Councillors green-light quantity-only model for local access fees

Citing the increased stability and predictability it will provide future budgets, Calgary city council voted Monday to pursue a new model for determining its local access fee (LAF).

The new formula, which administration will introduce in January 2027, will see Calgary councillors set an annual rate to target a specific revenue amount based on forecasted electricity/natural gas consumption figures.

Council's direction differs from a status quo that currently sees the city tie a portion of its LAF — also referred to as a franchise fee — to the province's regulated rate option (RRO) for electricity.

The current method has led to the city collecting higher-than-anticipated revenues from the fee in recent years, due to the fluctuating nature of the RRO and a surge in electricity prices since 2021.

Councillors debated the merits of the quantity only model, which staff claimed will provide more predictable revenue for the city and less variable bills for consumers.

Councillors. Peter Demong and Jennifer Wyness asked why administration was coming to council for a decision now, considering the provincial government is currently reviewing the RRO.

Wyness equated Monday's discussion to making a decision “without all the facts at the table.”

Carla Male, the city's chief financial officer, responded that creating a model with more stability is “paramount,” and that the current formula is creating “large swings” in the amount electricity users are charged and how much the city collects.

Coun. Andre Chabot, who has long touted the benefits of the current model, introduced a referral motion to send the item back to administration to undertake a scoping report to determine how much it would cost the city to make the change.

Chabot said he recently spoke to Alberta Affordability and Utilities Minister Nathan Neudorf, who told him legislative changes to the RRO would be announced “within weeks.”

“In light of the fact there is a decision that is imminent ... even if it takes a month, I think it's premature for us to move forward,” Chabot said.

Chabot's referral motion failed narrowly, 7-8, with councillors Wyness, Demong, Terry Wong, Sean Chu, Dan Mclean and Sonya Sharp voting alongside him.

Coun. Kourtney Penner said council should neither wait nor base its decision on the results of the provincial review.

“I think we're at a decision point and we often make decisions without knowledge of what the province may do,” she said.

“Even our budgets, we don't often know what provincial grants will be coming our way, yet we make budgetary decisions all the time.”

After voting down Chabot's referral, council collectively voted 12-3 in favour of pursuing the quantity only model.

Councillors Chabot, Mclean and Chu voted in opposition.

City administration will now work to implement the model for January 2027, to better align with the city's budget cycles.

“If it gives us the peace of mind that we won't have to experience what we experienced in the past two years ... I think it's worth it,” said Coun. Courtney Walcott, adding he felt council could have made the same decision in December.

“We're in the same place now — certainty versus windfall,” he said.

“As far as the city is concerned, it's the same.”