A plan detailing costs, processes, systems and structures for possibly shifting the city’s electric utility to a Municipally Controlled Corporation (MCC) will be complete by the end of the year.
On Monday, council unanimously passed a motion to direct administration to create a transition plan and provide the necessary supporting budget to explore the establishment of a MCC, as a way to modernize the city's utility governance models.
The plan is to be presented to council in the fourth quarter of 2024, or earlier if possible.
“Today’s city council decision enables us to proceed with focusing our work on exploring the evolution of our electric utility to a municipally controlled corporation. This is a governance review, and our citizens and staff will not see any changes resulting from today’s meeting. We have lots of work ahead before we land on a decision on model,” said City Manager Tara Lodewyk.
“We have proudly served our citizens with utilities since 1901 - over a century. Utilities are fundamental services we provide, and with a rapidly changing industry, increasing expectations from our community, and with our desire to grow, we need to review how we manage the business to ensure we continue to do this in the best way for our community.”
The goal of modernizing the electric utility is to ensure reliable service, maintain affordability and adapt to future energy needs, the City of Red Deer stated in a media release.
Over the past two years, administration studied different models and options for how the electric utility could operate. The development of this transition plan will enable administration to further identify costs, risks, and considerations related to implementation of a new model.
A decision related to the potential new model will occur at a future meeting when the plan comes back to council in the fourth quarter of 2024, or earlier if possible. At that time, the options in front of council will be:
- Continue to operate the electric utility as a City department, implementing additional improvements and structural changes to ensure its long-term sustainability.
- Establish a municipally controlled corporation, creating a new entity with a dedicated board to manage and operate the utility.
- Sell the electric utility, and no longer be in the business of electricity.
“Now is the right time for this work. We are well positioned to establish a new governance model that takes into account our unique role as owners of electrical infrastructure, especially during a period of rapid evolution and change in the electricity sector," said Mayor Johnson.
"The ideal model for Red Deer is still uncertain, but city council recognizes the significance of this decision. We are committed to prioritizing the needs of our customers and our community as we delve into the specifics and evaluate the available options."
The city describes a MCC as an entity established and owned by a municipal government to provide specific services or undertake certain projects that are typically within the realm of municipal responsibilities.
"These corporations operate with a degree of autonomy but are ultimately accountable to the municipal government. The purpose of creating an MCC can vary, but common reasons include enhancing efficiency, providing specialized services, fostering economic development, and managing public assets," the city explained in its media release.
