February 28th, 2024

City hall slammed with fixed-rate signups

By COLLIN GALLANT on December 9, 2022.

Piles of utility bill envelopes, representing the monthly mail-out to customers in Medicine Hat, appears in a display case in the lobby of city hall on Thursday.--News Photo


One in every four city power customers have jumped at the chance to lock in 2022 power prices for the coming winter, a city committee heard Thursday as part of an update on the rollout of new contract options for 2023.

The change consists of new terms of length, new rate setting formulas and new renewal requirements, but Hatters are apparently choosing a bare-bone rate now, while awaiting more info on how new rates will affect them.

“It’s the hot topic this season, for sure,” said corporate services committee member Coun. Cassi Hider. “I’ve heard complaints (about the changes), but I’ve also heard that our staff are being helpful. It seems confusing but our team is taking the time to explain it to people.”

The News reported on the price option late last week, the same day as letters were sent to residential utility users outlining the new options and highlighting the ability re-sign at current prices.

That provides a price for power of 8 cents per kilowatt hour, potentially until June, while floating rates in January could hit 30-cents, according to analysts.

Customer service superintendent Denise Schmalz said Thursday that reaction left her department “extremely busy” processing contract requests and explaining the changes to ratepayers.

It has dealt with 6,000 requests to renew at 2022 prices, out of a customer base of about 26,000. Abut 19,000 customers are currently on fixed rates, most of whom have reached a renegotiation date.

Schmalz ran committee members through the process of renewing contracts on a portal on the city’s website, and the rollout of advertising, including in the News, over the next five weeks.

Still, the billing department has received an average of 500 calls per day about the changes, and staffers are attempting to “simplify the process as much as we can.”

“It’s quite different than what we have today,” said Schmalz. “We’re trying to reach as many customers as possible in such a short window.”

At council’s late November meeting it approved a new slate of rate options proposed by utility administrators, who say more options benefit customers and better shield the city-owned power plant and gas department from selling below cost of production.

Specific to 2022, unexpectedly high market prices for gas raised expenses for acquiring home-heating fuel and high-pressure gas to run the city’s power complex.

All existing fixed-rate contracts and rates will be honoured for at least six months, meaning that portions of contracts signed after last spring, including those in December, could be carried into 2023.

Contracts older than six-months are eligible for renewal at today’s rate for a further six months.

For several years the city has offered two main rates to residential and small business customers: a fixed-rate based on cost recovery plus a premium, and a default rate based on the average of other prices in the province.

The current fixed rate required customers to sign on for a minimum six-month term, but they remain on that rate until they decided to leave.

In 2023, fixed-rate contracts will lock in the rate for a set 12-month term, after which the account moves to default rates unless the account holder decides to renew.

The rate will be reviewed and posted every quarter, but only available to new fixed-rate customers or those renewing their yearly contract.

A brand new “variable rate” contract, also 12 months in length, would charge the average of gas or power on the Alberta markets over a certain time frame, then adds a premium.

Default rates would remain in place, as required by Alberta utility regulations, for customers not on a fixed rate, but the local default rate of gas will be set as the average cost of city gas purchases for resale in months leading up to the billing period.

Administrators say that will provide a better reflection of local costs.

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