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The City of Calgary is fast-tracking its new formula for collecting local access fees that are tacked on to power bills, with the goal of introducing a “quantity only” model on Jan. 1, 2025 — two years earlier than originally planned.

At the Tuesday meeting, council voted unanimously to accelerate the new model for collecting the fees for electricity and natural gas. Council originally approved the new methodology in March, but was told it would take until 2027 to implement.

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The accelerated timeline will ensure the city complies with the Alberta government’s Utilities Affordability Statutes Amendment Act, which was passed in June as a means to standardize how municipalities calculate their fees.

Also referred to as franchise fees, LAFs are paid in lieu of property taxes by energy providers to access the city’s electricity distribution infrastructure. The providers pass the fees on to ratepayers, including it as a portion of their monthly power bills.

The City of Calgary has long used a different formula than other Alberta municipalities to collect its LAFs, by linking the fee to what was previously called the Regulated Rate Option (RRO) — essentially, the province’s default, wholesale rate of electricity.

Due to the fluctuating nature of the regulated rate — particularly from 2021 to 2023 — Calgary’s franchise fee experienced volatile price swings, resulting in soaring electricity costs for users on the default rate. Last August, the regulated rate reached a record 31.9 cents per kilowatt-hour, which meant the city collected $200 million more from the fee than it budgeted for in 2023.

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That spurred Calgary’s council to switch to a quantity-only model — a similar, volume-based fee structure that Edmonton uses — to provide more stability and predictability in how much revenue the city collects and how much consumers pay for power.

The formula will allow council to set an annual franchise fee rate that targets a specific revenue total, based on projected consumption for electricity and natural gas.

“The quantity-only methodology that council approved in March this year will provide greater clarity, predictability and control for consumers,” a city official said in a report to council on Tuesday. “It will give the city more predictability in collecting what we budget for and it will incentivize energy conservation, reducing climate impact.”

The province’s Utilities Affordability Statutes Amendment Act also changed the name of the RRO, which is now called the “Rate of Last Resort,” in a bid to disincentivize Albertans from getting on the default rate.

“Calling it the Regulated Rate Option is misleading,” Premier Danielle Smith said at a previous news conference. “It makes it sound stable and predictable when the truth is it is exactly the opposite.”

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Earlier this year, Mayor Jyoti Gondek and Smith quibbled over how long it would take the city to set up its new model.

Smith accused the city of “dragging its feet.” The city cited amendments to its agreements with Enmax and ATCO, as well as required approval from the Alberta Utilities Commission (AUC), as reasons for the initial three-year timeline.

At the time, Gondek said the city wasn’t able to receive approval from Alberta’s utility regulatory body before 2027 — a claim the AUC disputed, noting such applications could be processed in a handful of months.

According to a city news release, the next steps are to finalize new agreements with Enmax and ATCO to incorporate the new model. After that, the city will submit its application to the AUC for review and approval.

Once the submission is approved, the city, Enmax and ATCO will finalize changes to their billing systems and notify customers before year’s end.

— With files from Matt Scace, Matthew Black

[email protected]

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