Enmax dividend falls as industry faces uncertain times

Enmax's annual dividend to the City of Calgary dropped last year in what the utility's CEO called a challenging time for the electricity industry.

The City will collect $40 million from last year's operations at Enmax, but that's down from $48 million the previous year.

CEO Gianna Manes said the provincial rule changes for the electricity industry are coming at such a rapid pace, it's still hard to gauge the impacts.

"Every element of the electricity industry from a foundational basis is under review and is involving changes in regulation, changes in policy, changes in legislation," said Manes.

"Where are we going to invest and where might that make sense? And how much is that going to cost Albertans?"

Spending will be cut

She told the company's annual meeting with city council Friday that Enmax's capital spending for the next five years will be reduced, but it's too early to say by how much.

A ruling from the Alberta Utilities Commission earlier this year put limits on the ability of utilities to recover the cost of capital projects.

As a result, Enmax is going to lower its capital spending plan and ultimately, Manes said that will affect revenues and perhaps the dividend to the city in coming years.

On the competitive market side of the utility's business, power generation, she said prices are improving and revenues are slowly increasing as the economy recovers from several down years.

'Heresy to make a profit'

The situation seemed to irk Coun. Diane Colley-Urquhart.

She told the meeting that Enmax is one of the greatest assets the citizens of Calgary own, but its ability to make money for them is being constrained by the provincial government's new rules for the industry.

Colley-Urquhart said it's a "huge misnomer to call this a deregulated market."

She went on to say that under the NDP, "it's almost as if it's heresy to make a profit these days in this province."

Government is overhauling system

Manes said that the changes currently underway in electricity in Alberta are the biggest in 20 years and she's worried about there being too many changes too quickly.

"If we get this wrong, yes, customers and companies like Enmax in the near term will be financially hurt if we get it wrong. But at the end of the day, who really pays are Albertans."

Calgary has come to rely on the annual dividend from Enmax. The drop in the 2017 dividend — which is paid quarterly through 2018 — is a concern for Mayor Naheed Nenshi.

"There is some risk going forward. Certainly like everyone in Calgary, Enmax has been hurt by the economic climate over the past couple of years," said Nenshi.

"But the other problem here is regulatory uncertainty."

Lower dividend not a concern — yet

The mayor points out the city does have a reserve fund which could be tapped to off-set major reductions in the Enmax dividend over time.

He said it's not a concern yet.

"If dividends dip below the level they're at now and stay that way, that'll have a direct impact on the city's operating budget and that's of course funded largely by the property tax."

Nenshi said he's relying on Enmax to focus on the renewable energy future that the province is trying to move Alberta toward.

He noted that Enmax's power portfolio is now free of coal-fired electricity, whereas over a decade ago it was nearly 100 per cent reliant on electricity coming from coal power plants.

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