May 26th, 2024

Hatters too down on the Hat’s economy: Smith

By Collin Gallant on May 4, 2024.

NEWS PHOTO COLLIN GALLANT Premier Danielle Smith said the city’s ability to manage its power supply should be marketed as a huge plus when seeking high-tech and industrial investment in the region.

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Medicine Hat’s city-owned power supply could draw high-tech investment and become a hub for artificial intelligence, data processing and aero-space industries, according to Premier Danielle Smith.

She made the comment to a group of business and civic leaders Thursday, lingering on the point that while Hatters tend to see the local economy as depressed, she sees activity and further promise from a well-supplied, reliable power market.

“Every time I come down, it seems like everyone feels Medicine Hat is not booming to the same degree as the rest of the province, and it’s simply not true,” she said, noting activity in defence and aerospace sectors, as well as potential industrial and high-tech development.

“You have the ability to be the lowest-cost provider of both electricity and heating in the entire province,” she said. “What do you think it would do to if you advertised that you are able to build special purpose generation to attract data centres, AI, crypto-mining and all technology?

“Those areas are (where investors are) looking for places to go that have cheap, reliable power. I think that’s going to be the main proposition you have (when you) say, ‘Look over here, pick us.'”

That had been advertised widely by city economic developers in the past, though the department is now resetting an overall plan focused on business retention, labour force development, along with targeted industrial and investment attraction.

“Municipalities will have to be ready,” Chamber president Steve Heid said in a brief response to Smith’s address..

It’s the second time in eight months Smith has publicly noted the strategic advantage of a city-owned utility company, though it’s also been the focus of local controversy.

Last September however, the MLA for Brooks-Medicine Hat said the municipally owned electricity producer and supplier should be seen as a “benchmark” for the power sector across the province.

That was just as council called for a major review of business practice during a year of record profits and complaints about high prices.

On Thursday, Mayor Linnsie Clark welcomed Smith’s comment.

“It’s true, we’re in a very unique position owning our own utilities, as well as the manufacturing and technology companies that we have here,” she said. “We’re heartened to hear that she has as much confidence in our community as we do.

“We are doing a review of our energy business (expected later this year) and we’ll wait and see what that comes up with. It will help us frame up where we can and where we need to go for the interest of the community.”

Coun. Darren Hirsch, chair of council’s energy committee, attended the speech and said it highlights the strategic advantage the city holds.

“It’s refreshing to have someone who’s a bit removed to come and talk about what we’ve been doing and what’s possible,” said Hirsch, who stressed the electricity sector is in store for major shifts due to technology and the province’s market redesign.

That has implications on prices, and the city is also subject to conditions of its electricity charter, namely that its generating capacity is capped, and adding additional supply can be costly.

“There are a few wrinkles and we’d love to have a conversation about it,” said Hirsch.

The city-owned power company operates in a grandfathered franchise area, manages its own supply and currently has a surplus generating capacity that can be sold on to the Alberta grid.

Medicine Hat can also “over build” capacity as a nod to cost efficiency and to ensure its own backup power needs are met.

That’s what it did in 2018 when the Unit 16 power plant opened in the north end, and later Unit 17, bringing total capacity to 299 megawatts.

Over the same period, the city secured a major supply contract with Hut 8 Cryptocurrency and Aurora Cannabis.

Last year, the city agreed to break the Aurora contract – which was never fulfilled but provided revenue on a take-or-pay basis – in order to help Aurora repurpose the half-built Sun greenhouse to grow vegetables and cut flowers.

It also opens up Aurora’s huge block of power – 42 megawatts, enough to supply six petrochemical plants – to be offered to new customers.

Smith has often spoke about outages on the wider Alberta power grid as a reason for reforms, but this week said the province is, generally, well-positioned to meet demand from industrial customers compared to other provinces.

Hydro Quebec has suggested spending more than $100 billion to meet rising demand and net zero targets.

Smith says Alberta is supporting companies proceeding with hydrogen fuel projects, carbon capture and sequestration and high-tech expansions – efforts all on the radar in Medicine Hat.

Airport, Highway 3 twinning, irrigation and agri-processing investments are also sought, said Smith.

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