December 6, 2023
Rather than bringing the deregulated power system into Medicine Hat, Premier Danielle Smith says new local power rates approved this week should be target price for the rest of the province.
Smith is in her home constituency this week, days after city council approved a new interim power rate to float between 7 and 11 cents per kilowatt hour and abandoned a 14-year-old system of using the Regulated Rate Option to benchmark local prices.
Those pan-provincial prices rose to four times that range this summer, sparking a huge outcry from consumers both locally and throughout the province. In Medicine Hat it led to protest meetings and some calls to end the city power company’s franchise and exclusive monopoly in order to bring in more competition.
Smith told reporters Wednesday that since Medicine Hat maintains its position as an independent power producer and retailer, it has the ability to set its own rates.
“I think we’ve all learned that the RRO rate isn’t working as intended,” said Smith, who has said the RRO will be part of a broader review of the power system. “It’s a problem that’s happening all over the province, and we recognized it very early in our new mandate, and we’re taking.”
The new rates in Medicine Hat “are what we’re striving to ensure every provider is able to provide across the entire province. That’s what Albertans expect and so we’ll be making sure we make those policy changes to stabilize energy prices.”
Comments came after city council approved a new benchmark that staffers say will beat any other retailer’s offer because it is linked to the wholesale prices they pay “before markup.”
Hatters speaking at a three-hour public hearing on the rate however, challenged finance officials and councillors to adopt a cost-plus-return price-setting system instead.
A group calling itself the Medicine Hat Utility Ratepayers Association has said it will formally ask Smith and the province to force the city to compete against other retailers for business.
Afterwards, Mayor Linnsie Clark told reporters that discussions of ending the city’s exemption are premature. She felt Hatters would benefit from an interim rate while a permanent formula is developed after a business review is conducted.
“I think we’ve demonstrated that we are responsive and we’re able to provide a rate solution for our area – I can’t think of any other power provider who could have done that,” said Clark. “It’s a model that, while it has ups and downs, is working.”
MLA Justin Wright told the News he has often heard from constituents about high power prices, but relatively little about a formal move to change the Alberta Electricity Act, or Medicine Hat’s role as a grandfathered municipal provider that was won in the late 1990s.
“The challenge in this situation is that we have folks who feel they haven’t been listened to, and we do have some others coming to the table with solutions,” he said, adding the idea isn’t on the radar of the province.
He felt the controversy is complex and needs some time to be solved.
“I think the exemption is something worth fighting for, but the challenge is making sure the philosophy aligns with what’s right for everybody.”
New energy committee chair Coun. Darren Hirsch said this week that a business review is important, not only as good business practice but as an effort to engage citizens. He has said the answer might be a municipally-owned arms-length corporation to operate the utility, but will await the results of the third-party review, expected in 2024.
“I think we have a generation of Hatters that doesn’t understand just how valuable it is,” said Hirsch. “Any rational person would see that.”