The city's electric utility is askign council to approve three new projects to upgrade a planned substantion, boost production capacity at the north end powerplant and also leave a backup generator on site in order to cut potential downtime in case of breakdown. Council will decide on the projects on June 21. NEWS PHOTO
cgallant@medicinehatnews.com@CollinGallant
Medicine Hat now has the highest percentage of utility customers on fixed-rate power contracts in Alberta, which itself is seeing massive uptake for fixed over floating power prices.
About 80 per cent of the city’s 29,000 residential and small to medium business accounts now have a set rate for power, according to basic figures given at Thursday’s meeting of the corporate services committee.
That comes after a frantic December in the city’s billing department where Hatters were able to lock in 2022 rates through expected record pricing this winter.
The share compares to about 50 per cent share on fixed rates reported last summer, and roughly equates about 9,000 more account holders opting for contracts.
It is also higher than the 78 per cent of power customers in the Enmax distribution zone that have fixed rates, as of Jan. 6, at which point higher uptake was reported across Alberta.
Administrators and elected officials said the sharp local increase was expected, especially in the face of higher rates and the ability to re-sign contracts at much lower prices.
“We’ve been very transparent and forthright about it,” said Coun. Robert Dumanowski, the committee’s chair.
“Of course, there is an inverse effect that will mean the utility will receive less (revenue), and I’m curious about that effect.”
Administrators presented new contract options and formulas to council in late November, stating they needed the greater ability to reset rate offerings more often throughout the year to better align pricing to costs.
Financial reports from the city in the summer revealed $18 million in additional costs to buy natural gas for the power plant operations that couldn’t be recovered from customers through the previous whole-year rate system.
Corporate services managing director Dennis Egert stated that of the entire fixed-rate pool of customers, only 107 had secured prices after Jan. 1, meaning they are subject to the 2023 rate offering, that came in about double the price in 2022.
As well, Egert also reported that about 70 per cent of gas customers are now on contract rates, compared to about half in mid 2021.
That rate for 2022 was $4.35 per gigajoule, and it rose to $6.61 in the new year. That 12-month rate will be available until the rate is announced on April 1, similarly to the updated fixed power offering.
“We don’t have 100 per cent of our customers on fixed rates, he said. “There will still be people out there that are unaware.”
Councillors on the committee said public inquiries to them about how new fixed rate worked had declined, which was attributed to a major advertising campaign and the work in the city’s billing department.
“They’ve really done a fabulous job,” said Coun. Cassi Hider.
The share of fixed rate customers here ranks just ahead of the Calgary distribution zone, operated by Enmax. It had 78.6 per cent of customers with fixed power rates, rather than the default rate, often called the Regulated Rate Option.
That was highest of any major distribution area in the province, including large rural areas managed by Atco (61.2 per cent) and Fortis (59.4 per cent), as well as Epcor’s Edmonton and rural zone (55.2 per cent).
The average of all Alberta customers was 65.1 per cent on fixed power contracts.
The provincial government, which is offering a deferral program to keep RRO customers’ bills lower this winter, has also advertised the benefits of contracting a longer-term price.
The shift to fixed is a stark reversal of how Albertans have traditionally remained on default pricing, according to University of Calgary professor Blake Shaffer.
The split has basically reversed from early in the last decade, when one-third were fixed and two-thirds floating.
Shaffer told the News last week that an obvious financial advantage of fixed pricing has become apparent, especially over the past year.
The City of Medicine Hat only began offering fixed power rates in 2016, but set it at the same value as a then cap on power prices instituted by the NDP government of the day.
That was eliminated in 2019, at which point 1,000 local account signed onto the city’s fixed rates in the first two weeks.
