City council held a committee of the whole meeting Thursday to discuss details behind moving the publicly-owned power plant under the operation of a municipally controlled corporation, or MCC. The city's main power plant along the banks of the South Saskatchewan is seen in this file photo.--NEWS FILE PHOTO
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Councillors were briefed behind closed doors Thursday on work to create an arm’s length management board to run the city’s utility interests ahead of the issue moving to an open meeting, potentially next week.
Creating a “municipally controlled corporation” to oversee the city-owned power plant without direct council control was suggested as an option in a management analysis procured last year by the city.
Last month, division officials garnered approval to advance some exploratory evaluation of the setup – used by the cities of Calgary and Edmonton – and tentatively report back May 20.
This week, a closed-door committee of the whole meeting was held to give council members time to evaluate and ask questions about the findings, assumedly before the next regular public meeting Tuesday.
“It’s a confusing animal inside a municipal entity,” said energy division head Rochelle Pancoast in late April when energy officials asked council to approve further study of the setup and potential advantages and disadvantages of creating the entity.
The entire review was approved after a rate-setting controversy during 2023 over high power prices that wound up with substantial refunds to customers and a new interim rate.
As well, a review of business practices by consulting group KPMG determined the city could maximize value of the power plant and related distribution companies by depoliticizing and expediting decisions through an operating authority outside the municipal structure.
Mayor Linnsie Clark has said the issue is large enough to warrant greater discussion than in a public hearing and has argued the change should be debated as an election issue in the fall.
“I’m not sure other council members agree, but this is much bigger than a decision about a rec centre,” she told council.
“It seems like a very expensive way to get more skills-based governance … the worst of both worlds in my opinion, because council would retain all the accountability … but have far less control over what’s happening.”
Coun. Alison Van Dyke raised questions about universal rate offerings in the city, opposed to the rest of the province.
“I don’t want to get a lot further down the road and there being no time to get answers,” she said.
She was told the starting point was to continue services as they are now, said Pancoast, though changes may be suggested but philosophical points could be written into a shareholder agreement.
“It’s something that we have to decide on after all the facts are presented,” said Coun. Darren Hirsch, chair of the energy committee. “We’re not pioneers in this,” creating an MCC.
The advanced cost estimates and organizational layout was promised to council by mid May.
After that “disclosure” – required by provincial regulatory rules – a public hearing would need to be held before further decisions are made.
That could happen in the summer, according to a potential timeline presented last month, and if approved, it would likely take up to a year to put legal and operating frameworks in place.
The proposed municipally controlled corporation, or MCC, would govern and house the city’s power generation business as well as gas and power distribution lines.
KPMG recommended leaving the gas production business under direct municipal control, but also to shut down or sell it off as fast as possible to remove longer term risk and liabilities.
With industry veterans on the board, such as engineers, corporate lawyers or utility sector executives, KPMG says having a “skills-based” board of directors to evaluate and approve business decisions or capital planning is a viable option.
Staff say the change could also potentially open up new areas of financing to the city, such as issuing bonds, still provide dividends to the city, limit liability to the municipal corporation and free up council time to focus on municipal issues.
However, the KPMG report also suggests that council oversight has led to decisions that weigh rate increases in conjunction with municipal priorities.
In the 2025-26 budget, officials cut several utility distribution projects in order to limit increases to zero overall, while a tax increase above 5 per cent was approved.
Like Enmax in Calgary or Epcor in Edmonton, the city would be the only shareholder but it would operated at arm’s-length, though a shareholder’s agreement would lay out dividend expectations and some other goals.
KPMG also recommended creating a rate review committee that would parallel Alberta regulatory rate reviews.
“It would help delineate council’s conflicting role of protecting both ratepayer interests” as the council committee would have final say on rates, according to a staff presentation, that aside from commodity rates are set to recovers costs.
City finance managers said further analysis was required to determine the costs of setting up and working through an operating relationship between City Hall and the corporation, including fleet, building maintenance, payroll service and other items.
They estimate one-time costs could be $4 million to $5 million, and ongoing additional operating costs could be $2 million to $3 million annually for system software licensing, new positions, plus hiring a board and top finance officials.
That represents up to a 2 per cent increase in costs for the corporation, while a rate review committee could be created for $45,000 in one-time costs and about $200,000 annually.
