Calgary is gearing up to implement a new model for calculating electricity and natural gas franchise fees, starting in January 2025. This shift marks a significant departure from the existing method, where fees are tied to energy prices. Here’s everything you need to know:
What Are Franchise Fees?
Franchise fees are charges applied to energy consumers by utility providers, which are then passed on to the municiplalities and in this case, the City of Calgary. These fees allow utility companies (such as ENMAX and ATCO Gas) to use municipal infrastructure, including roads and right-of-ways, to deliver electricity and natural gas to homes and businesses. Historically, the City of Calgary has calculated the franchise fees as a percentage of the energy bill, meaning they fluctuate alongside market prices.
However, this pricing model has led to unpredictable and sometimes steep changes for consumers, especially during periods of high energy prices.
What's Changing?
To create more transparency and predictability, the City of Calgary is shifting to a “quantity-only” franchise fee model. Under this new system, the franchise fee will be based on the quantity of energy consumed—measured in kilowatt-hours (kWh) for electricity and gigajoules (GJ) for natural gas—rather than being tied to the volatile prices of energy. The average monthly franchise fee for a residential electricity customer is forecast to be $7.91 a month in 2025, down 30 per cent from an estimated $11.24 a month in 2024. This change is expected to provide the following benefits:
- Predictability: Consumers will no longer have to deal with unpredictable fee spikes caused by fluctuating energy prices.
- Transparency: Fees will be directly related to household consumption, making it easier to manage and understand your energy costs.
- Encouragement of Energy Efficiency: Since fees will be consumption-based, energy-efficient households and businesses can expect to see lower costs, incentivizing reduced energy use.
How Will Households be Impacted?
For most consumers, the transition to the quantity-based model will lead to more stable and potentially lower franchise fees. For example, ENMAX electricity customers are expected to see an average 30% reduction in their franchise fees once the new model is implemented. This will be particularly beneficial for high-energy users, as the new model will allow for more control over energy expenses.
It’s important to note that the changes are still in the consultation phase, and the proposal and feedbacks gathered will be submitted to the AUC – Alberta Utility Commission.
Why the Shift?
One of the main reasons for this overhaul is the unpredictability that comes with basing fees on energy prices. Calgary residents have seen fluctuating bills in the past, particularly during times of market instability, which has created a burden for many households. By adopting the quantity-only model, Calgary aims to create a more consumer-friendly approach while promoting energy efficiency.
This change aligns well with Calgary’s long-term energy strategies, and it reflects an effort to modernize the way calgarians pay for essential utilities. By focusing on energy consumption rather than market prices, homeowners are given more control over their energy costs, as reducing energy use will directly lower their franchise fees.
What Homeowners Can Do
One of the best ways to take advantage of this new model is for homeowners to improve their home’s energy efficiency. With muvar.ca, homeowners find the most cost-effective energy plans. As we transition into this new era of franchise fees, it’s a good time to compare energy providers and their rates. Explore our energy comparison tools to find the best plans that suit your needs.
Additionally, you can make small adjustments at home, such as upgrading to energy-efficient appliances or improving insulation, to further reduce your energy consumption and save even more once the new model is in place.
Stay Informed
As Calgary moves toward this new franchise fee structure, keeping informed is key. muvar.ca will continue to provide updates on energy-related changes and how they impact your wallet. Whether you’re looking for the best electricity or natural gas plans, we’re here to help you make informed decisions.
In conclusion, while the franchise fee overhaul may seem complex, the goal is to ultimately provide fairness, stability, and transparency to all Calgary residents. Stay ahead of these changes by utilizing our comparison services to find the best energy deals that will help you reduce both your consumption and costs.
