The City of Red Deer is continuing to explore a modernized governance structure and potential formation of a Municipally Controlled Corporation (MCC) for utilities after city council approved a placeholder within the 2025 utility budget going forward this fall.
“This is where the project and the budget process meet. As we proceed with modernizing the utility, we must plan for the investment required; this is necessary regardless of which model city council selects,” said Sarah Tittemore, Community Services General Manager. “While city council has not yet made a decision on a new model and approach, today’s decision enables us to plan and budget for change and modernization.”
Administration has retained Deloitte LLP to develop a Municipally Controlled Corporation (MCC) implementation plan and budget estimate.
“Through this work, we aimed to better understand the key planning strategies and estimated budget to deliver and implement an MCC,” added Tittemore “Today city council asked us to include this as a change to be debated when the 2025 utilities budget comes forward to city council in October.”
Key items included in the implementation plan shared with council Monday included:
- Municipal MCC implementation strategies and steps building on previous work
- Considerations of legal and regulatory requirements for MCC including associated bylaws and shareholder agreements,
- Potential MCC governance structure, considerations for board of directors and financing strategy
- A potential timeline view and detailed budget breakdown for MCC implementation
The anticipated range of MCC structuring and execution costs is $3.5 million to $7.8 million. Costs are estimates only and may be subject to change with further analysis and decisions regarding the scope of the transition.
At this time, placeholders are established in the electric utility budget and will be adjusted to suit the chosen governance model, which would be funded through the utilities department and is therefore not tax-supported.
Council did not make any budget decisions or final decisions related to the governance model. They noted that the utilities governance work is included in the utilities budget discussion in October 2024.
“The modernization of the utility governance is intended to allow the utility to more effectively operate while ensuring ongoing financial benefit for The City and residents,” noted Tittemore. “A change in governance structure will resolve fundamental challenges facing the electric utility, such as access to financial mechanisms for investments into infrastructure, talent acquisition and retention, and overall business development.”