City’s new interim single-price power explained
By COLLIN GALLANT on October 18, 2023.
cgallant@medicinehatnews.com@CollinGallant City of Medicine Hat power customers will move to one rate at the beginning of November – with no action required – in a reversal of pricing policy brought in about 10 months earlier and subject of widespread complaints about high rates and confusing options ever since. After a three-hour public hearing Monday, council unanimously endorsed the staff proposal to move away from using retail rates in the rest of the province to determine default. Local officials will now use the wholesale price forecast that those out of town retailers use to buy discounted power before markup. “The rate is expected to beat the one-year contract rate of other large retailers because those retailers reference the same wholesale price, but layer on additional retailer fees and other charges,” reads an explanation put out Tuesday morning by the city’s utility division. Senior administrators say the new local rate will be at or below 11 cents per kilowatt hour when it is introduced Nov. 1, and could drop to 9-cent range next spring as Alberta power prices are expected to soften. A late amendment will set 11 cents as a cap for the “interim” rate, while also ensuring the price doesn’t fall below 7 cents. It will reset every three months into next year as the division begins a review of the power production unit’s business model. Speaker after speaker at Monday’s public hearing into the rate called on the city to release cost of production figures and base a new rate on that to ensure profiteering wasn’t taking place. Administrators said accurate cost estimates are hard to make ahead of time in the industry, and cost analysis is considered a trade secret as it forms the basis of large industrial contract discussions. Previously the city offered several different types of power rates since introducing new options in late 2022: — Default rate set at the average of other major retailer default rates in the province (18.9 cents in October, but above 30 cents this summer); – Fixed-contract rate, in place for 12 months, ranging from a special 8-cent rate up to June, but 17 cents after and reset to 11.6 cents this month before the change; – A variable contract rate, based against Alberta grid price the previous month plus a 2-cent premium (ranging from about 13 to 21 cents since January). Those will be replaced automatically for contract users on Nov. 1, as the wholesale-determined rate becomes the default rate as well. Contract users do have a 30-day option to revert to the 12-month fixed rate however, said energy division managing director Rochelle Pancoast. She told council that might be considered attractive by customers who have bi-directional meters that flow power back to the grid from solar panels. 17-16
