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Preamble:
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;
Operative Clause:
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.
Member Background:
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 Background
RMA has no active resolutions directly related to this issue.
Municipal Affairs
The Municipal Government Act (MGA) allows municipalities to charge companies a fee to use municipal property to provide electricity to consumers, which the companies can then recover on customers’ electricity bills.
The MGA does not specify how municipal fees or charges under these agreements are to be disclosed when billing utility consumers and each company determines this on its own and in conjunction with standards set under the Electric Utilities Act.
Affordability and Utilities
The Billing Regulation under the Electric Utilities Act (EUA) and the Natural Gas Billing Regulation under the Gas Utilities Act (GUA) establish the minimum content required to be included in a customer’s bill as separate line items. To support transparency under these regulations, franchise fees must be included on a customer’s bill and must also include the name of the municipality that will receive the fee. Some retailers and regulated rate providers separate the municipal franchise fees and municipal taxes into two separate line items, while others bundle them into one line item. The retailers and regulated rate providers can decide how they present their bills, so long as it meets the minimum content required under the Billing Regulation and Natural Gas Billing Regulation.
Government has been reviewing franchise fees and its enabling legislation to ensure that Albertans have access to an affordable utility system. On May 16, 2024, Royal Assent was granted to Bill 19 (Utilities Affordability Statutes Amendment Act, 2024), which amends sections of the Electric Utilities Act and Gas Utilities Act to ensure that the Alberta Utilities Commission has stronger regulatory oversight on how these municipal fees are calculated and applied, ensuring Alberta ratepayer’s best interests are protected. Government is not currently considering any changes to the minimum required content required on a bill.
Development:
Municipal Affairs’ response fails to address any of the requests in the resolution, largely because the Municipal Government Act lacks any details or specifications about how municipal franchise fees should be displayed on a consumer’s utility bill; it only provides the authority to charge franchise fees.
Municipal Affairs essentially passes responsibility to the Ministry of Affordability and Utilities (AU), whose response is equally underwhelming. AU states that as long as the utility company or retailer meets the minimum requirements under s. 4 of the Natural Gas Billing Regulation, Alta Reg 185/2003, it is up to the retailer whether they choose to display the municipal taxes and franchise fees separately or as one single line item.
Neither ministry is considering any legislative amendments to the minimum content requirements for utility bills or any further steps to ensure the bills provide the correct details in a clear and transparent manner. Therefore, RMA assigns this resolution a status of Intent Not Met, and will continue to advocate for amendments to ensure municipal taxes are not misrepresented on ratepayers’ utility bills.
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