Cypress County is examining whether it should add franchise fees to utility bills.
cgallant@medicinehatnews.com @CollinGallant
City of Medicine Hat utility customers will be charged an additional fee next year, and now administrators in Cypress County are examining whether they, too, should add franchise fees not currently billed.
In early July, city councillors agreed to a basic budget plan that would see new revenue arrive via a consent and access fee charged by city hall to its own utility company, then recovered from customers.
Commonly known as a franchise fee, it is applied widely in other municipalities that have private or semi-public utility firms operating.
Fees set in a municipality can only be charged to accounts in that municipality, meaning only Hatters would pay the rate set by Medicine Hat.
Councillors in Cypress County — which doesn’t charge an access fee to city utility or others — heard at their late July meeting that something similar could provide a new revenue source.
They voted to postpone a decision until after a county budget plan is completed later this autumn. Reeve Richard Oster tells the News the issue is complex, considering ratepayers are also taxpayers and see revenue as coming from and going to the same place.
“We’re going to have a harder look at it in the fall,” he said.
“We would have to do it for everyone (utility company),” said Oster. “If we’re going to do it, then we better have a good justification.”
The county similarly doesn’t have franchise fee agreements in place with AltaGas or Equs power, which delivers utility service to rural and hamlet customers often on county rights of way.
According to an analysis by county staff, an agreement with the city alone could raise $37,700 in additional revenue next year, assuming the same rates as the City of Medicine Hat. It would grow to $113,125 annually in 2021 as rates are scaled up.
Medicine Hat city councillors approved a scaled-back MCAF fee in early July that would raise $1 million in revenue next year, increasing to $3 million in 2021 as rates rise to about one-quarter what other cities charge. In 2022, the charge itself is to be re-examined as the city seeks ways to fill an budget gap that currently sits at $16 million annually.
The city’s utility department says the fee won’t be applied to out-of-town customers due to its nature, meaning regional customers won’t face stacked fees.
“MCAF won’t be stretching extend to our entire service area,” said Rochelle Pancoast, general manager of city utility business support. “The fee that council has approved will be applied only to customers in the municipality (of Medicine Hat).”
Redcliff town manager Arlos Croft tells the News the town doesn’t charge a franchise fee for either CMH gas or power lines that enter the town, but didn’t immediately know the reason why.
The City of Medicine Hat utility took over natural gas supply agreements in the town in 1986 by purchasing the town’s former publicly owned utility, known as Redgas.
The relationship however, has included some strife. In 2007, the town unsuccessfully sued the city utility stating its rate setting disadvantaged its residents compared to city dwellers.
