Calgary expects $100 million increase in franchise fee revenue due to high energy prices – Calgary
The City of Calgary estimates it will end this year with another multimillion-dollar surplus, due largely to additional revenue from rising energy prices.
According to a semi-annual performance report presented to city councilors this week, city officials estimate a year-end surplus of $175 million; a combination of $75 million in operating savings and an additional $100 million in revenue from franchise fees.
$93 million of this additional franchise fee revenue is expected to come from electric bills, with the remainder coming from natural gas bills.
The city attributes the growth in fee revenue to Alberta’s surge in default electricity prices – also known as the Regulated Rate Option (RRO).
In Calgary, the fees charged on monthly electricity bills are based on the cost of the electrical infrastructure to provide electricity to customers and the cost of the energy consumed, which is based on the RRO price.
Calgary’s September RRO rate is 26.455 cents per kilowatt hour (kWh), after reaching a high of 31.858 cents last month.
These fees increase when the price of RRO increases; it is collected by Enmax and delivered to the City of Calgary.
Calgary’s mayor and city council will be briefed on the rate structure and possible next steps at next week’s council meeting, amid affordability concerns.
“We need to consider whether we are doing the right thing right now for people who are struggling financially,” Calgary Mayor Jyoti Gondek said Thursday.
“It will be a conversation about a little history, other best practices, and then making decisions for the future.”
However, some councilors are warning against any changes to local access charges on electricity bills following Tuesday’s briefing.
Ward 10 County. André Chabot said Calgary uses the same methodology for natural gas and electricity fees, and that changing the method would be like “picking winners and losers.”
Chabot instead wants to see changes to the process the Alberta Utilities Commission uses to determine the price of RRO to avoid big fluctuations.
“If we looked at the process of determining this regulated rate option, that would be the best thing to do,” Chabot told PKBNEWS. “Changing our policy will ultimately not be so beneficial. »
As discussions continue over affordability and measures to provide relief to those struggling, questions remain about how the city council will use excess funds.
Gondek said the numbers presented Wednesday are only mid-year estimates and the city won’t know exactly how much the surplus is, or determine how to use it, until the end of the year.
According to the city, excess franchise fees must be transferred into the capital reserve for infrastructure projects such as improving pedestrian and facility accessibility, as well as infrastructure lifecycle maintenance leisure and parks.
Last year, operating surplus was used to fund Calgary’s mental health and addictions strategy, Calgary Fire Department response times and to make public transit free for residents. children under 12 years old.
However, some city councilors are considering potential benefits for Calgarians who need affordable support.
“Throughout our city, there are people who are isolated from it and others who experience it day in and day out,” Ward 12 Council said. “said Evan Spencer.
“The city is in a place where we can potentially look at very specifically targeting this money to where it will have the greatest impact.”
Earlier this week, Medicine Hat elected officials approved an interim program that would provide electricity bill relief credits of up to $800 for residents and $2,000 for small and medium-sized businesses over the next four month.
Both Chabot and Spencer noted that a remission program could lead to administrative difficulties, as well as justice and equity issues.
Discussion of local access charges on Calgary’s electricity bills will take place at Tuesday’s city council meeting.
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