November 8th, 2024

City on track to collect nearly all money owed from power price deferral

By Collin Gallant on November 2, 2024.

While some power providers are likely to come up short on a collection of provincially deferred power costs from early 2023, but the City of Medicine Hat expects to achieve, or get quite close to, the full amount by Dec. 31 deadline.--NEWS FILE PHOTO

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The City of Medicine Hat expects to come close to recovering millions in deferred power revenue from a three-month provincial rate cap two years ago by a Dec. 31 deadline.

Filings show however, that other power providers in the rest of Alberta may not.

Retailers were owed a total of $187 million after the Alberta government capped bills for default power customers at 13 cents per kilowatt hour between January and March 2023. That difference was only deferred however, and was to be charged back to customers over the following 18 months.

In Medicine Hat, the total was $6.6 million, which was financed internally to keep local customers insulated from the larger liability.

The local collection process expanded to the entire customer pool when blanket pricing replaced contract options in late 2023, and each month since, a little less than a penny has been added to the local power price.

That will be eliminated on power consumed in January, but utility officials said Friday that with only $1.4 million outstanding at Aug. 31, they should square the program over four months this fall.

“It’s working out to roughly $350,000 per month, and we’re projecting to get close to the (full) amount,” said Jasmin Gross of the city’s utility business analysis office.

The province required all power retailers to take part in the deferral program, and has mandated that any over collection would be credited back to customers, but potential underpayment isn’t contemplated, she said.

“We’re essentially managing the program as it was designed … we won’t fully know where we sit until March (accounting is finalized), and where we sit, over or under, will be decided at that point.”

Any difference could be relatively small for the city.

The extra charge is built into local power rates, and typically amounting to $4 to $6 per month.

In November, it adds 0.972 cents per kilowatt hour to the city’s floor price of 7 cents for a total rate of 7.972 cents, according to new rates released Friday.

Three major power retailers in the province, Enmax, Epcor and Direct Energy, have each added 2 to 3 cents to customers on RRO contracts, know known as the “Rate of Last Resort.”

Recent filings to regulators show they will be collectively owed about $30 million at the end of November, and only collect about $7 million per month.

Gross said billing cycles complicate matching revenue to months in Medicine Hat financials. As such, the actuals won’t be finalized until March, but the charge will disappear on usage in January.

Also in new rates posted Friday, the price of natural gas for local customers was set at $1.864 per gigajoule in November, up from 76.24 cents in October.

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