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Sylvan Lake Town Council opts to not increase Fortis and ATCO franchise rates

Franchise fees are charged to utility companies for the right and access to distribute commodities

Sylvan Lake Town Council has opted not to increase the franchise fees fro ATCO Gas and Fortis Alberta.

Franchise fees are charged to the utility companies by the municipality that are granted exclusive right and access to distribute their commodity within the municipal boundary

The franchise fee is then reflected on customers utility bills from gas and electricity providers.

It was the recommendation of Town administration to keep the current rates for another year.

The ATCO Gas fee rate is at 27 per cent, and the Fortis Alberta fee rate is set at 15 per cent.

Revenue collected through the utility franchise fees is used to offset the Town’s operating budget, specifically to be used for future capital budgets.

The Town’s current policy states by 2028 100 per cent of the franchise fee collected will be set aside for capital projects.

The Town expects to see $1,269196 in 2020 from the Fortis franchise fee and $968,005 from the ATCO fee.

With the fee rates staying the same, the Town projects to see $1,107,373 from ATCO Gas and $1,319,618 from Fortis Alberta.

“Fortis Alberta has proposed increases to their Distribution and Transmission rates and is awaiting approval from the Alberta Utilities Commission. Should these rate increases be approved, the Town of Sylvan Lake will see a corresponding increase in franchise fee revenue,” the report to Council states.

When compared to other municipalities in Central Alberta, such as Red Deer, Rocky Mountain House, Innisfail and Blackfalds, the average ATCO Gas franchise fee is 31.75 per cent.

However, when compared to other communities which the Town of Sylvan Lake often compares itself to, the franchise rate for ATCO is a little higher in Sylvan Lake. Other similar communities have an average franchise rate of 24 per cent.

“A 10-year natural gas franchise agreement was signed in 2015 between ATCO Gas and the Town of Sylvan Lake. Town Council approved an increase to the gas franchise fee for 2016 to 23 per cent and for 2019 to 27 per cent. These two increases are the only times the Town has increased the gas franchise fee rate since it was originally set at 20 per cent in 2004,” the report states.

The Natural Gas Franchise Agreement gives the municipality the option to adjust the franchise fee percentage annually up to a maximum of 35 per cent.

The average Fortis Alberta franchise rate in communities the Town of Sylvan Lake compares itself to is 17.2 per cent.

When looking at other municipalities in Central Alberta, such as Old, Rocky Mountain House, Lacombe, Innisfail and Blackfalds, the average franchise fee for Fortis Alberta is 14.6 per cent.

The Electric Distribution System Franchise Agreement gives the option to the municipality to adjust the franchise fee rate annually up to a maximum of 20 per cent.

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