SUNDRE – Although town council has maintained Sundre's Fortis franchise fee at 12 per cent, users can nevertheless anticipate a modest increase on their utility bills next year as a result of higher electricity rates.
Council heard on Oct. 7 during a regular meeting that administration recommended leaving the fee as-is for 2025.
A franchise fee is a fee charged by the municipality in exchange for the granting of the right to provide the utility service in the municipality and for the ability to place distribution facilities on municipally-owned lands.
For electrical and natural gas distribution companies, franchise fees are typically calculated as a percentage of the total distribution charges on a customer’s bill.
Based on calculations crunched courtesy of a spreadsheet provided by the power company, maintaining the fee at 12 per cent was estimated to represent a monthly increase of roughly $0.29 or $3.48 per year on the average residential bill, by extension generating an additional $20,000 in revenue for the town.
Chris Albert, director of corporate services, said that by comparison, the municipalities of Didsbury, Olds and Crossfield had their 2024 fees set at 17 per cent, while Caroline was at 12 per cent with Carstairs and Cremona at 10 per cent.
In 2024, Sundre’s fee at 12 per cent had an impact of approximately $9.73 per month on the average residential bill, said Albert.
“Keeping the rate the same at 12 per cent, would increase that amount by 29 cents a month to $10.02 a month,” he said, attributing that increase to higher electricity rates.
Overall, the fee would in 2025 if maintained at 12 per cent be expected to generate roughly $300,000 in operating revenue for the town, he said.
Coun. Jaime Marr moved the motion recommended by administration to keep the fee frozen at 12 per cent.
Coun. Todd Dalke sought clarification and asked whether the revenues were earmarked for anything specific.
“It’s revenue,” said Linda Nelson, the town's chief administrative officer.
“As a revenue, it would offset taxes. If you remove (or reduce) the franchise fee, then you’d have to increase the mill rate to make up for the additional revenue.”
Albert confirmed the revenue is not allocated to any particular items and essentially pertains to offsetting the costs of operations generally speaking.
“This isn’t project specific, it’s related to the operating budget,” he said.
Speaking opposed to the motion, Coun. Owen Petersen said the Fortis franchise fee has never sat well with him. Although not outright opposed to having the fee in place, the councillor felt the percentage should be reduced.
“I would like to drop it a little bit because I do get rubbed the wrong way when it comes to nickel-and-diming ourselves,” he said, adding that as the numbers point out, people will still be paying more even if the fee is frozen at 12 per cent, albeit just a few bucks a year.
“And I feel that we are getting that from every single angle at this point in life; we’re always getting upped a few dollars, a few cents. And that nickel-and-diming is exacerbating this affordability situation that we’re in.”
Expressing confidence in the work the finance department is doing in “making the money that we have work for our citizens and ratepayers,” Petersen said the town would remain in good financial shape if it lowered the fee to 11.5 or even 11 per cent.
Speaking in favour of the motion, mayor Richard Warnock said there are some businesses and other entities in town that either do not own land or pay property taxes yet still use municipal facilities and services.
“So this is a way for us to collect revenue from those participants and keep taxes lower for our residents,” said Warnock.
“To lower franchise fees and then go along and raise our taxes to meet our budget, that in my opinion, then just hurts the residents that live in Sundre,” said the mayor, adding that the municipality should also be able to draw revenue from non-taxpayers.
Providing further context, Nelson said, “What this also does is those properties that are exempt from paying taxes – such as churches, schools, (and the) hospital – pay this franchise fee. So it contributes to the revenue through that rather than through the taxes.”
Dalke went a step further and suggested council might consider next year increasing the franchise fee to draw additional revenue not only from industrial and commercial properties but also those that do not pay property taxes to decrease the amount that needs to be collected from residential taxes.
With no further comments or questions, the mayor called a vote on the motion which carried with Petersen and Dalke opposed.
