St. Albert’s new user fee for electricity will enter its second year in January with a 50-per-cent bump to the amount residents will pay.
Last year, St. Albert city council introduced an electrical franchise fee to help offset property taxes, starting at five per cent of transmission and distribution costs and increasing for two consecutive years until it reaches 10 per cent.
On Jan. 1, the fee will become 7.5 per cent, an increase which is equivalent to offsetting a one-per-cent tax increase, city administration said during a city council meeting last week.
When council was deliberating introducing the fee last year, administration said the electrical franchise fee would help bring in revenue from areas that do not typically pay property taxes, such as schools, churches and non-profits.
The city predicted the new fee would raise $1.57 million in its first year, and St. Albert corporate communications manager Cory Sinclair said in an email the year-to-date actual by September was $1.27 million. New revenue in 2020 from the additional 2.5-per-cent increase is budgeted at $930,000.
St. Albert’s proposed 2020 budget includes a 2.4-per-cent property tax increase, which Coun. Sheena Hughes said is misleading. Hughes fought hard against introducing a franchise fee last year and said the fee is a way to make taxes appear more “palatable”. Rather than a 2.4-per-cent tax increase in 2020, she argued the equivalent of a 3.4-per-cent tax increase is still coming out of residents’ wallets.
“It’s made it look like it’s a lower tax increase than it really is,” she said. “Because ultimately, whether you pay for it on an electrical bill or you pay for it on a city bill, it's still going into the city coffers and out of your wallet.”
Resident Mike Killick spoke to council Monday, saying the franchise fee is just another name for a tax increase.
“The city controls it and it comes out of the same pockets of St. Albert taxpayers,” he said. “So, a franchise fee by any other name is just a tax on the ratepayers of St. Albert.”
Killick added he hopes council provides more information to residents on how increasing the fee will affect taxpayers and the city's 2020 budget.
When the franchise fee was first introduced, it received some public blowback, especially from the Catholic and Public school boards, along with the St. Albert and District Chamber of Commerce. While administration predicted the average households would only pay on average $3 more per bill in 2019, that number could be higher for businesses or schools that use a lot of electricity.
Hughes said she has not heard much feedback from residents lately, and the city has not consulted businesses on how the change has impacted them, but it would be “interesting” to do so.
A franchise fee is a fee charged by the city to a utility provider for the company's use of municipal rights-of-way. The fee is then passed on to the customer. St. Albert also has a franchise fee on natual gas of 20.3 per cent.
The Alberta Utilities Commission (AUC) sets maximum fee limits of 20 per cent for electricity and 35 per cent for gas.
