WHEREAS several public utility companies, including those that deliver electricity and natural gas services, provide distribution service throughout the province; and
WHEREAS these companies may have an agreement in place with a municipality where a municipality may grant the exclusive right to a utility distribution company to provide services to the municipality through a franchise agreement; and
WHEREAS in such cases, the municipality charges the distribution company a franchise fee for the exclusive right to serve utilities; and
WHEREAS the charges listed in franchise agreements are referred to as local access fees or municipal franchise fees on customer invoices; and
WHEREAS if a franchise agreement is in place, the franchise fees are collected by the retailer on behalf of the distributor, who then forwards the funds to the municipality; and
WHEREAS the provisions and requirements of franchise fees are found in section 45 of the Municipal Government Act (MGA); and
WHEREAS some utility companies list a municipal franchise fee on invoices even when a franchise agreement is not in place; and
WHEREAS in many such cases, the fees listed as “municipal franchise fees” correspond to the allocation of municipal taxes paid by the utility company; and
WHEREAS this has the affect of misrepresenting municipal taxes as municipal franchise fees;
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate that the Government of Alberta require all public utility providers, including those delivering electricity and gas, to list all fees and charges implemented by the distributor accurately, including municipal taxes and municipal franchise fees.
In late February, Leduc County became aware of an issue related to municipal franchise fees. Leduc County was asked about a municipal franchise fee listed on a resident’s natural gas utility bill. The resident inquired what Leduc County did with the fees collected. Leduc County does not have a franchise agreement in place with any utility companies, and investigated why the resident was being charged a municipal franchise fee.
When residents and business owners receive municipal invoices, such as utility bills or tax notices, municipalities endeavour to be transparent, accountable and accurate, which makes this issue of misrepresented municipal franchise fees especially concerning.
During the County’s investigation, 60 per cent of the bills reviewed had taxes misrepresented as franchise fees. Understanding there are potentially hundreds of natural gas retailers in Alberta, it is not feasible for Leduc County to approach all of them to have this corrected.
This is also an issue that extends past our municipal borders, affecting other municipalities without franchise agreements in place. It is assumed that these companies and many more are operating in the province without franchise agreements in place and are likely misrepresenting municipal taxes as franchise fees on their invoices.
Please see attached a copy of an invoice as an example.
RMA Background
RMA has no active resolutions directly related to this issue.