New electricity bill will force changes to Calgary's local access fees

The Alberta government is introducing changes to utility fees charged by municipalities with the aim of reducing electricity bills in Calgary.

The Utilities Affordability Statutes Amendment Act, tabled Monday in the legislature, will force Calgary to change how it calculates local access fees charged on Enmax utility bills, even though the city is already planning on making that change by 2027. 

The change would mean the province's default electricity price, the regulated rate option (RRO) that is being renamed the "rate of last resort," will no longer be allowed to be used to calculate local access fees.

The province said in a news release that municipalities that calculate local access fees like Calgary are profiting from and taking advantage of spikes in electricity prices. 

Premier Danielle Smith said she recalled trying to get the local access fees changed in 2006 when she was a lobbyist for the Canadian Federation of Independent Business.

"We tried to get it changed at that time, so it wasn't just an oversight," she said. " They knew that they were charging it this way. They knew it was a problem."

Smith said Affordability and Utilities Minister Nate Neudorf has been patient but now needs to take action. 

"They've known of this for a very long time and they chose to kick the can down the road to 2027," she said. "We don't think that's acceptable, so that's why we're making the change to have uniform policy across the province."

Calgary Mayor Jyoti Gondek said she was surprised by the province's announcement and confused at the "heavy-handed" approach toward making Calgary comply, when it's a change the city's council already voted in favour of. 

"You may remember that we made a decision to go to a quantity only model," said Gondek. "That was a decision that was approved by council on the 18th of March."

As for the province's criticism that Calgary won't make the change until 2027, Gondek said speeding up the process is out of council's hands. 

"Calgary would do it right now. The problem is our utility providers have to go to the Alberta Utilities Commission to get rid of existing contracts and put in new contracts. That all takes time and red tape. So if the minister is interested in speeding up the process for Calgary, this is fully within his jurisdiction."

The province says Calgary power users paid $240 in local access fees in 2023, compared to Edmonton customers of Epcor who paid on average $75 over that same period. The province said that as a result of the policy, Calgary collected $186 million more than expected in fees last year. 

Edmonton sets fees based on consumption but Calgary partly uses variable market rates in its calculation.  If passed, power companies could no longer use variable rates to calculate local access fees. 

Edmonton and Calgary are the only municipalities with power companies that can set rates without the approval of the Alberta Utilities Commission.

If passed, the legislation would only affect the City of Calgary. But Neudorf said the bill also put up roadblocks to other municipalities who are contemplating moving to Calgary's model.

"This is clarifying that this is not the avenue for them to seek those kinds of funds," he said. "This is about managing utility infrastructure and should be priced accordingly."

Neudorf said he and Municipal Affairs Minister Ric McIver raised concerns with Gondek in a meeting last fall. 

Nagwan Al-Guneid, the NDP Opposition critic for energy, said the UCP government removed the price cap on electricity in 2019 and the current government is now trying to lower electricity prices three years too late. 

"The UCP are essentially closing the barn door after the horses have bolted, as it will not help Albertans who have no choice but to remain on the RRO [regulated rate option]," she said in a written statement.