City of Calgary administration is proposing a review of Local Access Fees after a mid-year budget update showed they helped boost a sizeable projected city surplus.
At the Sept. 6 Executive Committee meeting, councillors heard that as of June 20, the city was running a $165.6 million “favourable operating variance” due in large part to increased franchise fee revenue, investments, lower-than-expected expenditures and other revenue.
Of that amount, $76.7 million was the result of higher energy prices, reflected in the city’s franchise fee collection via Local Access Fees (LAF). A LAF is used instead of charging utilities property tax to allow their infrastructure to run throughout the city.
Calgary ties its LAF to the Regulated Rate Option for electricity – the only municipality in Alberta, and perhaps Canada, to do so. The Regulated Rate Option for electricity has skyrocketed in recent months, putting considerable pressure on Calgary ratepayers through their Enmax bills.
According to a blog post by Ward 12 Coun. Evan Spencer, he first raised the issue with administration in a Dec. 20 city council meeting. That led to a closed session presentation last March, he said, where city officials laid out their case for the LAF formula and showed how well it performed.
Spencer said at that time that it was going to become a bigger problem.
“In that meeting, I also spoke to my displeasure with Admins rationale for keeping the LAF the same to provide ‘a natural hedge’ for its own energy expenses,” Spencer wrote in the blog.
“I don’t believe The City has a solidly defensible position to continue with business as usual.”
Options for the additional revenue
In a conversation with LWC on Thursday, Spencer said that there’s a lot that can be done with that money, including potential rebates. Especially at a time when there are affordability issues for citizens.
“There’s precedent from other levels of government and from other organizations when you collect fees and there’s overages, rebates should be on the table,” he said.
“Whether or not that’s the best path forward is yet to be determined.”
Spencer said the discussion next week would be around how to use that money in a way that impacts the most Calgarians feeling the weight of the affordability crisis. A rebate might be more costly to administer and not have a significant impact on the typical Calgary homeowner, he said.
Ward 10 Coun. Andre Chabot said providing a rebate on the Local Access fee is the equivalent of providing Calgarians a tax rebate. Further, he said they can’t direct Enmax to issue a rebate because it’s political interference. Not only that, but they can’t share individual billing information with the city.
“Enmax collects from individual customers on our behalf; they do not share individual billing information with us,” he said.
Mayor Jyoti Gondek, who raised the concerns again in August, when the Regulated Rate Option was set to hit a record, said they have options on the table, including a review of the formula.
“I think the most important conversation happens next week at Tuesday’s council meeting where we talk about why we do this the way we do and how we can make sure we’re protecting citizens into a future,” she said.
Spencer said just providing a little more predictability for citizens when getting their electricity bill is enough to review their process.
“The trade-off conversation the last time we had it hadn’t tipped far enough,” Spencer said.
“I have a sneaking suspicion it’s about to tip.”