Powerline cost hikes necessary: city
Report due at city council Tuesday outlines reasons for moving money to cover added $12M
A report detailing the long and complicated process of reinforcing Medicine Hat’s power distribution system goes before city council Tuesday, including a revelation that money was shuffled from other projects to cover some cost increases.
Some utility committee members and administrators said the increases are necessary, the project crucial, and such budgeting is well within the purview of the chief administrator.
However, similar practice was cited as a main reason why the budget for the city’s Solar Thermal Project spiralled out of control without council members knowledge.
CAO Merete Heggelund said the two issues don’t really compare and budget changes she authorizes are scrutinized.
“We report annually to council on all over and under project budgets,” she told the News this week. “It makes sure the process is open and transparent and we’re accountable.” “There is only a handful each year.”
Heggelund herself commissioned the presentation, given to the utility committee Feb. 9. that complies a myriad of work and cost changes over seven years into a single package.
At the same committee meeting, members were told north-end powerplant construction could be $10 million less than expected, but line upgrades could be $12 million more than first thought.
First proposed in 2009, upgrading lines and adding substations to ring the city was estimated to cost about $22.4 million. However, in the last five years, alterations, increased regulations and new additions increased the figure to $34.8 million.
That was paid for in part by unused portions of unrelated project budgets — about $3.5 million found internally in 2016 without amendments coming to committee or council.
Another $4.6 million was added in utility division budgets approved by council in December.
The city’s most recent annual report says for every dollar city projects went over budget in 2015, $10 was either cancelled or saved in projects under budget.
Council members lauded efforts of budgeters and procurement officers. One year earlier however, councillors grilled administrators after hearing reallocations hid the true cost of the Solar Thermal Energy project, which had cost $3 million more than thought but was carried along with money found elsewhere in the then-separate energy division.
Utility chair Coun. Bill Cocks told the News that the municipal chief administrator, who since mid-2015 has final authority on utility and energy issues, can alter some budgets on short notice in the best interest of the business. Also, he said, council is generally much more aware of the process now.
“When there’s capital that’s not spent in one envelope it can be spent in another envelope,” said Cocks, who also chairs the city’s audit committee. “Sometimes they pass a little bit under the radar but hopefully we’re being more attentive to it, and this one certainly is being dealt with right upfront.
“In this case the overages are quite explainable and justified.”
The project moves the tie-in to the provincial grid from the main powerplant, which was threatened by flooding in 2013, to the north end of the city. That’s near a new powerplant the city is constructing and also an AltaLink line the city will purchase. New, higher capacity lines to that point, and the city’s south, will safegaurd power supply throughout the city, planners say, and will save about $5 million over 25 years by reducing line loss.
The new system would also allow the city to import its complete power needs should an emergency arise, or export greater amounts of power to the provincial grid.
Construction of the south line could begin in early March and all work completed by the end of 2018, administrators said.