Council approves new four-year utility fee, set to begin in 2019

By Scott Roblin
July 4, 2018 - 5:07pm Updated: July 4, 2018 - 6:57pm

 

MEDICINE HAT, AB – Turning on a lamp or heating your home will cost you more in Medicine Hat beginning in January.

On Tuesday, Medicine Hat Council voted 8-1 to add an additional fee to utility bills over their current four-year budget cycle to fill a $16 million deficit in their budget.

Called the Municipal Consent Access Fee, it’s a cost that’s common across cities in Alberta but is usually reserved for a third-party utility such as Enmax setting up shop on city-owned property. The utility then imposes an extra cost on customers to make up the fee.

Since the City of Medicine Hat owns their own utilities, the plan is to charge the City’s utility department and have ratepayers cover the difference.

Councillor Darren Hirsch voted in favour of the new fee and said with depleting reserves, the City needed to get in front of this issue.

“I think what we’ve done is an elaborate, all-inclusive plan to make sure that we reduce our expenses,” said Hirsch. “When we go to the taxpayer, it’s something that people understand that we need additional revenue because we’ve exhausted all other avenues.”

After weeks of debate, Council decided to cut a proposed fee from June 18 in half on Tuesday with about a three percent increase in gas and electric prices for 2019.

Rates are expected to jump to around a six percent increase in 2020, and between an eight percent and nine percent increase by 2021.

With Council already approving a four percent property tax increase each of the next four years, Hirsch said this is the preferred option compared to a major one-time tax increase in the coming years.

“We spent $70 million in the last three years combating the rate shock that the taxpayer would have received if we didn’t have the savings available,” said Hirsch. “So, the intention is to have a bit of a savings account to ride out those types of shocks.”

The average home owner will see monthly increases of $1.97 in 2019, $3.90 in 2020, $5.83 in 2021, and $5.77 four years from now.

The City is hoping to lower their spending from reserves to make up deficits from $16 million to $5 million by 2022.

Mayor Ted Clugston was the lone vote opposing the amended utility fee, stating he wanted to wait and see if future power generation revenue would be enough to cover costs.

“I’m kind of a strong believer, a firm believer that you don’t take a dollar from the taxpayer until you absolutely have to,” said Clugston. “The majority of council felt that we needed to do this now and make sure that we shored up the reserves, where I was like, ‘Let’s wait and see, and let’s not pull this lever or introduce this tax until we absolutely have to.’”

According to Clugston, he disagrees with the City’s assessment that ‘historic high levels of NGPR and GENCO operating profits and corresponding distributable cash flows are not reliable or sustainable.’

Clugston is also concerned about spreading the fee to cover not only property owners, but utility ratepayers as well.

“When you own property, you perhaps have a source of wealth and you’ve accumulated wealth because you have equity in your properties,” said Clugston. “Where as if you’re that single parent with two kids making minimum wage, you’re going to pay for this MCAF some way, either if you’re paying your utilities or you’re going to pay for it in your rent.”

The fee will come up for debate again in four years during the City’s next budget cycle.

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