Council yesterday set the 2018 natural gas franchise fee for the City of Lacombe at the current rate of 22% of total revenues derived from ATCO Gas’s delivery tariff, and the 2018 electrical franchise fee at the current rate of 6.2% of total revenues derived from FortisAlberta’s delivery tariff for electricity within corporate boundaries.
“Following a review of the better-than-expected revenue forecasts received from ATCO Gas and FortisAlberta and a survey of other Alberta municipalities, council has voted to maintain the current fee structure for utility franchise fees,” said Mayor Steve Christie. “This decision allows the City to remain in the middle of the pack among municipalities.”
Based on the 2018 forecast from ATCO, the City would generate $739,216 in revenue for 2018. The 2017 budget was 712,384 and revenues are projected to exceed $730,000. As weather can impact total revenue, the 2018 forecast may be revised further in the year depending on actual revenues.
Based on the 2017 forecast from FortisAlberta, the City would generate $451,258 in revenue for 2018. The 2017 projected revenue is expected to reach $429,695 (compared to a budget of $420,862). The 2018 difference of $21,563 is an increase of 5% over 2017 projections. The 2018 forecast may be revised further in the year depending on actual revenue growth for Fortis. The franchise fee impact on a typical residential customer will be an additional $0.18 per month or $2.16 per annum for 2018.
The City of Lacombe and ATCO Gas are currently in the second full year (2017) of the 10-year agreement first entered into in 2015. The franchise agreement permits ATCO Gas to be sole distributor of natural gas within the corporate boundaries. In exchange for granting the franchise and providing the use of its municipal rights of way and roadways for ATCO distribution lines, the City receives compensation from ATCO Gas.
The City of Lacombe and Fortis Alberta are currently in the fourth year of a 10-year agreement. The franchise agreement permits Fortis Alberta to be the sole distributor of electricity within the corporate boundaries. In exchange for granting the franchise and providing the use of its municipal rights of way and roadways for Fortis’s distribution lines, the City receives compensation from Fortis Alberta.
The rates have not changed since 2004 when the previous agreements were signed. The agreements have resulted in more predictable and generally lower franchise fees collected by the City, which are ultimately paid by local utility customers.
Revenue growth in franchise fees is generated by increases in the customer base and the rates charged by ATCO Gas and FortisAlberta.