WESTLOCK — Westlock residents will see gas and electricity bills go up in 2024 after town councillors approved a small increase to the franchise fees charged by Fortis Alberta and Apex Utilities.
In her presentation at the Oct. 10 regular council meeting, finance director Julia Seppola said administration is proposing franchise fee increases of 1.5 per cent for Fortis Alberta and two per cent for Apex Utilities Inc. That increase means Westlock residents can expect to pay on average $1.71 per month or $20.57 per year on their gas bills and $1.68 per month or $20.12 per year on their electricity bills, with combined totals at $3.39 per month or $40.69 per year for utilities.
Councillors ultimately directed administration to notify Fortis Alberta to change the electric franchise fee from 14.75 per cent to 16.25 per cent as per the electrical distribution franchise agreement and to notify Apex Utilities Inc. to change the natural gas franchise fee from 27 per cent to 29 per cent as per the natural gas distribution system franchise agreement.
“Franchise fees are calculated based on transmission and distribution collected by Fortis (Alberta) and by distribution delivery for Apex (Utilities Inc.),” said Seppola, noting that no consumers are exempt from franchise fees. “Twenty-eight per cent of our assessed value is for non-taxable, non-assessable entities like schools, hospitals and churches and they are all subject to that.”
A franchise fee is a fee the utility companies pay for being allowed to access town lands to construct, maintain and operate distribution systems. The utility companies are given the exclusive right to provide their service within Town of Westlock boundaries. Municipalities often have franchise agreements in place to generate revenue from this type of fee. Apex Utilities and Fortis Alberta are the sole providers of natural gas and electricity within the Town of Westlock.
Seppola noted the deadlines to inform Fortis Alberta and Apex Utilities as to whether or not they will change franchise fees are Nov. 1 and Nov. 15 respectively.
Increasing the franchise fees two per cent and 1.5 per cent accordingly will see the town generate an additional combined total of $138,084 in revenue.
“Administration is requesting this increase because of the particular end of our contract with the energy provider, we saw a greater than anticipated increase to our contract fee, which will be discussed in budget,” said Seppola. “That’s what this revenue will be directed towards, about 90 per cent of it will go there.”
Franchise fee revenue comes from a customer base which includes schools, churches, and provincial government, which are exempt from paying municipal tax. Seppola said by using a franchise fee to generate income from exempt community members, the burden of paying for town services is more equitable for all residents.
