SUNDRE – The municipal council was split nearly evenly down the middle on whether to increase the Fortis franchise fee in Sundre by two per cent.
But in the end, following a lengthy debate during the regular Oct. 23 meeting, Town of Sundre council approved the hike to 12 per cent from 10 per cent by a single vote.
Municipalities all have an annual opportunity to revisit the rate, which cannot be set higher than 20 per cent.
“Council sets the rate, and Fortis applies it to all the electricity bills that are distributed within the town,” said Chris Albert, director of corporate services and acting chief administrative officer for the meeting.
The fee appears as an additional charge on every single electricity bill – not just for residential properties but also commercial as well as non-profits and even town-owned facilities, he said.
“One thing to note, is town buildings are also subject to this fee,” he said. “So the revenue that we generate, a little bit does come back out of our pockets to pay that electricity.”
The previous rate of 10 per cent – which was already among the lower end of the amount charged by comparable communities – had in 2022 been held frozen for this fiscal year, and council had to determine the fee for 2024, he said.
At 10 per cent, the fee had represented an average monthly impact of about $7.12 on a residential power bill – or $85.43 per year – as determined by calculations through formulas provided by Fortis, he said.
That represented additional revenue for the municipality to the tune of about $250,000, he said, adding administration recommended increasing the fee to 12 per cent.
“This would equate to approximately an extra $2 per month on the average residential bill, and it would generate approximately $50,000 of extra revenue for the town,” he said.
Opening the floor to debate, Coun. Connie Anderson moved the recommended motion.
“I think it’s a good idea to go up that two per cent,” said Anderson. “It’s a small increase, but it brings in a fair amount of money…and it’s in the lower end (of comparables).”
Seeking clarification, Coun. Owen Petersen asked how much of the additional $50,000 generated by the increase would end up being paid back out on town-owned properties.
“The rough estimate that I have is the amount of the revenue that comes from town properties is about 10 to 20 per cent,” said Albert, adding that would represent anywhere between $5,000 and $10,000 out of the $50,000.
Speaking in favour of the recommended resolution, Coun. Chris Vardas said additional revenue is always needed to cover the cost of major projects.
“And it’s not really a tax because it goes on usage,” said Vardas.
But his colleagues did not all agree.
“I’m definitely opposed. I can understand when we need to increase (the fee) to support a project, but I don’t agree on just the raise,” said Coun. Todd Dalke.
“Many of us have seen large, large increases in our electricity bills based on usage,” said Dalke, adding an increase to the franchise fee will exacerbate that.
The councillor clarified that he could get behind increasing the fee if there was a more specific justification other than generating additional revenue.
“We do have increased costs,” said mayor Richard Warnock, speaking in favour of the motion.
“When we hold our fees at a zero increase, we wind up paying for it later. A two per cent increase today, is in my opinion much more palatable than having to hit our residents with five or 10 per cent increases in the future.”
Petersen recognized the ever-increasing costs municipalities face, but expressed the opinion that the fee is a means to generate revenue without more ownership from council.
“If we set a budget that is going to increase the cost of doing business in Sundre, then that should come right on down to when we set the budget and we vote for taxes,” he said.
“This (fee) is one of those nickel-and-dime things,” Petersen said, adding council can just keeping increasing it while claiming taxes did not go up “but we snuck in taking in money from people in a different way.”
Petersen said the fee should be maintained at 10 per cent to remain at the lower end of comparable communities, and asserted that any increases to the budget should be publicized when council is discussing setting the tax rate in the spring.
Coun. Jaime Marr, who was opposed to the motion, spoke out of concern for tenants who are all-too-often already struggling to get by.
“I recognize that this is a sensitive issue and I appreciate all of the dialogue,” she said.
“But I think about the people that live in our community. People that have invested here, they’ve got a home. And the people that love our community but they’re unable to buy a home, so they’re renting,” she said.
“With the shortage of housing, I also see the power that landowners have over their tenants, and if we increase the franchise fee, their utility bills are going up and that’s just a straight fact. And how are they going to offset that?” she said, implying rents will just be increased.
“I’m just thinking about some of the vulnerable people in our society. We don’t need to increase this,” she said.
Vardas was of the opinion that the franchise fee is “one way to gather from everybody that lives in our community” without always resorting to increasing property taxes.
“It’s a catch-22 either way we look at it,” he said. “If we don’t collect some kind of income from everybody that partakes in our community, and we’re only focusing on the property tax part of it, then we’re not hitting everybody.”
From his point of view, Vardas said the fee is a good way to balance out the tax burden on property owners so renters are also contributing to the town’s coffers.
Coun. Paul Isaac said he recalled the fee first being introduced years ago as an alternate avenue to collect revenues from people as well as entities that don’t otherwise pay taxes.
Seeking clarification, Petersen asked who in town aside from the hospital does not pay property tax.
The short answer, said Albert, is hospitals, schools, churches, and certain non-profit organizations that can apply to have their taxes waived, such as the Legion and the Elks.
And regardless of whether revenues generated through the fee go to general reserves or a specific project, it’s part of the municipality’s effort to set aside funds for major projects like the Highway 27-Main Avenue overhaul of underground infrastructure, which did not end up needing debenture borrowing because enough money had been put aside, Vardas said.
“Every municipality has franchise fees,” said Warnock. “This is not something in Sundre where we’re punishing people.”
The mayor called a vote on the motion, which was narrowly carried with councillors Dalke, Petersen and Marr opposed.
