Regulated rate rise driving access fees high for every Calgarian

As the regulated rate option (RRO) for electricity hits record highs, Albertans are being encouraged to sign contracts to ensure electricity price stability, but Calgarians who have signed contracts will still see their bill go up as the RRO rises.

It's the result of rising fees, in particular the local access fee. It is charged to utilities in lieu of property taxes for public land used by the utilities.

Unlike other municipalities, this ties the local access fee to the RRO, which means as the RRO hits record highs, so does the local access fee Calgarians will see on their bills.

“In terms of dollars for an average homeowner, a Calgarian, as I mentioned, will probably pay upwards of about $260 in local access fees this year. An Edmonton homeowner will pay about $80 by comparison, "said Thomas Glenwright, a director with Energy Associates International.

Glenwright said with the unprecedented rise in the RRO, the City of Calgary is filling its coffers with surplus revenue from the linked access fees.

“Right now, they're achieving a significant revenue windfall, our RRO prices are going to hit a historic high, or they have hit a historic high this month, and they hit incredibly high the last couple of years. So that's resulted in tens, or hundreds of millions of dollars in excess revenue compared to what they had budgeted for," said Glenwright.

Based on data from the City of Calgary's 2023-2026 service plan and Enmax's financial statements, Glenwright said the city’s first-quarter estimate was $35 million in revenue from the fee, but it actually realized $91 million over the period.

High fees have caused a revenue surplus for Enmax, owned by the City of Calgary

UNFAIR PICTURE: CALGARY COUNCILLOR

Ward 10 Councillor Andre Chabot defends the city’s system, saying looking only at the electricity fees without other areas of city revenue paints an unfair picture.

“Any amount, that is beyond projections, it is used to offset any future property tax increases. So it's either pay property tax, or pay a franchise fee," said Chabot.

"Either way, the money goes and stays in Calgary. It's not like we go and spend it on other things elsewhere. All of the money that we collect ultimately stays in Calgary to the benefit of Calgarians."

Calgary councillor Andre Chabot

City of Calgary economist Oyin Shyllon said Calgary has used this approach to the local access fee since the late 1990s, and says while Calgary’s rate fluctuates over time, it has received about the same amount as Edmonton.

“Edmonton receives twice as much as we get in natural gas franchise fees, we receive twice as much as they get in electricity, franchise fees," said Shyllon. "And so in general, it comes out to be a wash. Theirs is more stable, for the electricity component, as it is based on how much you consume. So it tends to be stable over time. Ours tends to fluctuate, so there are years where we've been very, very lean.”

Alberta’s minister of affordability, Nathan Neudorf, has been tasked with examining electricity rates in the province, with an eye to eliminating the RRO. He said doing that would force the city off the fluctuating scale in setting fees.

“We will be talking to the City of Calgary on how we can look at that. The premier’s talked at length about phasing out, and since my mandate letter calls for phasing out the regulated rate option, we are in the process of looking at how to do that," said Neudorf. 

"We want to be very, very careful of taxation, and the layering of costs in terms of fees, levies and taxes to the consumer. So, we will be looking at that, and talking with the relevant stakeholders on how we can move forward together in a solution that really helps individuals with their bill in the matter of affordability.”

Are you troubled by the high cost of electricity, especially the other fees attached to your bill? We’d love to hear from you!

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