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Electric Utility generating money

Dec 5, 2017 | 3:25 PM

 

MEDICINE HAT, AB — The City of Medicine Hat utilities division is expected to garner a profit this year despite originally predicting a loss.

The city’s electric utility had a $3 million operating loss last year, and budget projections predicted another $3 million loss for 2017.

During a presentation at the city council meeting on Monday, city staff presented an updated budget highlighting a near $5 million dollar turnaround.

The city is now expecting a $1.5 million dollar profit for 2017. The prediction for 2018 is now a profit of $10.2 million, if the price for electricity and natural gas remain stable.

“GENCO has made a significant turnaround,” said utilities commissioner Cal Lenz.

The city is crediting the turnaround to higher prices for electricity, combined with the continued low price for natural gas used to produce the electricity.

“That’s got a lot to do as well with getting some of our excess energy to market more timely, and also with how we marketed that energy,” Lenz explained.

Lenz said cuts to spending within the department have also played a role in cost containment.

The city said it expects its new gas powered generation station will play a significant role in increasing the profits from the electric utility, as it will be able to sell more power to the grid.

Any new energy dividends from oil and gas production or energy and utilities will be split between the city’s own heritage trust fund and the tax stabilization fund, which has historically helped keep tax increases in Medicine Hat low.

Despite money going back into the stabilization fund, the city is looking at phasing out its reliance on that money from the volatile energy sector over the next several years by gradually increasing taxes.