Municipal Utilities - Municipal Government Act

The new Municipal Government Act describes requirements for operating a municipal utility including set up, scope, approval processes for water and sewer utilities, and increased expectations regarding accountability, transparency and transition for existing utilities.

Increased Scope of Municipal Utilities

Municipalities will be given broader powers for creating municipal utilities under the new Act. Any municipality will have the ability to establish a municipal utility to provide water, sewerage services, public transportation, heat, waste heat, and other services or products for public consumption, benefit, convenience or use. This does not include the ability to establish an electric utility, which is restricted to Maritime Electric and the City of Summerside Electric Utility.

How Utilities are Set Up

Public or municipal utilities may be established as or included in a department of the municipality or may be established as a controlled corporation. Public utilities, which refer to those that provide water and sewerage service, will require a bylaw to set out the establishment, management and maintenance of the service. 

All other utilities that a municipality wishes to operate may also be established, managed and maintained by bylaw, with any municipal utility charges being set and imposed through a bylaw.

Approval of Rates for Water and Sewer Utilities

The municipality will set the rates for their water and sewerage utilities in accordance with the Water and Sewerage Act, under which the City of Charlottetown, the City of Summerside, the Town of Stratford and the Town of Cornwall will continue to approve their own water and sewer rates. All other municipalities will need to have their water and sewer rates approved by the Island Regulatory and Appeals Commission. Rates must be sufficient to cover the cost of providing the water or sewer service.

Increased Accountability and Transparency

Public utilities will be required to prepare annual financial plans. The annual financial plans will need to contain, at a minimum:

  • an operating budget that includes estimates of revenues and expenditures,
  • a capital budget, and
  • on and after March 31, 2019, a five-year capital expenditure program that includes an asset management program.

Existing Legislation: What’s in Place Currently

All municipalities currently have the ability to establish water and sewer utilities, by bylaw, to provide services to their residents.

Water and sewer utilities are established as separate corporate entities under the current Acts and set service rates which must then be approved by IRAC.

The water and sewer utilities of the cities of Charlottetown and Summerside and the Towns of Stratford and Cornwall are exempt from the requirement to have IRAC approve their rates.

Summerside is the only municipality on PEI with the ability to establish and operate a municipal electric utility.

Note:  This document is prepared by the Municipal Affairs Section of the Department of Communities, Land and Environment for general information purposes. This document should not be relied upon as a substitute for specialized legal or professional advice. 
Published date: 
January 6, 2017
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