Hat utility customers shielded from ‘rate riders’

By COLLIN GALLANT on July 22, 2021.

cgallant@medicinehatnews.com@CollinGallant

Hatters still owe a combined $1.5 million on their city utility bills one year after a pandemic program to defer payments ended, but that money won’t be recovered through a province-wide rider on all utility bills.

Most Albertans will see extra charges of less than $1 per month added beginning in August to pay for defaults and costs of a provincial order to halt late fees and disconnections during the spring of 2020.

The City of Medicine Hat, however, didn’t take advantage of interest free loans to bridge financing, and because of that, its customers are shielded from “rate riders” meant to recover lost income for utility companies.

“Administering our own fund was a better financial decision for our customers so the city decided to self fund instead,” said Denise Schmaltz, the city’s manager of customer accounts and billing.

She said a local repayment plan, charitable programs and the city’s ability to transfer bad utility debt onto property tax accounts, gives the local utility an advantage in collections.

Internal city funds made up amounts in the city’s accounting, whereas joining the province-wide fund would require all Hat customers to join in repaying a share of bad debt across the province.

“It keep costs to a minimum and we wanted to avoid any additional charges to utility customers as a result of the program,” said Schmaltz.

Provincial associate minister of natural gas and electricity, Dale Nally, announced on July 16 the Alberta Utilities Commission is now tabulating costs and determining charges that will likely be much less than $1 per month for several months.

“The program’s intention was to provide relief to those hardest hit by the pandemic while having a minimal impact on utility bills for consumers as a whole,” he said. “This small, temporary rate rider ensures that the debt will be repaid in the most transparent and straightforward manner.”

Locally, progress is being made toward clearing up overdue accounts, said Schmaltz.

At the end of the deferral period, in June 2020, Hatters owed $2.7 million on power and gas bills (those services in the provincial order) as well as water, sewer and solid waste collection, which the city included on its own accord.

Currently, about 12% of the customer base is in some state of arrears for an average of $440. The cumulative total is now $1.5 million.

The city also offers 12-month repayment plans as a way to avoid carrying charges and potential disconnection and related fees.

In May 2020, city council also set aside a total of $1 million from reserves for the Community Warmth Program and the Community Foundation.

Community Warmth has allotted a total of $554,700 to the bills of Hat utility customers who apply for one-time relief. A typical year sees the program pay out about $20,000.

Schmaltz estimates that as much as $750,000 will be accessed through community Warmth.

A $100,000 donation to the Community Foundation was also made with the earmarked funds.