Town increases utility franchise fees

Sharon McLeay
Times Contributor

 

Money to pay for things has to come from somewhere, and Strathmore town council is trying to find a few extra dollars by increasing electric and gas franchise fees.
“This evening we are considering both the franchise fees for electricity and the next item is for natural gas. Included in the town budget and the long term budget plan, there was provision to adjust the fees,” said Mel Tiede, director of corporate services at the Jan. 25 town council meeting.
A franchise fee is paid by a utility company to a municipality to use their right-of-ways to install pipes, lines, poles and other infrastructure. The utility company passes those increases on to its consumers, collects it and turns it over to the municipality for use. The fees are usually a flat fee or based on consumption. A formula set out in the Municipal Government Act is used to calculate franchise fees.
“All provincial funded institutions, such as schools and seniors lodges, pay no property tax. Franchise fees are the only source of revenue from those provincially funded institutions. Those institutions make up about 10 per cent of all the properties in the town,” said Tiede. “Churches and libraries also fall in that category, but they only form a small portion of the provincially funded institutions.”
Tiede said the current 10 per cent fee has raised $663,500 in 2016. By raising the electric rate to 13.52 per cent and the gas to 17.22 per cent, it places Strathmore rates about mid-range to other communities in Alberta. High River currently has a 20 per cent electric franchise fee and Airdrie has a 32.1 gas franchise fee.
Tiede anticipates the raise will cost about $2.37 extra a month on electric bills, based on an approximate 625 kW usage monthly, which is average for Albertans. The gas bill will increase about $2.63 a month, based on about 320 gigajoules use per year. Tiede said the goal was to keep the increase for both under $5 per resident per month.
The increase will generate another $140,500 for municipal coffers, and will take effect April 1, 2017.
If the fees were not charged, the shortfall would need to come from town reserve funds.
“With the Town of Strathmore being able to keep property taxes low in the last few years, and that provincially funded institutions and schools are paying no property taxes, this is a way to generate funds for much needed projects,” said town Coun. Pat Fule.”If we are going to move forward as a community, we can’t continue to have zero property tax increases. At some point we have to generate revenue. This is more equitable because it covers institutions and lodges that don’t pay property tax.”