The City of Medicine Hat Power Plant - Photo by Colton McKee

By Hayley Ferguson

Surprise Profits

City looking at best ways to split up energy dividend

Nov 4, 2019 | 10:52 PM

Medicine Hat, AB – Last week, the City of Medicine Hat announced that they were expecting major profits from their energy department.

Predicting its dividend to total $42.4 million dollars for the year.

Which is more than $14 million dollars originally expected.

With that large amount of extra money, City Council announced on Monday that they are looking at how best to divide those kinds of dividends.

As it stands, half would be put into the city’s Heritage Savings Fund, while another portion would go to the Tax Rate Stabilization Reserve.

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Both of which were designed to help the city budget wean off commodity revenues, like natural gas and electricity, and make up the differences so that residents only see incremental changes.

“It’s a policy that maybe should be a little bit more written in stone. But the problem is that we’re in the commodity business and things change so much. And so what happened here I don’t think anyone could have foreseen,” said Mayor Ted Clugston. “Maybe we need to look at a dividend policy that looks at all the commodity income as one whole and then nets it out. Maybe if one makes 30 and one loses 30 that nets out at zero. No dividend paid.”

Clugston says he believes that may be the way to go.

“I think maybe that is probably more sustainable in the long term. Because as we know there were times where gas was absolutely subsidizing electricity way back when electricity was losing a fortune and we didn’t know what to do with all the money we were making in natural gas. So things have changed around and they could change again who knows,” he said.

Even if the city keeps each commodity income as it’s own, Clugston says they will be looking at the amount of the dividend that needs to go into those savings.

“I don’t think anybody is talking about taking money that is already in the trust fund out for tax abatement. But maybe not putting as much in. And I think there are two schools of thought here. One is you don’t take a dime from the taxpayer until you absolutely need it. I mean what other municipality has a heritage trust fund,” he continued. “So there will be those in the community, and if I were, say 95 years old I would be like ‘why are you putting away all that money and raising my taxes? I’m never going to be able to see any of that.’ Whereas maybe a younger generation may say ‘no save that for our future.’ “

Clugston says that they will have a decision soon.

“It has to be soon obviously because we are getting close to the year-end and we might have to make some changes. But this will be the fourth or fifth iteration of it since I’ve been here.”