Facts about energy costs and Local Access Fees
Reviewing Local Access Fees (LAF) in Calgary
In 2021, Alberta electricity prices surged, which resulted in rising utility costs and an increase in the Regulated Rate Option (RRO). As a result of these increases, The City received higher than budgeted Local Access Fee (LAF) revenue. Since keeping costs low is important, The City began reviewing its LAF method for electricity and natural gas in 2023. Recommendations to changes to LAF were brought forward and approved by Council in March 2023.
Today, Alberta electricity prices have decreased. The ENMAX RRO peaked at 31.9 cents in August 2023 to 9.6 cents in May 2024.
Learn more about The City’s new quantity only model and timeline approved by Council.
Providing emergency financial support to Calgarians experiencing vulnerabilities
We’re allocating $10 million from Local Access Fees revenue to assist non-profits in providing support to vulnerable Calgarians. This funding will help meet basic needs, such as housing, heating, and electricity, and aid those escaping violence.
Additional support
Fair entry
Programs and services for low-income Calgarians. Apply for multiple programs and services with one application. Your eligibility is based on your income.
211 Alberta
For additional provincial information on community, social and health services support, visit ab.211.ca or call 211.
What are Local Access Fees?
The Municipal Government Act allows local governments to charge utilities a fee instead of property taxes for municipal right-of-way access. LAF is a way to ensure public utilities pay their fair share, since they do not pay property tax on distribution infrastructure, such as gas and power lines.
The fees cover the cost of allowing utilities to build their infrastructure on municipal lands. LAF also cover restrictions on planning and development, and risks related to utility access.
Learn how LAF revenue supports Calgarians.
Electricity
There are two components of the LAF calculation for electricity:
- Distribution cost
- Amount of electricity consumed
The distribution cost is approved by the Alberta Utilities Commission. The City uses the monthly RRO* on the personal customer usage in calculating the LAF. This means the percentage of your bill attributed to the LAF may vary. The percentage changes depending on what price you pay for electricity.
| RRO (no electrical contract) | Contract |
|---|---|
|
Cost of distribution* (approx. 50% of bill) + Consumed electricity* (approx. 25% of bill) The City charges 11.11% of the monthly RRO to calculate the LAF. |
If the electricity price in your contract is:
the LAF will make up a higher portion of your bill and will be more than 11.11% for the month in question.
the LAF will be equal to 11.11% for the month in question.
the LAF will make up less than 11.11% of your bill for the month in question. |
* rates are approved monthly by the Alberta Utilities Commission
Calgary’s LAF per person is comparable with these municipalities. View our recent survey. At least 217 Alberta municipalities have electricity LAF.
Gas
There are two components of the Local Access Fee (LAF) calculation for 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.
| GCFR (no gas contract) | Contract |
|---|---|
|
Cost of distribution* (approx. 50% of bill) + Consumed gas flow-through* (approx. 25% of bill) The City charges the monthly GCFR, at 11.11% on the consumer's usage to calculate the LAF. |
If the price in your natural gas contract is
the LAF will make up a higher portion of your bill and will be more than 11.11% for the month in question.
the LAF will be equal to 11.11% for the month in question.
the LAF will make up less than 11.11% of your bill for the month in question. |
* rates are approved monthly by the Alberta Utilities Commission
Calgary’s LAF per person is comparable with these municipalities. View our recent survey. At least 217 Alberta municipalities have electricity LAF.
Understanding utility bill charges
Two main charges make up your energy bill:
- The cost of energy consumed, and
- The cost of delivering this energy from its source to consumption point.
Energy charges are based on how much of the actual commodity you used. However, the cost of delivering the energy is largely fixed.
Delivery charges cover the cost of installing, operating, and maintaining the infrastructure that's used to transmit energy. Charges also cover related ancillary costs such as customer care and meter reading. For electricity, this infrastructure includes poles, wires, and transformers. For natural gas, infrastructure includes pipes and compressor stations.
Delivery company rates are regulated by the Alberta Utilities Commission (AUC). The AUC is an independent, quasi-judicial agency associated with Alberta Energy. The AUC holds rate hearings to ensure you receive safe and reliable services at a reasonable cost.
Distribution of Utility Bill Payment by Beneficiary
In Alberta, customers have a choice of energy retail service providers. Albertans can choose between a fixed, variable or regulated rate option (RRO).
Your bill is determined by the open and competitive wholesale energy-only electricity market. Utility customers in Alberta have a choice of retail service providers. Customers can evaluate their choice of providers through the Utilities Consumer Advocate website.
For RRO customers, the charge on your bill is calculated according to the energy price-setting plan approved by the AUC. These rates are intended to reflect the actual wholesale electricity prices for the month. The rates will fluctuate between months based on supply and demand in the electricity marketplace.
The charge on your utility bill is based on your consumption for the billing period. Consumption is calculated per kilowatt-hour (kWh). This charge does not include costs or services related to delivery of the energy to your home or business.
Using LAF to support Calgarians
The revenue generated from LAF is a vital resource for our city. Budgeted revenue from LAF supports the operating budget. It also contributes to keeping property taxes low. Any positive variance is directed to the Reserve for Future Capital. It is then invested into new facilities, amenities, and maintenance. These initiatives are designed to benefit Calgarians directly.
The Reserve for Future Capital played a crucial role in supporting projects in 2023:
FAQs
How does Calgary’s Local Access Fees for natural gas and electricity compare to those charged by the City of Edmonton?
The franchise fees per person from 2013 to 2022 show Calgary’s fees for electricity have been higher than Edmonton's. However, Edmonton’s fees for natural gas have been consistently higher than Calgary's.
How do Alberta’s residential electricity costs compare to other major cities across Canada?
Hydro-Québec has conducted surveys of prices for customers across cities in North America. The two most recent versions are for April 2021 and 2022..
The surveys confirm customers in Calgary and Edmonton pay above-average prices relative to those in other Canadian cities. A key driver of the price differential is the source of electricity. Cities which rely on hydropower have lower prices. Cities which depend on natural gas-fired generating plants also contend with carbon taxes. In addition, cities which rely on natural gas-fired generating plants experienced substantial price increases for the underlying commodity. This occurred between December 2020 and 2022, as reflected in the higher rate of change.
Average electricity prices in major Canadian cities - residential (c/kWh, excluding taxes)
| City | 2021 | 2022 | Rate of change | Sources of electricity |
|---|---|---|---|---|
| Montréal, QC | 7.39 | 7.59 | 3% | Hydropower generating stations and wind power purchases (>99% of power supplied is clean and renewable) |
| Vancouver, BC | 11.58 | 10.24 | (12%) | Hydropower generating stations (about 98%) |
| Winnipeg, MB | 9.87 | 10.80 | 9% | Hydropower (about 96%), thermal and diesel |
| Ottawa, ON | 12.45 | 12.94 | 4% | Purchases from Ontario Power Generation |
| St. John's, NL | 13.60 | 13.76 | 1% | Hydropower (80%) and fuel-fired (20%) generating stations |
| Moncton, NB | 13.66 | 13.94 | 2% | Thermal (1,716 MW), hydropower (889 MW), nuclear (660 MW) and combustion turbines (525 MW) |
| Toronto, ON | 13.43 | 13.88 | 3% | Purchases from Ontario Power Generation |
| Regina, SK | 16.51 | 16.51 | 0% | Natural gas (43%), coal (31%), hydropower (20%), wind (5%), solar and other (1%) |
| Halifax, NS | 17.09 | 17.30 | 1% | Coal, petroleum coke, wind, hydropower and other |
| Charlottetown, PE | 17.38 | 17.78 | 2% | Purchases from NB Power and PEI Energy Corporation |
| Edmonton, AB | 16.99 | 19.48 | 15% | Market purchases |
| Calgary, AB | 17.26 | 19.94 | 16% | Natural gas (91%) and wind (9%) |
What has The City done to support affordable electricity prices in Calgary?
The City is aware electricity distribution charges have increased. Analysis indicates electricity ratepayers in Calgary (through ENMAX) pay the lowest monthly distribution costs in Alberta. It provides some assurance of better value for equal service.
The City of Calgary is also involved in utility rate setting proceedings at the AUC. The delivery charge for natural gas and electricity is regulated and approved by the AUC. This is following evidentiary submissions from utilities and consumer interest groups. Submissions can include municipalities. The City regularly exercises its rights as a rate-paying negotiator in AUC proceedings. We scrutinize natural gas delivery charges and help minimize rate increases for Calgarians.
How does the regulated rate (RRO) compare to the market price of electricity?
In early Aug 2023, the 30-day rolling average wholesale power price was 15 cents for a month. In Aug 2023 RRO is 32 cents per kWh. This means the utilities acquired power in the forward strips when it was expensive. The August 2023 RRO price was approved by the AUC in procurement plans.
How do Calgary’s local access charges compare to other municipalities in Alberta?
Most Alberta municipalities charge these fees. In Jan 2023, The City surveyed the 15 largest municipalities in Alberta. These municipalities represent more than 70 per cent of the population. They ‘all’ confirmed charging these fees for natural gas and electricity. The results of the survey demonstrate Calgary’s LAF per person is comparable with these municipalities. At least 217 Alberta municipalities have electricity LAF.
Where can I get more information about the increase in underlying commodity prices?
The distribution charges on natural gas and electricity are determined and approved by the Alberta Utilities Commission (AUC). Questions regarding the level of or increases to distribution charges can be directed to the AUC at 403-310-4282 or info@auc.ab.ca.
What other resources are available to Calgarians interested in education or mediation?
Distribution charges have been increasing steadily in recent years. The UCA has a mandate to educate and mediate. It offers services to small business, farm, residential electricity, natural gas and water consumers. It also acts as an advocate for energy consumers. You can contact them at 403-310-4822 or UCAhelps@gov.ab.ca..