The Alberta government said they want to stabilize Local Access Fees (LAF) paid by electricity consumers, ensuring that cities can’t reap windfalls from higher prices.
Calgary Mayor Jyoti Gondek said, however, that Calgary’s approved a change in their process, and now it’s up to the province to help expedite those changes.
On Monday, the province introduced the Utilities Affordability Statutes Amendment Act, 2024, which would prohibit the use of variable rates when calculating municipalities’ LAFs. Calgary was one of the only jurisdictions in Canada to use the variable rate – formerly known as the Regulated Rate Option (RRO) and now dubbed the Rate of Last Resort (RLR), to calculate LAFs.
When electricity prices spiked to more than 30 cents per kilowatt hour last August, Calgary reaped millions in additional fees. The City of Calgary more than doubled its LAF and franchise fee take to $376.7 million from a budgeted $175 million.
That had homeowners frustrated with skyrocketing power bills.
“Albertans need relief from high electricity costs and we can provide that relief by bringing in fairness on local access fees. We will not allow municipalities – including the city of Calgary – to profit off of unpredictable spikes in electricity costs while families struggle to make ends meet,” said Premier Danielle Smith.
“We will protect Alberta families from the extreme swings of electricity costs by standardizing the calculations of local access fees across the province.”
Back in September 2023, Calgary city council ordered a review of their LAF calculation in the wake of citizen frustration. At first that review was delayed as the City of Calgary awaited the results of a provincial review. In March, the City of Calgary approved a new model for the calculation.
Mayor says province can help with approvals
Mayor Gondek said she’s happy to see that the province had “finally caught up” with what they’d done on March 18.
She said Calgary would do it right away, but had to wade through provincial red tape in having the Alberta Utilities Commission (AUC) approve new electricity contracts. The City of Calgary has said the switch to the quantity-only model would likely take until 2027 as they’ll have to work with the AUC on those revised contracts.
“If ministers interested in speeding up the process for Calgary, this is fully within his jurisdiction,” she said.
“So, we look forward to the minister reaching out to us and maybe talking to us about the decision we made on the 18th of March, which was to go to a quantity-only model.”
Mayor Gondek said they weren’t aware this decision was coming and she’s had no contact with the province regarding expedited contracts.
“Quite frankly, I think it’s interesting that there’s embargoed information to the media and then I’m expected to respond to something that I have no embargoed information on. So, you all saw it before I did,” she said.
“I’ve been in a public hearing meeting and now that I’ve read what’s being contemplated, I’m a little bit surprised, a little bit confused that the province didn’t know what we did on the 18th of March, and the very heavy-handedness of ‘we will make Calgary do this’ – we already did it.”
Minister of Affordability and Utilities, Nathan Neudorf, however, said that since Calgary hadn’t taken responsibility for the issue, the province had to intervene.
“It is disingenuous and misleading for Mayor Gondek to blame the Alberta Utilities Commission for delaying any changes to Calgary’s local access fees. The AUC has confirmed to us that any future applications would take less than three months, not three years like the Mayor suggests,” Neudorf said, in an emailed statement to LiveWire Calgary.
“The Alberta Utilities Commission hasn’t received an application from the City of Calgary since 2017, which was fully processed in only two and a half months.”
The proposed provincial legislation would also strengthen the oversight of the AUC to see how the municipal local access fees are calculated and applied.
