Deficits and Deficit Applications

Municipally owned public utilities are expected to operate on a breakeven basis; however, if an operating deficit exceeding $10,000 or 5% of the utility’s operating budget is anticipated or occurs, The Municipal Act requires municipalities to apply to the Public Utilities Board (Board) for approval of the deficit and recovery methodology.  Typically, municipalities will address deficits either through the use of accumulated surplus funds. Alternatively, they may use reserves funds, or, rate rider surcharges. 

Deficit Application Process - What must be submitted:

•        Deficit Application

•        PUB Schedule 9

•        Council Resolution of Approving Deficit and Recovery Method

•        Explanation of Deficit

Failure to submit all pieces required for an application will result in it not being accepted and sent back to the Utility to refile.

References 

Board Order No. 151/08 - Water and Wastewater Utilities Financial Reporting Requirements

Board Order No. 93/09 -  Regulatory Requirements - Rate Setting, Required due to adoption of the Public Sector Accounting Board Accounting Standards for local Governments