cgallant@medicinehatnews.com@CollinGallant
A city councillor who helped develop the formula to stash away power profits for future use says council needs to loosen its rules this year in light of a massive dividend forecast as prices paid by the public double this summer.
“Extraordinary times call for extraordinary measures,” said Coun. Darren Hirsch on Tuesday night after council expanded a utility relief program for low-income workers, but postponed potential wider relief until the end of 2023.
That can be accomplished this year, argued Hirsch, without jeopardizing reserve funds that pay for property tax abatement, and be done with a record dividend payment last year, then go forward.
“I’m not recommending a regular annual dividend of a large amount of money, I’m looking at special cases, like what’s in front of us,” Hirsch told council, later adding for the press, “I had hoped to start the ball rolling, but it kind of fell on deaf ears.”
Others on council argued that a review late this year or early next would include a more accurate financial picture of the sums involved.
One option presented was putting $3.2 million of a forecasted $134-million power dividend toward a $100 one-time credit on August bills for 30,000 Hat households, which could pay $50 more per month this summer as rates rise.
Instead about 400 Hatters on the Fair Entry Utility program will receive $500,000 in total in $200 monthly increments until the end of the year.
Mayor Linnsie Clark said she is open to a review later this year, but generally favours the plan to use dividend-fuelled reserve funds as income funds to abate property taxes.
Energy committee chair Coun. Alison Van Dyke said the highly volatile Alberta market, where the city makes most of its profits, could see a quick reversal, or bottom out next year as new power sources come on line.
The city also has unfunded priorities such as carbon capture and renewable power production to consider, and in her opinion a review could wait until the fourth financial quarter.
“(The $3 million) might not be significant (to reserve balances), but my issue is that we don’t know (the final dividend) because we’re only halfway through the year,” she said. “My preference is to wait and see at year end to know where we stand.”
Rate-setting, the benefit of public ownership and the relative health of reserve funds (where the dividend would be directed) laced the 45-minute discussion at council’s meeting on Tuesday.
In June, Hirsch and Coun. Andy McGrogan had called for a list of “one-off” options to reduce the sting of rising rates on consumers as well as a backgrounder to explain the utility department’s philosophy on rate setting that has proved controversial this year.
McGrogan said a relief program should hit more citizens who are “losing sight of the tangible benefit of owning our own utilities.”
Coun. Shila Sharps was the lone vote against the “Fair Entry” measure, stating utility relief should reach a greater portion of Hat customers.
Coun. Cassi Hider also called for broader measures.
“I hope that we’ll be thinking of all our stakeholders, and we know it’s a hard time for a lot of people,” she said. “I think we need to do something for everyone.”
Like McGrogan, Coun. Robert Dumanowski said maintaining the principle of making businesslike decisions in the city’s business units was a key point in his mind.
“We’re really at the mercy of provincial prices, so do we do something at the expense of safeguarding our financial future, or do we find a happy medium?” he said.
Coun. Allison Knodel said the city will use about $9 million this year in reserve funds and $6 million next year to balance the budget without raising taxes.
The approved dividend plan is to build the heritage savings reserve to the point where returns would fill the gap, and Knodel would support using the excess revenue to fund facility construction.
Coun. Ramona Robins said the Fair Entry expansion would “help people here and now who need it, but I’m not quite done thinking or talking about (options).”
Council called for a review of local rate-setting policy early in its term, but that had been stalled for more than a year as council hasn’t provided terms and scope of the study, according to staff.
