Come Jan. 1, 2025, a new quantity-only model on Calgary’s electricity franchise fee could save most Calgary citizens and small businesses a bundle on power.

Calgary city councillors gave the first reading at Tuesday’s Regular Meeting of Calgary city council, to a bylaw that would see the new franchise fee rate for electricity set at 0.015507/kWh.

According to the city admin presentation, the change would save the average residential customer about $3.33 per month on their electricity bills. Under most consumer categories there will be a bill savings.

Changes were made to the franchise fee – or Local Access Fee, which is the amount collected on electricity bills, and then are payments delivered back to the City of Calgary in exchange for allowing utilities to build, run and maintain utilities on city-owned land.

Currently, until the new bylaw takes effect, Calgary calculates the franchise fee based on customer electricity usage, applying the variable Regulated Rate Option (RRO) for electricity. The RRO spiked last August, sending the franchise fee for electricity soaring, and city councillors scrambling for alternatives to this volatile model.

Because the franchise fee is collected by the City, it resulted in a substantial windfall. It more than doubled Calgary’s Local Access Fee take. This prompted the City of Calgary to begin taking action just before the province mandated a change to the fee calculation.

Ward 10 Coun. Andre Chabot said this was the right move for the City.

“This meets every test that the minister’s identified, including providing affordability to Calgarians, reducing the rate that they have to pay on franchise fee, and provide certainty for the City of Calgary in regards to the amount of revenue that is going to generate on a go-forward basis, and it will actually reduce the amount that we’re collecting overall,” Chabot said.

Predictable income, but much less for the City of Calgary

According to the City of Calgary, the change will generate $143 million in revenue in 2025. That’s down an estimated $36.7 million from the current calculation method.

“We’ve heard from Council and Calgarians about the importance of affordable and predictable energy bills,” said Carla Male, Chief Financial Officer at the City of Calgary, in a prepared media release Wednesday.

 “We’ve designed the new franchise fee, the only charge that is set and collected by the City, to be simpler and clearer to understand – a fixed amount per kilowatt-hour instead of a complicated formula tied to unpredictable energy rates. These changes will result in direct savings on electricity bills for Calgarians.”

The next step is the application to the Alberta Utilities Commission for approval of the new franchise fee agreement, including the rate.  The City will apply to the AUC by Sept. 27, following the gathering of public input, as required by law. A public notice has also been submitted to local newspapers.

City officials expect that decision will take roughly three months. Once that’s done, they will be able to have the second and third readings of the bylaw.

The anticipated date for the new rates is Jan. 1, 2025. The bylaw changes do allow the City of Calgary to review the franchise fee rate when deemed necessary by council.