Reshaping Sustainablility

Modern energy needs are creating interesting partnerships like the one between the City of Medicine Hat and Big Marble Farms. Brian sits down with Councillor Ted Clugston to discuss the new collaboration and what it means for you the taxpayer.

Chapters

00:00 Introduction to Energy Partnerships
02:57 Big Marble Farms and Power Generation
05:49 Regulatory Changes and City Bylaws
08:58 Public Utility Dynamics and Rate Setting
11:53 Future of Energy in Medicine Hat


Understanding the Partnership: A Win-Win for Energy
The collaboration between Big Marble Farms and Medicine Hat is designed to optimize energy usage, especially during the summer months when the demand for electricity increases significantly. 

Why This Partnership is Important
During summer, cities like Medicine Hat experience higher electricity consumption due to air conditioning and other cooling needs. The partnership allows the city to purchase excess power generated by Big Marble Farms, which utilizes a cogeneration system that produces both electricity and heat for its greenhouses. This setup not only ensures that the city has adequate power but also promotes sustainability by utilizing waste heat instead of releasing it into the atmosphere.

The Role of Regulations
The evolution of this partnership was made possible by regulatory changes at the provincial level that allowed the city to purchase excess power from Big Marble, despite its location just outside city limits. These changes have opened up opportunities for cities like Medicine Hat to innovate and adapt to growing energy demands.

Key Insights
Councillor Ted Clugston emphasized several important points during our discussion that highlight the significance of this partnership:

1. Meeting Energy Demands
Councillor Clugston noted, "Medicine Hat is unique in that it uses more electricity in the summer than in the winter." This fact underscores the importance of reliable energy sources, especially during peak demand periods when the city’s electricity usage skyrockets.

2. Long-Term Sustainability
The partnership with Big Marble Farms is not just about immediate needs; it’s also about future sustainability. By generating their own power, Big Marble can support the city’s energy needs while minimizing the environmental impact. The waste heat used in their greenhouses exemplifies a model for other cities grappling with similar issues.

3. Community Benefits
Councillor Clugston explained that the financial structure of this partnership is designed to benefit taxpayers. "When the energy department makes money, it pays a dividend to the tax side," he stated. This structure ensures that the utility remains profitable without burdening taxpayers with higher rates.

Challenges and Opportunities Ahead
While the partnership has many benefits, there are also challenges to consider. The city is currently facing a need for infrastructure upgrades to support increased energy demands. This includes developing new substations and ensuring that the power supply remains reliable as the city grows.

Addressing Concerns
One common question among residents is about the potential for increased taxes due to this arrangement. Councillor Clugston says, "This will not raise your taxes; it may lower them." This transparency is crucial for maintaining public trust as the city navigates these new agreements.

Conclusion
The partnership between Big Marble Farms and Medicine Hat represents a forward-thinking approach to energy management that could serve as a model for other municipalities. By leveraging local resources and innovative technologies, cities cannot only meet current demands, but also pave t

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Transcript

0:00

Hey, this is Brian again. And I'd like to ask you to do a favor. We can't do this work without people like you. So if you can, please, like, share, subscribe. Tell your friends about bring back the porch. it. So I think you're you were asking me a little bit earlier, does this mean more power for the city. Yes. But and also the perfect time in the summer medicine. That's a very unique operation because, Kelowna, Penticton, there's very few municipalities in the entire country of Canada that use more electricity in the summer than they do in the winter. Medicine. That would be one of them. Obviously, everybody has an air conditioner. And so we could use that power in the summer, and that's when they have it available. So it's a perfect win win situation for the city and for Big Marble. This episode of Bring Back the Porch, brought to you by Bernie Leahy, River Street Realty. Let's get you home. Recently, there was a ceremony in southwestern medicine at a big marble farms where city officials were joined by the people from Big Marble to mark a connection, a special connection between their cogeneration and the city's electrical grid. With the with us to talk about this today is Councillor Ted Clugston, who is the chair of the Energy Committee, and someone who was there when all of this began. So tell us the story. About four and a half years ago, I'm going to say, so a greenhouse is an interesting operation. Obviously we have lots of them around here, and they need both light and heat and and, big marble, built and, 12MW of generation. And, you know, it's awesome what they've done out there. If you've ever had a chance to go take a tour, which I'd probably have. If you haven't, you should, what an operation. And what they do is they they can make their own power. Now, big marble is actually outside the city limits. Very, very close. And there's been a delay in the, the, the substation down in the south. And you're probably aware of that. Do the residents push back on it? And, we are now going ahead with that substation, but it wasn't in time for, for Big Marble. So they built this generation. It's about 12MW. And obviously during the winter they have the lights on quite a bit. I'm not an expert in growing cucumbers and things, but, they need so many hours of light. And so they, they do that. And plus the way these generators put off heat, as you're well aware, and rather than going into the atmosphere, they use it to heat the greenhouse. So it's perfect in the winter. But in the summer they don't need them as much because the sun is up. And so they have this excess power that they could sell. And the problem with these generators and there's I mean, there's nothing wrong with them, but it's hard that you turn them on the tournaments like a, you know, jet engines on and off. And, and it's hard on them. It's better if you turn them on and leave them running and versus up and down and up and down and up and down. I'm sure they could explain it better than than I can. And, so in the summer, they maybe only need the generators a couple hours a day, and they don't need the heat, obviously, during the sun, when the sun's hot. So there's just excess power. But the problem was, is because we are the only retailer, the city medicine hat, and we have an exemption. And you can't, you know, you can't shop your power price around. So you're stuck with the city medicine now whether you like it or not. But part of that is, is that we have a lot of rules so that we don't compete, we don't have an unfair advantage against Alcoa, Max, and those kinds of things. So we couldn't take their power because they weren't inside the city of Medicine Hat. Now, there were some rule changes made. I think it was around March of 25 or ish by the ISO, the Alberta electric system operator that said, okay, you can't. So they use their it's their excess or their net. So sometimes they might be running the generators but but they have they don't need all the power. And then there's this excess. So we are now allowed to purchase that excess and sell it. So I think you're you were asking me a little bit earlier, does this mean more power for the city. Yes. But and also the perfect time in the summer medicine. That's a very unique operation because, Kelowna, Penticton, there's very few municipalities in the entire country of Canada that use more electricity in the summer than they do in the winter. Medicine. That would be one of them. Obviously, everybody has an air conditioner. And so we could use that power in the summer, and that's when they have it available. So it's a perfect win win situation for the city and for Big Marble. Now, the regulations that were changed at the, level of the province allowed this partnership. But it was in the works. I think, going back even to 2016, when they first started to kind of explore this and they kind of were stuck with, well, we can't do it because of the regulations. So the provincial regulations changed then. Did the city have to do something on their own to in terms of bylaws? Yes. So we had to change a bylaw. Now I think this was done. This was obviously done before my time because I wasn't around. And so that we could take their net power. But, I don't know if it was just as long ago as 2016, but, I mean, I remember becoming involved in my last term as mayor. So that was 20, 20, 21 ish. Okay. So all right, that answered your question. Yeah. Now the other question that people are asking is, so what is the city paying to buy the power? And I'm not sure if you can tell me that. That's probably confidential. That's the problem. Right. So, you know, everybody wants to know because it's publicly owned power plant. It's my power plant. I'm a shareholder. You're a shareholder. I want to know the deals. And that's why people are reluctant to do business with the city. Because if you're a private enterprise, you don't want your business on the front page of the news or on a podcast or anywhere on Facebook. Right. So the beauty of Medicine Hat is that we are a one stop shop like we can sometimes it helps us attract new businesses here because you can get the power in, you know what, your property tax. You can get the land from one place, the permitting, but you're also dealing with a public entity. And so I that's a private example. Everybody wants to know what is high rate, you know, and I like to say it's like the most I can say about this deal is it's called a power purchase agreement or a PPA or an energy service agreement. EASA is that, you know, if I had a used car and I'm going to Brian, I'm going to sell you my car and you're a willing buyer. Hopefully you're not under duress and I'm a willing seller. I'll also not undress you. You and I are going to go back and forth on the price, and at the end of the deal, you're going to buy my car, and we're both going to be kind of happy. You're going to be mad because you think you pay too much, and I'm going to be mad because I think you stole it from me right? But that's the only way a deal works, right? So everybody is kind of happy and kind of unhappy. And that's what I can say about this. I read on Facebook, is this going to make my taxes go up? Same thing with hot air, right. And the thing is, like the energy division is over here, has its own bank account, its own investment arm has nothing to do with the taxes. The only thing is, is that when the Energy Department makes money, it pays a dividend over to the tax side. But in the not since the beginning of the utility, 125 years ago, has money ever come from the taxes over to the utility utilities? It's a one way street, so this will benefit the taxpayers. Obviously, if it's a profitable to the city, profitable big Marvel. There may increase the dividend and it actually may lower your taxes, but it won't raise your taxes. Okay. What would have happened if a deal like this hadn't been made and we were still lacking power in the southwest and south part of the city. So we're okay right now. So that new subdivision is coming online. And a lot of these subdivisions are redundancy. And, you know, if one gets kind of a spoken wheel, but if one goes there, you know, you can. So we are we are at our limit when we do need this new substation. And, it is approved and it's moving forward. If we had to do a $20 million budget amendment and people are like, why are you doing budget amendments? Because it took so long. And now with all the data centers being built all over the world, prices, those stations are going up all the components. Plus there's a lead time now on them. Used to be of apartment. You could get it in six weeks. We're talking five years sometimes for these things. So the city is in some way scrambling to make sure we have backup parts for, for different transformers and all the other electrical equipment, because it's such a long lead time now. But this is nice to have this availability. So when we have people as well, like with canned carp, we have one, they're they're waste heat. They produce electricity. And we buy that as well as the, the wind farms, those three turbines. That is not those aren't owned by the city. They're owned by a private company. And we buy 100% of their output when they're producing. Is this new, agreement with Big Marble Farms? Is this categorized as green energy? Does it help their. I don't think we would call it green because it's natural gas fired. But for them, if they're using that waste heat, that's energy they would have burnt in a furnace. Or how to heat the greenhouse that they are having to do. And you can it's a greenhouse. So I guess it is green. Okay. There we go. The other thing I wanted to talk to you about too, was, during the campaign in the fall, a lot was made about the, municipal corporation that might control utilities. Is that been laid to bed now? I think so, the mch part was laid to bed by the previous council. And but part of it was kind of tied into the, rate review committee. And you may have seen last some people, some of you may have seen last council meeting where myself and Councillor Cox kind of, you know, maybe were curmudgeons or like, it's just the way we've always done it. You're veterans. Yeah. Veterans. Okay. That's a better word than Curmudgeons 125 years city Council has been elected. City council sets rates. Whether that's been good or not, you know, councils have made mistakes. I've made mistakes in my time. But there's a tradition here in Medicine Hat that you elect is is a publicly owned utility by the residents. Every 68,000 of us each owns a share in that utility. It's your utility, and you elect us to run it and to set the rates. It's the way it's always been done, and it has pretty much been sent to bed. We got, I think a, an 8 to 1 vote on that one or 7 to 1 vote on that one. I think maybe somebody might be missing. It's pretty set to bad. But the thing is, and I was talking about this last Monday, I was, a municipal Councillor, medicine hat has a unique responsibility that other Councillors don't in other municipalities, and it's a challenge. And when you get when you run for city council, you better be aware that not only are you dealing with policy and procedure on the municipal side, but you're also running a $400 million a year utility, and you have to have the courage to make some some tough decisions. And they're never popular when you raise rates. It's never popular. And I always like to make an example of, you know, if you're in any other city and you don't phone the CEO of Atco and say, I don't like my rate, do something about it because see you out, go, well, hang up the phone and you'll never have. Even takes. The call. She will never answer your call. And if they do, they'll hang up the phone on you because they answer to their shareholders. And they must remain profitable. And whether you like your rate or not, it's not as inconsequential to them. But in Medicine Hat you can phone their and say, I'm not voting for you again, or I don't like this or I don't like that. And the mayor or city Councillor goes, you know, I live in this city as well. I have to pay these rates. And, well, maybe we could shave a little bit off here and shave a little bit off here to the detriment of the utility. Because if you're if politicians are always just giving away the rates and making lower race to the bottom, then you have an unprofitable utility that goes bankrupt and that doesn't benefit anybody. So it's a it's a really tough, tightrope to walk. So now these changes Council will be setting the rates. Yes. Every month and no one see sorry. No. So there's a rate setting formula right now. The previous council did the 7 to 11, but that may change with this new council. I don't know what they're going to do, but. But the rate review committee was going to be an outside group of experts from the utility industry that said, you know what, $0.07 per kilowatt is not sustainable. You need to raise the rate or the fixed charges as well. You know, all those charges on your bill that you can't stand right? So you need to raise those or lower them. But they were going to be outside experts. I, I'm we I know there's been a lot of controversy. We have a lot of good people employees or staff or administration that come from industry. They we used to when I was back in my day, we stole from f corn and Atco. That's where we got our employees from. And so they were private sector people with a lot of experience. And so they do advise us. Okay. So that is still, have you haven't determined what's going to happen? I guess on the 1st of April, we're still going to follow the, monthly setting until we get the other stuff sorted out. We did set the fixed rates. Back in November, the new council, raised them about 3%. Across the board. Those are the the fixed charges for the lines, not the actual commodity. No. Yeah. And the commodities, as we know the world today, they're going. Yeah. Up. Yeah. You know, with, Well, we'll see what happens. I mean, everything is based on the price of gas, especially when it comes to electricity. The other bit of unfinished business, I guess, is, you're still looking for a customer for the same solar? Yes. They are. Thank you for asking if there's a customer. You know, that was a for the were four, criteria in that motion. Energy service agreement, PPA and customer to buy it. A tax credit, for building the solar and, a some, some changes from a so to make it a bit of a smaller solar farm and all four of those have to be met before construction will be started on that died down in the community, you know, a very it was a it was a rough it was a rough sell, two months ago now, I guess already in February. I mean, we had a lot of, we took the the grandstand was full. People had, signs stuck to their faces and and refused to watch the presentation. And then the questions they all asked were all obviously in the presentation. If they had watched it and taken the signs off, the faces. But, yeah, we we're still we're in active negotiations with, actually more than one, potential purchaser, I think. Oh, that's good news. Yeah, yeah. Because when you have, two willing buyers competing with each other. Yeah, hopefully. As the seller, you're in a pretty good. Position. And just once again, that used car analogy, we will sell it at a profit. Amen. Yes. All right, Ted, anything else you want to add before we sign it? That's good. You know, you maybe a lot of people, if you're interested, a lot of people have been asking about this new council, you know, I know you have experience on this will be my first council. And, each one of them is a unique animal. And this one is no different. They are gelling very, very well. You maybe noticed, a real concerted effort by this council to to work together, maybe, you know, disagree respectfully, but work together. And they've made a commitment to do that. And you had most of them appear. And it was one of the number one things you heard at the doors is, you know, all I want is for this new council to get along and get something done. I used to make a joke, and maybe I made it here last time. Is make city council boring again, which we have no fighting, no front page of the tabloid. That would, you know, in the last four years. And they are. And they're a very diverse group. The mayor, the mayor alluded to it during our state of the city speech. You know, the very, very unique group that are trying exceptionally hard to work together. That is good news for everybody. Yes. That it's what you actually want. Ted, thanks for the visit. Thank you very much. I'm.