After signing two huge power supply contracts this spring, city officials say they will work to manage what they supply to customers, rather then moving ahead with adding new turbines. The city's main powerplant in the South Saskatchewan River valley is seen on Thursday, May 3, 2018. -- NEWS PHOTO COLLIN GALLANT May 4, 2018
City councillors may push for greater help to Hatters facing rising utility bills during budget debates on Monday, but staffers told elected officials this week the authority to redirect power profits rests with council, not staff.
Coun. Shila Sharps told a Committee of the Whole meeting this week she wants general options to help shield Hatters from higher utility prices this winter.
Some potential relief is already scheduled to be presented when budget debate resumes Monday, but Sharps signalled she felt some amount of record profits from 2022 could be used to offset taxes or utility rates going forward.
“The citizens are still the stakeholders, and I think they would like to see us spend this a little bit differently instead of seeing huge tax increases,” said Sharps.
“I’d like to see us do – when we’re bragging about $85 million – what can we do to ease more money into their pockets when we’re facing increases.”
Acting city manager Rochelle Pancoast said the business units have been directed by council to operate the commodity businesses according to best private-sector practice while offering fair market prices to customers.
Decisions on how to use profits to alleviate high costs in a volatile free market come under council’s authority, but the principal of “operating the business as a business” is greatly beneficial.
“We certainly heard council’s request and will bring that back for council’s consideration,” she said, adding a moslty “arm’s length” relationship on operations and rates allows the city-owned company to benchmark its earnings and performance against the private sector.
Utility division head Brad Maynes said the health and sustainability of profits in the division must be considered.
“There’s a misconception that this all came on the backs of our ratepayers,” he said.
“We’re running this as a business, we have external clients, and that is generating (about 40 per cent) of the earnings (from grid sales).”
The budget will be debated Monday, and could be passed Dec. 5.
This year, city administrators will divide $83.8 million of profits into $25 million to a long-term savings reserve, and $50 million to an investment fund that will provide a replacement dividend on a yearly basis similar to the former gas production dividend prior to 2015.
Next year, the budget will see $6 million in such investment income, but still require property tax increases in the range of 4 per cent each year, as well as a similar hike to most fees and $3 million more per year in franchise fees paid ultimately by ratepayers.
Council requested relief options on Nov. 7 “for the most disadvantaged customers,” according to a motion by Utility and Infrastructure committee chair, Coun. Alison Van Dyke.
That might be coupled with a new move by the province to provide “direct” relief from high inflation and utility bills promised by Premier Danielle Smith earlier this month.
Currently the province provides a $50 direct payment on electricity bills, but the six-month program will expire this winter, while a rate cap on natural gas has yet to reach the tripping point.
There’s no schedule for new measures to be announced, though the Alberta legislature resumes Nov. 29.
In early 2022, as bills began to rise, the city announced it would spend up to $2.2 million to forgive late fees and backdate some new fixed-rate customers.
Changes to non-commodity rates included in the business plans would see operating charges rise by 2.8 per cent over all areas in 2023 and then by 3.5 per cent in 2024.
Including higher franchise fees, the difference to the average residential bill would be $11 per month next year, then $10 in 2024.
The utility also has to reset fixed rates offered to customers that in 2022 were 8-cents for power and $4.35 for gas, but which came in well below market rates as well as the city’s own costs.
Specific to power, higher cost of gas fuel bought for the power plant led to an $18-million negative variance over the year.
Gas purchased off the Alberta system for resale to local customers was also higher than forecast, it ranged as high as $8 in 2022, where each dollar of difference added up to a $2.5-million loss to supply the fixed-rate base.
The proposed fixed rates for 2023 are 13 cents for power and $5.50 for gas.
