A tweak to the power and gas franchise fees incoming for 2024

At the end of October, Whitecourt Town Council reviewed the community’s franchise fees for gas and
power. Franchise fees are charges paid by a utility company to a municipality in exchange for the right to
exclusively provide a service, in this case, gas and power. Fortis Alberta and ACTO Gas, the utility
providers, can then recover that cost through their users. The fees are calculated as a percentage of the
distribution charges, and both have provincial caps: 20 percent for electrical and 35 percent for natural
gas.
Town Council reviews the fees charged for the delivery of electricity and gas each year and can change
them, if deemed necessary, by altering their franchise agreements. The Alberta Utilities Commission is
then tasked to approve or not approve the contracts. Both Fortis Alberta and ACTO Gas required a
decision from the Town Council before November 1, 2023, as to whether the franchise fee rates would
be changing.
Through 2023, the franchise fee for power was 3.91 percent, and the fee for gas was 27.17 percent.
Both are in year three of a five-year plan adopted by the council in 2020, which forecasts the fee
revenue and expected community growth using specific calculators provided by each utility provider.
Franchise fee revenue is based on the rate used by the Town of Whitecourt, applied to the delivery of
both utilities. For gas, rates approved by the Alberta Utilities Commission resulted in lower delivery
revenues. Combining that with lower gas consumption than forecasted due to a warmer winter resulted
in a significant shortfall in revenue for the Town of Whitecourt.
From the gas franchise fee, the shortfall was $110,000, while the power shortfall was approximately
$48,000, combining for a nearly $160,000 loss. Town administration recommended that the council
increase both rates enough to cover the losses, making up for the previous year and covering the
expected usage and growth for 2024.
The power franchise fee was recommended to rise from 3.91 percent to 4.47 percent, while the gas
franchise fee was recommended to increase from 27.17 percent to 33.55 percent, nearing the cap (35
percent). As to what that might look like for residents’ bills, the average resident would see an increase
of $3.11/month on their gas bill, and a small non-residential customer would see an increase of
$10.45/month.
For power, the increase is much smaller. The average resident will see an increase of .61 cents per
month, and a non-residential customer will increase by approximately $2.59/month. For a resident,
when combined, it works out to just under $45 for the year.
Tax-exempt businesses and organizations that do not pay municipal taxes do pay their share of franchise
fees, which account for roughly twelve percent of the pot. “If we didn’t do this, then 88 percent of our
population would pay 100 percent of that amount (municipal taxes), and the exempt companies and
businesses would not pay anything more,” commented Mayor Tom Pickard. After weighing the
proposed increases, Whitecourt Town Council voted to approve them.
Regarding the cost of living for Whitecourt residents, the Town provided a chart of thirteen comparable
communities stacked up against Whitecourt. Municipal taxes and franchise fees were combined to show

the average yearly cost of living in each municipality. The communities used to compare against were
Hinton, High River, Edson, Drayton Valley, Cold Lake, Morinville, Drumheller, Lacombe, Rocky Mountain
House, Slave Lake, Grande Prairie, Peace River, and Wetaskiwin.
Communities were compared for total annual charges to residents and non-residents and listed from
least expensive to most. The top three municipalities for resident affordability were Hinton, High River,
and Whitecourt. The top three most costly communities for residents were Wetaskiwin, Peace River,
and Grande Prairie. For non-resident payers, Whitecourt sits fifth on the list, under High River, Hinton,
Morinville, and Lacombe. The same three higher-costing communities listed above in the residential
column remained the same for non-residential.
If one only looks at the franchise fees, one will see that Whitecourt’s gas franchise fee is the highest of
all comparable communities. However, if they compare municipal taxes or the power fee, the story
changes. To get a complete picture, one need only to add all the fees together.
For example, though Grande Prairie has a much lower gas franchise fee (25 percent) than Whitecourt
(33.55 percent), Grande Prairie’s residential rates are significantly higher than Whitecourt’s, with the
average Grande Prairie resident paying $3,269 for yearly municipal taxes last year. The average
Whitecourt resident spent $2,136. Similarly, residents in Slave Lake paid an average of $3,104 in
residential taxes. Hence, Grande Prairie and Slake Lake land towards the pricier end of the chart, unlike
Whitecourt, even though one fee is much higher than theirs.
When all fees are combined (taxes and franchise fees), the average resident of Whitecourt pays
$2,373.10 yearly, and the average non-resident pays $17,959.90. The increased rates will provide the
Town of Whitecourt with just over $900,000 from the power franchise fee and nearly $1,159,000 from
the gas franchise fee. Funds can support various needs and projects that benefit the community.