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By rdnewsNOW Staff

PLACEHOLDERS TO DIRECT BUDGET DISCUSSIONS

City continues to explore modernized utility governance options

Sep 17, 2024 | 4:59 PM

Red Deer city council is continuing its pursuit of improving the management of Red Deer’s electric utility.

During their regular meeting Sept. 16, councillors further discussed the possibility of creating a Municipally Controlled Corporation (MCC) as a possible approach.

Council unanimously directed administration to include a placeholder for an updated governance structure and the possible creation of an MCC in the budget plans for 2025. Utility governance work will be discussed in October, ahead of the full debate in November.

“This is where the project and the budget process meet. As we proceed with modernizing the utility, we must plan for the investment required; this is necessary regardless of which model city council selects,” said Sarah Tittemore, Community Services General Manager. “While city council has not yet made a decision on a new model and approach, today’s decision enables us to plan and budget for change and modernization.”

Essentially, this was not a decision on whether to move forward with this particular type of governance model, it is merely a way for council to consider the transition in the context of the budget and make appropriate plans to accommodate forseeable changes. When the time comes, the item will be adjusted to reflect the governance model chosen, which will be funded through the utilities department and therefore not tax supported.

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Regardless of how the City decides to update its utility governance, a process that it began looking into in 2021, administration said that modernization is needed.

“The modernization of the utility governance is intended to allow the utility to more effectively operate while ensuring ongoing financial benefit for the City and residents,” added Tittemore. “A change in governance structure will resolve fundamental challenges facing the electric utility, such as access to financial mechanisms for investments into infrastructure, talent acquisition and retention, and overall business development.”

Creating an MCC is a lengthy process and could cost anywhere from $3.5 million to $7.8 million, and those numbers could change.

READ MORE: Red Deer to explore creating a Municipally Controlled Corporation for utility management

Under an MCC structure, the utility would be overseen by a board rather than city council, but the City would remain as the majority, or sole, shareholder. 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.

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