SUNDRE — Municipal councils have an annual opportunity to review, reconsider and at their discretion adjust the rate at which they can set a franchise fee with Fortis Alberta up to maximum of 20 per cent.
Sundre first introduced a franchise fee of five per cent in 2015 with the council of the day aiming to reduce dependency on regular tax revenue while allocating a portion specifically for restricted surplus accounts. The fee was increased to seven per cent for the 2016 fiscal year before incrementally being increased by one per cent over the years since until it reached 10 per cent, where it has remained frozen since 2020.
According to administration’s research of neighbouring municipalities throughout the region, the highest franchise fee is set at 17 per cent in Didsbury, while the second highest is 15 per cent in Olds. Crossfield does not charge the fee, while Caroline’s is set at 12 per cent. Like Sundre, both Carstairs and Cremona have theirs set at 10 per cent.
“That 10 per cent generates approximately $240,000 revenue for 2022,” said Chris Albert, director of corporate services, who joined the regular Oct. 17 meeting remotely by phone. Albert added the anticipated amount of revenue generated in 2023 by a 10 per cent fee will be roughly the same at about $243,000.
“There is a philosophy about the Fortis franchise fee being an opportunity to collect revenues from tax-exempt properties such as seniors housing, hospital, schools,” he said, adding there is a caveat of sorts.
“The Fortis franchise fee does also apply to the town’s electricity bills and all of our facilities,” he said. “We are also tax exempt, but we are not exempt from the franchise fee.”
Left at a rate of 10 per cent, the fee in 2023 is estimated to increase the average residential bill by about $0.20 every month, or $2.40 annually, he said.
“It’s important to note, Fortis only does their calculations on their residential bills; not on their commercial bills,” he added. “So, we don’t have an estimation of what it would be for a non-residential property unfortunately.”
Each half percentage point increase from the current rate would represent an additional roughly $0.35 monthly to an average residential bill, but would overall generate about $12,000 for the municipality, he said.
“Based on the current economic conditions that households are experiencing,” he said, “administration does recommend that council leave the current Fortis franchise fee at 10 per cent.”
Providing a parting thought prior to council’s discussion, Linda Nelson, chief administrative officer, said, “Any increase to revenue that we would see, would be eaten up by increase to our budget. It’s not really a big increase to our revenue because we pay those fees as well.”
In the absence of questions or comments from members of council, the mayor spoke in favour of the motion.
“It always sounds good to bring more money in, but if more money goes out, we defeated the purpose,” said Richard Warnock, expressing confidence in administration’s review of the numbers that led to the recommendation.
“It’s not only that,” added Coun. Chris Vardas. “I think due to the fact that what we’ve all gone through throughout the years and what’s about to come, I don’t think it’s a time to increase people’s bills.”
Council proceeded to unanimously carry a motion as per administration’s recommendation to leave the fee at 10 per cent for the 2023 fiscal year.
