The Power Profits Problem

MEDICINE HAT, AB - Power prices are skyrocketing in Medicine Hat and across Alberta. Our city recently changed how we agree to purchase power from it through numerous, and some could say confusing, contracts. With the federal government announcing decarbonization of electrical production and the provincial government freezing renewable power projects for "further study", what does the future of our power utility look like? Is it time for our city to separate the management of the utility from city council so a professional knowledgeable board and management team, like Calgary (Enmax) and Edmonton (Epcor), can make sure we can keep our power utility beneficial to Hatters?

It is unavoidable that the rising costs of living has become political. When things start to be painful financially for the average Canadian, it is natural to want to find blame and focus that pain on something, or someone else. When it comes to an essential cost of living, that powers our lives and survival, it becomes a tough choice between "keeping the lights on" as they say, or cutting other essentials of life.

So, is it safe to say that with just over 2 years left until we have another civic election, that electricity production and the profits it is making for city hall, and our community, may just become a political hot potato? We are already hearing about cost relief for the most vulnerable in our community. Council will also be hearing from others, like Condo association representatives, on the impact of escalating costs. There is also much conversation around the table about what we are going to do with all the money we are making from power generation. Dividend to all anyone?

Calgary and Edmonton decided to create Enmax and Epcor as independent wholly owned subsidiaries to remove political control over the utilities. Epcor went a step further to separate the power generation assets from other aspects of Epcor into a publicly traded corporation called the Capital Power Corporation. This then allowed them to operate their electrical utilities as true businesses, owned by the cities, run by professionals in the power generation and distribution industry and not directed by political masters that could direct the utility to do things that were not great business decisions in the long run.

Some of these issues were discussed in the last election with the standard response of fear mongering from some that it would not be in the best interest of Hatters to go down this path. But if none of our politicians have any experience running a power generation utility, how can we be confident they will make the best decisions for our utility and our community? Our Mayor has very strong opinions on what the future of our power utility should look like. This is understandable when she has a background in environmental law and helped draft the "Green Bylaws Toolkit for Protecting and Enhancing the Natural Environment and Green Infrastructure" document.

The last thing we need is more pie in the sky ideas that cost Hatters millions upon millions of dollars - see the solar array that cost $12 million to build, with 30% cost over runs, and was dismantled for another $3 million - and not look realistically at our electrical utility, what we are good at, what areas can we compete in and whether we should be there at all. This issue needs a more robust discussion from our community leaders, political and otherwise. As our Mayor stated in her election platform, make evidence based decisions, not politically expedient ones. More to come.