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Local Access Fee to be reviewed, possible formula change, prescribed by Calgary city council

City councillors weren't thrilled with the proposed extended timeline, so they asked for a scaled review to come back with information in October, November and December of this year.

Calgary city council has asked for an expedited review of the Local Access Fee that has resulted in a jump to many Calgarians electricity bills – and a sizeable city surplus.

Councillors were initially presented a plan to report back to Executive Committee in November of this year, with a report on potential changes and budget implications by the end of Q1 2024.

Councillors weren’t happy with that and suggested a different plan of action.

The new timeline and process, approved unanimously by Calgary city council on Tuesday, would see a history of the local access fees presented in October, options for a potential affordability program in November and a report in December on possible changes to the formula.

“We need to work with our colleagues to expedite this process and explore and understand what those implications are, and then be having those conversations with Calgarians about what it means for them,” said Ward 11 Coun. Kourtney Penner.

This discussion comes as the City of Calgary, during a recent mid-year budget review showed a preliminary surplus of $165 million, with a large portion of it coming as the result of franchise fees obtained through Enmax. The Local Access Fee (LAF) is used in lieu of charging utilities a property tax to allow infrastructure throughout the city.

Calgary’s LAF formula is tied to the province’s Regulated Rate Option for electricity prices. That rate was over 30 cents per kWh in August and now sits around 27 cents.

Ward 10 Coun. Andre Chabot said that it was going to take time to review potential options for how LAFs are collected. That also requires a review by the Alberta Utilities Commission. Chabot said it could result in a shift in who pays.

“We have to be very cautious on how we change our methodology to make sure that it doesn’t negatively impact those people who were trying to help,” he said.

Bulk of Local Access Fees paid by businesses

City administration said that more than 60 per cent of the LAF sum is paid by Calgary businesses. When asked what impact a change would have on them, admin said that it would take a thorough review as each would be impacted differently.

The Calgary Chamber of Commerce, in an open letter to Calgary city council from president Deborah Yedlin, said that they supported a review of the policy.

“Calgary businesses have been directly impacted by the recent volatility of energy prices, with

many witnessing increases of more than 100 per cent in their LAF costs in recent months,” Yedlin wrote.

“While both residents and businesses are affected, the impact on business is compounded: in 2022, over 63 per cent of the total LAF collected was paid by commercial customers.”

Yedlin advocate for a part of the review to include how the city could reinvest windfalls in the LAF to offset rising costs for business owners.

Ward 12 Coun. Evan Spencer said he’d be looking forward to seeing options in November for how the affordability aspect could be seen by the broader community.

“We want you to know that we absolutely are going to be looking at this in the days to come and then also to the business community that has been looking at this and asking for some stability,” said Spencer.

“A lot of things have transpired and come together to create some really unfortunate outcomes for businesses, large organizations trying to balance books as well, partners of ours in the community.”

Mayor Jyoti Gondek said the status quo wasn’t working any more and a new solution for the fees had to be sought.

“We need to be having some pretty clear strategic discussions on, is the way of the past going to serve us well into the future and I think that’s what people need to understand,” she said.

“We’re not being reactive. We’re behind the game. We should have known long ago that we needed to be ready for something like this.”