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By rdnewsNOW staff

Alberta

Province aiming to make utility bills more affordable

Apr 24, 2024 | 6:27 PM

Alberta’s government says it is taking action to protect Alberta’s ratepayers by introducing legislation to lower and stabilize local access fees.

Provincial officials say affordability is a top priority for Alberta’s government, with the cost of utilities being a large focus. By introducing legislation to help reduce the cost of utility bills, the government says it is continuing to follow through on its commitment to make life more affordable for Albertans. This is said to be in addition to the new short-term measures to prevent spikes in electricity prices and help ensure long-term affordability for Albertans’ basic household expenses.

“Albertans need relief from high electricity costs and we can provide that relief by bringing in fairness on local access fees,” explains Danielle Smith, Premier of Alberta. “We will not allow municipalities – including the city of Calgary – to profit off of unpredictable spikes in electricity costs while families struggle to make ends meet. We will protect Alberta families from the extreme swings of electricity costs by standardizing the calculations of local access fees across the province.”

The government says local access fees are functioning as a regressive municipal tax that consumers pay on their utility bills. Provincial officials say it is unacceptable for municipalities to be raking in hundreds of millions in surplus revenue off the backs of Alberta’s ratepayers and cause their utility bills to be unpredictable costs by tying their fees to a variable rate.

The government says Calgarians paid $240 in local access fees on average in 2023, compared to the $75 on average in Edmonton, due to Calgary’s formula relying on a variable rate. The government says this led to $186 million more in fees being collected by the City of Calgary than expected.

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“Albertans deserve to have fair and predictable utility bills,” adds Nathan Neudorf, Minister of Affordability and Utilities. “Our government is listening to Albertans and taking action to address unaffordable fees on power bills. By introducing this legislation, we are taking yet another step towards ensuring our electricity grid is affordable, reliable, and sustainable for generations to come.”

To protect Alberta’s ratepayers, the Government of Alberta says it is introducing the Utilities Affordability Statutes Amendment Act, 2024. If passed, officials suggest this legislation would promote long-term affordability and predictability for utility bills by prohibiting the use of variable rates when calculating municipalities’ local access fees.

The government says variable rates are highly volatile, which results in wildly fluctuating electricity bills. When municipalities use this rate to calculate their local access fees, officials say it results in higher bills for Albertans and less certainty in families’ budgets. The province says these proposed changes would standardize how municipal fees are calculated across the province, and align with most municipalities’ current formulas.

“Over the last couple of years many consumers have been frustrated with volatile Regulated Rate Option (RRO) prices which dramatically impacted their utility bills,” explains Chris Hunt, Utilities Consumer Advocate. “In some cases, these impacts were further amplified by local access fees that relied upon calculations that included those same volatile RRO prices. These proposed changes provide more clarity and stability for consumers, protecting them from volatility in electricity markets.”

If passed, the government says the Utilities Affordability Statutes Amendment Act, 2024 would prevent municipalities from attempting to take advantage of Alberta’s ratepayers in the future. Officials say it would amend sections of the Electric Utilities Act and Gas Utilities Act to ensure that the Alberta Utilities Commission has stronger regulatory oversight on how these municipal fees are calculated and applied, ensuring Alberta ratepayer’s best interests are protected.

“Addressing high, unpredictable fees on utility bills is an important step in making life more affordable for Albertans,” states Chantelle de Jonge, Parliamentary Secretary for Affordability and Utilities. “This legislation will protect Alberta’s ratepayers from spikes in electricity prices and ensures fairness in local access fees.”

If passed, the government says this legislation would also amend sections of the Alberta Utilities Commission Act, the Electric Utilities Act, Government Organizations Act and the Regulated Rate Option Stability Act to replace the terms “Regulated Rate Option”, “RRO”, and “Regulated Rate Provider” with “Rate of Last Resort” and “Rate of Last Resort Provider” as applicable.

Alberta government quick facts

• Local access fees are essentially taxes that are charged to electricity distributors by municipalities. These fees are then passed on to all of the distributor’s customers in the municipality, and appear as a line item on their utility bills.
• The Municipal Government Act grants municipalities the authority to charge, amend, or cap franchise and local access fees.
• Linear taxes and franchise fees are usually combined together on consumers’ power bills in one line item as the local access fee.
• The linear tax is charged to the utility for the right to use the municipality’s property for the construction, operation, and extension of the utility.
• The franchise fee is the charge paid by the utility to the municipality for the exclusive right to provide service in the municipality.
• Local access fees are usually calculated in one of two ways:
• (1) A percentage of transmission and distribution (delivery) costs, typically 10-15 per cent.
• (2) A fixed, cents per kilowatt-hour of consumed power charge (City of Edmonton).
• Calgary is the only municipality that employs a two-part fee calculation formula:
• 11.11 per cent of transmission and distribution charges plus 11.11 per cent of the Regulated Rate Option multiplied by the consumed megawatt hours.