The Water Federation: Working Together to Distribute Quality Water

Our recommended approach to establish the size of the required reserve is to complete a reserve fund study, similar to what is required under the Condominium Property Act. This requires:

• Establishing an inventory of all the assets (e.g. buildings, wells, water lines, pumps, equipment, etc.).

• Understanding the condition of the assets by physical inspection and reviewing operating performance.

• Estimating the remaining life of the assets.

• With this prework, you can make a reasonable estimate of future expenditures to repair, refurbish, and/or replace the infrastructure, and when those expenditures will most likely occur. This estimate should also include any planned capacity additions or improvements.

• With the information on the amount and timing of future capital expenditures, the association can establish a plan to build up the reserve fund to meet the anticipated expenditures.

The co-op can retain an engineering firm with expertise in asset management to conduct the study or do it internally if resources are available. The reserve fund study completed won’t be exact, but it will put the co-op in a better position to manage future expenditures.

In the absence of a reserve fund study, it is best to ensure the reserve fund will at minimum cover the cost of an unplanned failure of the most expensive piece of equipment you have (including replacement and contingency operating costs). In some instances, the equipment failure may be covered by your insurance policy, but even then, it can sometimes take a considerable period of time to get reimbursed for costs incurred, while repairs will need to be made and paid for immediately.

The main reason for a utility to establish these easements and right-of-way agreements is to ensure they have the necessary access to maintain and operate the infrastructure, and to protect that infrastructure.

The Alberta Land Surveyors’ Association has a brochure Understanding Easements and Rights-of-Way that provides a good introduction to easements and rights-of-way.

The easement or right-of-way agreement defines the rights and obligations that the holder (e.g. your co-op) has, and the restrictions (to the owner) that are placed upon the property subject to the agreement.

A landowner must consent in writing before the registration of a new easement or right-of-way. If the landowner refuses to grant consent, an easement or right-of-way may still be obtained and registered if it is based upon a decision of the Surface Rights Board, expropriation, or a judge’s order that it is in the greater public good.

The first step is always to speak to your Board and to try and understand the situation and the reason for their decision or action. This also provides you with an opportunity to make your case if you think there is a better alternative.

If not successful, and you think the issue is important, you always have the right to raise the issue at the next annual general meeting (AGM) of your co-op, share your perspective with attendees, and introduce an appropriate motion for debate and decision by the members.

If the situation is urgent and can’t wait until the AGM, you may ask your Board to call a special general meeting. Under Section 4 of the Rural Utilities Regulations, your Board must call a special general meeting of the association within 60 days when requested to do so by at least 25% of the members.

If none of these actions successfully resolve the concern and you think it is important enough, you may request the Director of Rural Utilities to hold an inquiry into the affairs of the association. Note that this requires a written request signed by 3 members or 10% of the association (whichever is greater), or an inquiry can be held at the direction of the Minister responsible for the Rural Utilities Act.

Legally, as a director, you must ensure that your water co-op complies with all applicable acts and regulations.

The first step in this situation is to ensure that you fully understand the applicable regulations, the rationale behind them, and that you have all the relevant facts for your situation. After this review, if you think the inspector is not correct in their assessment, you can make your case to the inspector in an attempt to get them to change their ruling. Note that it is of little value to dispute the appropriateness of the regulation itself, as AEP staff do not have the authority to sanction or grant exemptions to legislation.

If you are not successful in changing the inspector’s assessment, your next step is to try to arrange a meeting with your district's Alberta Environment Regional Compliance Manager to convince them that you are in compliance with the legislation and regulations.

If that is not successful, Albertans have the opportunity to appeal certain decisions made by AEP under the Environmental Protection and Enhancement Act, the Water Act, and other Acts to the Environmental Appeals Board.

There are many resources to help you understand the regulations and the underlying rationale.  Below are some links to helpful information:

• Alberta Environment and Protected Areas

While there are provincial government programs that provide funding for investment in water and wastewater infrastructure, the likelihood of obtaining that funding is low. Your co-op will be competing with municipalities across the province for a limited pool of funds.

This is a situation that continually changes given government priorities. At the present time, there is at least one avenue to explore.

Alberta Municipal Affairs has a Local Government Fiscal Framework that:

• May cover some of the costs directly related to acquisition, construction, development, betterment, rehabilitation, or non-routine maintenance of water and wastewater infrastructure.

• Allows non-profit water co-ops to be eligible for funding, but the application must be made by the municipality on their behalf.
  

Alberta Transportation administers the Alberta Municipal Water/Wastewater Partnership, which provides cost-shared funding to eligible municipalities to help build municipal facilities for water supply, treatment, and wastewater treatment and disposal.

Unfortunately, country residential subdivisions, condominium associations, and private developments are not eligible.

There are a couple of reasons to carry these types of insurance.

First, the Rural Utilities Regulations (Section 19) requires that associations that own works shall at all times maintain:

• General liability insurance in an amount not less than $2,000,000 inclusive per occurrence, insuring against bodily injury, personal injury, and property damage, including loss of use of property

• Theft insurance or fidelity insurance against loss or damage caused by officers, employees, and directors who carry out the functions of employees

Secondly, insurance is a key part of a good risk management plan to protect your water co-op and your directors against risk-related costs.

AFRWC members have access to a comprehensive insurance program through the Rural Municipalities of Alberta. As a member-owned, non-profit organization, RMA Insurance will work with co-ops to implement appropriate loss control and risk management in their operations. More information is available on the RMA Insurance website.

Under the Rural Utilities Act Section 15, directors are responsible for the general direction and supervision of the affairs and business of the association. The directors are expected to carry out their responsibilities in good faith, in accordance with applicable legislation, and in service to the membership. The seven international principles for co-operatives provide useful guidance for directors and members alike (covered later in the FAQ).

It is also important to note that under Alberta’s Environmental Protection and Enhancement Act (EPEA) and its regulations, persons responsible for waterworks and wastewater systems have a legal duty to ensure water is safe from contaminants and that operations are in compliance with the Act.

Alberta Environment has published a guide for members of municipal councils titled Taking Care of Your Drinking Water and Wastewater.

In particular, page 41 of that guide provides a summary of the actions you can and should take to meet your responsibility as a director. At a high level, those actions boil down to:

• Be Informed

• Ask Questions

• Get Answers

This guide is generally applicable to directors of water co-ops, and in our opinion, a must-read for all Board members.

The regulatory framework that has evolved under EPEA is highly complex and difficult to interpret. However, the following from Alberta Environment & Parks provides some context for regulation of drinking water systems in Alberta.

Water Chart

In summary, water systems will be regulated under EPEA by Alberta Environment and Parks if:

• The water source is:

  • Surface Water

  • Groundwater Under Direct Influence (GUDI)

  • Other than High Quality Groundwater

  • An EPEA Approval is required

OR

• The water source is High Quality Groundwater, and the water co-op has:

  • 15 or more connections

  • A distribution system longer than 3 km

  • Registration under the Code of Practice is required

Water systems using High Quality Groundwater are regulated by Alberta Health Services if they have fewer than 15 connections or less than 3 km of distribution piping.

Note that raw-water co-ops, originally established to provide a reliable supply of water for agricultural purposes with incidental household use only, may fall under EPEA jurisdiction (requiring an AEP approval) if:

• The water source is Surface Water or Groundwater Under Direct Influence

• The water is being piped directly into homes for potable purposes (as opposed to dugouts or cisterns)

If an EPEA approval is required, the raw-water co-ops will face the same infrastructure, treatment, and monitoring requirements as potable water co-ops.

Alberta Environment and Parks has a FAQ that provides answers to many more questions on drinking water. 

And finally, if you have any further questions, don’t hesitate to call your district AE&P staff. Contact details for each region are here.

1. Voluntary, Open Ownership

Co-operatives are voluntary organizations, open to all without gender, social, racial, political or religious discrimination.

2. Democratic Owner Control

Co-operatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership.

3. Owner Economic Participation

Owners contribute equitably to, and democratically control, the capital of the co-operative.

4. Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members.

5. Education, Training and Information

Co-operatives provide education and training for members, so they can contribute effectively to the development of their co-operatives.

6. Cooperation among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, regional, national and international structures.

7. Concern for the Community

While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.