Utility Regulatory Information

Last Updated: September 29, 2017

New public members appointed to Rate Application Committee


Posted September 29, 2017
In early August, the City asked for interested members of the public to provide expertise to Council (in its role as utility regulator) by serving as members of the City of Chestermere Rate Application Committee.


 

Several interviews were conducted with qualified candidates and on September 18, Malcolm Cox, Brad Krizan and Kay Leyde were appointed to supplement the three Council members who sit on the committee. One of the public committee members is a long time resident.

 

“We are very excited about the vast cross-section of skills that these committee members bring,” said Brenda Hewko, Controller for the City. “These individuals have a wide range of board experience in utility rate setting modeling, planning and development, engineering, and wastewater facilities, and they will be a great help in providing effective oversight of CUI.”

 

The creation of the committee came last year after a thorough review of the utility company’s rate regularly framework and oversight processes. Following the recommendations of a third party consultant, the City overhauled the Utilities Mandate, drafted a comprehensive operational agreement, created a robust Rate Regulatory Framework that mirrors the process of the Alberta Utilities Commission, and established the Rate Application Committee.

 

The committee will have three tasks: to review the company’s audited financial statements, review quarterly key performance indicators of the company and review any rate adjustment applications. They will meet at minimum on a quarterly basis.

 

For more information on the City’s role as CUI’s regulator, visit www.chestermere.ca/cui.



City progresses changes with Chestermere Utilities Inc. (CUI) - Summer Update

For the first half of the year, City staff, Council and CUI have been actively pursuing work that stemmed from the City’s 2016 Utilities Mandate and Rate Regulatory Review.

"Council looks forward to seeing the final pieces, which will be presented to us in a few months,” says Mayor Patricia Matthews. “We commend staff for working hard to reflect the community’s desires and the demands of Council as a regulator."

Key elements of this work have included:

Unanimous Shareholders Agreement (USA)

The Second Amended and Restated USA was presented to and approved by Council at the May 15 regular Council Meeting and signed on June 2.

The agreement aligns key considerations with the recently adopted Utilities Mandate, including changes to CUI’s Board (e.g., composition, responsibilities, compensation process).

“The revised USA clarifies key accountabilities for both the City as shareholder and the CUI Board, which contributes to enabling CUI to provide quality services to residents,” says Chen Peng, Corporate Strategy Officer.

For further details, the full agreement is available on the City’s website.

Utility rate setting process

Since January, the City has been drafting a Policy for future utility rate applications. Once the draft is complete, staff will present it to Council for their input and approval.

The Policy will focus on two key areas: financial reporting and rate application requirements. It will also describe a review committee and membership composition, focused on members with relevant skills.

“As it was for 2017 rates, the new process will ensure future utility rate requests are scrutinized before any decisions are made,” says Mayor Matthews. “Staff, the new Council and community members will be given opportunities to evaluate and provide feedback using the new rate setting and engagement processes, which will align with Alberta Utilities Commission principles.”

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Municipal Affairs' Review Complete: No Investigation Necessary

February 17, 2017

"I am pleased to let you know that the City of Chestermere has received a decision from the Government of Alberta indicating that, following their receipt and subsequent review of a 2016 petition, an investigation is not necessary.

Throughout the past few months, City Council and Administration responded to requests for additional information from Municipal Affairs as they undertook a preliminary review. That review has now concluded.

The Minister has indicated that he appreciates the efforts of City Council to strengthen the utility rate setting and regulatory processes. You can read the Minister’s letter here.

Our entire organization took the matters residents brought forward very seriously. In listening to those concerns, we took proactive steps to enhance our communication methods, the utility rate-setting process and more. We appreciated that the Minister indicated his satisfaction in the approach and actions taken.

As an organization and Council, we are confident that we operate to best serve our community with professionalism, transparency and openness. We will continue to make decisions in the best interests of Chestermereians and work with the highest level of integrity.  

On behalf of Council, and as a long-time resident, I want to reiterate that we genuinely value your feedback as we grow this great city together. We encourage you to continue to get involved and provide your perspective to make a positive impact. Together we can make Chestermere an even better place to live and work."

Mayor Patricia Matthews

Council Approves 7.8% Utility Rate Increase for 2017


December 20, 2016

Following a thorough review process, City of Chestermere Council approved a motion at their regular December 19 meeting to allow Chestermere Utilities Inc. (CUI) to increase 2017 rates by an average 7.8% overall. CUI’s original request was to increase rates by an average of 15% overall.

As part of the 2016 Interim Rate Setting Process, Council heard presentations from CUI, InterGroup Consultants, a third party utility consultant, and City finance staff regarding CUI’s 2017 Utility Rate Request. These comprehensive reports scrutinized CUI’s financial projections, applied Alberta Utilities Commission principles, and considered the impacts of a challenging economy.

“This was a complex decision that we didn’t make lightly. By using our Interim Process, we are confident that we took the necessary steps to ensure this rate increase was absolutely necessary for CUI to continue to provide services to our residents,” says Patricia Matthews, Mayor of Chestermere. “We appreciate the extensive analysis that City Staff and InterGroup Consultants did to lessen the impact on residents by reducing the overall rate request by almost half.”

InterGroup Consultants recommended lowering the rate request from 15% to 10% by reducing the revenue CUI may collect for Water and Storm Water Services. Council determined, upon the advice of the consultant, that reducing Water revenues by $300,000 and Storm revenues by $300,000 will still allow CUI to be financial sustainable.

City Staff recommended reducing the request further by:
  • Considering interest savings from CUI’s newly negotiated funding arrangements. This will result in reduced rate-related interest expenses of approximately $149,000, with additional savings benefits occurring in future years.
  • Reducing the demands on cash through appropriate debt financing. CUI will pursue debt financing that aligns with the life cycle of their long-term assets to provide short-term ratepayer relief.
“When making this decision as the rate regulator and as residents, Council understands the importance of listening to our community’s concerns, respecting today’s economic conditions, and enabling CUI to continue to serve Chestermerians,” says Matthews.

The average residential customer will pay an additional $11.74 per month, significantly lower than CUI’s original request, an average increase of $22.60 more per month.

CUI’s final submission, InterGroup Consulting’s report and the City’s detailed recommendations can be viewed on the agenda, which is available at: www.chestermere.ca/agendas


Chestermere Utilities Inc. (CUI) to Present Final Submissions for 2017 Rate Request


December 16, 2016
On Monday, December 19, City Council will deliberate over the final submissions for CUI’s 2017 Utility Rate Request. At this meeting, Council will review CUI’s responses to the public, Intergroup Consultants, and Council questions. Council will also review the Staff Report submitted by Administration and will have an opportunity to ask further questions and may make a final decision on 2017 utility rates.

Residents are invited to observe the discussion. Please note that the general question period will occur at the beginning of the meeting, not as part of CUI’s presentation. As per the Interim Rate Setting Process, Council will use the meeting to review CUI’s responses to the public’s questions that were submitted to CUI in advance.

Visit the City of Chestermere’s website to review Monday’s agenda, which includes CUI’s final submission and the Staff Report from Administration.

Linking Disclaimer:


The link to the CUI website is being provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by the City of Chestermere of any of CUI’s responses to the 2017 Rate Request questions. The City of Chestermere bears no responsibility for the accuracy, legality or content of CUI’s responses to the 2017 Rate Request questions.


CUI Publishes Answers to Questions about 2017 Rate Request


December 12, 2016

Chestermere Utilities Inc. (CUI) has begun publishing answers to questions from Council and residents about its 2017 Utility Rate Request on its website at www.cuinc.ca.

For those unable to attend the Council Meeting on December 5, an audio recording of CUI’s 2017 Rate Request discussion, including questions and answers from Council is also available by emailing info@chestermere.ca.

Disclaimer:
The link to the CUI website is being provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by the City of Chestermere of any of CUI’s responses to the 2017 Rate Request questions. The City of Chestermere bears no responsibility for the accuracy, legality or content of CUI’s responses to the 2017 Rate Request questions.

Council Begins Thorough Review of CUI’s 2017 Rate Request


December 7, 2016

On Monday, December 5, Chestermere Utilities Inc. (CUI) presented its 2017 Utility Rate Request to Council. Council is now continuing to review the information, consulting with an industry expert, and asking CUI questions before rendering a decision.

“In today’s economic climate, we know that utility rate increases are challenging for many households,” says Mayor Patricia Matthews. “As both residents and members of Council, we will make sure we leave no stone unturned in evaluating this request before making a decision about 2017 Utility Rates.”

During the meeting on Monday, Council asked CUI preliminary questions, including:
  • Are the increases requested necessary for 2017 operations?
  • What has CUI done to reduce costs and improve efficiencies?
  • What is the risk to residents if the new rate doesn’t get accepted?
  • Are there any other possible funding options that may help alleviate the financial burden for residents?

In addition to Council’s questions, CUI is soliciting public input. Residents are encouraged to submit written questions to CUI by emailing 2017rates@cuinc.ca by noon on December 8. They will be compiled and answered by December 15 or sooner, as per the new Interim Rate Setting Process.

Also as part of its Interim Process the City has also engaged an external consultant to review CUI’s rate request and provide advice to Council. Patrick Bowman Principal and Consultant, InterGroup Consultants, has more than 18 years of experience in research and analysis for regulatory and rate reviews of electric, gas, and water utilities. He has consulted for more than a dozen organizations in six Canadian provinces and territories.

“This is a significant decision as a regulator, so it was important for us to use a consultant with extensive industry expertise to help us analyze CUI’s request, understand the intricacies, and ensure it aligns with AUC principles,” says Matthews.

The next steps for the Interim Rate Setting Process are:
December 8: Resident, Council, and consultant questions are due to CUI by noon.
December 15: CUI will provide a final package to Council, containing a written response to the questions received from the public as well as any supplemental information provided by the consultant. This information will be posted on CUI’s website. City Administration will report back to Council with information from the consultant.
December 19: Council will review all the final submissions (public questions, responses from CUI, and the consultant’s review) and may make a final decision on 2017 utility rates.

CUI’s rate request presentation is available online through the Council Meeting Agenda or on the CUI website.

We encourage residents to review the information and contact CUI directly with any questions.


Chestermere Utilities Inc. Publishes 2017 Rate Request


December 1, 2016

As part of its annual planning cycle, Chestermere Utilities Inc. (CUI) has submitted its request for new 2017 utility rates. The requested rates and rationale supporting the requested changes are now available on the CUI website.

The City is adopting an Interim Rate Setting Process to review the 2017 rate request, as recommended by Stack’d Consulting. The new measures will make the rate setting process stronger by aligning with Alberta Utilities Commission (AUC) principles, clarifying accountabilities for both CUI and the City, and soliciting third party expertise on CUI’s 2017 rate request.

The next steps for the interim process are:
  • December 1: CUI will publish its rate request on its website. Residents may submit questions directly to CUI by emailing 2017rates@cuinc.ca.
  • December 5: CUI will present the 2017 rate request to Council. No decision will be made at this meeting. Council will work with an external utilities consultant to review the request.
  • December 8: Resident and consultant questions are due to CUI by noon.
  • December 15: CUI will provide a written response to the questions received from the public as well as any supplemental information provided to the consultant as part of a final package to Council. This information will be posted on CUI’s website. City Administration will report back to Council with information from the consultant.
  • December 19: Council will review all the final submissions (public questions, responses from CUI, and the consultant’s review) and make a final decision for 2017 utility rates.
We encourage residents to review the information and contact CUI directly with any questions. You may submit questions in writing to CUI by emailing 2017rates@cuinc.ca by noon on December 8.


City Council moves forward with new Utilities Mandate and Rate Regulatory Framework


November 25, 2016
“The recommendations represent the culmination of several months of work to strengthen our processes with CUI,” says Mayor Patricia Matthews. “We are eager to move forward with the actions, which help create a more transparent environment, and are aligned with Alberta Utilities Commission (AUC) principles.”

Matthews says Stack’d used a thorough and robust process to prepare their recommendations, including soliciting input and expertise from other communities, industry organizations, and experts. “We wanted to make sure we were adopting best practices in the industry, to address the concerns expressed by residents earlier this year,” she says.

While work has begun to implement all of the recommendations, Council will implement an Interim Rate Setting Process now to prepare for 2017 utility rates. “The full set of recommendations will take some time to put into effect. In the meantime, we don’t want to miss the opportunity to immediately bolster our processes for how the City governs its utilities,” says Dr. Randy Patrick, CAO.

These interim measures will make the Rate Setting Process stronger by aligning with AUC principles, clarifying accountabilities for both CUI and the City, and soliciting third party expertise on CUI’s upcoming 2017 rate request. “We will use our learnings from the Interim Rate Setting Process to help guide next year’s activities, along with implementing all of the recommendations in 2017,” says Patrick.

The next steps for the 2017 Interim Rate Setting Process are:
  • November 23-24: The City will engage an external rate review expert(s) to assist in the rate request review.
  • December 1: CUI will publish its 2017 rate request on its website. Interested residents may submit questions in writing to CUI by emailing 2017rates@cuinc.ca.
  • December 5: CUI will present its rate request to Council.
  • December 8: Resident questions are due to CUI by noon.
  • December 15: CUI will respond to public questions and submit a package to Council. City Administration will report back to Council with information from the external consultant.
  • December 19: Council makes final rate decision.
After the Interim Process is complete, work in 2017 will focus on implementing the recommended processes in full, including:

  • Revising overarching policy documents to align with Stack’d Consulting’s recommendations.
  • Setting up communication and reporting protocols between CUI and the City, and Chestermere residents.
  • Reviewing and updating key administrative procedures to reflect the new processes.
  • Enhancing the process for setting 2018 rates using the consultant’s recommendations and learnings from the Interim Process used to set 2017 rates.

Stack’d Consulting’s Final Report can be found below. A copy of the Report and the City’s actions have been sent to the Minister of Municipal Affairs in response to the resident petition earlier this year. The City will update residents on the results of the Province’s review and any further actions that are required as soon as it is available.


Plans to implement Stack'd Consulting's Recommendations coming to Council November 21
November 17, 2016

Residents are invited to attend the November 21 Council Meeting to hear how the City plans to implement recommendations from Stack’d Consulting’s Final Report on the Utilities Mandate and Rate Regulatory process. The agenda and information for the presentation will be posted to www.chestermere.ca/agendas on November 18.

The presentation as a separate document is available here.

Note: Due to timing constraints, Council asked for an updated schedule around the interim process. This addendum was provided as part of the final report.

Stack’d Consulting’s Summary Report to Council


October 19, 2016

On October 17, 2016, Stack’d Consulting presented a summary of their final report to Council. The presentation provided a high-level overview of their progress to-date, a summary of the Mandate and Rate Regulatory Process, and next steps.
"We have been eagerly awaiting Stack’d Consulting’s report since they were appointed by Council in June," says Mayor Patricia Matthews. "We are happy with the thorough approach they’ve taken to ensure their report is based on industry standards and best practices."

Key changes to the Mandate and Rate Regulatory framework include:
  • A new, detailed Mandate that aligns with the City’s objectives for Utilities.
  • Appropriate organizational reporting and forward-looking plans and forecasts from CUI.
  • A rate-setting process and guidelines will set future year’s rate-setting activities.

    CAO, Randy Patrick says the Stack’d report includes valuable changes to the way the City works with CUI. "We are moving forward with controls that align with the Alberta Utilities Commission to ensure that customers receive safe and reliable service at reasonable rates," he says.

    But the process is not over yet. Council asked Stack’d and City Administration to come back in November to present the implementation plan and corresponding actions. "We look forward to seeing more details about the steps the City and CUI will take to implement these important changes," says Matthews.

The City encourages residents to read the summary report and attend the November Council Meeting in-person. The date and detailed report will be posted on the City web site prior to that meeting.

To sign up for a City Alert about upcoming events and Council Meeting Agendas, please visit the Notify Me section of the City’s web site.

Additional Updates



CUI Regulatory Review:

In June, Council announced that they have selected a consultant to review CUI's mandate

Background:


Winter 2015:
In the winter of 2015, the new CEO of Chestermere Utilities Incorporated (CUI) discovered an oversight in the way utility rates were being calculated and the company was facing a significant shortfall because the rates were not covering the actual costs to provide utility services.

In January, CUI brought forward a request to City Council to increase rates by 25% (approximately $30/month per household) to cover the current cost of services provided to Chestermere.

Council met at a special meeting, on February 18, 2016, and decided not to grant the 25% increase in rates as CUI requested but did approve a 15% increase on water and sewer and 25% on solid waste and storm water. This decision was made after extensive review and consultation as recommended by an independent third party regulatory utility consultant who reviewed CUI’s request.

Following the decision, Mayor Patricia Matthews explained, “Our decision to change the request for the rate increase took into account the impact on the residents of Chestermere and the recommendations from the third party consultant. This decision will assist CUI in covering the cost of providing services. We have also asked CUI to take additional measures to cut costs and improve efficiencies in order to make up any additional shortfall.”

In addition, Council will continue to provide increased scrutiny of the utility company in the form of quarterly financial reports (which will be made public), and regular updates to Council. Council has also communicated to CUI that they will need to find alternative ways to cover past shortfalls without rate increases.

In the coming months, Council will adopt a rigorous regulatory process, and will also evaluate the viability of CUI as a whole.

Learn more about the process and steps taken since the decision above.