Just before the Christmas holidays, Chestermere Utilities Inc. (CUI) came forward and identified what they are calling a significant billing mistake. According to CEO Leigh-Anne Palter, the utility company was not billing its customers at the appropriate rates to recoup the cost of what they were being billed from the City of Calgary – a mistake which carried on for three years and ended up to the tune of $1.4 million unbilled to Chestermere residents.
When this first came out, Palter stated that beginning in March 2016, customers would be experiencing a $30/month increase in their bills from CUI – but promised that was only being implemented so that the billing was being done correctly on a go forward basis…. Not to attempt to recoup the money the utility company had lost over the last three years. But when the math was quickly done by a number of residents, a $30 per month per customer increase would have the utility company earning $2,059,200 in the first year of the new rates – but it took them three years to only lose $1.4 million. So why such a drastic increase? Who was responsible for setting the rates? Who was supposed to be watching the billing?
Well if the frustrated and furious social media posts weren’t an indication of how residents felt about this, the January 18th meeting of city council sure was. With a packed council chambers, hallway and lobby that started filling up close to an hour before the meeting even started, it was no doubt that residents came to be heard.
With a full house, the utility company CEO Leigh-Anne Palter began her presentation to council. Palter has only been with CUI since July 2015 and was the one who found this billing error and brought it to the attention of council. Not much time was spent discussing the sins of the past and who should be held accountable for this error but did state that if this billing isn’t corrected, the deficit will result in an operating shortfall of $3.2 million in 2016. “CUI’s current mandate is to fully recover its costs, however, the corporation is currently operating at a loss. As a result, utility rates must be increased in 2016 to accurately reflect the full cost of services”, said Palter.
Palter proposed recommendation is to implement a 25% increase and move to a monthly billing cycle. A 25% increase! It was attempted to soften the blow by presenting a table that basically takes the average customer and breaks it down showing the daily increase of about $1.07.
However, it seemed that the cause of most of the frustrations of the residents is not necessarily the amount of the increase but more so how we got here and who is responsible. Sure, no one likes having to pay more money for things, but most of the questions that were asked of residents during the question and answer period of this council meeting and in the days to follow were more to do with the how and the who.
The who seems to be a mystery. Since August 2015, there have been significant staffing changes and shuffling of the Board of the Directors (which it has been confirmed does contain members of Chestermere City Council). I appreciate professionalism as much as the next guy but in this case, is it beneficial for someone to step up and say “so and so was fired and this is why”? Well, we’ll likely never know as the new CEO wouldn’t comment to the reasons for staff leaving and the previous staff aren’t talking either.
Then the attention shifts to the City of Chestermere. When you look at CUI’s website they have the following as an explanation:
“Who is responsible for this issue?
CUI is responsible for forecasting the revenues and expenses, and ultimately proposing the rates to be charged to customers to cover the costs of providing those services. Any rates proposed by CUI are subject to final review and approval by City Council acting in their role as regulator.
Throughout that process the CEO is accountable to the CUI Board of Directors, and the CUI Board is accountable to the Shareholder as represented by the City’s elected officials.”
Ok….so even if this billing error wasn’t caught at the company level for whatever reason, the governing body of the regulator perhaps should have caught it – which was the concern of many residents. How does something like this not get noticed for three years?
Mayor Matthews explained it to residents who asked the question that “it was nothing that stood out on paper as even when audited financial statements were done, this never showed as a loss in money – it was money that was never collected and simply missed out on”.
Residents brought up very valid questions during the Q & A portion of the January 18th council meeting. However, in speaking with residents afterwards, many felt they were just given the run around and we’re provided no answers. With that, residents took to social media even before the meeting was over. Some calling for a complete forensic audit of CUI and the City of Chestermere, others wanting an early election to clear house of council, others claiming that this will be the end of Chestermere and that residents will start leaving the community that they can no longer afford to live in.
One of the suggestions that seem to get the most public support at the council meeting and also on social media in the days following was to dissolve CUI and put the utilities back in the sole hands of the City of Chestermere. If you lived here in the pre-CUI years, you’ll remember that our utilities were handled by a utility department of the Town of Chestermere.
One resident said, “I took a look through my old bills and with a house of 8 people living here and during that time they were all very small children so we had higher usage then we do now, my bill was significantly less than it has been since CUI was created”.
But just as some feel that is the answer, and there is even now a petition circling to collect signatures in support of that decision, others feel that putting it back in the hands of the city is an even worse idea.
So, what happens now? Well, both CUI and the City of Chestermere have enlisted the help of third parties who are going over the proposed increase and trying to come up with the best move forward. Palters presentation to council asked for council to make a decision by the first council meeting in February and for the rate increase to be implemented in March – but that may not be the case.
We spoke with Mayor Matthews on January 22nd for a follow up to the council meeting and what are the next steps on this. “We are in the process of doing a regulatory review and we have a meeting coming up to go over the rate conversations we’ve had with Patrick Bowman (who is conducting a third party regulatory review) . We will be releasing that information in the first council meeting in February but it is really important to us that we take as much time as we can”.
Mayor Matthews went on to say that as a council they heard what residents were saying and they plan on taking some of those suggestions into consideration when making their decision.
“We’ll be looking at rates at the end of February. We’re also going to looking at taking applications for the board and that will be coming out not only through us but also CUI and there will be a central location where people can submit their information. The board and CUI will be conducting interviews for those positions”.
Another big issue of contention with that came up in the January 18th council meeting was the fact that members of council, since CUI’s start, have always sat on the CUI board of directors. When CUI first started, there were four members of council on the board (including the Mayor – but she has not been on the board since 2013) but every year since they have decreased that number and currently there are two councillors that sit on the CUI board. I asked Mayor Matthews if it would be considered to have no members of council on the CUI board. “One of the things that we also need to consider is do we have enough authority as a regulator to ensure the company is following the mandate that was set up? Do we have enough clout as shareholders to keep that on the right path if there is no member of council on the board to act as an expert? The purpose for them being on the board in the first place is to access that council expertise – the same reason you would put an accountant on the board. Not so that they do the books but so that if CUI veers off, that expertise councillor can identify that. The long term thought for council members on the board was always to have it reduced, and we’ve done that. The question now is are we comfortable enough letting go of that ability to access that expertise? Are we comfortable enough that CUI is at a point that they can self-direct”.
Matthews added that there will also be an advisory group organized from the community. “We’re then going to sit down and hash out all the information, figure out what the mandate of CUI needs to be and how to move forward with it. What it looks like. What it needs to accomplish and what the priorities are. What we want to see for next year and going forward”.
Aside from now having this council meeting where even though many residents didn’t feel they got the answers they wanted but still had the chance to be heard and a petition started to dissolve CUI, many have asked who can come in and help in a situation like this.
I spoke with Amanda Brinker with the Alberta Utilities Commission back in December, who at first glance admitted they typically don’t get involved with municipally governed utility companies. However, after we spoke and she did some research on her own, she advised that there are some cases when the AUC does get involved in the wrong doings of utility companies. She pointed out that in Section 43 of the Municipal Government Act:
Appeal
43 (1) A person who uses, receives or pays for a municipal utility service may appeal a service charge, rate or toll made in respect of it to the Alberta Utilities Commission, but may not challenge the public utility rate structure itself.
(2) If the Alberta Utilities Commission is satisfied that the person’s service charge, rate or toll
(a) does not conform to the public utility rate structure established by the municipality,
(b) has been improperly imposed, or
(c) is discriminatory,
The Commission may order the charge, rate or toll to be wholly or partly varied, adjusted or disallowed.
Now, Ms. Brinker said that if Chestermere City Council would have approved this rate increase at the January 18th council meeting, the above reasons are put in place for residents to appeal that decision. Since council has not yet approved a rate increase, an appeal cannot yet be filed, however the AUC is interested in hearing from Chestermere residents on this issue.
“They can contact the Alberta Utilities Commission at consumer-relations@auc.ab.ca or 780-427-4903 with a formal complaint, clearly identifying how Chestermere Utilities Inc. rates fall under one of the above conditions in which the AUC can investigate”, said Brinker.
At this point, the next meeting of council which is Monday February 1st at 1pm is when it is hoped that the third party regulatory review will be completed by and discussed and then at the February 16th (not Monday February 15th as that is Family Day) council meeting at 3pm it’s anticipated that council will be making their decision. But as Mayor Matthews stated, if there is more time needed to go over information, council will not rush to make a decision and that March rate increase date could be pushed back.
