Speaker Ian Parkinson told a public hearing related to the proposed creation of a municipal corporation for Medicine Hat's energy company that existing staff should have the skills to manage challenges in the power sector, or if not, "should be fired."--NEWS PHOTO COLLIN GALLANT
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A city-controlled corporation would have the authority to make operational and substantial business decisions at the power plant through a board of directors, but could not sell itself or make “material changes” without council approval, Medicine Hat officials said Tuesday,
But, what constitutes a material change is up for discussion, according to the city’s legal department, but would be outlined in a shareholder agreement that would outline the relationship.
A public hearing into the potential of creating a municipally controlled corporation heard Tuesday that a number of residents had concerns about transparency and responsiveness of the corporate management compared to council, and the level of oversight and board representation.
Several said they fear that the creation of an entity holding city assets creates a vehicle for a sale to private interests.
Top administrators say that is not part of the plan, but a common question.
“It’s actually harder to sell assets under an MCC model than currently,” said Pancoast, who outlined that creating an MCC requires public disclosure, public hearing and decision of council.
Any “material change” to the corporation would require a similar process, but councillors debated the definitions of what an MCC could and could not do without bringing decisions back to council.
Coun. Andy McGrogan asked if the board, for example, could unilaterally move ahead with building portions of the Saamis Solar Park, potentially a $100-million capacity expansion in the city’s north end.
“The question is whose responsibilities is it,” he said. “A decision of that magnitude … it’s a significant business investment that will have significant effect on the business, either way good or bad, where does that decision lay?”
Matt Klassen, a city solicitor assigned to the project, said “parameters could be adjusted” but the bulk of the governance relationship would be written at the outset with a shareholders’ agreement.
“The MCC would have its own personnel, organizational structure and finances and budget, but certain key decisions could come back to council because they’re of a magnitude that council wants to assure have best value for the community.”
Alberta government rules for MCCs state that the business must “operationally independent so respecting that separation, council can still give itself some influence and even approval authority over key decisions.”
That would be outlined in a “unanimous shareholders agreement,” finalized if council approves the move after its July 21 meeting.
“We set the rules about what an MCC would and wouldn’t do,” said McGrogan.
Mayor Linnsie Clark has said citizens will continue to see council as responsible for business decisions and rates from a board, even though council would have limited authority to manage the business.
Members of the Medicine Hat Utility Ratepayers Association have called for a full stop on Saamis Solar, the marketing of gas wells for sale (another recommendation in a 2024 business review), as well as any MCC project work, until after a fall election.
Three former city councillors supported removing management of the complex business to a suggested corporate board of utility industry specialists in engineering, finance or other related skills, with two of nine seats reserved for city council members.
Hatter Brendan Hillson questioned the quality of candidates considering that the city estimates compensation for non-council board members to be about $40,000 each per year.
Several speakers said however, that limiting the corporate board’s authority and limiting the business to operating only within the city’s power franchise area, could affect who would apply for the job.
Wayne Knodel told the hearing that he sees difficulty in recruiting top talent to a company that would be limited in scope and mandate to maintaining the city’s electricity franchise area.
“Our electrical department has been well run with reasonable rates,” he said. “With the city 100 per cent the shareholder, I see difficulty in finding people to run it.
“Corporations are set up to expand, grow and make money and be profitable, and maybe that’s at odds with what our utility has been about. Maybe we should fine tune what we have?”
Council will debate business arising from the public hearing at its July 21 meeting. Staff say that if approved, further work would begin on creating the corporation that could be operating within one year. It is “unlikely” that a shareholders agreement would be finalized before the October municipal election, administrators said.
