City council has opted to explore the idea of a separate city-controlled corporation operating the energy business, but regardless of findings isn't planning a decision until the next council term. The city's Unit 16 power plant is seen in this file photo.--NEWS FILE PHOTO
@@CollinGallant
City council has voted 9-0 to further explore creating a separate city-controlled corporation to operate its energy business, but any final decisions may not come until late next year.
Mayor Linnsie Clark says that squarely puts the question into the 2025 municipal election next October, and she’ll ask council to hold off making major decisions before next fall.
“Certainly in the last election the mandate was not to privatize, and this should be an election issue for the next council with the information that we provide them,” Clark told a special meeting of council Thursday. “The trust with the public would be bolstered.”
A portion of the 2021 civic vote swung on a “valuation” process that was suggested but scrapped by council’s energy committee earlier that year.
Council members stressed in debate Thursday that support for a staff recommendation to look into a municipally controlled corporation – akin to Enmax in Calgary or Epcor in Edmonton – doesn’t set the path in stone.
A council motion asks that energy division review author KPMG continue with a portion of its contract to detail the process of creating the MCC and, separately, an independent rate-review board to advise council.
Another motion asks that staff revisit gas production business plans to further shut down or divest low-production, high-liability natural gas wells.
Coun. Darren Hirsch, who has discussed adding a private-sector management style to the power business in the past, said his opinions are well-known, but didn’t mark out current feelings.
“We’ve received the report, staff have gone through it, and now we’re considering it,” he said. “It’s the next logical step.”
Other councillors said they have a lot of questions about the cost and benefits of changing the management model, or Medicine Hat’s ability to maintain a grandfathered municipal franchise.
“I need tremendously more information to make an informed decision,” said Coun. Alison Van Dyke.
Coun. Ramona Robins endorsed fact finding and outlining legal steps.
“I’m struggling with the ‘why’,” said Robins.
Coun. Robert Dumanowski said he likens the current review and recommendations as similar to a 2009 outside report that suggested setting up an independent board to run the city’s then-burgeoning natural gas business.
Council owed it to generations of previous Hatters to contemplate its best potential, he said.
“There was hesitation to act (in 2009),” Dumanowski said. “This (power issue) is real, and now for us … the climate has dramatically shifted. We’re in a very complex environment; an end state for some parts of the utility, a growth state for other parts, and outside pressures like never before.”
Energy officials have said in budget meetings and special presentations on net-zero regulatory pressure that a huge amount of capital spending may be needed to modernize the power production and distribution company.
That’s as power prices fall in the province – slashing export revenue, raising citizen’s expectation of lower prices and lowering dividends.
The report by KPMG, commissioned after a rate revolt last summer, suggests that a municipally controlled corporation under city control could act without political consideration to strengthen the business. Specifically, it could add trading staff to take advantage of low market prices on the grid.
Administrators have been asked to present analysis on the report’s findings – released Nov. 25 – by Monday.
“This is a proposed next step, but not a decision to implement anything,” said energy division head Rochelle Pancoast, describing the report’s findings as sound, but lacking details on what an operating MCC would look like as well as whether it fits “our community.”
“It’s worth our effort to answer some questions of what we’re really talking about.”
A strategy to create a rate review panel could be developed early in 2025, and after a recruitment process, could be in place late next year.
Both the city’s division and KPMG – working off the final portion of a contract – would review and create governance scenarios for an MCC, potentially by the fourth quarter of 2025, for a final council decision.
Coun. Andy McGrogan said he was confident in exploring the idea if there were delineated “off ramps” to halt the process depending on the findings.
Coun. Cassi Hider said that when tasked with major decisions on complex issues in the energy division, adding expertise on a board was “very appealing.”
