City council to consider ‘quantity only’ model for local access fees

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Calgary metropolis council will contemplate a advice to vary how the municipality collects native entry charges (LAF) on Monday, however the urged components wouldn’t be carried out for practically three years, if permitted.

A employees report that councillors will obtain at their strategic assembly on March 18 suggests they approve a “amount solely” mannequin for amassing LAFs. The report touts the larger stability and predictability the brand new components would supply over the established order, which ties a portion of Calgary’s price to the provincial regulated charge possibility (RRO).

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“Transitioning to a amount solely mannequin would supply larger stability in LAF income for town and extra predictability of fees for shoppers,” said the report.

What are native entry charges?

Native entry charges are paid in lieu of property taxes by electrical energy suppliers to town as compensation for entry to municipal rights-of-way and electrical energy distribution infrastructure. The charges are then handed on to ratepayers, included as a portion of their month-to-month energy payments.

Differing from different Alberta municipalities, Calgary at the moment hyperlinks its LAF — additionally known as a franchise price — to the RRO.

Because of the fluctuating nature of the RRO, Calgary’s franchise price has skilled unstable worth swings since 2021. Final August, the regulated charge reached a document 31.9 cents per kilowatt-hour (kWh), surpassing 30 cents/kWh for the primary time for the reason that charge was launched within the early 2000s.

In consequence, town collected practically $200 million extra from the LAF in 2023 than it budgeted for, in line with town’s report.

After skyrocketing electrical energy costs final fall, council permitted a fast-tracked evaluate of how Calgary calculates its franchise price.

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However council voted in December to postpone a call till the provincial authorities accomplished its personal evaluate of the RRO this spring. That evaluate continues to be underway.

What’s a amount solely mannequin?

Below the amount solely mannequin, council would be capable to set an annual LAF charge to focus on a selected income quantity primarily based on forecasted figures for electrical energy and/or pure fuel consumption.

Altering LAF methodologies (beneficial for each electrical energy and pure fuel) would have an effect on metropolis planning and budgeting, in line with the report. Doing so would require modifications to town’s franchise price agreements with each Enmax and ATCO, in addition to approval from the Alberta Utilities Fee.

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Nonetheless, the report doesn’t suggest implementing the brand new methodology till 2027, as a way to align with town’s subsequent four-year funds cycle.

Sheldon Fulton, a Calgary-based impartial vitality advisor, stated an LAF mannequin primarily based on quantity consumption is an apparent enchancment from the established order.

Nonetheless, he has two criticisms of town’s report — the advice to postpone the change till 2027 and the omission of what the annual LAF charge can be.

“If the issue is predicated on evaluation worth and what would in any other case be the mill charge that may apply to Enmax … then I’m superb with that,” he stated. “That’s precisely what the Metropolis of Edmonton does.

“My threat or fear is (metropolis employees) are simply going to choose a quantity that creates them income. They are saying they’re going to attempt to choose a quantity that retains it near the funds, however who is aware of what the funds goes to be? If it’s $175 million, that’s OK. If it’s $375 million, that’s not OK.”

Councillors disagree on formulation

Ward 12 Coun. Evan Spencer stated the mannequin employees is recommending would supply higher stability for Calgarians — significantly for big asset holders, who might see hundreds of {dollars} in financial savings yearly underneath a consumption-only mannequin.

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“Lengthy-term, stability is what’s finest after we’re speaking about governance,” he stated. “Town has income constraints, however a unstable instrument just like the RRO shouldn’t be how we glance to back-fill income shortfalls for the Metropolis of Calgary.”

Nonetheless, assist isn’t unanimous on council. Ward 10 Coun. Andre Chabot has lengthy argued in assist of the present components, and stated the proposed mannequin would take away town’s capacity to make use of surpluses generated from the LAF to assist fund capital tasks.

He additionally identified the RRO has stabilized significantly for the reason that dramatic worth swings it skilled in 2022 and 2023, and is forecasted to proceed dropping this yr, bringing Calgary’s electrical energy prices consistent with Edmonton’s.

“The concept we’re in some way doing this (change) for affordability isn’t correct,” Chabot stated.

“Our mannequin could be the mannequin that different municipalities sooner or later will look to emulate as a result of it depoliticizes the method.”

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