Alberta said Calgarians paid about $240 in local access fees in 2023, compared with an average of about $75 in Edmonton, where fees reflect consumption.Jeff McIntosh/The Globe and Mail
Alberta Premier Danielle Smith plans to axe the formula Calgary uses to bill businesses and residents for delivery of electricity and natural gas, a provincial measure made in the name of affordability and at the expense of municipal independence.
The government on Monday tabled legislation that would limit the way city-owned utility companies, such as Calgary’s Enmax and Edmonton’s Epcor, calculate local access fees for electricity and natural gas. The United Conservative Party intends to make the changes by amending the Municipal Government Act, which gives the province authority over local governments.
Ms. Smith is increasingly exerting power over municipalities, especially Calgary and Edmonton, as part of her jurisdictional scrap with Ottawa. She also argues she has a duty, as Premier, to step into municipal affairs when she feels local politicians are not acting in the best interest of Albertans. While she is fiercely defensive of Alberta’s territory when it comes to perceived meddling or overreach from the federal government, she counters that municipalities exist thanks to provincial legislation and are therefore under her purview.
Local access fees vary across the province and Calgary’s fluctuates depending on market forecasts. In turn, it has provided recent windfalls thanks to soaring electricity prices. Calgary’s calculation is based, in part, on the regulated rate option, which is the projected market price of next month’s electricity. The Alberta Utilities Commission approves the RRO.
Alberta said Calgarians paid about $240 in local access fees in 2023, compared with an average of about $75 in Edmonton, where fees reflect consumption. Calgary, the province said, collected $186-million more in local access fees than budgeted by basing fees on the RRO.
“It is a bit of a Wild West situation,” Ms. Smith told reporters before tabling the proposal.
The government, she said, will end variable rates for local access fees. The province also proposed giving the Alberta Utilities Commission oversight over the methods municipally owned utility companies use to set local access fees. Municipalities will still have wiggle room to adjust fees to recover money to pay for the necessary infrastructure, the government said.
Calgary was already considering revising its fee structure. Council, in March, directed city bureaucrats to design a “quantity only” system for local access fees. The city’s timeline calls for the new system to be implemented Jan. 1, 2027.
Nathan Neudorf, the Minister of Affordability and Utilities, in a press conference said Calgary is treating local access fees like a “slush fund” and is not moving fast enough to lower fees. He said he met with Calgary Mayor Jyoti Gondek last fall and warned that if the city did not move quickly, Alberta would be “forced” to intervene.
“We felt that we needed to act much more quickly,” Mr. Neudorf said, noting the changes would kick in next year.
Ms. Gondek said she was the one who communicated the need for urgency when meeting with the province last year. The mayor, in a statement, said local access fees are governed by the Alberta Utilities Commission, under Mr. Neudorf’s watch.
“The AUC is the reason council couldn’t just flip a switch and make a change to the fees,” Ms. Gondek said. “This bill explicitly targets Calgary after we as a council already have the work underway to change the local access fees.”
Mr. Neudorf said it took aim at Calgary’s fees because other municipalities were considering copying the city’s method in order to rake in extra revenue. When pressed, he refused to reveal which municipalities were weighing that idea.
Alberta last week proposed changing the name of the RRO to the rate of last resort. The government also plans to let retailers purchase power two years out, compared with the current three-month restriction. This, Alberta said, will provide stability to the RRO, which is often the only rate available to consumers with poor credit. The RRO will still be set monthly, but the government expects price volatility to settle given the two-year hedging window. The RRO is applied when customers do not sign other rate contracts.
Ms. Smith on April 10 introduced legislation designed to prevent municipalities from striking funding deals directly with Ottawa without provincial consent. The United Conservative Party tabled the bill in response to Calgary negotiating for federal cash for housing and related infrastructure. Ms. Smith accused the federal government of using the money to push municipalities to change their zoning bylaws to reflect Ottawa’s preference for greater density.
Ms. Gondek, in turn, said Calgary would continue to chase federal support given the city is in a housing crunch.