'This is critical and it's important — we need to move faster'
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In the face of any outcry over spiking electricity fees amid an affordability crisis, city council on Tuesday fast-tracked a review of the levy.
Lawmakers unanimously scrapped an original plan to have a report on the so-called local access fee’s (LAF) merits come back to council members at the end of March, opting instead to receive it on Dec. 19.
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With Calgarians throttled by the ever-rising cost of living, the question of why Calgary — alone among Alberta municipalities — ties its LAF to the variable regulated rate option (RRO) price of electricity that’s reached unheard-of heights demands an urgent response, said Ward 11 Coun. Kourtney Penner.
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“This is critical and it’s important — we need to move faster,” she said.
“There’s no reason it couldn’t be brought sooner … many of us are deeply uncomfortable with the timelines we have heard.”
Council also asked for a report on how the city might provide affordability programs for Calgarians as they wait for possible changes to the LAF.
That’s because council heard any changes to the fee structure, such as uncoupling it from the RRO, would take 18 months to two years given the regulatory complexities that would include approval from the Alberta Utilities Commission.
Noting that timeline, Ward 12 Coun. Evan Spencer said he wanted to assure Calgarians their concerns aren’t being ignored.
“Any deferred relief doesn’t feel great,” he said.
“I want you to know council hears you … we care.”
Mayor Jyoti Gondek voiced frustration over the lack of action on the LAF and the time required to change it.
“We should have known long ago that we needed to be ready for something like this and instead we chose to go with the status quo. Well, I’m not very happy with that,” she told reporters.
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“Status quo isn’t working. We need to be looking at other options.”
City’s surplus projected to grow this year
Last year, the city collected $225.8 million from the electricity LAF — $98 million more than was budgeted — with at least one consultant predicting this year’s take will exceed $300 million.
The city’s Acting Chief Financial Officer Les Tucker said Tuesday there’s “an additional $100 million in revenue estimated as a result of these higher energy prices” this year.
He said those estimates will be revised in 2023’s fourth quarter “which will provide council with more certainty.”
The RRO hit a record 31.86 cents per kilowatt-hour in August, up from 27.57 cents in July, which was the previous high. Last year, the RRO jumped from 9.97 cents to 22.1 in December.
The price of electricity has jumped by 246 per cent since 2021 compared to 16 per cent inflation overall inflation rate during that same time.
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Based on the RRO for the first eight months of 2023 and estimates for the rest of the year, the average cost for a homeowner in Calgary is $261 this year, compared with $140 in Lethbridge, $79 in Edmonton and $78 in Red Deer. Large commercial users will exceed $100,000 in Calgary, compared with $34,000 in Edmonton and Lethbridge and $24,000 in Red Deer.
This affects all customers in Calgary, even those on fixed rates as the access fee is set by the RRO and applied to all electricity users. The fee is collected by Enmax for the city.
Formula an issue due to spiking price of electricity: councillor
Provincial legislation allows municipalities to levy a fee in lieu of property taxes and right-of-way access fees on utilities. Calgary’s franchise fee is made up of the cost of distribution infrastructure to deliver the energy and the value of the power based on the RRO price.
The LAF formula, which dates back to the 1990s, has only now become an issue because of the spiking price of electricity, while a similar fee is attached to natural gas whose price has been much lower and stable, said Ward 10 Coun. Andre Chabot.
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“If we’re going to be reviewing franchise fees, we should be looking at both utilities,” he said.
The fee supports crucial capital projects while acting to limit tax increases, said Chabot, who added he nonetheless supports a review.
“(Changing it) would be taking from one pocket and putting it in another,” he said.
Of the fee amount collected, 63 per cent comes from non-residential customers, meaning any drastic changes to it could come at the expense of homeowners, said Chabot.
Council heard surplus revenue from the fee has or will go towards things like pedestrian infrastructure, affordable housing, firefighter readiness, facility and parks maintenance, transit and access to recreation and the arts.
But critics say the present system is too volatile and places all the risk on customers, who are already facing heightened affordability challenges.
— With files from Chris Varcoe and Josh Aldrich
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City council fast-tracks review of volatile, costly electricity fees - Calgary Herald
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