A loophole in fixed-rate power pricing contracts allowed most of the City of Medicine Hat's customers to lock in 2022 pricing for another six months, but about 600 households weren't eligible to take advantage.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
Medicine Hat ratepayers moved en masse to fixed-rate power contracts last month to take advantage of a six-month extension of 2022 prices, but a small number of customers landed in a no-go zone, unable to renew contracts.
Thanks to a loophole in rate-setting policy, four in every five electric customers are now paying one-third of record-setting market prices this month, or one half of new adjusted fixed rates brought in by the city.
But about two per cent of the city’s 26,000 residential customers signed on for a minimum six-month fixed rate last summer and had no way to lock in again for the upcoming coldest months.
“I don’t understand why it can’t be applied city wide,” said Hat resident Leanne Collings, who says she’s one of those who fell through a crack in the changeover and feels it is unfair.
She had a fixed-rate contract for several years before moving last August, at which point she was told she couldn’t carry over her fixed rate to the new address.
At the time – months before city administrators proposed new contract structures – she accepted the offer of a new contract at the same 2022 rate.
The timing of the six-month minimum deal however, made her ineligible to renew before 2023 rates came in.
“I had a very pleasant conversation (with the billing department), and I talked to a manager, but the answer was that they couldn’t do anything,” said Collings, who expects her monthly bill to rise by $50 to $60 month this winter. “I feel that I can manage it and hang on, but how many people can’t?”
Officials in the city’s billing department say only 143 out of 26,000 residential customers are set to come off the 2022 pricing in January as their minimum six-month term expires. Another 488 will lose the 8-cent rate in February.
“It is a difficult situation,” said city customer service superintendent Denise Schmalz, stating the size, nature and complexity of billing operations can make it difficult to foresee every circumstance.
That is especially true when altering contract options, term offerings and other programs for a large number of customers, each with a unique situation, she said.
The city’s billing philosophy is to follow regulated requirements, which offer contract choice to consumers, but also leads to some exposure.
“Some months the fixed rate is higher or lower (than the default rate) – it is really up to the customer to decide what is best for them,” Schmalz said.
“There is a saving grace, though, the highest prices are typically in the winter, and the province has provided a deferred cap on prices, and will provide $75 per month on bills in January and February, which should make up any difference.”
A similar situation exists for default customers for gas, which is capped by the province at $6.50. And the province will also pay a $25 credit on bills for March and April.
Schmalz also told the News that 113 customers had been approved for a “fair entry” subsidy as low-income earners. That “relief” program, approved by council along with rate changes in November, will pay a $75 credit during six high-use bills, including those in January, February and March, as well as the summer.
Administrators say 80 per cent of Medicine Hat’s power customers in the city, Redcliff and near portions of Cypress County are now on fixed-rate contracts.
Those who didn’t renew the 2022 rate of 8 cents per kilowatt hour will either pay 17 cents (the new 12-month rate from the city) with a new contract, or the default price of 28.6 cents. Customers now immediately move to the default rate after their contract term expires (either six months for 2022 contracts or 12 months for new contracts).
All but 13.5 cents of the default rate will be deferred on to future bills under a provincial government program.
Every cent of difference in power rate translates to about $6 on power bills.
