ATHABASCA – It's that time of year again, when councils everywhere decide to set the franchise fees that will be collected by utility companies and paid to the municipality.
Athabasca town council approved two motions at the Oct. 4 regular meeting, following recommendations from chief financial officer Jeff Dalley to increase the fees collected on the town’s behalf by Apex and Fortis by two per cent each, identical actions to those taken by council in 2021.
The Apex franchise fee now sits at 16 per cent and will increase the average gas bill up by $19.12 over the year once implemented in January 2023, Dalley told council. Overall, that fee is estimated to generate $249,780 for 2022, which is about $9,780 more than budgeted.
The two per cent increase will provide the town with $36,000 in revenue, he noted.
“For Apex, we can go up to, theoretically, 35 per cent of the fee,” Dalley said, adding he would like to see it at 20 per cent in a phased-in approach over the next several years.
“With those companies that don't pay property tax, for example, those that are public and are tax-exempt, raising franchise fees or utilities such as water and sewer, we would gain revenue from those, whereas, if we just increase property taxes you don’t get the same revenue from the tax-exempt properties,” he said.
Deputy mayor Sara Graling asked Dalley to clarify his strategy to get the fees to 20 per cent.
“I understand that these fees allow us to get revenues coming into the town that are not assessment-based,” she said, with Dalley interjecting it was his strategy as opposed to that of council. “When I hear that from you, we start to operate on building that capacity, and then you lose that flexibility.”
Dalley responded that many municipalities have taken to raising franchise fees for a little extra revenue that doesn’t involve raising property taxes.
“This is just another strategy that we can get revenue. In a small town with a small tax base there is no other way for us to get revenues. As you’re aware, everything is increasing. So, if everything is increasing, we’ve either got to decrease our services, or we have to find other ways to get revenue,” he said.
A second motion to increase the Fortis franchise fee by two per cent was also approved for 2023, bringing it to 16 per cent, after it was also increased by two per cent at this time last year. This franchise fee can be raised as high as 20 per cent.
Dalley said the increase will see an average consumer’s bill rise by $20.89 over the course of a year.
Based on estimated delivery revenues for the year, he said, each percentage increase will bring in an additional $29,595 for the town. Expected revenues from the Fortis franchise fee are estimated to reach $397,408, about $16,952 under the budget.
