Battle erupts over power rates

August 13, 2002

Battle erupts over power rates
Province's plan to seize control angers Edmonton, Calgary councils

Kelly Cryderman

A huge political fight is brewing between Alberta's two major cities and the provincial government over its plan to take control of electricity rates away from municipally controlled Epcor and Enmax.

Premier Ralph Klein said he's in favour of the plan.

"The argument was made in a recent meeting I had with Epcor that the city is simply a shareholder, that the city really doesn't own Epcor -- they're simply a shareholder like any other shareholder," he said Monday.

"Using that argument and the fact that Epcor and Enmax are becoming more arm's-length from the municipalities, we feel that they should be subject to the same rules and regulations, vis-a-vis setting rates, that other companies like Atco and TransAlta are."

The City of Edmonton controls Epcor and sets the rates, while the City of Calgary controls Enmax.

Klein said the change would mean that any request for an electricity rate increase would be decided by the Alberta Energy and Utilities Board instead of by municipal councils.

Edmonton city councillors raised the spectre of budget shortfalls if the change goes ahead as planned.

Epcor will contribute about $100 million this year to city coffers while Calgary will get about $70 million from Enmax. Any reduction would likely result in greater than expected property tax increases.

"There is certainly the potential for financial ramifications for the city," Coun. Allan Bolstad said.

"I don't want to jump to conclusions at this point, but it definitely adds an element of uncertainty that we didn't need or want."

Coun. Karen Leibovici said she doesn't know what the city will do if the dividends are reduced.

"If in fact there is a significant hit to the budget, then the responsibility rests squarely on the province's shoulders to make sure Edmonton taxpayers aren't the ones who are burdened," Leibovici said.

In addition to threatening revenue, Bolstad said putting Epcor's rates under the jurisdiction of the energy and utilities board will also increase the city's expenses.

"It adds another layer of bureaucracy to the process," he said. "We'll have to go through applications and rate review procedures. Lawyers and consultants will have to be involved. All of it drives the cost up."

The province defended its decision as a way to level the playing field between private power companies, which are already under the jurisdiction of the AEUB, and city-owned utilities.

But Bolstad said it appears the move is part of a provincial campaign to force municipalities out of the electricity industry.

"And if that's true, then it's very disappointing because cities have to have access to income sources. In this day and age, it's better to be more independent rather than less."

Mary O'Neill, the Conservative MLA for St. Albert, said the province's move could have benefits for her constituents in the form of lower electricity bills.

O'Neill is upset with Epcor because it charges customers outside Edmonton higher fees than its city customers.

According to the company's figures, a typical homeowner outside Edmonton pays $102 a month. That's 32 per cent higher than a bill in the city for the same type of home.

"I hope that the AEUB will look at rectifying the issue of fairness with Epcor," O'Neill said. "What we have right now is a situation of inequity."

Epcor representatives could not be reached for comment.

City of Calgary officials say they're going to fight the province over the plan because it will likely wreak havoc with their budget.

"They're heading into a major political issue with us. I hope they know that," said Ald. Dale Hodges, a member of the Enmax board and chairman of the city's gas, power and telecommunications committee.

Calgary-Mountain View MLA Mark Hlady, chairman of the legislature's committee on energy and sustainable development, said the provincial cabinet and Conservative caucus have endorsed his committee's recommendation to give the energy and utilities board jurisdiction over rates charged by municipally owned power companies.

"I'm sure the City of Edmonton and the City of Calgary aren't that happy about it because they've had a monopoly on the marketplace," he said.

"We're working on trying to get people the lowest prices in the competitive marketplace. No new players from anywhere in the world will come into this marketplace if they can't compete on a level playing field."

The decision is being praised by private power companies, which have been lobbying for such a change for months.

"We're pleased. It alleviates the wrinkle of having two sets of regulators in the province," said Evan Bahry, executive director of the Independent Power Producers Society of Alberta, representing 185 corporations involved in the electricity sector.

While Hlady said he welcomes input on the issue from city councils and their respective power companies, he considers the change to be a done deal.

Earlier this year, the city and province butted heads over proposed changes by the Municipal Affairs Department to the Control of Corporations regulation. Some critics charged the changes would give the minister the power to control municipally owned power companies or force them to get out of the electricity business.

The department eventually changed a clause giving municipalities full authority to "dispose" of a controlled corporation as it saw fit.