Decision Date: December 10, 1997

Panel: David Brown

Keywords: Water Act – s.45, 16; Water Regulation (204/88) – ss. 7, 12, 16, 20, 21; licensees for power purpose; statutory interpretation; payment by calendar year; relationship between statute and regulation; meaning of royalty; Crown’s ability to increase fees; tariff; charges for water license rentals; definition of “instalment”; purpose of section 12 of the regulation

Cominco Ltd. appealed a decision of the Deputy Comptroller of Water Rights concerning the calculation of certain water license rentals and late payment penalties included in an Account Statement. The disagreement over the charges arose in relation to the sale by Cominco of its Brilliant Dam to the Brilliant Power Funding Corporation (BPFC) on May 22, 1996. It was the position of the Comptroller that Cominco was responsible for paying the water license rentals for the dam for the whole of 1996, and that the 1997 water bills for Cominco’s other dam (Waneta) should be based, in part, on Cominco’s power generation from the Brilliant Dam from January 1 to May 22, 1996. Further, the Comptroller argued that Cominco and the BPFC were jointly responsible for payment of the outstanding 1996 calendar year and 1997 calendar year accounts in respect of the Brilliant Plant.

The Panel found that the Water Regulation imposes an obligation to pay water licence rentals on a yearly basis in advance of the “rental due date”. The Panel also found that the “rental due date” was determinative of responsibility to pay the royalties – not ownership as of January 1st. Therefore, Cominco was the licensee responsible for payment because it owned the dam on the rental due date. However, the Panel accepted Cominco’s submission that its 1997 water rates for the Waneta dam should not be based on the 1996 Brilliant water licenses because Cominco no longer held those licenses in 1997. The Panel rejected the Comptroller’s proposition that there was either joint or joint and several liability for the payment of water rates, finding that there is nothing in the legislation that imposes such an arrangement on the parties.

The Panel confirmed the billing sent to Cominco for 1996 water rentals and set aside the portion of the billing sent to Cominco for 1997 water rentals that related to water used in connection with the Brilliant Dam from January 1 to May 22, 1996. The late payment penalties assessed on the 1996 billing were upheld and the penalties assessed on the 1997 billing are set aside. The Panel allowed the appeal in part.