
Water purchases
62,468
62,468
Transmission and distribution
10,455
10,455
Other water supply costs
5,228
5,228
Amortization
50,584
50,584
Contingency
7,292
7,292
Interest on long term debt
6,315
6,315
Total expenses water
142,342
142,342
Bulk water revenues
6,275
6,275
Amortization of capital grants
40,888
40,888
Taxation revenues
15,480
15,480
Total revenue water
62,643
62,643
Net revenue requirement - water
79,699
79,699
Contingency Allowance and Utility Reserves
The RM has included a contingency allowance of 10% of Water Purchase and
Transmission and Distribution Expenses. This equates to approximately $7,000 per year.
There is no provision for transfer to Utility Reserve proposed.
Order No. xx/20
March xx, 2020
Page 10 of 17
Working Capital
The May 30, 2019 rate study indicated the WCS was $1,306,134 at December 31, 2017,
which included long term debt of $2M. The RM submitted amendments to the rate study
on February 20, 2020 which included a revised working capital calculation, showing the
2017 results were actually a deficit of nearly $700,000.
As per the 2018 audited financial statements, the working capital surplus (WCS) at
December 31, 2018 was:
2018
Accumulated Fund Surplus/Deficit
$2,373,053
Deduct tangible capital assets
$2,575,750
Add long term debt
$190,621
Add utility reserves
$0
Equals Working Capital Surplus/Deficit
($12,076)
Operating costs
$56,899
20% of operating costs (target)
$11,380
Operating Deficits
The rate application stated the Utility experienced an operating deficit of $1,942 in 2014
and there are no outstanding PUB Orders or instructions with respect to deficit recovery.
The rate study also stated the Utility Fund is operating with a WCS that exceeds the
minimum levels established by the Board.
The RM's February 20, 2020 amended rate study did not address any issues with
operating deficits, given the change in working capital.
Cost Allocation Methodology
The RM proposed a Cost Allocation Methodology (CAM) to recover 4% of the RM's
operating costs, allocated equally between the Eden and Kelwood utilities.
Order No. xx/20
March xx, 2020
Page 11 of 17
Unaccounted for Water
The Utility originally indicated levels of unaccounted for water that were very high,
between 30-60%. After the Board inquired about these volumes, it was determined the
Utility was calculating the volume of water sold by dividing the total fees charged (based
on residential equivalency units, not cubic meters) and the volume of water purchased.
5.0
Board Findings
The Board considered the RM's request for interim ex parte water rates, and found there
was an urgent need to revise the rates as soon as possible. The rates were approved in
Board Order No. 128/19.
Having considered the RM's filing and reviewed the responses to the Notice of
Application, the Board has chosen a paper review process.
The Utility requested the Board's approval to create a reserve fund for the Eden Utility.
Section 168(1) of The Municipal Act grants council the authority to establish reserve
funds, therefore the approval of the Board is not required. The Utility would need to seek
the Board's approval for any expenditure from that reserve, if it were not related to the
Utility, as per Section 168(2)b of the same Act.
The Board has reviewed the application and revenue projections presented by the RM,
and with two exceptions, finds them to be reasonable. The Board had some questions on
the calculation of unaccounted for water, given the lack of historical information prior to
the installation and use of meters in January 2018, which were answered by the RM. An
inflated percentage of unaccounted for water results in a higher water rate. The Board
finds while the methodology used by the RM in calculating unaccounted for water is
logical, it does not serve the ratepayers of the Utility. Given the age and recent history of
the Utility, it appears unlikely the actual unaccounted for water is nearly as high as was
estimated. In one instance in particular, it was brought to the Board's attention that one
Order No. xx/20
March xx, 2020
Page 12 of 17
of the large use customers has historically been charged five REUs, when an assignment
of 30 REUs would have been more accurate. The Board finds it appropriate to use a 15%
estimate to calculate water rates, until enough time has passed for an accurate historical
measurement to be used.
In addition, the Public Utilities Board Note of the 2018 audited financial statements (Note
20) indicates of $2M in grants received by the Eden Utility, but "Amortization During Year"
is nil. The Note was not prepared correctly, and the Board had to contact the RM to ask
for information on the annual amount of amortization that should have been included in
the Note. This capital grant amortization amount has the effect of offsetting amortization
expense, and resulted in a decrease in revenue requirements of approximately $40,000.
The adjustments in revenue requirements have resulted in a significant change in the
indicated rates, which have been varied in this Order by the Board.
The Board strongly encourages the RM to work closely with its auditor(s) to ensure the
Public Utilities Board Note to the Consolidated Financial Statements is complete and
accurate. If this note is omitted, incomplete, or incorrect, it limits the Board's ability to
assess the Utility's financial position, and the RM's ability to set appropriate rates to
sustain the Utility and its operations.
The Schedule of Utility Operations is prepared in a summary format that does not lend
itself to the Board's rate setting methodologies. It does not include a general section for
service charges and expenses are lumped together. The Eden Utility does not show any
"water purchase expense" for 2018, but the transmission and distribution expenses
increase from $9,504 in 2017 to $74,707 in 2018. Accepted practice in the preparation of
these Schedules includes providing comprehensive information on the Utility's revenues
and expenses.
In addition, the Long-Term Debt Note should include the name of the relevant utility, given
the RM owns two utilities. Note 8 of the 2018 audited financial statements indicates there
are two outstanding utility debentures, but provides no information regarding which utility
Order No. xx/20
March xx, 2020
Page 13 of 17
holds the debt. The debentures appear to relate to Eden, but the Board reached this
conclusion by examining Schedule 8, which indicates that only Eden has interest expense
on long-term debt. Neither Eden nor Kelwood include any taxation revenue, which is the
standard label for debenture revenue collected by taxes. This should also be revised
going forward, as this note can also have a significant impact for rate setting purposes.
The Board will require the RM to review the financial position of the Utility on an ongoing
basis, to ensure the rates approved remain appropriate. The RM should submit either a
statement of rate adequacy or, if it has determined revised rates are necessary, a date
by which the Board will receive a rate application. This submission will be due July 31,
2022.
The Board reminds the RM regular reviews are important for a financially sound utility
and encourages the RM 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 RM finds it meets the designated criteria for a simplified
rate application, it should apply for future rates using the Simplified Rate Application
Process.
6.0
IT IS THEREFORE ORDERED THAT:
1. The water rates for the Rural Municipality of Rosedale - Eden Water Utility, BE
AND ARE HEREBY VARIED in accordance with the attached Schedule A,
effective April 1, 2020.
2. The water rates for the Rural Municipality of Rosedale - Eden Water Utility, as
approved on an interim ex parte basis in Board Order No. 128/19, BE AND ARE
HEREBY CONFIRMED AS FINAL.
3. The Cost Allocation Methodology for shared services as submitted by the Rural
Municipality of Rosedale BE AND IS HEREBY APPROVED.
Order No. xx/20
March xx, 2020
Page 14 of 17
4. The Rural Municipality of Rosedale amend the Eden Water 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.
5. The Rural Municipality of Rosedale - Eden Water Utility review water rates for
adequacy and file a report with the Public Utilities Board on or before July 31, 2022.
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
"Marilyn Kapitany, BSc. (Hon), MSc."
Panel Chair
"Jennifer Dubois, CPA, CMA"
Assistant Associate Secretary
Certified a true copy of Order No. 45/20
issued by The Public Utilities Board
____
Assistant Associate Secretary
Order No. xx/20
March xx, 2020
Page 15 of 17
SCHEDULE "A"
RURAL MUNICIPALITY OF ROSEDALE
UTILITY RATE BY-LAW
SCHEDULE OF QUARTERLY RATES
April 1, 2020
1. Schedule of Commodity Rates & Quarterly Service Charge
Water rate per cubic meter
$3.15
Quarterly Service Charge
$19.21
2. Minimum Quarterly Charges
Meter Size
Group
Capacity
Ratio
Minimum
Quarterly
Consumption
(m3)
Customer
Service
Charge
Water
Commodity
Charge
Total
Quarterly
Minimum
5/8 inch
1
14
$19.21
$44.10
$63.31
¾ inch
2
27
$19.21
$85.05
$104.26
1 inch
4
55
$19.21
$173.25
$192.46
1 ½ inch
10
140
$19.21
$441.00
$460.21
2 inch
25
341
$19.21
$1,074.15
$1,093.36
3. Bulk Sales Rate
All water sold in bulk by the Eden (Neepawa) Public Water Distribution System
shall be charged for at the rate of $4.43 per cubic meter.
The following clauses take effect April 1, 2020
1. Service to Customers Outside the L.I.D. of Eden Limits
The Council of the Rural Municipality of Rosedale may sign agreements with
customers for the provision of water and sewer services to properties located
outside the boundaries of the LID of Eden. Such agreements shall provide for
payment of the appropriate rates set out in the schedule, as well as a surcharge,
set by resolution of Council which shall be equivalent to the frontage levy, general
taxes and special taxes for 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 these boundaries. In
Order No. xx/20
March xx, 2020
Page 16 of 17
addition, all costs of connection to the Utility's mains and installing and maintaining
service connections will be paid by the customer.
2. Water Allowance Due to Line Freezing
In any case where, at the request of Council, a customer is allowed to run water
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 billings for the last two quarters for the same customer, or the same
premises if the occupant has changed.
3. Billings and Penalties
Accounts shall be billed quarterly, and shall be due and payable fourteen (14) days
after the date of billing. A late payment charge of 1.25% per month shall be charged
on the dollar amount owing after the billing due date and shall be compounded
monthly.
4. 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 matter as notice and the right to appeal such action to the Public
Utilities Board. A copy of the Conditions Precedent is available for inspection at
the Municipal office.
Any service disconnected due to non-payment of account shall not be reconnected
until all arrears, penalties and a reconnection fee of $40.00 have been paid.
5. Outstanding Bills
Pursuant to Section 252(2) of The Municipal Act, the amount of all outstanding
charges for water and sewer services, including fines and penalties, 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, said charge and penalties shall be added to the
taxes on the property and collected in the same manner as the other taxes.
Because water and sewer services may be provided and billed to a tenant,
information about accounts outstanding may be shared with the property owner.
6. Water Used During Construction
Contractors using water in connection with the construction of buildings shall be
charged a flat fee of $35.00 for dwellings and $55.00 for commercial buildings for
every three month period until completion.
Order No. xx/20
March xx, 2020
Page 17 of 17
7. Meter Testing
In any case where a utility customer requests that a meter be tested for accuracy,
the customer will provide the RM with a deposit of $200. The RM will then remove
the subject meter and send it to an independent lab for testing. If the meter is found
to be faulty, all costs associated with the testing process will be borne by the RM
and the deposit will be refunded to the customer. If the meter is found to be in
proper working order, all costs associated with the testing process will be borne by
the customer and the customer will be billed or refunded any balance owing.
8. Meter Tampering
Where there is evidence of meter tampering, a minimum charge of $500 will be
applied to the customer's account in addition to an amount calculated to adjust for
the tampering based on historical usage.
9. Cross Connections
No customer or person shall connect, cause to be connected or allow to remain
connected any piping fixture, fitting, container or appliance in a manner which
under and circumstances may allow water, wastewater or any harmful liquid or
substance to enter the RM's water system.
If a condition is found to exist which, in the opinion of the RM, is contrary to the
aforesaid, the RM may either:
Shut off the service or services; or
Give notice to the customer to correct the fault at his or her
own expense within a specified time period.
10. Authorization For Officer to Enter Upon Premises
The Public Works Manager, Shop Foreman, or other employee authorized by the
RM in the absence of the Public Works Manager or Shop Foreman, shall be
authorized to enter upon any premise for the purpose of:
Affixing to any pipe, wire or apparatus connected with any
such utility, a meter or any other measuring or testing device;
or taking reading from, repairing, inspecting or removing any
meter or apparatus belonging to the RM.