Town sets electricity franchise fee cap at 5 per cent

September 5, 2001

Town sets electricity franchise fee cap at 5 per cent

by Richard Westlund

Town of Didsbury Councillors have opened a door that may see Town residents pay a franchise fee on the electricity they buy.

Council, in a 5-2 vote at last week's council meeting, allowed for up to a five per cent fee that would be visible on a residents' bills and would go exclusively to the Town of Didsbury.

For the 2002 year, however, Council decided not to implement a franchise fee.

Councillor Gary Dolha, who voted against the five per cent cap along with Councillor Don Watt, said that by setting a cap another tax could be levied against local residents in the future.

"We are giving future councils a tool to apply another tax. And then they are going to have to pay GST on top of that tax.

"Do we want to add that potential?"

Council had to make a decision on a cap in order to move along the process of completing a deal with Utilicorp about the delivery of electricity to Didsbury. Utilicorp would handle the processing and organization of a franchise fee and would send the money to the Town.

"We are the administrators of this," said Dwayne Mack on behalf of Utilicorp at the meeting.

"We are indifferent on whether municipalities choose to have this or not."

Mack said often when he attended municipal meetings he is asked what others were doing in the way of franchise fees.

He said the highest cap he has seen is 25 per cent and the lowest is a zero per cent cap.

Mack said the municipalities that implemented a zero per cent franchise fee cap did so to assure their taxpayers there would be no new tax over the terms of the agreement.

The Town of Didsbury will have the power to change the franchise fee rate on an annual basis.

Town CAO Evan Parliament said the Town already collects a franchise fee on natural gas that is sold through ATCO. He said the amount of money that the fee brought to the Town was significant.

"From an administration point of view it gives us a sizable cheque," said Parliament who said that when a new subdivision is established the Town pays some for the costs associated with bringing electricity to the area.

"It already costs to bring electricity to a subdivision. It depends on how you look at the issue."

Parliament explained to Council they could impose a franchise fee and put the money in a special reserve that would pay for appropriate issues.

"I wouldn't recommend collecting a franchise fee for a new arena or Zamboni," he said.

Dolha asked why the contract being discussed with the municipality had to be a ten-year agreement.

Mack answered that Utilicorp was seeking a 20 year deal while the AMUA, which regulates the monopoly company, was seeking a five year agreement.

He said utilicorp needed a term long enough that it would make a positive impact on the company's credit rating.

In addition to setting a cap for franchise fees at the Aug. 29 meeting, Town Council also passed first reading of the necessary bylaw that accompanies the deal.