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Fortis, ATCO franchise fees could see 2024 increase

“My concern is around maximizing franchise fees in relation to affordability, but I also believe we should maximize franchise fees because they’re a revenue source that everyone pays, directly connected to the usage of non-renewable resources and we have a clear allocation of how we use that. The affordability factor is in my head.”
Canmore Civic Centre 1
Canmore Civic Centre on Thursday (April 21). JUNGMIN HAM RMO PHOTO

CANMORE – A potential change to the franchise fees for Fortis and ATCO could be coming to Canmore in 2024.

On the second day of the 2023 budget review on Nov. 10, Town of Canmore staff made a recommendation to the finance committee to increase the Fortis fee to 16 per cent from its current 12 per cent and ATCO to 35 per cent from its present 30 per cent.

If council were to go through with the changes, Town staff estimate it would bring in an extra $860,000 in revenue in 2024. It would also mean the average residential Fortis bill would go from $8.54 a month to $11.71 a month, while ATCO would go to an annual bill of $219 for a $31 increase for the average residential bill.

“My concern is around maximizing franchise fees in relation to affordability, but I also believe we should maximize franchise fees because they’re a revenue source that everyone pays, directly connected to the usage of non-renewable resources and we have a clear allocation of how we use that,” said Coun. Tanya Foubert.

“The affordability factor is in my head.”

The finance committee voted to postpone a decision to council until formal budget deliberations begin later in November. Council initially directed Town staff to review the franchise fees in July.

The Town has to notify Fortis and ATCO by Nov. 1, 2023, of a possible change. Similar to a public hearing or development permit, it would then have to be advertised to inform residents.

The potential increase would impact property owners, as well as renters, schools, churches and federal and provincial government properties that are exempt from paying property tax.

With the main source of revenue for a municipality being property taxes, franchise fees and user fees, the Town has an opportunity to collect money from alternative sources.

“Franchise fee revenue is a piece of the puzzle designed to generate revenue from a different customer base,” said Palki Biswas, the Town’s manager of finance.

“By using a franchise fee to generate income from exempt community members, the burden of paying for Town services is more equitably distributed.”

If approved by council, the Fortis fee would be bumped up to 16 per cent in 2024 and jump an extra two per cent every other year until it hits the maximum fee of 20 per cent in 2028.

The move, if council were to approve it, would see an extra $570,000 come into the Town as revenue. It would take the average residential monthly bill to $11.71 a month after a $3.17 increase.

Town staff provided additional options such as starting at 14 per cent in 2024 and working up to 20 per cent by 2030, deciding on a different percentage or maintaining the status quo.

Between 2004 and 2015, the Fortis fees were set at eight per cent, increasing to 10 per cent from 2016 to 2021 when it then hit the existing level of 12 per cent.

In comparing the rate, Canmore aligned with Rocky Mountain House, was higher than Banff and lower than Cochrane. The average of 19 municipalities was 14 per cent.

The current rate generates $1.6 million to Town of Canmore coffers and costs the average resident $8.54 per month.

If the Town staff recommendation of ATCO fees being set at 35 per cent went ahead, it would see an extra $290,000 in revenue generated for an annual total of $2 million. The cost of an average residential bill would annually be $219.

From 2004-2015, ATCO fees were set at 22.50 per cent and were increased to 25.50 per cent in 2016. In 2021, it was moved up to 30 per cent.

Compared to other municipalities, Canmore was on the higher end and had the same rate as Rocky Mountain House. Canmore was slightly below Banff, but more than Cochrane, Hinton, High River, Crowsnest Pass and Drayton Valley.

Five per cent of franchise fees support climate action initiatives, bumping up a percentage point each year until hitting 10 per cent in 2026. The fees cover 75 per cent of the climate change specialist position.

A further five per cent is transferred to the operating capital reserve and the remainder goes to the asset replacement/rehabilitation reserve. Franchise fees that aren’t allocated to a specific use flow into the sustainability reserve.