Understanding franchise fees and local access fees

On your utility bills, you will see different types of fees and charges for using and delivering energy to your home or business.

The fee collected by The City is a franchise fee. It’s also called a Local Access Fee on your electricity bill. This is the only charge that is set and collected by The City on your electricity and natural gas bills.

What are franchise fees?

Franchise fees are payments we get from utility companies for letting them build, run and maintain utilities on City land. They also give utility companies the right to be the only ones providing their services in certain areas. These fees are added to utility bills and sent to The City.

Franchise fees make up a small percentage of your overall utility bill.

Why do we have franchise fees?

Franchise fees are an important factor in supporting the operating budget, help fund the services Calgarians rely on and keep property taxes low. They contribute to The City’s capital budget and support new facilities, services and important maintenance, directly benefiting Calgarians.

How are franchise fees calculated?

Franchise fees are currently calculated based on the formulas below. 

Starting Jan. 1, 2025, The City is proposing that franchise fees will be calculated using the quantity only model. 

For electricity

There are two components of the franchise fee calculation for electricity:

  • Distribution cost
  • Amount of electricity consumed

The distribution cost is approved by the Alberta Utilities Commission. The City uses the monthly Regulated Rate Option (RRO)* on personal customer usage in calculating the franchise fee. This means the percentage of your bill attributed to franchise fees may vary. The percentage changes depending on what price you pay for electricity.

Calculation

11.11 per cent of Delivery Tariff charges + 11.11 per cent of monthly electricity cost (variable Regulated Rate Option* x kilowatt-hours consumed)

* rates are approved monthly by the Alberta Utilities Commission

For gas

There are two components of the franchise fee calculation for natural gas:

  • Distribution cost
  • Amount of Gas flow-through

The Gas Cost Flow-through Rate (GCFR) is applied to the customer usage component of the bill. The GCFR is approved by the Alberta Utilities Commission. The natural gas franchise fees for all consumers are based on the GCFR and collected by ATCO Gas.

Calculation

11.11 per cent of Delivery Tariff charges + 11.11 per cent of monthly gas cost (variable Gas Cost Flow-Through Rate* x gigajoules consumed)

* rates are approved monthly by the Alberta Utilities Commission

Updating franchise fees

The City is proposing changes to utility franchise fees that will start in 2025.

Learn more

Looking for information on how to read your electricity and gas bills?

The Utilities Consumer Advocate (UCA) provides detailed information.

Learn more

Franchise fees and your bill

Franchise fees make up a small percentage (typically less than 10%) of your utility bill.

Charges on your bill (For accessibility)

The pie-chart outlines various charges that may appear on a utility bill. Here is a description of the content:

1. Energy charge (retail charge)

2. Administration fee (retail charge)

3. Local access fee (Shared by all Alberta Municipalities)

4. GST (Government of Canada)

5. Balancing Pool allocation (Government of Alberta)

6. Delivery charges (AUC-regulated) - Utilities 

*Adapted from the Alberta Utilities Commission

Monthly cost estimates based on a typical residential consumer’s electricity bill in Alberta. Costs will vary depending upon the distribution service area, the municipality where you live, your energy use and billing period.

Charges on your bill (For accessibility)

The pie-chart outlines various charges that may appear on a utility bill. Here is a description of the content:

1. Natural gas energy charge (retail charge)

2. Delivery charges (AUC-regulated)

3. Federal carbon tax (Government of Canada)

4. Rate riders (AUC-regulated)

5. Municipal franchise fee (Government of Alberta)

6.  GST (Government of Canada)

7. Administration charge (retail charge) 

*Adapted from the Alberta Utilities Commission


Monthly cost estimates based on a typical residential consumer’s natural gas utility bill in Alberta during higher consumption months (or winter months), with higher natural gas consumption. Costs will vary depending upon the transmission and distribution service area, the municipality where you live, your energy use and billing period.

Using franchise fees to support Calgarians

The Reserve for Future Capital played a crucial role in supporting projects in 2023:

Forest Lawn Civic Centre

The first phase of the multi-service facility. Once complete, it will improve fire response times, library and recreation access, transit, arts and culture supply.

Parks infrastructure lifecycle

Replacement and upgrades of park equipment. These upgrades ensure continued accessibility and usage.

Recreation lifecycle

Maintenance and upgrades of recreation facilities to meet Calgarians needs.

Public realm investments

With input from our partners, investments were made to attract business. This initiative helps to create complete communities and support growth.

Mobility

Enhancing access for pedestrians and facilities across our city.

Public safety

City investments to address land stabilization. Investments ensure we can address the appropriate course of action to ensure safety.

FAQs

What is the difference between franchise fees and Local Access Fees?

Local Access Fees are a type of franchise fee.

On your electricity bill, franchise fees are called Local Access Fees. Your electricity retailer is required to call these charges Local Access Fees based on section 4 of the Electric Utilities Act - Billing Regulation, 2023. 

On your natural gas bill, they’re simply called franchise fees.

How will franchise fees be collected?

Franchise fees are charged to consumers on their electricity or natural gas bills. Energy companies collect the fees and send them to The City.

What are the different charges on my electricity and natural gas bills?

You can find more information on how to read your energy bills on the UCA’s website.

Where can I learn more about utilities in Alberta?

You can find more information about Alberta’s energy market on the UCA’s website.

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