Will it be a City of Medicine Hat Bonus or Boondoggle?

Hatters deserve the final say on electricity profits

For most Albertans, today’s electricity costs are shocking.

As I noted in a recent column, our province’s electricity prices hit an all-time high in July, up a whopping 128 percent year-over-year.

There are plenty of reasons for this:

• Electricity demand is spiking in correspondence with our province’s rising population (up from 4.5 to 4.7 million over the past year). Most estimates have Alberta passing the 5 million mark in 2025 or 2026.

• The cost of a massive overbuild of Alberta’s transmission infrastructure is currently being passed on to consumers. By some estimates, power companies spent $13.5 billion in the last 20 years upgrading transmission, including the unnecessary and under-utilized Western and Eastern Transmission Lines at a cost of $4 billion.

• Both the federal and provincial carbon taxes are driving up the cost of everything. Now pegged at $65 per tonne, these taxes will rise in tandem to $170 per tonne by 2030. As virtually none of Alberta’s global competitors have a carbon tax, these policies are a recipe for job loss and economic decline.

• The accelerated coal phase-out adopted by the NDP in 2015 cost taxpayers $1.1 billion in direct payments to power companies. These costs are being paid out of the proceeds of the provincial industrial carbon tax. In addition, the loss of coal as our province’s most affordable and reliable fuel source means higher costs for consumers.

Things are only poised to get worse for consumers and local business owners in the years to come. Under the federal government’s Net Zero 2035 objective, costs will spike and reliability will vanish. Meanwhile, under the provincial government’s Net Zero 2050 objective, costs will also rise substantially, albeit at a lower rate. Either way, consumers lose.

While electricity costs are likely to continue to spiral out of control for most Albertans, Medicine Hat finds itself with a unique opportunity.

Since natural gas was discovered here in the late 1800s, the community has enjoyed a unique advantage. The municipally owned natural gas system turned on in 1902 and the community began generating electricity in 1910.

Today the City-owned electric company provides power for 30,000 customers including neighbors in Redcliff, Dunmore, Veinerville, and other outlying rural areas.

The question is, as the owners of their own electric company what do these rising costs mean for Medicine Hat residents? In the short term, the City stands to collect tens of millions in new revenue as prices soar.

The numbers don’t lie. Last year, the City budgeted to earn a $45.3 million electricity dividend in 2023. In reality, the City is on pace to bring in closer to $140 million, even with a $10 million per month discount (for the first six months of 2023) to consumers.

So what will City bureaucrats do with this rising tide of cash? Will they use it to protect families and local business owners from federal and provincial carbon tax gouging? Will they use it to reinvigorate the local economy and create a Ralph-Klein-style Medicine Hat advantage? Will they use it to reduce residential property taxes, which rose by four percent this year? Will they use it to pay down debt, soon to be over $500 million?

Or, taking a page from the federal and provincial governments, will they dump it into wasteful pet projects and ideologically driven economic experiments? I certainly hope not, but you have to admit this situation has real boondoggle potential.

It reminds me of that old bumper sticker, “Please God, give us another boom, we promise not to piss it away this time.”

At the end of the day, the City’s electric company belongs to Hatters.

If the City truly respects its residents, it should give local residents to final say through a referendum.