Council approves increase to utility franchise fees

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Lacombe residents will see a slight increase in their gas and power bills next year, as city council approved an increase to franchise fees.

The item was discussed and unanimously approved during council’s regular Aug. 13 meeting.

CAO Matthew Goudy said the increase is an opportunity to generate increased revues in the city, using a mechanism that most other municipalities take advantage of.

Franchise fees for ATCO Gas and Fortis Alberta are reviewed annually, though in Lacombe, Goudy stated the fees had not been increased since 2004.

“Last time (the fees) were reviewed, council chose not to raise the rates and that was a long standing tradition, as (the review) came and went as a matter of formality more than anything else,” he explained.

“I don’t think there’s been serious consideration to adjusting these rates for some time.”

Goudy said Lacombe has one of the lowest composite rates among comparable communities. The City has a 22 per cent rate with ATCO and 6.2 per cent rate with Fortis, for a composite rate of 37.2. Neighbouring Blackfalds has an ATCO rate of 35 per cent and Fortis rate of 20 per cent. The only comparable communities with lower rates is Fort Saskatchewan, which is supported by a large industrial base, and Beaumont, with its rapidly expanding population as a bedroom community to Edmonton.

“Ultimately, these other communities that are making use of this revenue, are able to do things that are different and better for the residents of their city than Lacombe … (which) has to rely solely on the tax rate to raise that revenue,” said Goudy.

As the rates are attached to utility use, franchise fees are one way municipalities can receive revenues from properties that would otherwise be tax exempt, such as churches.

City administration recommended council approve new rates for ATCO at 22.1 per cent and Fortis at 12.75 per cent. This will increase the average households power and gas bill by an estimated $6.75 per month total. The estimated additional annual revenue is approximately $480,000.

“This revenue generation isn’t for some nefarious purpose,” said Goudy. “If you want to keep your tax rates low and fill your reserves and have economic development, my recommendation is you should be making use of the same tools that all other municipalities are.”

“As much as no one likes these ‘hidden’ taxes, the problem is you’ve got other communities charging substantially more and they’ve got this pool of funds to work with and provide all the needs and wants,” noted Mayor Grant Creasey.

“I don’t disagree with increase some of these rates, but we have to remember that there is just one tax payer and we’re taking it from them. Some of the people that pay the highest gas bills are the ones that need the most help, in the low income homes and are not as well insulated,” pointed out Coun. Don Gullekson.

-sswenson@postmedia.com

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