cgallant@medicinehatnews.com@CollinGallant
Mayor Linnsie Clark says council will “meet the ask” of Hatters upset with high power prices if an interim rate is approved Monday, but a protest group says if that happens, it will call for the city’s grandfathered franchise area to be dissolved.
It comes as a public hearing is scheduled for Monday on changing the rate, potentially reducing rates by almost one-third or more until a promised business model review can be done in 2024.
That follows an allocation of $33 million in credits to 35,000 local bills last month, but also widespread discontent this summer on how local rates are set.
Clark said she will support the rate change as it moves the issue forward and will give better rates this fall.
“For me it strikes the right balance,” said Clark on Friday during a press availability ahead of Monday’s public hearing where dozens of residents may want to be heard on the subject.
“We’re looking forward to hearing from the public,” said Clark. “It’s an interim measure that will take us to the point where a broader review of the business and rate philosophy is completed.”
A letter from the Medicine Hat Utility Ratepayers Association argues otherwise.
It was formed by some organizers of a protest meeting in late August, which then helped pack council chambers when a relief program was debated in early September.
The group includes restaurant owner Sou Boss, former council candidate and local businessman Barry Knodel and David Frey. They call for council members to defeat the interim rate proposal and heed calls to set rates based on production cost.
“If the (city commodity businesses are) being operated as a for-profit entity, the citizens of Medicine Hat should be given the opportunity to seek an alternate supplier of our electricity,” states the letter. It is included in the council package and also forwarded to the News and local MLAs, including Premier Danielle Smith, who is scheduled to be in town next week.
“In the event that council (passes the bylaw) the association will immediately move to seek the right to engage alternative utility providers,” it concludes.
The city maintained exclusive ability to sell power locally when the greater electrical system was deregulated in the late 1990s. Customers in the city limits, Redcliff and near portions of Cypress County cannot go through another retailer to negotiate prices.
But, over the years city leaders and public power advocates have argued that as a completely independent supplier, local customers avoid costly transmission fees and the city has earned huge export profits on the Alberta grid.
Those profits could surpass $200 million over the last three years, but it has also led customers to ask why their rates are generally average in Alberta when so much export income is being made.
Administrators have said power plant dividends support the municipal budget, make up for losses in gas production and fund special capital projects. Changing the model would mean major budget changes.
The proposed interim rate would be based on the wholesale rate of power in the province, rather than the retail comparison used since 2009 by city staff.
If approved, the initial rate would be near 11.6 cents in November, said division head Rochelle Pancoast. That is close to the October contract offer and much less than the previous contract price of 16.9 cents offered in July, where many Hatters locked in.
Those contracts would revert to the lower price automatically, and the rate would be readjusted starting Jan. 1 on a quarterly basis based on new forecasts.
“We expect to see it fall (in price) into next year,” said Pancoast, adding the business overview is on the way.
“The large discussion in the community is about the philosophy … We’ve heard the ask to consider that cost plus, but there are large implications and we want to make sure that council is informed going into that decision.”
The controversy arose after the division reconfigured its contract and fixed-rate system late last year. The 2022 price (8 cents per kilowatt hour) could be locked in until June 2023. After that point, customers could lock in a new 12-month contract at about 16-cents, or remain on a default rate that hit 30 cents in July.
The authors of the letter describe that as administrators “scheming” to force Hatters into long-term contracts at higher prices when lower prices are on the way.
“The city-owned electric gird and power supply stations belong to taxpayers and citizens (and are) the only source of electricity available,” it reads. “It should be operated as a co-op where all costs should be known to all members.”
Clark said the rates should be adjusted now while the report is being developed.
“I think this is meeting the ask of residents – I hope they agree – and we’ll hear from them on Monday,” said Clark. “I’m thrilled that we’re reviewing the business as a whole and the rate philosophy. Part of that is (reviewing) what are all the benefits of owning our own utility.”
