DECISION 2018 NSUARB 35 M08344 NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF THE PUBLIC UTILITIES ACT. - and -

Transcription

1 DECISION 2018 NSUARB 35 M08344 NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF THE PUBLIC UTILITIES ACT - and - IN THE MATTER OF AN APPLICATION by HALIFAX REGIONAL WATER COMMISSION for an Order approving amendments to its Regulations to enable financing for the Full Replacement of Private Laterals and the Establishment of a Reserve BEFORE: Peter W. Gurnham, Q.C., Chair Murray E. Doehler, CPA, CA, P.Eng., Member Steven M. Murphy, MBA, P.Eng., Member APPLICANT: HALIFAX REGIONAL WATER COMMISSION James G. Spurr, LL.B. INTERVENORS: CONSUMER ADVOCATE John P. Merrick, Q.C. William L. Mahody, Q.C. FINAL SUBMISSIONS: January 23, 2018 DECISION DATE: February 22, 2018 DECISION: The Application is approved, subject to a compliance filing.

2 INTRODUCTION AND BACKGROUND [1] This is a Decision of the Nova Scotia Utility and Review Board (Board) regarding an application by the Halifax Regional Water Commission (Halifax Water, Utility), dated October 16, 2017 (Application), for approval of amendments to the Halifax Water Regulations to enable financing for the full replacement of private laterals for the provision of water, wastewater or stormwater service, referred to as the Private Lateral Replacement Assistance Program (PLRAP), and to establish a related reserve. [2] Service lines, which connect a pipe in the street to premises plumbing, are the joint responsibility of Halifax Water and customers. The section of line between the pipe in the street and the street boundary line (public portion or right-of-way) is Halifax Water s responsibility, while the remainder of the line is owned by the customer (private portion). [3] In an Order dated August 22, 2017, the Board approved Halifax Water s application for amendments to its Regulations to provide for the repair and replacement of lead service pipes in the provision of water service. At the time of that application, Halifax Water indicated that a request to Halifax Regional Municipality (HRM) to establish a financing mechanism for customers regarding replacement of the private portion of a lead service line was being considered, through a 10-year loan from the Municipality s Local Improvement Charge (LIC). [4] Upon further consideration, Halifax Water determined that there is a need for a financing mechanism for the replacement of other types of private laterals, not just lead service lines. It was noted in the Application that many customers have difficulty in dealing with the unexpected costs associated with the replacement of the private portion of service laterals.

3 -3- [5] Funding of the private portion of service line replacements has been identified by Halifax Water as a barrier to regulatory enforcement in the provision of water, wastewater and stormwater service. In cases where the customer is unable to pay for the private portion of a lateral replacement, this could result in situations which may negatively impact both public health and the environment. While the full replacement of service laterals is more expensive than repairs, this is preferable for a utility, as it provides more permanent solutions and operational benefits, including reduced leakage in distribution systems and reduced inflow and infiltration in the wastewater system. [6] The Application provided some examples of situations of lateral replacements in which the customer is responsible for the costs associated with the private portion, while Halifax Water pays for the public portion. [7] In some cases, Halifax Water does not have the authority to force the replacement of the private portion, and Halifax Water is not seeking that authority in this Application. Instead, the Utility has requested approval for a financing program to assist customers who wish to replace the private portion, and do not have other financing options. This includes replacement of Orangeburg (no-corrode) pipe, which was constructed in the late 1960s and early 1970s, and is susceptible to collapse, impairment and blockage. Also, in cases involving the installation of deep storm sewers in areas where there were none previously, customers who may wish to connect to a new deep storm sewer must pay for the private portion of the connection. [8] Another example is lead service line replacement, which was the subject of a recent Board decision in which Halifax Water received Board approval to provide funding assistance for the replacement of the private portion of a lead service lateral for

4 -4-25% of the cost, up to $2,500. The Application explained that there will be customers unable to afford the remaining 75% of the cost. [9] There are instances, such as cross connections and leaking water service lines, where Halifax Water has the authority to force the connection of the private portion, through the disconnection of service, or completing the necessary repair and billing the customer. Sometimes the customer is unable to pay the associated costs. Halifax Water has requested that it be able to assist such customers who do not have other financing options. [10] Municipalities such as HRM have used LICs to finance public infrastructure, which can be recovered in an account separate from the property tax bill. The Application provided the example of HRM s Solar Cities program, in which property owners can access funds to offset the cost of installing a solar energy system on the property. The LIC is financed over a 10-year period at a fixed interest rate, with the property owner having the option to pay the balance at any time with no penalty. [11] LICs are lienable charges, reducing the financing risk as the lien is attached to the property. While Halifax Water does not have the authority to levy liens, HRM has the authority to do so on Halifax Water s behalf through s. 34 of the Halifax Regional Water Commission Act (HRWC Act). In the past, Halifax Water has only used s. 34 to establish liens for outstanding accounts collection in circumstances where no water service exists. The Application considers the expanded use of liens, with Halifax Water registering a lien on the property (if the customer agrees) to provide security for the loan. Halifax Water would not provide a loan for the private portion of a lateral if the customer is not agreeable to the lien.

5 -5- [12] The Application included the following Attachments: Appendix A - Proposed Changes to the Regulations Appendix B - Certified Motion of HRWC Board dated September 28, 2017 Appendix C - Reserve Model Appendix D - Reserve Business Case Appendix E - Sample of Customer Agreement and Lien [13] The Board has determined that the issues which need to be addressed in this Application are: 1. Is Halifax Water s proposed PLRAP reasonable? 2. If a customer is in default for a lateral replacement loan repayment, should this give Halifax Water the right to disconnect the customer s service? 3. Is Halifax Water s PLRAP funding reserve model acceptable? [14] The Board issued information requests (IRs) to Halifax Water on November 2, 2017, to which responses were received on December 8, [15] Halifax Water was represented by James G. Spurr, LL.B., Corporate Legal Counsel. [16] The Consumer Advocate (CA), represented by John P. Merrick, Q.C., requested intervenor status, and issued information requests (IRs) to Halifax Water on November 22, 2017, to which responses were received on December 8, Scott J. Rubin filed direct evidence on behalf of the CA with respect to the matter on January 9, 2018.

6 APPLICATION ISSUES 2.1 Is the Proposed PLRAP Reasonable? [17] Halifax Water s PLRAP Application is based upon the premise that customer financing of the cost to replace the private portion of service laterals has been a barrier to regulatory enforcement and delivery of water, wastewater and stormwater services for a number of years. The proposed PLRAP is intended to assist customers finance the cost of full replacement of the private portion of water, wastewater or stormwater service laterals, where the replacement aligns with Utility objectives. These objectives include maintaining public health and environmental regulatory compliance: If the customer does not have the financial means to pay for their portion, or does not have the ability to obtain financing, then it can result in the continuation of a situation that may negatively impact public health or results in environmental regulatory non-compliance. [Exhibit H-1, p. 4] [18] Halifax Water had initially planned to explore a lead service line replacement financing mechanism through the HRM. However, in order to meet its above noted objectives, Halifax Water subsequently determined that the need for a financing mechanism for private lateral replacements was broader than just lead service line replacements. As a result, Halifax Water considered it more practical and administratively effective for the Utility itself to establish the financial mechanism rather than HRM. [19] The specifics of the proposed PLRAP are described in Halifax Water s Application as follows: 1. Financing is available (subject to program cap) for full replacements of the private portion of water, wastewater or stormwater laterals and new installations of laterals to connect to a deep storm sewer as part of programs initiated by the utility; and where the utility agrees the full replacement is necessary. 2. Partial replacements or isolated repairs due to leaks, blockages, or collapse that are normally the property owner s expense are not covered by the program. 3. Expenses for full replacements covered by property owner s insurance are not eligible for the program. Such repairs are not normally covered, however there may be some

7 -7- extenuating circumstances or future changes in insurance coverage typically available to homeowners. 4. Only registered property owners are eligible. 5. Participants must enter into a contract with the utility, and must be willing to accept registration of lien against their property. 6. Repayment term is not to exceed five years (60 months) 7. There will be no penalty for early repayment. 8. Any outstanding balance must be paid in full at the time of sale of a property unless there is an agreement to transfer the lien and financing arrangement to the new property owner. 9. Financing interest rate will be prime plus 2%. 10. Interest on over-due accounts will be 1.5% per month or part thereof, or 19.56% per annum, consistent with clause 10-(c) of the Regulations. 11. Suspension or Refusal of Service under Section 13 of the Regulations will apply. If an account remains unpaid for more than 40 days, the utility may suspend service (if a water service connection exists). After Halifax Water s other collection efforts have been exhausted, Halifax Water will take action to enforce the lien. 12. Section 14 of the Regulations will apply, which permits the utility to charge a $35 fee for each visit by Commission staff to a customer whose payment is overdue, if in the opinion of Commission such fee is warranted. 13. Section 16 of the Regulations will apply regarding dishonoured payments. The Commission will charge a $25 fee plus bank charges for cheques or pre-authorized payments that have been dishonoured by the customer s bank or other financial institution. 14. The maximum financing assistance to a customer for a private lateral replacement will be $10, Applicants will be required to provide supporting documents such as payed [sic] invoices as part of the application process. 16. The utility will inspect the lateral replacement to ensure the work has been completed in a satisfactory manner. 17. Halifax Water s rate regulated revenue requirements will not be increased as a result of the introduction of this program. The source of financing will initially be provided through unregulated funds. An initial budget of $200,000 per year for five years will be established, with the funding moved into a new Reserve - Private Lateral Replacement Assistance Program (PLRAP) Reserve. As the financing is repaid, the principle and interest payments will be deposited in the Reserve to help fund other replacements in future years. 18. The Private Lateral Replacement Assistance Program (PLRAP) will be available to rate regulated customers, and will be reported as a rate regulated program, with funding initially provided from unregulated revenues. 19. Annual program funding and requirements will be reviewed and adjustment by the Halifax Water Board as part of the annual approval of the budget for Unregulated business. 20. If there are insufficient funds within the Reserve, the program will be adjusted or closed until the following year. [Exhibit H-1, pp. 9-10] [20] In response to the CA s IR-5, Halifax Water stated that under the proposed PLRAP, if a customer agrees to a PLRAP financing arrangement, Halifax Water will be responsible for the public side of the service-line work and would engage a contractor to do the related construction work. The customer would be responsible to engage a private

8 -8- contractor to perform the private side portion of the work. However, Halifax Water would encourage and co-ordinate the complete replacement (i.e., public and private side) through one contractor to minimize disruption and maximize efficiency. [21] The proposed PLRAP will not be applicable to partial replacement or repairs of private service laterals. Halifax Water justified this approach by noting that full replacements are preferable, as they provide a more permanent solution and a benefit in terms of system operation, such as reduced leakage, or reduced inflow and infiltration. In response to the CA, Halifax Water used similar reasoning to indicate that lining/coating of lead service lines would not qualify for financing under the proposed PLRAP. [22] In CA IR-6, Halifax Water was asked how it developed the proposed terms of the PLRAP loan agreement to ensure the terms would be reasonable, appropriate, and consistent with customer affordability. Halifax Water responded as follows: a. Halifax Water has modelled the financing terms for 60 months using the maximum expected scenario, a lead service line replacement where 25% is paid by the grant and the other 75% is financed and a maximum estimated lead service line replacement cost of $10,000. Under this scenario, the monthly payment was calculated as $ Anecdotal interaction with customers lead staff to believe a payment in this range is reasonable. As most replacements should be in the $5,000 range as opposed to the $10,000 range, the monthly payments would be much lower. Using 60 months also has the advantage of enabling the reserve to be self financing within 5 years. If payment terms beyond 5 years were extended, it would mean that reserve funding would have to continue beyond 2022/23. b. HRWC s Director of Corporate Services/CFO reviewed Administrative Order 18 - Revenue Collection Policy to confirm that prime plus 2% is the interest rate currently used for Local Improvement Charges or the Solar Cities Program. The Director of Corporate Services/CFO also contacted the Deputy City Treasurer to discuss this and confirm the intent of the interest rate. It is not HRWC s objective to compete with banks and financial institutions, or to be providing financing to customers who can obtain more favourable rates through their own financial institutions. The proposed rate of prime plus 2% is reasonable in that it will only be attractive to customers who have no other means of securing financing either due to not having available credit, or having a poor credit history. The higher than premium rate is reflective that there is higher risk with such customers, placing additional administrative burden on the utility to monitor accounts, and register liens. Additionally, HRWC wants to ensure that the interest rate charged is sufficient to offset the interest that would have been otherwise earned on the cash if it were in HRWC s bank account. [Exhibit H-2, IR-6, pp. 1-2]

9 -9- Halifax Water also noted that the interest rate on a PLRAP loan would be fixed for the term of the loan so that the customer will have predictability and stability. [23] In response to CA IR-10, Halifax Water stated that PLRAP loan repayments will be billed to customers on a monthly basis, separate from quarterly water/sewer bills. [24] Halifax Water further clarified specifics concerning lead service line replacements in response to Board IR-4. For replacement of lead service lines, a grant program previously approved by the Board in its Decision [2017 NSUARB 138] can provide up to 25% of the cost of the private portion to a maximum of $2,500. Under the proposed PLRAP, a customer can finance the remaining 75% of the private portion to a maximum of $7,500. Therefore, the total combined funding assistance available for a private lead service line replacement is a maximum of $10,000. [25] In order to implement the proposed PLRAP, Halifax Water has requested an amendment to its Regulations. Specifically, Halifax Water has requested that Section 31 of its Regulations be repealed and replaced with the following: 31(1) The Commission may recover from a person who has violated these regulations its costs incurred as a result of any such violation. 31(2) The Commission may recover costs and expenses from a person who has entered into a repayment arrangement with the Commission to enable full replacement of the private portion of a lead service line, full replacement of the private portion of a noncompliant water, wastewater or stormwater lateral, or installation of the private portion of a new deep storm sewer lateral such repayment arrangement not to exceed a period [of] 60 months at an interest rate not to exceed prime plus 2%. [Exhibit H-1, p. 14] [26] In Board IR-8, Halifax Water was asked if No-Corrode pipe should be included in the proposed amendment to Regulation 31. Halifax Water responded affirmatively, and put forward the following revised amendment: 31(2) The Commission may recover costs and expenses from a person who has entered into a repayment arrangement with the Commission to enable full replacement of the private portion of a lead service line, full replacement of the private portion of non-corrode

10 - 10- pipe, full replacement of a non-compliant water, wastewater or stormwater lateral, or installation of the private portion of a new deep storm sewer lateral such repayment arrangement not to exceed a period [of] 60 months at an interest rate not to exceed prime plus 2%. [Emphasis in original] [Exhibit H-3, IR-8, p. 1] [27] Mr. Rubin agreed that the proposed PLRAP will help some Halifax Water customers afford to pay for the replacement of the customer-owned portion of a lead service line. Mr. Rubin did, however, recommend that the proposed exemption of lead service line replacements from Halifax Water inspection fees be incorporated into Halifax Water s Regulation 21 Inspection of Service Connection and Driveway Culverts. In its Reply Evidence, Halifax Water agreed with this recommendation, but suggested that Regulation 51 Water Service Connection was a more appropriate section into which the recommended amendment be integrated. [28] Mr. Rubin further noted that Halifax Water s Regulations do not contain a definition of lead service line. He recommended that if there is any concern about possible ambiguity with the language, a definition should be included in Section 3 of Halifax Water s Regulations. [29] Mr. Rubin also expressed specific concerns related to the loan repayment default provisions of the proposed PLRAP. These concerns will be addressed in a later section of this Decision Findings [30] The Board agrees that full replacements of private service laterals are preferable to spot repairs, partial replacements and lead service pipe lining/coating, as full replacement provides a more permanent solution and operational benefits. A financing program intended to assist with full replacements could help to incent customers to pursue such measures, rather than undertaking repairs, partial replacements and

11 -11 - linings. As such, the Board finds it is reasonable that the proposed PLRAP apply to only full replacement of the private portion of water, wastewater or stormwater laterals and new installations of laterals to connect to a deep storm sewer as part of programs initiated by the Utility. [31 ] Neither the CA or Mr. Rubin objected to the proposed financing terms of the PLRAP loan agreement. The Board has reviewed these terms, as well as the rationale presented by Halifax Water describing how these terms were developed. The Board finds the proposed financing terms to be reasonable and appropriate. [32] The Board agrees that invoices for PLRA loan repayments should be issued on a monthly basis, separate from quarterly water/sewer bills. The Board, therefore, directs Halifax Water to add this provision to specifics of the program parameters. [33] The Board also directs Halifax Water to modify Clause 14 of the PLRAP parameters (as well as Halifax Water s Sample PLRAP Customer Agreement contained in Appendix E of its Application) to clarify that the total combined funding assistance available for a private lead service line replacement is a maximum of $10,000, inclusive of any grants provided by Halifax Water. [34] The Board agrees that Halifax Water s Regulation 31 requires an amendment to enable implementation of the proposed PLRAP. Therefore, the Board concurs with Halifax Water s proposed amendment to its Regulation 31, as revised in Halifax Water s response to Board IR-8. However, the Board finds that the proposed amendment lacks detail regarding the maximum dollar amount of financing assistance available under the PLRAP. The Board, therefore, directs Halifax to incorporate such detail into the amendment. In addition, for clarity purposes, the Board directs Halifax

12 -12- Water to change the non-corrode pipe reference in the proposed amendment to nocorrode pipe. For further clarity, the Board also directs Halifax Water to incorporate a definition for No-Corrode Pipe" into Section 3 of its Regulations. [35] The Board believes that the definition of a lead service line is self-evident. As such, the Board does not find it necessary to direct that a definition for lead service line be incorporated into Halifax Water s Regulations. [36] The Board agrees that replacement of lead service lines should be exempt from Halifax Water inspection fees. The Board further agrees that this provision should be incorporated into Halifax Water s Regulations. In reviewing the current Regulations, the Board finds that it is most appropriate to include this provision in an amendment to Regulation 21, as that section deals specifically with inspection fees for service connections. Halifax Water is, therefore, directed to amend Regulation 21 accordingly. [37] The Board agrees with Halifax Water that it is generally most cost effective for a customer to effect and finance private service lateral work themselves. However, if customers do not have the means to do so, the Board finds that, subject to the directives presented above, the proposed PLRAP presents a reasonable alternative that is appropriate and consistent. The proposed PLRAP is, therefore, approved, subject to the aforementioned directives. The effective date for the PLRAP shall be April 1, 2018, subject to Halifax Water s Compliance Filing. 2.2 If a customer is in default of a PLRAP loan repayment, should this give Halifax Water the right to disconnect the customer s service? [38] Halifax Water has indicated that it intends to apply Suspension or Refusal of Service provisions (under Halifax Water s Regulation 13) to the proposed PLRAP. Under this Regulation, Halifax Water contends that it would be entitled to suspend water

13 - 13- service if a PLRAP loan account remains unpaid for more than 40 days. In response to CA IR-8a Halifax Water further stated: Halifax Water believes it is important to apply a consistent and fair approach for all customers for non-payment of bills. The alternate to disconnecting the water service is to ask the municipality to enforce the lien. Unpaid lienable charges eventually result in a property going to tax sale. Disconnecting water service is a more immediate and effective recourse. [Exhibit H-2, IR-8a, p. 1] [39] Furthermore, in its Reply Evidence, Halifax Water noted:... If HRWC does not have the authority to suspend service after following the normal collection of overdue account process, it will result in the necessity to budget for additional bad debt expense, increasing revenue requirements and creating an additional costs to other customers. HRWC submits that it would not be equitable to other customers to permit this to occur. HRWC notes that if disconnection of service is not available as a collection mechanism, the lien could be immediately activated, which can ultimately conclude in the municipal tax sale process which takes approximately two years. HRWC would be forced to carry uncollectible accounts for a longer period and may not be able to fully recoup the loans, potentially resulting in additional expense. Accordingly municipal liens, versus disconnection of service as a collection tool are more administratively burdensome and less timely. [Exhibit H-5, p. 2] [40] Mr. Rubin has recommended that a customer s inability to make a PLRAP loan payment should not be grounds for suspension or disconnection of the customer s water service. He presented several examples from other utilities where non-payment for ancillary services, such as charges for repairs or other non-basic services (which Mr. Rubin argued are similar to the proposed PLRAP loan) can result in late fees, collection actions, or liens against the property, but not disconnection of basic utility service. Based on these examples, Mr. Rubin asserted that Halifax Water customers should not lose the ability to safely occupy their homes (as a result of water service suspension or disconnection) because a PLRAP loan payment was not made.

14 Findings [41 ] Both Halifax Water and Mr. Rubin agree that the proposed PLRAP will likely be used mainly by customers who lack cash reserves and/or have difficulty obtaining financing from other sources. As such, the Board finds that it is probable the proposed PLRAP will present a higher than normal collection risk. Furthermore, without the possibility of suspension or disconnection of water service resulting from PLRAP loan payment default, customers in this higher risk category may opt to choose to pay their regular water bill (and not risk suspension or disconnection of water service) rather than make timely PLRAP loan repayments. [42] The Board, therefore, agrees with Halifax Water that without the option to suspend or disconnect water service, the higher credit risk associated with the PLRAP will likely result in added debt collection related costs for the Utility. These costs will, in turn, increase the Utility s revenue requirements which are charged to all customers through rates. The Board does not believe it is fair or equitable for other customers to incur the costs associated with late PLRAP loan payments and/or defaults caused by customers who opt to use the program. [43] Therefore, the Board finds that Section 13 of Halifax Water s Regulations is applicable to the proposed PLRAP. This gives the Utility the authority to suspend or disconnect a customer s water service if a customer s PLRAP loan account remains unpaid for more than 40 days. [44] In most cases the customer and the property owner will be the same. The Board is concerned about a situation where the customer is a tenant. In such a case, should the tenant, or the owner, be responsible for the repayment of the LIC? If the tenant is current in paying the quarterly billing, should they be penalized for the owner s non

15 - 15- payment of the monthly PLRAP loan? In its Compliance Filing Halifax Water should address this. [45] In Appendix E of its Application, Halifax Water included a sample agreement that would be signed by customers who take part in the PLRAP. The Board directs Halifax Water to revise this agreement to include wording outlining the Utility s authority to suspend or disconnect water service if a PLRAP loan account remains unpaid for more than 40 days. 2.3 Is the PLRAP funding reserve model acceptable? [46] Halifax Water has indicated that the PLRAP will be available to rate regulated customers, and will be reported as a rate regulated program, with funding initially provided from unregulated revenues. Therefore, Halifax Water has requested Board approval to establish a reserve for the PLRAP, funded initially from unregulated revenues, with an effective date of April 1,2018. [47] Appendix D of Halifax Water s Application describes the proposed reserve funding as follows: There will be reserve contributions of $200,000 a year for five years (2018/19 to 2022/23) from unregulated revenues. The Private Lateral Replacement Annual program funding and requirement will be reviewed and adjusted by the HRWC Board as required as part of the annual approval of the budget for unregulated business. If there are insufficient funds within the Reserve, the program will be adjusted or closed until the following year. Loan payments from customers will be deposited (credited) to the reserve, and will become part of the reserve balance available for future disbursements. [Exhibit H-1, p. 18] [48] In Board IR-1, Halifax Water was asked if the proposed PLRAP reserve funding model would have any impact on the Utility s regulated budget. Halifax Water responded that the proposed reserve funding would have no impact on the Utility s

16 /19 regulated budget or on current rates. However, Halifax Water stated when it next applies to the Board for rate adjustments (likely using 2020/21 and 2021/22 as test years), the $200,000 unregulated expense in those test years would reduce the amount of unregulated surplus taken into account in the calculation of revenue requirements. This would thus increase Halifax Water s revenue requirements for those test years. [49] The CA made no objections to the proposed PLRAP reserve funding model Findings [50] The Board approves Halifax Water s Application to establish a reserve, funded initially by unregulated revenues, for the PLRAP. Board approval will be effective April 1,2018, subject to Halifax Water s Compliance Filing. [51] Halifax Water must abide by s of the Water Utility Accounting and Reporting Handbook (Accounting Handbook) in setting up and reporting on the reserve. 3.0 COMPLIANCE FILING [52] Halifax Water is to file a Compliance Filing by March 8th, 2018, following which the Board will issue an Order establishing the effective date of the PLRAP. 4.0 SUMMARY OF BOARD FINDINGS [53] The Board approves Halifax Water s PLRAP, subject to the Utility s Compliance Filing. [54] The effective date for the PLRAP will be April 1, 2018, subject to Halifax Water s Compliance Filing.

17 - 17- [55] The Board finds that Section 13 of Halifax Water s Regulations is applicable to the PLRAP. This gives Halifax Water the authority to suspend or disconnect a customer s water service if a customer s PLRAP loan account remains unpaid for more than 40 days. [56] The Board approves establishment of a reserve, funded initially by unregulated revenues, for the PLRAP. Board approval will be effective April 1, 2018, subject to Halifax Water s Compliance Filing. Halifax Water must abide by Section 3080 of the Accounting Handbook in setting up and reporting on the reserve. [57] Halifax Water is to file a Compliance Filing as soon as reasonably possible, following which the Board will issue an Order establishing the effective date of the PLRAP. Some issues to be addressed in the Compliance Filing include: Modification of the PLRAP parameters to indicate billing for a PLRAP loan will be on a monthly basis; Modification of Clause 14 of the PLRAP parameters to clarify that the total combined funding assistance available for a private lead service line replacement is a maximum of $10,000, inclusive of any grants provided by Halifax Water; Further amendment of Halifax Water Regulation 31 to: incorporate detail regarding the maximum dollar amount of financing assistance available under the PLRAP; and change the non-corrode pipe reference in the proposed amendment to no-corrode pipe Addition of a definition for No-corrode pipe in Halifax Water s regulations; Amendment of Halifax Water Regulation 21 to indicate that replacement of lead service lines is exempt from Halifax Water inspection fees; Revision of the sample PLRAP customer agreement to: clarify that the total combined funding assistance available for a private service line replacement is a maximum of $10,000, inclusive of any grants provided by Halifax Water; and

18 -18- include wording outlining the Utility s authority to suspend or disconnect water service if a PLRAP loan account remains unpaid for more than 40 days. How Halifax Water will deal with customers who are renting a property subject to a PLRAP loan agreement that is in default, but who are current with their quarterly water/sewer service payments. [58] An Order will issue upon receipt of a Compliance Filing. DATED at Halifax, Nova Scotia, this 22nd day of February, Peter W. Gurnham Murray E. Doehler Steven M. Murphy