City reverts to 2022 natural gas default pricing methodology after bylaw omission discovered

Medicine Hat – The City of Medicine Hat has discovered that a clause to amend the methodology for calculating the default rate for natural gas was inadvertently omitted when Bylaw #4722 to amend the Gas Utility Bylaw #2489 was presented and adopted near the end of 2022.

The omission negates a proposed change to calculate the default regulated rate (RRO) for natural gas on a weighted 120-day buying window and reverts the calculation back to the average of the monthly gas charges set by default supply providers.

“The intended change represented an opportunity to better manage risk by aligning rates to the local cost of purchasing fuel to serve City customers, rather than on third-party market benchmarks as before,” explains Travis Tuchscherer, manager of Energy Marketing and Business Analysis. “However, the former methodology was a reasonable pricing strategy that was supported by staff and Council for more than a decade and we are comfortable moving forward with the status quo until another bylaw amendment can be raised.”

Residential, farm, and small and medium commercial customers who pay the default regulated rate for natural gas will see an adjustment for January and February on their April utility statement.

The January default natural gas rate will be adjusted from $6.117 per gigajoule (GJ) to $6.426 per GJ. The February rate will be adjusted from $5.218 per GJ to $3.446 per GJ. Based on the number of customers on the RRO in January and February and their corresponding consumption, the result is a net credit of $484,537 to those customers, though due to variances in consumption and billing cycles, some customers may not see a significant credit.

“I hope our community chooses to extend grace to our public servants for this accidental omission.” adds Managing Director of Strategic Management and Analysis, Rochelle Pancoast. “While errors are unfortunate, we learn from them and take the opportunity to improve our processes.”

The natural gas RRO rate for March (that will be released on March 1) and onward will be calculated from the average of the monthly gas charges set by default supply providers, as defined in the Gas Utilities Act, RSA 2000, Chapter G-5.

- 30 -

For media inquiries, please contact:
media@medicinehat.ca