City council is set to debate an interim power rate at Monday night's city hall meeting. NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
Hatters will begin seeing relief credits applied to power bills in late September, but so too will residents of Redcliff and Cypress County who live within the city’s power franchise area.
That goes against the historical view at city hall – endorsed by successive councils over decades – that profits from Medicine Hat’s publicly owned utility benefit those inside city limits.
City councillors who endorsed the payments, totalling $33.1 million, also called for a utility business model review that could touch on price-setting philosophy and the general mission statement.
To this point it’s directed to produce an operational profit for the city’s municipal needs, be they construction, investments or tax abatement, but a change to value a lower price could open up “the benefit of public ownership” to customers outside the city.
Regional political leaders tell the News that operations and finances at the city are its council’s to determine, but their constituents appreciate the move as they too need help with high costs.
Redcliff Coun. Jim Steinke was on council in 2009 when the town took the city’s rate-setting formula before the Alberta Utilities Commission and eventually lost the issue at the Court of Appeal.
Today, he said he appreciates the new program including Redcliff residents, and hopes the city utility can devise a system for ongoing stable prices for customers.
“It’s a fair way of doing it,” said Steinke. “We’re all paying into it, and there’s a substantial profit that will be made, so it’s probably the right thing to do.”
Medicine Hat expanded power service to Redcliff in 1947 and acquired the town’s gas distribution company in the 1980s,
Steinke, like many vocal city dwellers, would back a single rate set at cost plus a reasonable profit.
“There’s a need to have that profit because there are risks involved,” he said.
That could be difficult, administrators told Medicine Hat councillors Sept. 4, citing how the city earns profits from both local and provincial sales, but could be part of a review that could be completed in early 2024
Also on Sept. 4, council approved a cost-relief package totalling $33.1 million, consisting of a $400 payment on the next bill, then $200 per month through November. Amounts for small- and medium-businesses are $1,000 then $500, respectively.
But that includes about 12 per cent of the city’s 36,000 accounts that are located outside city limits, in Redcliff, Veinerville, Dunmore and other homes on the rural outskirts of Medicine Hat.
Alberta Electricity regulations bar using differentiated rates within a class of customers, essentially meaning all residential or business customers – in town, the city or county – must be offered the same rates.
Lowering rates would therefore extend the benefits of “city-owned” power to town and county residents.
Administrators have clearly stated they view the program as a general “cost relief” measure, not a utility rebate.
A motion to consider only Medicine Hat residents for credits failed to get a seconder.
Currently, the benefits of owning and operating a local plants and power system are described in two ways.
One is the local rate setting and the benefit of shielding customers from costly provincial transmission fees.
The second is cash dividends that fund city reserves to cover portions of the municipal budget, a portion of general infrastructure costs, avoid higher taxes.
Cypress County Coun. Richard Oster lives on an acreage near the city limits and says a municipal enterprise must be kept healthy for future generations.
“I don’t think our power bills are any different than anywhere else in Alberta,” he said. “We’re all paying the same price, but the advantage is that we own our own.
“Is it realistic to expect (large discounts) down the road? I don’t think so. (City council members) understand it’s a terrible burden that people didn’t see coming. This gives them some time to react.”
Reeve Dan Hamilton, who lives in Dunmore and will receive the credit like others in the hamlet, was diplomatic about another council’s decision-making authority, but said elected officials in the three municipalities are working more closely than in the past.
And though there was no discussion between the city, county and town, Hamilton felt the new relationship has led to greater consideration of each other.
“I just think that everyone is working more together like we’re a region,” he told the News.
Things haven’t always been so friendly.
In 2009, the Town of Redcliff applied to the Alberta Utilities Commission asking for a discount on gas distribution rates, and then lost a Court of King’s Bench appeal.
After years of discounting local gas, the city had begun moving to more of a market-based price-setting model in the mid-2000s. Then Redcliff mayor Rob Hazelaar and his council argued that if Redcliff residents weren’t benefiting the gas company’s profits, then it should have a lower rate than Hatters.
