City council voted to increase FortisAlberta franchise fees from five per cent to eight per cent, Oct. 3.
The City of Airdrie has franchise agreements with ATCO Gas Pipelines and FortisAlberta to pay the City for the right to distribute natural gas and power respectively. The agreements are subject to annual review.
The fees give the companies the right to use designated portions of roads, right of ways and other land owned, controlled and managed by the City. Jana Jaeger of corporate services said managing the rights-of-way and determining line assignments with numerous utility companies including gas, power and telecommunications is a significant workload for staff and the franchise fees help to pay for the consumption of these City resources.
“Franchise fees are an important source of revenue for the municipality and one that reduces the burden on property taxes,” said Jaeger.
“Franchise fees apply to a slightly different customer base including renters, schools, churches, seniors’ facilities and federal, provincial and municipal governments that are exempt from taxation. It helps to spread the burden to more than just the property owner.”
The franchise fee is charged directly to the ratepayers of the utility company and is shown separately on the bill.
The additional franchise fee per household will be about $16.58 per year. The increase will provide estimated net revenue to the City of about $373,600.
The ATCO Gas fee currently sits at 29.6 per cent of delivery revenue recorded by the company and will not increase.
“We need to be positive about this and look at it as a positive way to make ends meet,” said Alderman Glenda Alexander.
“We have to look at a way to make a bit of revenue so we don’t have to cut services.”
According to Jaeger, the 2012 budget projection includes a $4 million shortfall and these funds will help pare that down.
Alderman Allan Hunter voted against the motion, saying he didn’t think it was fair to base the franchise fee increase on a “preliminary draft of the budget.”
“Will the taxpayers be getting a increase in their pay?” he asked.
“I am here to be the voice of the citizens. It will have the biggest impact on those that can afford it the least. It is hard to make a decision on the preliminary numbers. We have a potential for a $4 million shortfall but it could be substantially less than that.”
Mayor Peter Brown voted for the motion but agreed with Hunter.
“We don’t have all the information but we are asking for our citizens to pay more,” he said.
Jaeger said staff isn’t able to create a budget and then set the franchise fee because the deadline for the fee is Oct. 15.
The franchise agreement with FortisAlberta was established in 2005 at zero per cent and revised in 2010 to five per cent. In comparison, Okotoks pays seven per cent, Cochrane pays 15 per cent and High River pays the maximum of 20 per cent.
