After the review: next steps for Medicine Hat’s energy business

Published in the Medicine Hat News, December 19, 2024

This fall, City Council heard the results of an independent, third-party review of the City of Medicine Hat’s energy business to confirm overall strategic approach to ensure best value for the community.

Following an intensive five-phase project that evaluated the current state of the City’s energy business, a strategic assessment of trends, regulations, and change drivers, options analysis, and recommendations, KPMG LLP recommended four strategic actions:

1. Establish a rate review committee to support Council in its role of approving energy distribution and commodity rates
2. Expedite the abandonment or sale of the natural gas production assets
3. Establish a (City-owned but) independently-governed Municipally Controlled Corporation (MCC) to own and operate the distribution businesses (both natural gas and electricity) and electricity generation business
4. Develop an MCC dividend policy

Those recommendations expect to preserve the City’s exemptions under the Electric Utilities Act including, for instance, retaining City authority over establishing our local rates, avoiding provincially determined transmission tariffs, and continuing to retain ownership of our (profitable) business units (with continued delivery of an annual dividend back to the City).

City administration ultimately endorsed KPMG’s recommendations and Council directed staff to establish implementation plans based on those recommendations.

So, what does this all mean?

Simply stated, no decisions have been made to trigger a change for our four energy interests: electricity generation, electricity distribution, natural gas production, and natural gas distribution.

However, staff are now charged with investigating, evaluating, and presenting the best approach IF we were to decide to execute one, some, or all of the recommendations. Additional due diligence will help better understand what a future state Rate Review Committee and future state MCC could look like BEFORE Council considers any further steps to enact the change(s). Essentially, KPMG’s recommendations were provided at a directional level, and more details are needed to appropriately inform whether those recommendations should be triggered into reality.

We know our century-old energy business is important to our residents: past, present and future. While the future energy environment that we see ahead of us is not at all the same as what our pioneers faced before us, our objective is the same - to ensure this unique enterprise continues to benefit our community long into the future.

Follow along at medicinehat.ca/energybusiness.

Published in the Medicine Hat News, December 19, 2024

Energy Business Review: Timeline

Sept. 5, 2023 City Council requested an independent, third-party review of the City of Medicine Hat’s energy business to confirm overall strategic approach to ensure best value for the community.

Nov. 25, 2024 KPMG LLP presented their analysis and recommendations.

Dec. 5, 2024 City administration endorsed KPMG’s recommendations and Council directed administration to develop an implementation plan to establish both a Rate Review Committee and a Municipally-Controlled Corporation.