The City continues to explore a modernized governance structure and potential formation of a Municipally Controlled Corporation (MCC) for utilities after City Council approved a placeholder within the 2025 utility budget going forward this fall.
“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.”
The information shared with City Council today comes after administration retained Deloitte LLP to develop a Municipally Controlled Corporation (MCC) implementation plan and budget estimate.
“Through this work, we aimed to better understand the key planning strategies and estimated budget to deliver and implement an MCC,” said Tittemore “Today City Council asked us to include this as a change to be debated when the 2025 utilities budget comes forward to City Council in October.”
Key items included in the implementation plan shared with City Council today includes:
- Municipal MCC implementation strategies and steps building on previous work
- Considerations of legal and regulatory requirements for MCC including associated bylaws and shareholder agreements,
- Potential MCC governance structure, considerations for board of directors and financing strategy
- A potential timeline view and detailed budget breakdown for MCC implementation
The anticipated range of MCC structuring and execution costs is $3.5 million to $7.8 million. Costs are estimates only and may be subject to change with further analysis and decisions regarding the scope of the transition.
At this time, placeholders are established in the electric utility budget and will be adjusted to suit the chosen governance model, which would be funded through the utilities department and is therefore not tax supported.
Today, City Council did not make any budget decisions or final decisions related to the governance model; they directed that the utilities governance work is included in the utilities budget discussion in October 2024.
“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,” said 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.”
Key Points to Note:
- This decision-making process aims to ensure that 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.
If The City proceeds with the development of an MCC, the electric utility will operate as a market participant while ensuring the financial benefit of those operations stays in the community. Additionally, the MCC would be overseen by a Board instead of City Council.
A municipally controlled corporation (MCC) is 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.
City Council meetings are streamed online at www.reddeer.ca. Red Deerians, industry stakeholders and employees are all encouraged to login and check out the conversation.
For more information about the City Council meeting and the future of the municipal electrical utility, please visit www.reddeer.ca