+ RMA Rural Municipalities
of Alberta

Resolution 12-04F

Natural Gas Royalties

January 1, 2004
Expiry Date:
December 1, 2007
Active Status:
Vote Results:

WHEREAS natural gas is a provincial resource owned by all Albertans;AND WHEREAS royalties are collected from the sale of natural gas for the benefit of all Albertans;AND WHEREAS Albertans are paying the current market price for natural gas;AND WHEREAS the current and projected prices of natural gas are very high relative to historic levels of demand;AND WHEREAS this puts a heavy financial burden on low-income households, recreational facilities, community facilities and agricultural producers;AND WHEREAS this effectively makes a mockery of the argument that all Albertans benefit from the ownership of this resource;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Province of Alberta to no longer collect, or rebate royalties collected from the natural gas consumed in the province for residential, agricultural, municipal and service club facility infrastructure.

Member Background:

Facts to backup resolutionRoyalties Collected – the fiscal year 2002-03 – $5.125 billion Of the total gas produced in Alberta, 85% is exported outside of the province 15% is consumed within the provinceOf that 15% 5% is used by utilities 10% is used by industries (Oilsands, Sherritt, Dow, fertilizer plants, etc.) 5% equates to 300,000,000 gigajoules annually There are 1.1 million customers in the province using the 5% (these are called core market customers).Utility customer countATCO N & S 900,000 plus customersCo-ops & municipalities 100,000 plus customersMedicine Hat 15,000 plus customersAlta Gas 60,000 plus customersThe Province collects 25% to 30% of full market value as royalties. Currently in the 1st quarter of 2004, the rate is 25%.The average early market price has been as follows: 2003 – $5.81/GJ 2002 – $5.68/GJ 2001 – $5.12/GJ 2000 – $4.27/GJRoyalties collected by government from the core customers is as follows:Year 2003 – 300,000,000 GJs x $5.81/GJ x 25% = $435,750,000.00 from utility core customers. (This does NOT include the 10% industrial class customers in the province).By withholding the royalties, the monies can be distributed to the utilities, then passed on to the core customers (you and I) as a tax rebate. This is perfectly legal within the NAFTA agreement. It would be considered a complete flow-through program.The rebates being paid in 2003 and 2004 don’t even come close to the royalties being collected under the current Act that is in place for a further two years.For further information facts go to the Alberta Energy website at www.energy.gov.ab.ca/Average annual customer consumption is approximately 200 GJ’s annually for one house. – 200 GJ’s x $5.81 x 25% = $290.50 annual savings to a core customerHall or school consumes 1000+ GJ’s annually- 1000 GJs x $5.81 x 25% = $1,452.50 annual savings

RMA Background:

The AAMDC has three resolutions currently in effect with respect to this issue. Resolution 3-03S, endorsed at the spring 2003 convention, urges the provincial government to put in place a natural gas rebate program for municipalities and Albertans to offset the high cost of natural gas.Resolution 18-01S, endorsed at the spring 2001 convention, urges the provincial government to remove the taxes and royalties charged on farm fuels and fuels used in the production of farm products such as fertilizers or chemicals.Resolution 17-01S, also endorsed at the spring 2001 convention, urges the provincial government to examine alternatives and develop a long-term action plan to alleviate and eliminate the high cost of energy for Albertans.

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