The Alberta government is stepping in to stop Calgary residents from being forced to pay hefty surcharges on their power bills. Utilities Minister Nathan Neudorf is sworn into cabinet in Edmonton, Friday, June 9, 2023. THE CANADIAN PRESS/Jason Franson
EDMONTON – The Alberta government is stepping in to stop Calgary residents from being forced to pay hefty surcharges on their power bills.
Utilities Minister Nathan Neudorf introduced a bill Monday that, if passed, would ban cities from using variable rates to calculate local access fees on power bills starting in the new year.
Local access fees are charged to power companies in lieu of property taxes. Calgary’s fees rise and fall with the price of electricity, while other municipalities have a fixed rate or some other formula.
As a result, Calgary took in $186 million more than expected last year from the fees. Residents paid about $240 on average – three times the fees Edmonton residents paid.
“It is unacceptable for municipalities to be raking in hundreds of millions of dollars of surplus revenue off the backs of Albertans by tying their fees to that variable rate,” said Neudorf, who called the unexpected windfall a “slush fund” for city hall.
Calgary city council had agreed to change how it calculates the fees to make them more affordable, but it’s not set to take effect until 2027.
Neudorf said Calgarians need relief sooner and the proposed legislation would also prevent copycat fees from other municipalities.
“(The bill) would prevent municipalities from attempting to take advantage of Alberta ratepayers in the future,” he said. He added that while power prices are trending downward, it’s difficult to predict what they will be in the long-term.
Neudorf said he warned Calgary Mayor Jyoti Gondek last fall that if council didn’t take action on the cost of the fees, the province would intervene.
He said out of $329 million in provincial utility rebates that went out to Calgarians last year, some $200 million, or 60 per cent, was passed onto the city, unintentionally padding the city’s surplus.
Gondek, in a statement later Monday, said the bill explicitly targets Calgary after council already started work to change the local access fees.
“It’s nice that the province is finally paying attention to this,” said Gondek, adding changes to the fees are governed by the Alberta Utilities Commission.
“The (commission) is the reason council couldn’t just flip a switch and make a change to the fees,” she said.
The United Conservative Party government’s move to more urgently address high power bills in Calgary comes after it delayed a personal tax cut promised in last year’s election campaign.
Premier Danielle Smith said her government is committed to a timeline for the tax cut.
“If anything changes and we’re able to accelerate it, we certainly will. But the first part of the tax cut will be implemented in 2026, and then fully implemented in 2027.”
Opposition New Democrat utilities critic Nagwan Al-Guneid said in a statement the government’s proposed legislation is 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 (default Regulated Rate Option),” said Al-Guneid.
The proposed legislation would also force providers to change the name of the Regulated Rate Option to the Rate of Last Resort, a rebrand the government announced last week to discourage Albertans from signing up for monthly rates that can be volatile.
The bill doesn’t dictate the exact charges consumers would see on their utility bills, but it would require municipalities to justify their fees and get approval from the Alberta Utilities Commission.
This report by The Canadian Press was first published April 22, 2024.
