A request to review power pricing formulas for small business in Medicine Hat is on hold because officials say fixing it for a few would raise costs for many others.--NEWS FILE PHOTO
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A push by a downtown business owner and a city council member to review how some businesses are charged for power appears to be stalled after council heard changes could harm more users than it would help.
That was revealed at council’s May 5 meeting, where energy division analysts said changing the tripping point at which a small business is considered a medium-commercial customer would cut bills in half for a few dozen, but raise them for 2,400 others.
“That’s where we’re at unless we do a substantial rate review,” said Coun. Darren Hirsch following presentation on where Medicine Hat’s levels compare to other municipally-owned power systems in Alberta.
That wasn’t good enough for Coun. Shila Sharps, who had requested a third-party comparison with other municipal power distribution systems, and told council the city’s rate setting should encourage business development.
“We keep talking about how we want growth and then we budget for 2.5 per cent and get 0.5,” she told council. “Maybe these are the things that we need to start looking at.”
Council accepted the presentation – which states the department is developing a customer outreach program and a potential “grace period” before higher charges kick in – as information with no further action.
Sabrina Moore, owner of Collective Cycle on Sixth Avenue, raised the issue publicly last year at hearings on new power fee adjustments.
She says that while she is only slightly over the lowest business class limit, it’s for small periods of time and her total consumption is low, but the jump has cost her thousands in additional fees.
“We’re talking about a hair-length over … and that will be about $5,000 over a year,” said Moore, whose operation also offers “hot yoga,” which requires space heating while clients exercise. “It has huge financial implications for small business, to be grouped in with greenhouses.
“At this point I don’t want to see everybody punished, but it’s a unique thing, so how about scaling it differently?”
The controversy revolves around when a “small commercial” customer qualifies for added charges to cover more system maintenance.
Power used is charged at the same blanket rate, but customers that require large amounts delivered at any given time are also charged fees to cover system costs.
A third-party review of the local rate system presented to committee this spring found the Medicine Hat system met regulatory requirements and worked as well as others, but also stated it is up to power providers to determine how they apportion costs based on local philosophy.
City officials say analysis suggests that raising a kilovolt limit from 25 to 50 would provide about 40 small businesses a 60 per cent reduction on overall bills, but 2,400 others would see rates rise between 5 and 10 per cent.
The city’s philosophy on rate setting is to recover costs for infrastructure, apportioning costs across the ratepayer according to their power needs.
“Customers who cause the cost should pay for that cost, and the easiest way to do that is demand billing,” said Travis Tuchscherer, a director of energy business analysis. “We recover costs to maintain the system as well as earn a regulated rate of return … If someone’s charges are lowered, someone else on the system would see increases to make up the difference.”
He said the city’s distribution office is working to develop a system that would see the planning department flag the potential of higher power fees when permits are sought to upgrade panels or expand use at the development stage.
“We are looking for ways to inform the customer and for the customer to control their use and demand,” said Tuchscherer.
