Council authorized Administration to proceed with a franchise agreement between The City of Calgary and ATCO Gas and Pipelines Ltd., readying it for an application to the Alberta Utilities Commission (AUC).
This new agreement enhances the stability and transparency of the franchise fee for Calgarians by changing the variable cost of gas to a fixed rate within the current franchise fee calculation. Additionally, it outlines a timeline to transition the franchise fee calculation to a quantity only model.
Since The City’s franchise fee is currently linked to natural gas commodity prices, which is very low in 2024, the natural gas franchise fee for the average residential consumer is expected to rise by $1.08 per month in 2025 or a 1.5 per cent increase on the total bill. However, residential customers can still expect to pay less in combined franchise fees for both electricity and natural gas in 2025, as The City estimates the electricity franchise fee to decrease by $3.33 per month in 2025 compared to 2024.
“With this new franchise agreement, we are eliminating the unpredictability associated with variable energy prices,” said Amit Patil, Director of Supply Management at The City of Calgary. “This change provides greater transparency and predictability for Calgarians, ensuring they won’t experience large swings in the franchise fee when natural gas prices fluctuate. Overall, Calgarians will see savings in the total franchise fees paid across both electricity and natural gas bills.”
The proposed 2025 natural gas rate is fixed at $3.15 per gigajoule for all customers. This fixed rate replaces the fluctuating Gas Cost Flow-Through Rate that is currently used and satisfies the updated requirements for franchise fee calculations outlined in the Government of Alberta’s Utilities Affordability Statutes Amendment Act, 2024.
As part of this agreement, The City and ATCO Gas and Pipelines Ltd. will transition to an updated quantity only calculation method in 2027, like the proposed model for the electricity franchise fee that is currently with the AUC for approval. At this time, the franchise fee will be calculated using only a fixed rate per gigajoule of natural gas consumed. The 2027 timeline allows for a successful implementation and transition schedule for The City and ATCO Gas and Pipelines Ltd.
The next step for ATCO Gas and Pipelines Ltd., on behalf of The City, is to apply to the AUC for approval of this new franchise fee agreement, including the franchise fee rate, by the end of November. The City anticipates receiving approval to implement the new franchise fee rate in early 2025.
A Public Notice period is being held Oct. 31 to Nov. 20 to gather feedback from Calgarians about this proposed change. This feedback will be included as part of the application to the AUC.
For more information on franchise fees and to provide feedback on the changes we’re making, visit calgary.ca/franchisefeeupdate.
