VIEWS OF THE BOARD. The Board notes that the scope of the MSA Xxxxxx included both a comparison of the Renewal MSA to the Original MSA, and a review of the appropriateness of the terms and conditions of the Renewal MSA. The Board has previously stated its reluctance to ‘micro-manage’ ATCO’s affairs, however, that does not imply that the Board and interveners must accept the Renewal MSA, given its significance, without an appropriate review and testing. The Board also considered Calgary’s argument that the Original MSA did not permit a renewal until after the completion of the initial term. The Board disagrees with Calgary’s interpretation of sections 12.1 and 12.2. The Board considers that the meaning of the Original MSA allowed for either a 3-year renewal at the end of the initial term, or a 3-year extension to the original term on the third anniversary of the initial term. The Board notes interveners’ submissions regarding the nature and number of changes made to the Original MSA. The Board also notes interveners’ submissions that the Renewal MSA changed materially from the Original MSA, and that several of the terms and conditions did not conform to industry norms. Notwithstanding ATCO’s claims to the contrary, the Board considers that it would be a stretch to accept ATCO’s argument that the Renewal MSA is a bare extension, not warranting a review of its terms and conditions. The Board notes for example that ATCO acknowledged during the proceeding that the intellectual property (IP)/ownership changes were new.34 32 Transcript, page 40 33 FIRM/NCC-ATCOMSA-2 34 ATCO Utilities Reply Argument, page 10 Therefore, the Board will not require a change to the term of the Renewal MSA, but will proceed to review the major changes individually and then look at the changes as a whole to determine whether or not the new terms and conditions are appropriate. The Board also considered the ‘cumulative’ impact of regulatory revisions cautioned against by Xx. Xxxxxxx.35 While ATCO may be concerned about the cumulative impact of revisions that the Board might contemplate making to the Renewal MSA, the Board and interveners could have legitimate concerns about the cumulative impact of revisions between the Original MSA and the Renewal MSA. The Board notes Calgary’s concern that if the 55,000-hour commitment for DME were breached, customers could be burdened.36 The Board notes that under the “exception handling” provision in the Renewal MSA, any under utilization across the ATCO Group would be...
VIEWS OF THE BOARD. The Board considers that all the witnesses provided value to the proceeding and all were credible to the extent of their expertise and experiences. The Board is not interested in ranking witnesses or commenting on the relative value of their contributions in this case. Each of the witnesses was helpful in differing ways. For example, while the ATCO Utilities policy witnesses may not have been experts regarding the IT industry at large, the Board accepts that Xx. Xxxxxx clearly has wide experience as an IT executive and in benchmarking specifically, and the Board found his views in this area to be very helpful. While Xx. Xxxxxxxx is not a CIO, and has not had direct benchmarking experience, her extensive involvement in IT agreements and major outsourcing transactions is impressive. Her ability to speak definitively on the appropriateness of terms and conditions commonly used in IT industry contacts was of great assistance to the Board. Similarly, while Xx. Xxxxxxxx does not have direct experience as a benchmarker or as a CIO, he has been accepted in prior proceedings as a knowledgeable witness on the IT function, and he appeared to be knowledgeable regarding service levels and the costs of performing various IT services.
VIEWS OF THE BOARD. The Board agrees with ATCO that ‘service levels are a complex, detailed area’. The Board also notes that any change to service levels could impact either or both of prices and volumes. The Board considers, based on the record from the MSA Xxxxxx, that while the inter-relationship between service levels, prices and volumes for the various ATCO I-Tek services are undoubtedly well understood by ATCO I-Tek and the ATCO Utilities, they are not as well understood by 93 CAL-ATCOMSA-14 94 CAL-ATCOMSA-14 Preamble 95 Exhibit 308 - Calgary Further Written Evidence dated May 30, 2003, page 4
VIEWS OF THE BOARD. The Board believes there is little value in debating or discussing which party was to ‘blame’ for the failure of the initial attempt to collaboratively determine the terms of reference for the benchmarking study of ATCO I-Tek prices. The Board considers that the requested direction regarding the Renewal MSA has now been provided. The Board is hopeful that subject to a satisfactory Compliance Filing, ATCO and the interveners will now be able to arrive at terms of reference for the benchmarking study that are acceptable to all parties, and that can be submitted to the Board for approval as originally required by Decision 2002-069.Therefore, the Board will provide three months, from the time the Compliance Filing is submitted, for the completion of the Collaborative Process and the filing of an application by the ATCO Utilities in respect of the terms of reference for the benchmarking study.
VIEWS OF THE BOARD. The Board is concerned that this clause could impede the municipality’s ability to negotiate a future franchise agreement that varies from the Standard Agreement. The Board considers the purpose of section 47 is to provide uniformity in provision of service even when franchise agreements have expired and new agreements have not yet been negotiated and implemented. This in turn allows municipalities and utilities the ability to properly negotiate future franchise agreements without compromising the rights and responsibilities provided in a franchise agreement. While the Board recognizes AE’s concern that franchise negotiations be completed in a timely fashion so that the utility can make reasonable long-term decisions respecting the facilities in the municipality, the Board is concerned that such a clause could compromise the ability of a future municipal council to negotiate a new agreement that may vary from the Standard Agreement. Although the Board expects that AUMA fully understands the implications of this clause, it is possible that some individual municipalities could enter into a franchise agreement based on the Standard Agreement without understanding the implications of this clause on the municipality. The Board may therefore require confirmation from a municipality seeking approval of a franchise agreement that it understands that this clause could result in reduced revenues for the municipality after the agreement expires and that the municipality is satisfied that this provision will not compromise its ability to negotiate future franchise agreements. The Board would also expect that the utilities should be providing municipalities with adequate notice of the level of franchise fee that would be applicable if the agreement is not renewed within one year of expiration.
VIEWS OF THE BOARD. The Board considers that the authority of a municipality to charge a franchise fee is implied by the power of municipalities to enter into agreements with utilities pursuant to section 45 of the MG Act. As the Board has the responsibility to review agreements pursuant to section 45, the intent of the legislation seems clear that any kind of compensation that a municipality is receiving from a utility for use of the municipal land pursuant to a section 45 agreement should be subject to the Board’s review. The requirement for a review of franchise agreements by the Board is also contained in section 61 of the EU Act. This section indicates that approval of a franchise agreement may be given if it is determined that the privilege or franchise is necessary and proper for the public convenience and properly serves the public interest. When considering this responsibility, it would seem that the Board should not approve agreements that could result in unreasonable costs being passed on through rates to the customers of the utility. The Board considers that if it approves an agreement with a provision that municipalities can set the level of franchise fee at their discretion on an annual basis, the Board would no longer be in a position to review the level of the fee to determine whether it is reasonable. Such a review is necessary to allow the Board to fulfill its mandate of ensuring that customer rates are fair and reasonable. The Board recognizes that the MG Act provides a municipality with broad authority to make many decisions in the best interest of its residents. The Board must, howeve r, temper this deference to municipal decision- making with its obligation to ensure that the fees established by the municipality are in the public interest. Accordingly, the Board has considered the criteria that should be used in reviewing franchise agreements pursuant to section 45 of the MG Act and section 61 of the EU Act. The Board reviews franchise agreements from a more general perspective than when it reviews a utility’s costs and rates. The Board considers it must, however, review such agreements to ensure that the fees are not unreasonable. The Board therefore considers that the provisions in the Standard Agreement, which allows a municipality to change the level of the franchise fee without any further review by the Board, are unacceptable. Currently franchise fees are recovered through a specific rider of the utility. The Application indicates that franchise fe...
VIEWS OF THE BOARD. The Board is concerned that the wording of this clause could interfere with the Board’s responsibility to ensure that rates are fair and reasonable and not unduly discriminatory. The Board notes that the proposed clause 12 allows the municipality the right to require the utility to charge customers within the increased area a different franchise fee percentage. This clause must be considered in light of the Board’s power to set tariffs. The Board considers it has a responsibility to ensure that the rates of investor owned utilities are not unjustly discriminatory pursuant to sections 51 and 58 of the EU Act. Furthermore, the Board has the jurisdiction to change, waive or disallow a service charge of a municipally owned utility if the Board considers the charge to be discriminatory pursuant to section 43 of the MG Act. The Board has a similar jurisdiction in respect of rural gas utilities pursuant to section 33 (2) of the Gas Distribution Act. Given this broad responsibility, the Board would have concerns about approving an agreement that could potentially result in the imposition of unjustly discriminatory rates to consumers. AUMA indicated that a differing franchise fee rate might be appropriate due to a greater demand on municipal services in the annexed areas. The Board is not convinced that the demand on municipal services should impact the fee that a municipality charges the utility for use of the right of ways. However, if a municipality were able to demonstrate that the circumstances warranted a different level of franchise fee in the annexed area, the Board might be persuaded to approve a different level of franchise fee for that area. As noted earlier, the Board considers that any instance in which the municipality intends to levy different levels of franchise fees to be recovered from customers within the municipality would require an application to the Board. The Board would have to be convinced that the different levels of franchise fee were appropriate in the circumstances in order to grant approval.
VIEWS OF THE BOARD. The Board has concerns that this clause could result in subsidization of high growth urban communities by all customers of the utility. Indeed, the Board notes AE’s comments in the proceedings that this could result in subsidization from one group to another. 3 The Board recognizes that this clause would ensure that both urban and rural municipalities are treated in the same manner with respect to the cost of relocations of facilities located on municipal lands, which are required for municipal purposes. However, municipalities would continue to be responsible for the cost of relocation of utility facilities located on private lands in cases where the municipality has requested the relocation. The Board expects that the portion of facilities that could be impacted by this policy could be considerably different between urban and rural municipalities given the difference in the distribution systems between urban and rural areas. For example, the utilities’ rural distribution systems are a combination of lines that have been installed by the utility and by Rural Electrification Associations (REAs), when purchased. Any facilities currently owned by a utility, which were originally installed by an REA, were located pursuant to the REA’s policies, which could be significantly different from the utility’s policies. It seems reasonable to expect that there could be basic differences in the facility locations between urban and rural municipalities, which could result in cross subsidizations if relocation costs are recovered through the revenue requirement. The Board considers there could be potential for cross subsidization between both urban and rural customers as well as between areas of high growth and areas of low growth if relocation costs are included in the revenue requirement. The Board believes the requirement in the Standard Agreement for a joint planning process is an appropriate measure to try to minimize line relocations that could have been avoided through better planning. The Board is still concerned that there could be less incentive for a municipality to minimize these costs if the utility is required to bear these costs and if the costs are then recovered through the revenue requirement, since relocation decisions would not have a direct monetary impact on the municipality. The Board considers that these types of costs might be further minimized if they are collected by the utility on a municipality specific basis. The Board notes XXXX’s position ...
VIEWS OF THE BOARD. The Board notes that section 28(2) of the Indian Act refers to the federal Minister of Indian Affairs. The Board encourages the aboriginal communities to direct their concerns regarding permits under this section to the Department of Indian Affairs, Government of Canada.
VIEWS OF THE BOARD. The Board considers that the wording included in the Standard Agreement is reasonable when considering that the franchise fee is intended as a formula for calculation of a fee. The Board considers that the utilities have sufficient opportunity to decrease any risks associated with bad debts through their security deposit and disconnection clauses included in their service regulations, as approved by the Board.
