Staff at Kollektiv wear shirts protesting the studio's rate reclassification.--Photo Sabrina Moore/Kollectiv Facebook
A Medicine Hat business owner is asking the city to take further action on adjusting commercial utility rate structures after she was struck with over $6,000 in penalties for a small overage in 2024.
Sabrina Moore owns Kollektiv, a spin class and hot yoga studio in the city’s downtown. She purchased her building in November 2023 and renovated it to add a heated studio, opening in April 2024.
In July, she received notice her business had been reclassified from small to medium commercial business utility rates.
The threshold for small commercial business rates in Medicine Hat goes up to 25 kVA – a measure of peak power demand. Medium commercial business rates span from 25 kVA to 200 kVA.
The result was a jump in the cost of utilities from around $700 annually to $6,100.
Once a business is reclassified as medium commercial, they must remain below the 25 kVA threshold for 12 consecutive months before being moved back to the small category.
While experimenting with class schedules as a way to sustain her kVA below the cap, Moore says she cancelled more than 250 classes. She estimates the total loss of revenue as up to $60,000.
And with her power use hovering so close to the limit – her average kVA in the period since her reclassification has been 23.88 – she says the current threshold limits her ability to grow the business.
According to the commercial utility classification structure, small commercial businesses must maintain energy usage below 5,000 kWh and below 25 kVA every month.
The threshold for small commercial businesses is notably lower in Medicine Hat than in other Alberta cities.
Red Deer allows small businesses to reach a maximum threshold of 50 kVA, while Lethbridge allows 150.
Council did revisit the classification last summer, however initial findings suggested that raising the ceiling would cause substantial revenue losses for the city, which would need to be reclaimed by imposing 5 to 10 per cent increases on the entire category.
Small businesses like Kollektiv may exceed the small commercial threshold but fall well under the majority of medium commercial businesses like greenhouses, which operate at a substantially higher peak demand.
One of the months Kollektiv breached the threshold, the studio registered a kVA of only 25.05.
“We’re grouped in with businesses that are pulling 37,000 kilowatts and 74 kVA,” she said. “It’s not similar businesses.”
In a statement to the News, the city said the 25 kVA limit was arrived at by grouping “like” customers in terms of demand, consumption and infrastructure.
The city says per cent of the medium commercial customer base falls between 25 kVA and 80 kVA.
“Though the span for the threshold is wide, the majority of customers are on the lower end of that spectrum, and the pricing that is assigned across the rate class reflects that,” reads the statement.
But Moore says Medicine Hat’s classification structure essentially asks businesses like hers to subsidize utility rates for the rest of the small business category.
Under pressure from Moore and others to update the bylaw, city council passed a motion in August to extend the grace period to four months.
Implementation of the motion was dependant on council receiving reports from administration about the financial implications of the change, which six months out has yet to be received.
As a result, the grace period is still two months after a breach.
For example, under the current system, if a breach occurs in January, the customer will be notified in February and placed under a grace period expiring at the end of March. After that, any breach occurring before the end of the following March would result in a reclassification.
The city told the News that the matter is due to return to council in Q1 this year.
Moore says the cost of this whole ordeal has added up to more than financial losses.
She posted a four-part op-ed on Kollektiv’s social media this week outlining her experience navigating the rate reclassification over the last 20 months.
In the post, she describes waking up on her wedding day and going to her computer to check on her business’s kVA.
“That was even embarrassing for me to say, because that makes me look bad,” she said. “How does that reflect on me? How does that reflect on my partner? But that’s what this did to me, because I knew that it’s one minor spike, and we would be back at the start again.
“It’s a level of stress that it caused me that I wouldn’t wish upon anybody else.”
She says she hopes other business owners will learn from her experience.
The city directs concerned business owners to consult the City of Medicine Hat webpage, where further information is available on rate classes, reclassification and utility bills, or to reach out to city representatives.
