The Enmax Dilemma

Feb 22, 2001

The Enmax Dilemma
Who will profit from the success of Calgary's city-owned power company?

Calgary's electricity company is poised to make huge profits under power deregulation. Now some civic politicians are wondering who will actually reap the benefit from the company's good fortune.

As a publicly-owned utility, Enmax's goal was to break even. Then, a few years ago, it was privatized to compete in Alberta's newly-deregulated electricity market. Now, it's focus is on making a profit.

The City of Calgary still owns the company but has no say over how it's run.

Alderman Dale Hodges sits on the Enmax board of directors. Hodges estimates the company's profits could hit $400 million by 2002. "It's a very large amount of money. It's more money than anyone ever contemplated," he says.

Instead of focusing soley on profits, Hodges thinks Enmax should give the citizens of Calgary a price break.

"I think their price to the customer should be reasonable but their idea is not much different than Atco's idea, TransAlta's idea. Their idea is to flow through the market rate, which is the power pool rate, to the customer," says Hodges.

Calgary residents like Sharon Schweiger would also like to see Enmax bring power prices down. "It's unbelievable, frankly. Two hundred and sixty dollars from $120 seems a little high. This is on a capped rate. I'm afraid once the real rate comes in my bill will triple," says Schweiger.

Enmax president Bob Nicolay says the company should be focused on making money. "Profit is not a bad word. Profit is the ability of an investment to increase the wealth of the shareholder that owns the investment," says Nicolay.

Nicolay says that means as the shareholder, the City of Calgary will benefit, but it will be the Enmax board, not city council, that will decide what to do with the company's profits.

City politicians are now trying to clarify their new relationship with Enmax. The big question is what role the company should play and what responsibility it should have to Calgarians.

In a confidential report, obtained by the CBC, senior city bureaucrats predicted problems:

"Enmax Corporation... is incented to earn profits wherever it can find them, even if that means exporting electricity to California when shortages and high prices exist here in Alberta." (The situation) creates a natural bias that is not in the best interest of Calgary's citizens."

Dale Hodges now wonders if the city did the right thing by privatizing Enmax.

Enmax's Bob Nicolay believes the decision will prove to be a good one for Calgarians. "Is this in the best interest of consumers? Is electricity deregulation the best thing to do? The answer is definitely, yes," says Nicolay