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By rdnewsNOW Staff

MUNICIPALLY CONTROLLED CORPORATION?

City council to decide on future of electricity management in Red Deer

Jul 19, 2024 | 10:51 AM

On Monday, July 22, 2024, city council will consider next steps for the future operation of the City of Red Deer’s electric utility.

The ask of city council on Monday is to seek direction on creating a transition plan and necessary supporting budget requirements for the establishment of a Municipally Controlled Corporation (MCC) as a means of exploring modernization of the City’s utility governance models.

A municipally controlled corporation (MCC) is described 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.

“This is a necessary step in the process so we can fully understand the costs, processes and systems necessary if city council were to decide to proceed with an MCC for the City’s electric utility,” said Jim Jorgensen, utilities manager for the City of Red Deer. “Red Deer is, without question, in an enviable position of having ownership of critical systems and infrastructure that not all municipalities have retained. This has created ongoing benefits for our community and represents opportunities for the future. For the first 100 years, our structure and model has served our citizens very well, but the scope and pace of change over the past two decades is straining how we operate, and we must consider new ways of doing business.”

If approved, the transition plan would come back to city council in the third quarter of 2024, at which time, the decisions and options in front of council will be:

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1. Continue to operate the electric utility as a city department, implementing additional improvements and structural changes to ensure its long-term sustainability.
2. Establish a municipally controlled corporation, creating a new entity with a dedicated board to manage and operate the utility.
3. Sell the electric utility, and no longer be in the business of electricity.

This decision in front of council stems from extensive studies and reviews conducted over the past two years. In 2022, the City of Red Deer undertook a comprehensive scoping study followed by a utility review that examined various models for electric utility operations. These efforts have been guided by the objectives of ensuring reliable service, maintaining affordability, and adapting to future energy needs.

“In directing and supporting the creation of a transition plan related to the development of an MCC, city council is signalling an interest in the MCC model as a potential option they believe ensures the success and sustainability for the electric utility in our community,” said Jorgensen. “However, right now, it is business as usual. Administration’s recommendation is all about building a plan for the potential establishment of an MCC, and that will take time. Change cannot happen overnight, but city council’s decision will be pivotal for the future of our electric utility and how it serves our community.”

Key Points to Note:

• This decision-making process aims to ensure the utility remains a valuable and responsive asset for the community.
• The City of Red Deer is committed to maintaining the affordability and reliability of electricity for its citizens.
• Modernization of all City utilities is being considered. The first one being considered is the electric utility; the City will also explore options related to water, wastewater, storm water and waste management.
• There are many steps in this complex process, and we are committed to transparency and sharing information with citizens, industry stakeholders and city employees.

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