KPMG delivers review of Medicine Hat’s energy business

Medicine Hat – Representatives from KPMG LLP (KPMG) presented their analysis of Medicine Hat’s energy business at a special open City Council meeting on Monday, Nov. 25.

Read the report | View the slide deck | Watch the meeting

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, the review recommends 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 an 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

“Council is in an unenviable position of balancing the needs of three potentially competing interests: the residents, ratepayers, and the business,” said Ann Mitchell, City Manager. “We’re grateful the review provides an impartial outside analysis that can aid Council in making informed future decisions about our energy business that is in the best interest of the community now and into the future.”

The City’s energy business is faced with a changing market and regulatory landscape that will significantly impact the level of risk and profitability of its electricity generation and natural gas production business units.

Rochelle Pancoast, Managing Director of the City’s Energy, Land and Environment division is pleased that KPMG’s recommendations are now available for consideration. “We know public trust waned in 2023 when electricity prices were at record highs. It’s only natural for our residents to desire clarification, verification, and justification when unprecedented circumstances arise. I commend Council in recognizing the need for an impartial outside analysis which allows us all to move forward with more clarity and transparency.”

“Regardless of the path forward, my team and I are committed to continuing the hard work of generating and delivering the energy needs for our community and remaining nimble to react to a shifting energy landscape,” adds Pancoast.

Following the presentation, Council passed a motion to request staff to consider and evaluate the KPMG review and bring recommendations forward to Council by Dec. 9, 2024.

The full energy business review report and presentation are available on the City’s Shape Your City page at www.medicinehat.ca/EnergyBusiness.

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The City of Medicine Hat owns and operates its own electric generation and natural gas production business and remains the only municipally-owned commodity business of its kind in Alberta. The City also owns and operates its own electric and natural gas distribution businesses and is the sole electric retailer within the local electric franchise area.

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