Utility cost drops as payback fee expires

By Medicine Hat News on January 3, 2025.

The power price in Medicine Hat will remain at a floor price of 7 cents per kilowatt hour in January but still decrease, as a charge to recover provincial deferral program costs from 2023 are eliminated.

The city brought in blanket pricing based on Alberta market wholesale pricing in late 2023, but the switch expanded the pool of customers required to repay costs from a deferral program ordered by the province earlier that year as prices spiked that year.

The difference added about one cent to the local commodity rate, but the financing arrangement was set to conclude on Dec. 31, 2024.

The Alberta wholesale power rate, offered to retailers, is 4.92- cents in January. Medicine Hat sets its rate on three-month blocks based on the one-year wholesale forecast price.

The province also changed default pricing options in the rest of Alberta – providing a full-year price to non-contract customers – which will sit at about 12 cents per kilowatt hour for 2025.

The city’s price for natural gas will also drop as the new year begins, to $1.97 from $2.25 in December, as the rate is set at cost recovery of gas purchased for resale plus a 7-cent per gigajoule premium.

Power companies across Alberta deferred $187 million in charges over the winter of 2023 to cap billed prices at 13 cents.

Medicine Hat provided a city-financed parallel program which totalled about $6.6 million in delayed revenue.

Administrators told the News this fall the difference should be made up entirely in early 2025 due to the scheduling of billing cycles.