Municipal Utilities - User Guide
Setting Rates and Regulations
a) Rate Applications/Changes to Regulations
The Utility (i.e., the MEU) decides that a rate application is necessary. Based upon the circumstances, the Board may determine that a rate review is required. A rate study is prepared either by staff or an external consultant. The type of information that is required in a rate application includes: Proposed Electricity Rates and Revenue; System Description; Historical and Projected Financial Information.
The completed rate study must first be presented to Municipal Council (or an equivalent body) for a resolution authorizing that the application be filed with the Board for approval.
The Utility files with the Board a copy of the completed rate study along with copies of a petition, affidavit and resolution supporting the application.
Board staff then reviews the application and supporting documents. If additional information is required, Board staff will request clarification. Once the application is complete, the Board drafts a notice of the public hearing and after consulting with the MEU determines a date and location in the community for the hearing. The hearing date is usually eight to ten weeks following complete information being filed with the Board. This is necessary to allow time for advertising the notice and the process for intervention. The notice is forwarded to the Utility, and the Utility's consultants, if applicable, for verification. The notice further specifies a date by which Formal Intervenors should file their submissions with the Board and provides the Board's contact information if any individuals wish to provide comments.
The Board issues an Order which specifies the dates, as required by the Public Utilities Act, that the notice is to appear for three consecutive weeks in a local newspaper(s). The MEU is responsible for ensuring that the notice is published in the paper(s) on the specified date and is also responsible for payment of associated costs. Copies of the notice confirming it was placed in the paper on the dates specified in the Order are required to be filed at the start of the public hearing and are entered as exhibits, along with other pre-filed evidence.
The MEU must have copies of the rate study available at its offices and/or an agreed upon central location for public viewing during the application and hearing process.
The Board issues Information Requests ("IRs") to the MEU for response, generally within a two week period. The Board usually specifies the number of copies required to be filed. The responses to the IRs are identified as a pre-filed exhibit at the public hearing.
The Public Hearing process is generally as follows:
- The Board reads the notice of hearing, outlining the proposed amendments.
- The parties are identified.
- The Board explains the procedure to be followed at the hearing.
- The hearing exhibits are marked.
- The witnesses are sworn/affirmed.
- The Applicant presents evidence (direct examination), which is generally a review of the rate study.
- There is cross-examination of the Applicant by Formal Intervenors.
- The Board questions the Applicant, and if a response cannot be given at the hearing, the Board may request that the answer be provided as an Undertaking within a specified period of time.
- The Formal Intervenors present evidence.
- The Formal Intervenors may be cross-examined by the Applicant, and by other Formal Intervenors.
- The Board questions the Formal Intervenors, and if a response cannot be given at the hearing, the undertaking process noted above will be followed.
- Any members of the public who wish to speak are given the opportunity to do so.
- The Applicant/Formal Intervenors are given the opportunity to make oral or written submission, should they have further comment.
- The Board asks any additional questions/provides additional comments.
- The filing date for Undertaking(s) response is set.
- The hearing is adjourned and the Board's decision is reserved.
If Undertakings are requested during the hearing, the MEU is usually given a one to two week time period to respond. Undertakings are set out at the hearing and are confirmed, including the filing date, in a letter from the Board soon after the hearing date.
b) Pass Through for NSPI Rates
When NSPI has received Board approval to raise rates, this includes approval for an increase in NSPI’s municipal rate. In order to recover increased costs due to NSPI increases, and upon application by the MEU to the Board, the Board may amend the Rates without a public hearing for Domestic Service, Small General Service, General Service, Domestic Service Time-of-Day Rate, Industrial Rate, Street & Yard Lighting Rates, and Other Lighting & Miscellaneous Small Load Rates, based on a formula approved by the Board.
The MEU can apply to have the Board approve, without a hearing, an increase in its rates to allow the MEU to pass through the approved NSPI rates to its customers.
The MEU makes written application to the Board, including the following required information:
- Second previous year’s power purchase cost from NSPI
- Second previous year’s total sales for the classes noted
- Previous year’s power purchase cost from NSPI
- Previous year’s total sales for the classes noted
- A proposed rate schedule, based on the formula referred to above
The MEU also files copies of a petition, affidavit and resolution of either the Municipal Council or other equivalent body supporting the application.
Board staff then reviews the application and supporting documents. Additional information may be required. If so, Board staff requests clarification through IRs.
After the Board has reviewed all of the required information, it issues an Order approving the schedule of rates.
Application Process by MEUs for Capital Expenditure
Capital assets include property, plant and equipment that are used and useful in the supply of electrical power by an MEU.
As set out in s. 35 of the Public Utilities Act, Board approval is required, in advance, for each capital acquisition or construction project costing $250,000 or more. In addition, Board approval is required for any capital projects for which the proposed source of funding includes the MEU’s depreciation funds, any utility reserve fund, or debt.
Capital costs requested for Board approval may include expenditures such as the purchase price of the asset; construction costs (materials, labour, project management, overhead, etc.); site preparation costs; engineering costs; professional fees; and interest during construction.
There is no set or prescribed form for an MEU to use in requesting approval for a capital project. It can be as simple as a one page letter or a covering letter with several attachments or enclosures to describe the project. Major capital projects that occur infrequently such as a building, or a substation addition, will require a more detailed explanation than routine projects that occur on a regular, on-going basis. Generally, the Board requires the following information for any capital expenditure approval:
- Each capital expenditure and associated cost should be listed separately, with a brief description of the project and the need for the project. The project cost should, where possible, be identified by major category such as: contractor; materials/supplies; professional fees; engineering and design; communications; equipment purchase or rental; other labour; administrative; land purchase; capitalized interest; and any additional information seen by the MEU as being helpful in explaining the project.
- The source of funding for the project should be identified. If the source of funding is through the MEU, information indicating that the particular funding source is available should be provided. For example, if the funding is through the MEU’s depreciation funds, an indication of the balance in this fund is required. For larger projects which involve long term debt financing, pro forma statements, setting out the annual non-operating expenditures associated with the debt charges, and the effect of these payments on the MEU’s financial health, should be provided. Copies of the MEU’s most recent financial statements should be filed with the Board in order to provide current information on the fund balances and the MEU’s overall financial health.
- If external funding is to be used to fund the project’s costs, documentation indicating that the amounts specified have been approved by the funding sources should be filed.
- It is understood that for certain projects, the above noted level of detail may not be necessary to justify the capital expenditure.
Receipt of an application for a capital expenditure approval is acknowledged by the Clerk of the Board. These applications are available on the website.
IRs are developed for clarification on certain aspects of the application or to provide information if it is deemed to be incomplete. These IRs can be asked over the telephone, sent by email, or more formally sent out by the Clerk. Often the IRs are informal, and dealt with through communication between a Board Advisory Staff member and the applicant MEU.
The MEU is expected to respond in a reasonable time, e.g., within a three week period.
When the Board receives the answers to the IRs they are reviewed for completeness. If required, a second set of IRs can be issued. This step does not happen frequently.
The Board then reviews the material before it and determines whether the application should be approved, or denied, and the MEU is advised accordingly.
Submission of a Complaint
All complaints must be in writing (email, fax or regular mail) and directed to the office of the Clerk of the Board. The Complainant must identify in sufficient detail the matter which is the subject of the complaint. The processes under which complaints are heard are set out in ss. 83 - 89 of the Public Utilities Act.
Process followed by the Board for Complaints:
- The Clerk of the Board acknowledges the written complaint by letter which is copied to the MEU, along with a copy of the complaint.
- Complaints filed with the Board are a matter of public record and information about them can be accessed through the internet or through the offices of the Board. This means that other persons can see information about the complaint. If a party wishes, a request may be made to the Board to hold information in confidence by making an application under Regulatory Rule 12. Further information can be obtained from the Board Clerk.
- The Board reviews the complaint and obtains any additional information required from the MEU and the Complainant. IRs to the MEU and the Complainant are issued by the Board and written responses to these IRs are necessary in order to proceed with the complaint.
- The Board reviews the material before it and, based on the information provided, determines whether further investigation is warranted. If the Board decides no further investigation is warranted, a letter is sent to both parties stating the reasons for this determination.
- If, after reviewing the file, the Board determines that further investigation is warranted, it shall conduct a more detailed investigation.
- After reviewing the results of the further investigation, the Board determines whether a hearing is warranted. A letter stating the decision is sent to both parties.
- If the Board determines, following either the initial review or further investigation, that an issue has been raised which should be heard, the MEU and the Complainant shall be notified of this decision and provided with an Order which sets out the nature of the complaint and gives the MEU an opportunity to satisfy the complaint within 20 days of the service of the Order. If the MEU fails to satisfy the complaint within the time frame set out in the Order, a formal hearing will be set down.
- The Board will then consider the evidence presented and issue its written decision.