City won’t access loan program to cover overdue utility money

By COLLIN GALLANT on July 23, 2020.

cgallant@medicinehatnews.com@CollinGallant

The City of Medicine Hat is currently carrying about $2 million worth of unpaid utility bills one month after a deferral program ended, but the city won’t access interest-free loans provided by the province to tide them over.

Local finance officials told the News that about 20 per cent of its monthly utility billings by value are in arrears after a deferral program ended on June 18.

However, accessing a government loan would mean all local customers would be charged a rider next summer to clear up any bad debt that is left over across the province.

Locally, the amount owed is down from 26 per cent at its height as the city took part in a province-wide program to halt late fees and disconnections for the first three months of the coronavirus pandemic.

“We are moving in the right direction,” the city’s corporate services commissioner Dennis Egert told the News on July 17, adding that he’s been encouraged to see customers pay what they can and others arrange a 12-month payment plan.

A utility disconnect process begins once a bill is 60 days overdue, meaning that without payment or arrangement, notices will be sent out Aug. 18.

“We do see the potential for a lot more activity at the end of August,” said Egert. “But we’re really encouraging customers to call us, make arrangements and we’re offering very flexible terms. But once disconnection (process) starts, there are fees added.”

Egert said 16 per cent of customers had a balance owing (a typical number is nine per cent). There are about 26,000 accounts in total, but only residential customers are involved.

Province-wide, about 350,000 accounts took part in the 90-day deferral program, representing about 13 per cent of Alberta households, according to officials with the associate ministry of Natural Gas and Energy.

That office announced in May that up to $337 million in interest-free loans would be provided to utility companies to bridge the cost of offering 12-month payment plans to clear up accumulated bills.

Egert said that Medicine Hat opted not to access the loan because doing so would expose local customers to a province-wide rate rider that would recoup the costs of any defaults after 12 months.

Ministry officials confirmed how cost recovery would proceed, but say they only expect “a small amount” of bad debt at the end of the year-long process.

“We did have that option to participate,” said Egert, stating that Medicine Hat’s reserves and internal collection process (by which unpaid utility bills are added to property taxes, if applicable) were considered sufficient.

“We did the analysis and didn’t want to apply and expose our customers (to the rider),” he said.

The provincial measure only included portions related to natural gas and electricity, though many municipalities – including Medicine Hat, Cypress County and the Town of Redcliff – provided similar deferrals for things like water delivery, sewer service and trash collection.

As part of a COVID-relief package, Medicine Hat city council allocated $500,000 in reserve funds as one-time support to the Community Warmth Program.

That program helps those on the Hat utility system clear up overdue bills on a one-time basis based on need and circumstance. A typical year sees the program pay about $20,000.

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