City officials are in the process of deciding whether a provincial power rate cap, which would have to made up later, is a good plan for its ratepayers.The city's Unit 16 power plant is shown in a file photo.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
A proposed provincial cap of power prices may apply in the City of Medicine Hat, but local administrators are still determining if that is a good thing for the utility or customers.
Bill 2, which would set a top price on most bills from January through March, 2023 at 13.5 cents per kilowatt hour, is now being debated in the legislature.
That rate is about half the current default rate based on market conditions and approved by regulators, and well below forecasts heading into the colder weather months.
But, that only applies to customers who do not have a fixed-rate contract, which are are typically below that level. The cost savings this winter however, would be repaid by the entire pool of default rate customers by the end of 2024 with incremental amounts on monthly bills.
City of Medicine Hat finance officials told the News they are studying the bill and its potential effect.
The provincial government says it would save ratepayers money over the coming months.
“(The changes) will enable us to deliver affordability relief to all Albertans struggling under the burden of increased costs and crippling inflation,” said Matt Jones, the minister for Affordability and Utilities, when introducing the bill.
The government would also extend a total of $200 of direct rebates onto all bills until the end of April in the bill. Separately, the Danielle Smith-led United Conservatives have separately promised a further review of the Regulated Rate Option (RRO) system, which includes about 800,000 accounts in Alberta, including Rural Electrification Association members.
New Democrat Marie Renauld (St. Albert) called the proposed cap a “utility payday lending scheme.”
“Folks on the RRO get three months of temporary relief but then end up paying more over the next 19 months to pay off the loan,” she told the legislature on Thursday.
Since utility customers could sign up for fixed contracts in April, she argued, that would leave a smaller pool of customers to pay off the costs.
“(It creates) a huge economic incentive for people to leave the regulated rate option … It will trap Albertans who can’t get off the RRO into paying even higher utility costs.”
In Medicine Hat, the potential rebate comes as major changes are already coming to local billing in the new year. They require customers to give greater consideration to remaining default RRO pricing or sign up for a 12-month fixed price.
But customers have traditionally rejected change to contracts.
Even during rocketing high prices in 2022 and an obvious discount by signing on to fixed rates, about half of local customers remained on default RRO rates.
The city, which holds a unique power generation and distribution franchise, has opted out of provincial power relief programs in the recent past.
In 2020, the province suspended all utility disconnections and late payment fees during the initial months of the COVID-19 pandemic, then offered interest-free loans to power companies until costs were recovered via a special fee on all power bills later that year.
The city utility also suspended disconnections and fees, but bore the costs in house rather than accepting the loans. The result shielded local customers from the recovery fee.
In the end, the fee collected a total of about $4.50 per account outside Medicine Hat.
