Written by Trevor Busch
Wednesday, 03 April 2013 15:42
Town council is investigating the advantages of further enrolment in a province-wide municipal energy aggregation program designed to save costs on electricity and natural gas.
Currently, the Town of Taber is enrolled in the 2009-2013 energy aggregation program administered by the Alberta Municipal Services Corporation (AMSC), which fixed base load electricity rates at $82.97/Wh, and natural gas rates at $8.52/GJ. The current contract is set to expire on Dec. 31, 2013.
In preparation for the expiration of the contract, AMSC has announced a partnership with TransAlta and the offering of a new program, the 2014 AMSC Energy Program, relating to the further aggregated procurement of electricity and natural gas for municipalities.
“They came to us with some information, and they’re basically looking for support from municipalities to start their first rounds,” said Dale Culler, director of corporate services, at the March 25 meeting.
“If you’re not locking in your rates, you would be subject to market rates and fluctuations at the time. This may not be our only option — there are other ways to lock in prices. This is one we’ve participated in for a number of years.”
Incorporated in 2005, the AMSC is a wholly-owned subsidiary of the Alberta Urban Municipalities Association (AUMA), and provides aggregated services to member municipalities and other related organizations.
The current 2009-2013 energy program had 768 participants.
Coun. Randy Sparks commented under the previous aggregation program contract, the Town of Taber had been “hooped” when paying a locked-in rate due to a drastic reduction in the price of natural gas in the marketplace.
“If memory serves me right, has not the town been waiting for this day to come, that we got out of this previous contract? Because the previous contract did not work to the town’s advantage at all, and I think we actually got hooped pretty good on the last one. So I think we’ve got to be very prudent and wary of locking in at this time, because of what happened the previous time. We need to make sure that all of the ducks are in line here before a commitment is made. I think they need to come up with a pretty sweet deal — as sweet as possible — before the town would venture into such a thing again.”
Culler pointed out the timing of the previous contract had been unfortunate considering the current cost of natural gas, but this had hardly been a foreseeable outcome.
“The timing of the last one happened just before the market corrected, and there was actually a lot of interest in municipalities wanting to lock in, because prices were going up fairly steadily. Based on the market price at the time, the amounts that were being offered over a five year period were lower than the market. In other words, there was some advantage.”
Rolling the dice on energy costs by not participating in an aggregation program will expose the town to possible market fluctuations and increased risk, according to Culler.
“One of the things you look at when you’re considering these is where has the market gone, and has the market pulled back to a point in which you’re comfortable, and where’s the risk point. If you feel that energy prices are going to be lower, then you would hold off. If you feel that they’re going to be slowly coming back up, you might want to consider locking it in. The unknown is always a difficult thing to try to manage. Do we want to have risk in price, or not really, is what it boils down to with these programs.”
Mayor Ray Bryant came out in favour of participation in the program, while still noting the previous contract had not been advantageous with regard to natural gas.
“It would seem to me with the information they’ve provided that certainly there are more options, more flexibility, this time around. I think from what I gather with the power we were in the ball park, but it was the natural gas that we took a hit on, keeping in mind our power costs are about $1.2 million per year and our natural gas was about $400,000. Now, knowing full well that natural gas is down, maybe if that is the bottom and it’s starting to trend up this might be a good time.”
Following discussion, council voted unanimously to authorize town participation in the 2014 Energy Aggregation Program administered by AMSC for the first round of aggregations, but reserved any final decisions on the matter until any potential advantages or disadvantages of a renewed contract have been fully investigated.
The first aggregation round of negotiations is scheduled for this month, with a requirement that all requisite documentation to be submitted by April 5.