Medicine Hat faces uphill battle in clean energy transition but ‘sky is not falling’, director says

That reality is forcing the “Gas City” to look at what comes next and, while time is of the essence, there remains a “runway” for Medicine Hat to figure out how it should adapt during a time of drastic change over the next decade, Pancoast explained.

While some residents will argue the city should use its large cash reserves made from its energy business to offset taxes every budget, Coun. Darren Hirsch said it’s important to use the money carefully with so many uncertainties.

“It doesn’t take very long to go and burn through that cash and, coupled with the unknown, my preference — or council’s preference or maybe the city’s preference — is I’d rather have some buffer to that than move forward with nothing,” Hirsch said.

Should the reserves be depleted, the city would need to rely on the taxpayer to fill gaps in the municipal budget as energy revenues dried up.

“There’s such a myriad of variables out there and hence why we want to do this thorough review,” Hirsch added.

Rochelle Pancoast, the city’s managing director of energy, land and environment, gave an in-depth presentation on Thursday. Photo/City of Medicine Hat

After skyrocketing electricity prices hit Medicine Hat in the summer of 2023, council hired a third-party to review its approach to utility rates. That review is expected back for council consideration by the end of 2024.

Liabilities for the city’s energy sources are not immediate, so it does have interim cash to work with, according to Pancoast.

Smaller, scaled projects like the Saamis Solar Park could provide an opportunity for the city to try diversifying its resources.

A scaled approach without sinking a lot of money into one idea or another will help Medicine Hat find its footing, Pancoast said.

Also, because the decarbonization rules could change, the city’s non-renewable assets could operate for longer than anticipated at this time, she added.

The city has some wiggle room — but there’s lots of work to go, the committee heard.

In general, it’s not a catastrophe but the city will need to make some important decisions in the near-future.

Some of the options presented by Pancoast’s report include expensive carbon capture projects, replacing current sources with alternative energy or potentially a gradual sell-off of the energy business.

“None of those are good,” Pancoast said, adding it’s possible the best path forward for taxpayers is a mix of the options.

To keep control of its power generation as Medicine Hat has done for over a hundred years will require large investments, she said.

The 63-page strategy is only a first go and will be revisited as the city learns more of what’s in store in terms of regulations and market realities.

Hirsch and his colleague Alison Van Dyke voted to send the presentation to a future council meeting, for the full horseshoe and residents to hear.

by Eli J. Ridder

Medicine Hat faces uphill battle in clean energy transition but ‘sky is not falling’, director says

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