Council Passes Utility Fee Hike
Utility fee rates will be increasing by three to four per cent next year following council’s approval Monday of the city’s amendments to the Utility Rate Bylaw.
Council had deferred a decision on the bylaw during its Nov. 17 regular meeting following presentations on the city’s financial outlook along with requests by the energy division for amendments for the 2025-26 budget. The previous council had only set rates for the 2025 calendar year during last year’s budget discussions.
“We are so far below our competitors in other municipalities – about $70 a month on average, $700, $800 a year – that our residents save,” said Coun. Ted Clugston, Energy Committee chair and mover of the motion to delay a final decision to Monday. “Nobody believes me when I say that – I’ve been saying it for 14 years – we have an advantage on the rates.”
Council heard on Nov. 17 the city’s utility rates are well below the average for Alberta municipalities with residential and commercial rates rising by 3 per cent in 2026 following passage of the bylaw amendment. Rates for large commercial will go up by 4 per cent.
Graphics shown to city councillors regarding impacts of amendments to the city’s Utility Rate Bylaw. (City of MH)
Clugston also highlighted inflationary pressures on costs for the energy division, including a budget amendment passed Monday due to a 60 per cent increase in the estimate for a new south side sub-station, bumping the cost from $24 million to $40 million
“I remember when we built generators for $50 million,” he said. “Now we got a $40 million sub-station. They used to be small potatoes.”
The initial budget for the sub-station was set as part of the Utility Distribution Systems budget for 2022-23 but the city’s application to the Alberta Utilities Commission was rejected. A new application has since been approved. Another $15.4 million was added to the 2026 budget to allow for maintenance work on energy division infrastructure originally scheduled for 2027 to commence earlier due to long lead-times required by contractors. Another $200,000 for a specialized fork-lift for the energy division also required a budget amendment.
Mayor Linnsie Clark called the amendments necessary, particularly regarding the sub-station.
“We need that for electricity to the south for development,” she said, adding the new council needs to dig into city budgets generally. “Over the next year starting very early on we’re going to be taking a deeper dive into the budget. But, these are just tweaks on an already approved budget.”
Possible costs associated with the Saamis Solar Project wasn’t part of budget or utility rate discussions but are the focus of a consultant’s report on the business case and options commissioned by the city earlier this year and anticipated to be presented by year’s end.
That could come forward as soon as next week at the city’s Energy, Land and Environment which is anticipated to meet for the first time.
Clark said she anticipates all of council will either see that report at the Dec. 15 regular meeting or have a request for more time.
“I want to see the business case. Ultimately, is it a good investment or not. That’s the question. For me it’s not about ideology, it’s about is it going to be a good investment for the people of Medicine Hat,” said Clark.
Gas and electricity utility rates are adjusted quarterly and monthly respectively based on market value of the commodities. The rate increase approved Monday is specific to maintaining a cost-recovery model for municipal energy production and distribution operations and infrastructure along with a small return.