Minimal increase for residents on ATCO gas bills to help offset large revenue loss

 

 

At a recent Policies and Priorities meeting the board recommended that council raise the ATCO Gas Franchise fee rate to make up for a loss in revenue in 2018 due to an issue between ATCO and the Alberta Utilities Commission. ATCO took part in a performance regulation program which lasted five years, and at its completion did its first review which resulted in a lowering of the rate by 13 per cent. This resulted in a revenue loss of roughly $90,000 to the Town of Whitecourt.

The franchise fee rate was originally set to increase to 22.5 per cent as part of the five-year plan approved by council at the March 27, 2017 regular meeting which shows minimal increases each year. During the meeting the board also asked if administration could provide council with a breakdown of the rate increases should they choose to spread the increase out over a few years to make up for the loss rather than doing it within one year.

At the regular council meeting on Monday, September 24 council reviewed the recommendation by the Policies and Priorities Board and reviewed the breakdown provided by administration. The options were to leave the rates as they sit within the five-year plan already approved by council and make up for the loss elsewhere in the budget process, increase the rate for one year to immediately make up for the loss, or recouping the loss in revenue over several years by increasing the rates in smaller increments. The third option would allow council to change the rates again in 2020 to reflect any increase in revenue that occurred which could potentially lower rates.

“If you were to do it over the four years remaining on the five-year rate plan, and we’re looking to recover roughly $90,000 which is about $22,500 each year, you would see the rates go to 23.26 per cent for next year, 24.03 per cent for 2020, 24.86 per cent for 2021 and 25.72 per cent for 2022. When you compare that to the original plan they are quite close. You’re going up less than a per cent each year,” explained Judy Barney, Director of Corporate Services.

“So, if we had a really cold winter with lots of revenue for the following three years, could we lower it a little bit?” asked Councillor Pickard to which Barney said that it was an option. Councillor Hilts was the lone descending vote at the Policies and Priorities meeting when the board originally made the recommendation to council and he continued his dissent at the council meeting. “I’m conflicted on supporting a motion to increase them. We did have a surplus last year and I’m not convinced that we don’t have space in our reserves or our financials to make up for a $90,000 shortfall.”

Mayor Chichak responded. “I know we had a surplus last year, but I’ve also sat at this table when we’ve had a deficit so it’s not always a given. I think we need to look at things holistically as opposed to isolated. It is a small portion of our budget but holistically when we look at it we don’t know in 2019 where we are going to be with some of our agreements with the county, or where we will be with government funding from the province. If there are opportunities whether it’s the over/under fee or the gradual increase, I think we have to always ensure that the revenue stream that we projected is maintained and $90,000 is a lot to absorb.”

Councillor Schlosser said that though he doesn’t like fee increases he does appreciate being able to plan and know what the increases will be going forward. “Unfortunately, the municipality becomes where the rubber meets the road. Everybody says that minimum wage is going up and gas is going up and my wage in the last eight years has stayed the same. Then the municipality says that we shouldn’t raise taxes but then where does the buck stop? It usually stops at us and, unfortunately, that’s a $90,000 shortfall that we might not be able to make up. However, with a five-year plan we can say to our residents that this is the gradual increase that may occur, this is the worst-case scenario, and I like that idea with it being over the next four years rather than in one.”

Councillor Chauvet made a motion to accept the recommendation from the Policies and Priorities Board to increase the fee for one year at a rate of 25.5 per cent but the motion was defeated. Councillor Schlosser then put through a motion to spread the increase out over four years and it passed unanimously. Residents will see an annual increase of $13.24 on their gas bills.