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Decision 2020 Nsuarb 129 M09494 Nova Scotia Utility

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Decision 2020 Nsuarb 129 M09494 Nova Scotia Utility DECISION 2020 NSUARB 129 M09494 NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF THE PUBLIC UTILITIES ACT - and - IN THE MATTER OF AN APPLICATION by the HALIFAX REGIONAL WATER COMMISSION for approval of a revised Regional Development Charge for Water and Wastewater Infrastructure and for approval of Amendments to the Schedule of Rates, Rules and Regulations for Water, Wastewater and Stormwater Services to revise the Regional Development Charge BEFORE: Roland A. Deveau, Q.C., Vice Chair Steven M. Murphy, MBA, P.Eng., Member Jennifer L. Nicholson, CPA, CA, Member APPLICANT: HALIFAX REGIONAL WATER COMMISSION John MacPherson, Q.C. Heidi Schedler, Counsel INTERVENORS: NORTH AMERICAN DEVELOPMENT CORP. Nancy G. Rubin, Q.C. CONSUMER ADVOCATE William L. Mahody, Q.C. Emily Mason, Counsel BOARD COUNSEL: S. Bruce Outhouse, Q.C. HEARING DATE(S): June 11-12, 2020 FINAL SUBMISSIONS: August 6, 2020 DECISION DATE: October 29, 2020 DECISION: The Board approves the revised water and wastewater RDCs, subject to the findings and directives outlined in this Decision. Document: 277697 -2- TABLE OF CONTENTS 1.0 SUMMARY...................................................................................................................... 4 2.0 BACKGROUND..............................................................................................................7 3.0 ISSUES..........................................................................................................................12 4.0 ANALYSIS AND FINDINGS........................................................................................13 4.1 Does the 20-year term of the RDC remain appropriate?............................ 13 Findings..............................................................................................................15 4.2 Is the relevant data properly allocated within the 20-year term of the RDC? Findings............................................................................................................. 18 4.3 Are the proposed lists of RDC capital projects appropriate?......................18 Findings............................................................................................................. 22 4.4 Does the RDC appropriately account for future wastewater treatment facilities, including secondary treatment upgrade costs for the Harbour Solutions plants?.............................................................................................. 23 Findings............................................................................................................. 30 4.5 Are Halifax Water’s calculations and allocation methodology for the Benefit to Existing (BTE) and the RDC appropriate?...................................34 Findings..............................................................................................................36 4.5.1 Assignment of BTE to Specific Capital Projects.............................. 38 4.5.1.1 I/I Reduction Projects...........................................................38 Findings..............................................................................................................41 4.5.1.2 WWTF Projects.....................................................................42 Findings............................................................................................................. 42 4.5.1.3 Port Wallace Water Transmission Main............................ 42 Findings............................................................................................................. 45 4.6 Are Halifax Water’s calculations and allocation methodology for the Post Period Benefit (PPB) and the RDC appropriate?........................................ 47 Findings............................................................................................................. 49 4.7 Is residential growth appropriately reflected in the RDC in terms of Persons per Unit (PPU)?.................................................................................49 Findings..............................................................................................................50 4.8 What is the appropriate proportion of single-unit dwellings (SUDs) to multi­ unit dwellings (MUDs) for the residential RDC?.......................................... 50 Findings..............................................................................................................52 4.9 Is Industrial, Commercial and Institutional (ICI) growth appropriately reflected and allocated in the RDC (Floor Space per Worker v. Residential Equivalent Units)?............................................................................................ 53 Findings..............................................................................................................64 ICI RDC for the Current Application.............................................................. 64 ICI RDC for the Future RDC Applications.................................................... 66 4.10 Is the cost of the RDC appropriately split between residential and ICI development?................................................................................................. ..72 Findings............................................................................................................. 75 Document: 277697 -3- 4.11 Should the Board approve the proposed amendments to the Schedule of Rates, Rules and Regulations?......................................................................76 Findings............................................................................................................. 78 4.12 Does the Board have the jurisdiction to waive or reduce RDC charges for developers of non-profit housing?..................................................................78 Findings............................................................................................................. 80 4.13 Are there other issues to be considered in the calculation of the RDC? ..82 4.13.1 Halifax only escalation factor.............................................................. 82 4.13.2 Construction interest adjustment........................................................83 4.13.3 Surplus financing figure.......................................................................84 4.13.4 Layering of contingency factors..........................................................84 4.13.5 Lifecycle costs...................................................................................... 85 4.14 Are there any gaps in the RDC’s foundational documents, including Halifax Water’s Infrastructure Master Plan and the Integrated Resource Plan?..................................................................................................................86 Findings............................................................................................................. 90 4.14.1 WWTFs................................................................................................. 92 Findings............................................................................................................. 98 4.15 Was stakeholder consultation effectively carried out by Halifax Water?. 102 Findings........................................................................................................... 106 4.16 Should Halifax Water continue to review and update the RDC every five years?..............................................................................................................108 Findings........................................................................................................... 110 5.0 CONCLUSION AND COMPLIANCE FILING......................................................... 110 Document: 277697 -4- 1.0 SUMMARY [1] Halifax Water applied to the Board for approval to revise its Regional Development Charge (RDC) for water and wastewater infrastructure. An RDC is a one­ time charge that is paid by a developer or builder when obtaining a building permit. It is meant to recover the future costs of those infrastructure needs which are defined as regional. An RDC assigns a portion of Halifax Water’s estimated water and wastewater infrastructure capital costs to growth over a 20-year term on a per unit basis (residential and non-residential). This application proposed changes to the current RDC rates for both water and wastewater. [2] After reviewing all the evidence, the Board approves the revised water and wastewater RDCs, subject to the findings and directives outlined in this Decision. In its findings, the Board has directed revisions to parts of the RDC calculations, including: • a portion of the estimated costs of the Harbour Solutions wastewater treatment facilities’ (WWTFs) secondary treatment upgrades to be allocated to the proposed RDC; • the allocation of a portion of the Port Wallace Water Transmission Main project costs used to develop the proposed RDC; • the ratio of single-unit dwellings (SUDs) to multi-unit dwellings (MUDs) used in the residential RDC calculation; • the approval of the settlement on the blended average Floor Space per Worker (FSW) amount in its RDC calculation; and • the allocation of RDC costs between residential and Industrial, Commercial and Institutional (ICI) development on the basis of 781 square feet per employee. Document: 277697 - 5 - These changes are to be reflected in a Compliance Filing to be filed with the Board setting out revised RDC rates, [3] The most significant changes directed
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