Brendan Hilson speaks at a public hearing Tuesday on a potential plan to move city utility interests under the management of a municipally controlled corporation.--News Photo Collin Gallant
@CollinGallant
Residents spoke against and for the idea of creating a municipally controlled corporation to manage the City of Medicine Hat’s power plant at a public hearing on Tuesday, citing concerns over accountability of a new corporate structure, or arguing that more efficient operation of the city’s legacy public industry is needed.
After the 2.5-hour hearing, featuring almost 20 speakers, council voted to postpone further debate until the July 21 council meeting.
One third of speakers, including some former city councillors, said industry experts, not elected officials, are needed to maintain the 110-year-old business into the future.
Most presenters called for a pause to both the plan, or moving ahead with a rate review committee, while seeking interim action to better manage the business as a city department.
“(An MCC would) provide political cover for difficult or unpopular decisions that council doesn’t want to make,” said presenter Craig Rattan. “I’d recommend that any councillor who doesn’t want to make difficult decisions not stand for election.”
Another speaker, Brendan Hillson, wore a “Clark for Mayor” T-shirt and questioned the ability of an MCC, as proposed, to better manage the business units.
“I’m not opposed to an MCC but I’m opposed to this proposal because it’s a weak proposal,” he said. He felt staff are overstating challenges and the benefits of potential changes.
“Council wants to unload its governance responsibility because it doesn’t know how to govern an energy company.”
Several former city councillors said that is the problem, and a corporate board made up of industry veterans is better suited for the task.
Former energy committee chair Phil Turnbull said he supports the move, especially to bring in a rate analysis and approval body.
Both the MCC board and rate committee should be filled with apolitical industry veterans with “talent and experience in the utility business,” he said.
“You need people with a long-term strategic plan to operate a business – any business.”
Former city councillor Kris Samraj said that during his term he felt ill-suited to making million-dollar decisions on complex problems.
“Any councillor would,” he said. “If I applied to be an energy executive with my resume, I wouldn’t have gotten in the door … I think there are political dimensions to this that should be separate from the business ones.”
Longtime former alderman Ken Sauer, who chaired the energy committee in the 1980s, recommended that a utilities commission, akin to the police commission, run the utility with tighter focus.
An MCC, like Epcor in Edmonton or Enmax in Calgary, was suggested in a third-party business review last winter, and would, according to city staff and consultant KPMG, better navigate a massive reinvestment program, a moribund export market and increasing regulation of carbon-based industries. The Alberta energy market, where the Hat has traditionally captured large profits, is undergoing a major financial and technological change.
Dwight Kilpatrick, the mayor of Redcliff (which is in the Hat’s franchise area), said he sympathizes, but the business could probably be managed internally.
“Right now seems like a volatile time and it is,” he said, adding that residents may need to accept that power and utility bills can rise, but elected officials need to defend their decisions.
“Do we need a thick skin? Yes, we do, and it’s not easy and not everyone is understanding.”
The city has always promoted its ability to offer services above a typical mid-sized city, or pay for special projects like Co-op Place, due to utility or gas production revenue. At the same time, it had until late 2023 allowed market rates to dictate local rates as a nod to private sector targets.
“Ultimately there’s concern in the community that with any change there’s potential to lose what’s been a very important thing in our community,” said Coun. Allison Knodel, later adding: “We have an historical reliance on our business – it offsets our taxes.”
Coun. Shila Sharps responded to Kirkpatrick stating all comments have been “insightful.”
“The suggestion is to run like an MCC without an MCC,” she said.
The KPMG report says more business-like focus and hard business decisions may need to be made to stabilize the business during the bottom of a business cycle.
“Ultimately we believe there is the potential for long-term dividend growth,” said energy division head Rochelle Pancoast during an opening presentation.
She said more businesslike “discipline” would likely help the utility, and that could spur efficiency at the municipal division.
“If we don’t navigate (challenges) well, dividends could dry up.”
A number of other speakers called for steep management change, but also for a pause on MCC progress.
Scott Payne said council has been undisciplined and indecisive during the term and should table a decision.
“If people can’t get along at meetings, should they be making these sorts of decisions,” he asked.
Darlene Collings, who identified herself as a member of the Medicine Hat Utility Ratepayers Association, said a halt is needed on all major energy decisions, including potential gas well sales or the Saamis Solar Park build, until after the fall municipal election.
“We feel that there really isn’t enough information or guarantee for residents to move ahead,” she said. “It’s not right for this council to decide what the next council is strapped to … so I’d ask for a moratorium.”
A late, second submission from the MHURA consisted of eight pages of bullet points on nine areas of concern.
Another late submission from the Southeast Alberta Chamber of Commerce said a small number of survey responses from members showed about half support the model, one quarter were “not sure” and 19 per cent opposed.
Several submissions appeared supportive of a rate review committee, proposed as a check against potential profit-motivation in the local franchise market.
David Condon, the former president of the Medicine Hat district labour council, opposed, stating, “The most important thing in the discussion is that it’s a publicly owned utility.
“We have a board of directors and I’m looking at them (council). City councillors should have faith in their ability to make decisions in the best interest of the city.”
