City Notebook: With a sale off the table, a power plant review still smart

By Medicine Hat News Opinion on February 13, 2021.

cgallant@medicinehatnews.com@CollinGallant

This week Hatters heard a sales option for the power plant was off the table in a review of the viability of the last remaining municipal power company in Alberta.

The thought had raised the ire of some residents who, it seems, remembered they are shareholders of the company.

Such a review however, is sorely needed when utility companies the world over are contemplating how to operate in a decarbonized future.

Aside from an arguably booted rollout of the process by administrators and elected officials to the public, it’s the conscientious thing to do.

Mind you, it’s hard to imagine a smooth intro to the conversation in Medicine Hat about the permanence of the local power company, or the threat of renewable energy to the business plan.

It seems only now that the majority of Hatters are resolved to the fact natural gas prices aren’t ever coming back.

That’s nine years after the advent of shale gas and nine years of using reserve cash to fill holes in the city budget.

Of course, half the idea behind selling the power plant now, at top dollar, stems from a supposed offer for the gas company way back when.

“If we only had that cash stashed away,” the reasoning goes, though it must be noted there’s never been official on-the-record confirmation that it ever actually happened.

That’s not to say it didn’t, just that it’s never been certified.

The closest it’s come was last week in a letter to the editor when former alderman Cathy Smith referred to a $750-million offer from Pengrowth in 2002.

That aligns with general, glancing references over the years in committee meetings and surely in coffee shops, as well.

But another off the cuff remark from a Medicine Hat politico this week pegged it as an $800-million offer from Saudi Aramco.

In the same fashion as a fish tale, offers have run as high as a billion bucks offered on the back of a napkin.

“It’s certainly become a legendary story,” said Mayor Ted Clugston this week.

He first joined council as an alderman in 2009, years after the bid was supposed to have taken place.

“We’ve looked and there’s no official meeting notes about an offer.”

Plant offers

In the end sources tell the News there was “substantial” interest in purchasing the city plant, but no firm offers.

So, who would have been in the market for the city’s operation?

The News surveyed a number of industry observers and analysts, most of whom weren’t keen to go on the record as they are still active in the sector.

The consensus was that incumbent power producers in Alberta would be obvious suitors.

Those are, in no particular order, TransAlta, Enmax, Capital Power and Heartland Generation.

The last in that list is a U.S.-based conglomerate that recently took over Atco’s generation portfolio. The middle two are former city of Calgary and Edmonton entities that now have different corporate arrangements. Capital Power was spun out from Epcor through a stock offering, while Enmax is owned by the Corporation of the City of Calgary.

Or, there’s a possibility that an emerging utility company might see Medicine Hat’s relatively stable market as a launching pad to enter the broader Alberta market, then branch out from here. Heck, even Enmax bought a utility in Maine last year.

A company like Northland Power, for example, operates combined cycle and peaking plants (like the Hat’s operation) in Saskatchewan on supply contract for Crown supplier SaskPower.

That company however, announced a major shift toward prioritizing green energy investments in its short-term business plan this month, while explicitly stating income from continuing profits from gas-fired operations would help fund it.

A look ahead

An economic growth incentive program potentially worth $5.2 million will be unveiled at council’s meeting on Tuesday.

As well, council could receive official confirmation that a petition to dissolve the City Centre Development Agency has been received, and then discuss next steps.

100 years ago

Railways minister and former Medicine Hat MLA C.R. Mitchell was promoting the need for an extension of the Suffield to Lomond rail line, the News reported in early February 1921.

Council fixed the natural gas rate for the year at 25-cents per 1,000 cubic feet. Notes from Norton, a settlement southeast of Dunmore, described a pageant held the Feldman Lake School, alongside regional item columns from Alderson, Pearsonville and the M.D. of Brittainia.

The Canadian Senate Chamber was turned over by contractors who finished the final stages of rebuilding the parliament buildings that were destroyed in a massive fire in 1916.

Collin Gallant covers city politics and a variety of topics for the News. Reach him at 403-528-5664 or via email at cgallant@medicinehatnews.com