City eyes $25M more in natural gas fees from ATCO, shifts collection method
Calgary considering franchise fee changes that could pull significantly more revenue from utility rates while staying below Edmonton's burden.
Calgary city council is considering changes to how it collects natural gas franchise fees—a move that could net the city an extra $25 million annually from ATCO while maintaining rates competitive with other Alberta municipalities.
The vote last Tuesday directed administration to analyze shifting from the current "quantity-only" method (a fixed rate based on energy use) to a "distribution tariff" method (a percentage of a utility's delivery charges). The shift would be studied for council's December meeting.
Franchise fees—also called Local Access Fees—are included on monthly utility bills. Utility providers pay them in lieu of property taxes to access municipal distribution infrastructure.
Mayor Jeromy Farkas said the Alberta Utilities Commission allows for greater franchise fee collection than Calgary currently pursues. "We're targeting a certain amount, but even if we achieved the $25 million, we'd still be at a more competitive local jurisdiction rate than Edmonton," he said.
The move mirrors Calgary's 2024 shift for electricity franchises. That change was prompted by volatile wholesale electricity price swings that created an unbudgeted $200 million surplus when prices spiked. The province later renamed the regulated rate option to discourage that volatility, and Calgary switched to quantity-only collection for stability and affordability.
Ward 10 Coun. Andre Chabot supports the natural gas adjustment, arguing Calgary has been under-charging compared to municipalities using distribution-only methods. With a challenging four-year budget ahead and a growing infrastructure deficit, finding ways to increase revenue without raising property taxes is crucial, he said.
ATCO said all franchise fee funds are delivered back to municipalities. The company collects the fees from customers on behalf of the cities it serves. Any municipal increase triggers a corresponding increase on customer bills.
The AUC noted it reviews and approves municipal franchise agreements to ensure transparency and compliance, but decisions about whether and how much to charge remain with municipalities.