Changes to electricity and natural gas franchise fees
We’re updating our franchise agreements with ENMAX and ATCO. This will change how we calculate franchise fees (also known as Local Access Fees). The proposed change will make fees more stable and transparent for Calgarians than they are today.
These are not new fees; we're improving how we calculate them.
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What are franchise fees?
A new franchise fee model: Quantity only
On March 18, 2024, Council approved changing how we calculate franchise fees on utility bills. This was in response to rising utility costs and affordability concerns of Calgarians.
We will use a quantity only model to calculate franchise fees for electricity and natural gas. This will start Jan. 1, 2025, subject to AUC approval. It means for every kilowatt-hour (kWh) of electricity, or gigajoule (GJ) of natural gas, a small fee is added. Currently, we calculate franchise fees based on the total bill. It’s a complicated formula and the amount customers pay varies with unpredictable energy rates.
The quantity only model was developed by The City over the past two years. It’s a new and innovative way to calculate franchise fees offering these benefits:
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Provides consumers with clarity, predictability and control around franchise fees. Fees will be a transparent fixed rate tied to the amount of energy consumed, not volatile energy prices.
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Encourages consumers to reduce their energy consumption. This benefits both their finances and the climate.
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Allows The City to meet its budget targets. This minimizes the risk of collecting more or less than we need and provides stable revenue to fund services.
Proposed franchise fee rates
ENMAX
| Currently | Proposed |
|---|---|
| From 11.11 per cent of Distribution Tariff charges and 11.11 per cent of the monthly cost of electricity based on the Regulated Rate Option Energy charge (not the rate paid by the consumer). | To $0.015507 per kilowatt-hour consumed (equivalent to approximately 19.2 per cent of Distribution Tariff charges) effective Jan. 1, 2025. |
ATCO
Proposed franchise fee rates coming soon.
The Alberta Utilities Commission has set caps of 20 per cent of Distribution Tariff charges for electricity and 35 per cent for natural gas.
Household impact
ENMAX
The average monthly franchise fee for a residential customer is forecast to be $7.91 a month in 2025, down 30 per cent from an estimated $11.24 a month in 2024.
The new fee will be much more stable, varying with energy usage only – not the market price of electricity.
ATCO
Proposed franchise fee rates coming soon.
Franchise fees make up a small percentage of the average utility bill. With the proposed changes, that percentage will drop further.
Status of applications
The City works with our partners ENMAX and ATCO to apply for new franchise agreements. These applications are sent to the Alberta Utilities Commission (AUC) for review and approval. Learn more about the AUC process.
ENMAX
ENMAX, on behalf of The City of Calgary, submitted our application for a new franchise agreement to the AUC on Sept. 27, 2024.
A Public Notice period was held from Sept. 4 to Sept. 26 (extended from Sept. 24) to gather feedback on our proposed changes.
ATCO
More information coming soon.
Timeline
FAQs
How does The City currently calculate franchise fees?
The City uses a total bill model to determine franchise fees on utility bills. This means we include the cost of distribution and energy in the calculation. The current calculation is complicated to understand. Since it incorporates changing energy prices, it is unpredictable for consumers.
Is this a new fee added to my bill?
Franchise fees are currently charged to customers in Calgary and across Alberta. This is not a new fee. It’s simply an improvement in how franchise fees are calculated on utility bills. Franchise fees are common among Alberta municipalities. They are an important source of revenue that compensates The City for letting utilities build, run and take care of utilities on City land. Learn more about franchise fees in Calgary.
Why is Calgary’s proposed franchise fee model different than most other Alberta municipalities?
Since energy prices spiked two years ago, Administration has been researching different models. This made-in-Calgary solution has been researched and developed with Calgarians’ best interests in mind. It provides clarity and stability for consumers and for our budgets. The model financially incentivizes consumers to reduce their energy consumption. Reduced emissions are especially important, given that Council declared a Climate Emergency on Nov. 15, 2021.
How will The City set franchise fees?
It’s expected that Council will set the target amount of franchise fee revenue yearly. Once a revenue amount is set, a charges per unit of energy will be calculated for electricity and for natural gas. Setting fees yearly allows The City to consider and incorporate:
- Changes based on current inflation and population growth.
- Affordability for Calgarians.
- Revenue needed for City services and projects.