March 9th, 2016 ~ Vol. 85 No. 10
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Open house on sale of electrical utility
Crowsnest Pass Herald Front Page
Ezra Black Photo
Mike Pashak, vice president of Customer Service for Fortis, and Tony Vastenhout, municipal linesman, discussing the sale of the municipal electrical utility to Fortis.
EZRA BLACK
Pass Herald Reporter
As folks munched complementary donuts, sipped free coffee and admired municipal information plaques, an impromptu debate sprung up between a public relations man and the municipality’s power line technician on the pros and cons of selling the municipality’s electrical distribution system to Fortis Alberta.

“The system is old,” said Mike Pashak, vice president of Customer Service for Fortis. “Thirty-five per cent of the infrastructure is at end of its life. Within ten years, 70 per cent would be at the end of its life. If you wait too long, you start running into safety and liability issues.”

“That’s easy for you to say, you want to buy the system,” replied Tony Vastenhout, municipal linesman. “Really our system isn’t that bad and it would last even on 4,160 volts for quite a while and actually 4,160 is more reliable than 25,000, believe it or not.”

But at the March 3 open house on the potential sale of the municipality’s electrical utility to Fortis Alberta, the numbers had their own things to say.

According to municipal projections, all told, if the system is not sold to Fortis, the electrical system will make $267,559 for the community in 2017. If it decides to sell it’ll make $747,392. Selling to Fortis would also free up about $900,000 that had been previously saved to make upgrades to the municipal system.

Last August, administration invited Fortis to conduct an assessment of the municipal electricity distribution system. The assessment concluded that $1.5 to $2 million in upgrades would be required to bring the system up to industry standards and increase the power of the electrical distribution system from 4,160 volts to 25,000 volts.

The municipality owns and operates 20 per cent of the community’s electricity infrastructure. Fortis owns the other 80 per cent. The municipality services about 40 per cent of the community’s customers. Fortis serves the other 60 per cent.
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According to Fortis’s assessment, the municipally owned infrastructure is old. Thirty-five per cent of the power poles are the ends of their lives, the transformers, which are typically good for 50 years, are 45 to 55 years old. The power lines are showing wear and require updates and streetlights are below standard.

Pashak said his company has offered $3.7 million to purchase the municipality’s system. He said the offer is based on a formula provided by the Alberta Utilities Commission. In addition, Fortis would supply a linesman who would permanently live in the community.

Pashak said residents electricity bills would not be greatly affected because Fortis’s and the municipality’s rates are similar.

In 2013 the municipality made $123,134 off the electrical system. In 2014 it made $62,813. The difference between these sums comes mostly from the transfer of funds to reserves to upgrade the system. In 2013 about $80,000 was put away. In 2014, $213,000 was saved.

Selling the utility would deprive the community of all the revenue it gets from distributing electricity, replacing it with franchise fees that Fortis pays to the municipality.

According to projections provided by the municipality, the community would make $514,443 in franchise fees if it doesn’t sell the utility and $747,392 if it does.

Vastenhout disputed those numbers. He argued that all the salaries paid out to him and the community’s electricians had been lumped into the costs of the distribution system. He argued that this was inaccurate because he only spends about 35 per cent of his time working on the utility.
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As Vastenhout and Pashak discussed the numbers Patrick Thomas, director of Planning, Engineering and Operations explained why there was such a dispute of the figures.

“There has been confusion over the account structures,” he said. “This goes across a lot of the different departments. If it was electrical in nature, it was put within this department so there is stuff that was included in there that was not directly related to electrical distribution. What we’ve been trying to do is more clearly identify expenses and revenues to the appropriate accounts.”

An example of this confusion is contained in the 2015 budget documents, which show that the utility produced approximately $600,000 in revenue. However, CAO Sheldon Steinke said this was not an accurate representation of revenue created by the electrical utility because it included the $400,000 in franchise fees that Fortis paid the municipality.

Darren Nastasi, president the Canadian Union of Public Employees (CUPE) Local 812, said the issue should go to a vote of all the taxpayers in the Crowsnest Pass.

“I believe that people should have a right to vote for this,” he said. “Utilities make money but it’s like everything else around here; they let it run into the ground.”

A sale to would have to go through more public consultations, council deliberations and regulator approval before assets and customers would be transferred to Fortis.
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March 9th ~ Vol. 85 No. 10
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