A plan expected to show the benefits of putting Red Deer's electricity system in the hands of a municipally controlled corporation was unveiled on Thursday.
The business plan outlines how Red Deer’s electric utility could transition to a Municipally Controlled Corporation (MCC) . City of Red Deer says itis a model in which the utility remains publicly owned but operates with greater independence, agility, and business flexibility.
“This is about modernizing how we operate our Electric Utility so we can better respond to industry changes, plan for future growth, and continue delivering reliable, sustainable power to Red Deerians,” city utilities manager Jim Jorgensen, in a statement Thursday.
“The release of the business plan marks a critical milestone in this project, and we invite citizens to review the plan and supporting documents to better understand what an Electric Utility MCC could look like in Red Deer.”
The business plan highlights the benefits of moving to an MCC, provides a financial and market analysis and details on how the city would maintain public ownership as sole shareholder.
Under the Municipal Government Act, a public hearing must be held before council can consider making the switch to a municipally controlled corporation (MCC) and a proposed business plan ready 30 days before that. The city has already set a 5 p.m. June 23 public hearing in council chambers and five public information sessions are taking place between May 29 and June 11.
The city has previously estimated it will cost $3.5 million to $7.8 million to set up an MCC. The business plan must be cover issues such as cost, financing, timelines, legal and regulatory requirements and the makeup of the governing board.
Creating an MCC provides a number of advantages, including more flexibility in finding financing for upgrades or expansion of electricity infrastructure. Red Deer's current electric system is entirely paid for by the money raised through power bills.
The city considered three options for dealing with its electric utility: divesting it, which means selling it off to the private sector; keeping it in house through an upgraded city department; or creating an MCC.
While the other options are "not off the table," the city says "that this particular phase of the process focuses on exploring development of an MCC …"
Included in this phase is financial analysis and the creation of a business plan as well as a regulatory review "that presents a full picture of what it could mean for the city to transition to an MCC," says the city in a Tuesday update.
The city has been in the electricity business for nearly 100 years. But it says rapidly changing technologies and regulatory requirements mean the current model limits the city's ability to keep up and plan for the future as well as tap into sources of capital investment.
Under an MCC, the city remains in control of a system that can access investment and expertise while maintaining a reliable and affordable power system.
The existing electrical departmental is becoming outdated, with only five Alberta municipalities still running its own power departments, and one of those, Medicine Hat, is also considering the MCC route. Calgary's Enmax and Edmonton's Epcor are MCCs.
Red Deer residents can make written MCC submissions until June 13.
Information sessions are set for:
• May 29, 1-4 p.m. – Northside Community Centre, 6391 76 St.
• June 3, 4-7 p.m. – Bower-Kin Community Hall, 85 Boyce Street
• June 5, 3-6 p.m. – City Hall, Main Floor
• June 7, 11 a.m. to 3 p.m., Bower Place shopping centre, 4900 Molly Banister Drive
• June 11, 2-4 p.m., Golden Circle Senior Resource Centre, 4620 47A Ave.
For more information on how to participate, go to reddeer.ca/publichearing.
Meanwhile, changes to how water and wastewater is delivered is also in city sights.
On Tuesday, council approved a new Water Governance Policy and updated its Utility Governance Policy in what was described by city manager Tara Lodewyk as a "very preliminary step" in a possible overhaul of that system.
A background report to council says that the way city utilities operate had not been reviewed in depth for two decades before a review was launched four years ago that focused first on electricity.
Work has also been ongoing on whether there is a better way to provide water and wastewater services. That will be followed by a deep dive into garbage collection.
Coun. Victor Doerksen pointed to Calgary's disastrous water main break as an example of what can happen. The June 5 break prompted a local state of emergency and water restrictions for the city and surrounding communities.
Mayor Ken Johnston said recent statistics show that 11.5 per cent of the water and wastewater infrastructure in Canadian municipalities is at least 60 years old and every city in the country has been "playing catch-up" while facing future bills that will likely be measured in the trillions of dollars.
"How do municipalities address a trillion-dollar issue in this country?"
Johnston pointed the finger and the provincial and federal governments for taking a 50-year "poor cousin approach" by failing to provide the necessary funding for municipalities to maintain their infrastructure.
Those bills will come due in Red Deer as well, he suggested.
"It's sobering, but it's necessary for us to start. This is a start."
