Province announces changes to lower utility bills in Calgary, but no relief for Edmonton customers

The Calgary skyline is seen on Friday, Sept. 15, 2017. (THE CANADIAN PRESS/Jeff McIntosh)

The Alberta government is changing existing legislation to lower utility bills in Calgary.

Electricity customers are currently charged a local access fee, which is used to compensate a municipality for the use of its property to provide electricity services.

About 200 municipalities currently charge such a fee to electricity providers, but how the municipality calculates the fee varies across the province.

The fees, which may not exceed 20 per cent of the distribution charge for electricity and 35 per cent of the distribution charge for natural gas, must be approved by the Alberta Utilities Commission (AUC) and are regulated by the Municipal Government Act.

Edmonton and Calgary both have agreements with municipally owned subsidiaries, which exempts them from needing AUC approval.

Edmonton follows a consumption-based calculation for its fees, while Calgary bases theirs partially on market rates.

As a result, Calgary customers can see fees vary wildly, depending on the price of electricity or gas.

The government says Calgarians paid an average of $240 in local access fees in 2023 compared to the $75 paid by Edmontonians during the same period.

The province plans to amend the Municipal Government Act to ensure the AUC will have oversight of all local access fees, and prevent municipalities from charging fees based on variable costs of electricity or gas.

The changes will take effect immediately.

Based on the numbers provided by the government, the average Calgarian could save $13.75 per month.

"Thanks to Calgary's formula, relying on the variable default electricity rate. This led to the City of Calgary collecting $303 million in revenue from local access fees, which is a surplus of $186 million more in these fees being collected by the city than they budgeted," said Nathan Neudorf, minister of affordability and utilities.

Staff behind the website EnergyRates.ca say Calgary's local access fee is charged at 11.11 per cent of the Regulated Rate Option (RRO) plus 11.11 per cent of transmission and distribution costs.

In the summer of 2023, there was a record-high price surge in the RRO, with rates reaching 31.858¢/kWh in August, before dropping to 26.455¢/kWh in September.

"If the price of electricity was 10 cents one month and your local access fees were $10. If the price of electricity went to 20 cents, your local access fees would be $20.

"This produced a compounding effect when your electricity bill was going up significantly because the spot price of electricity was going up, you also had significantly increased local access fees. So people in Calgary were seeing double sticker shock," said Joel MacDonald of EnergyRates.ca.

The province also announced on Friday it would change the name of the Regulated Rate Option (RRO) for electricity customers to the Rate of Last Resort.