Bill 203: The Municipal Government (Local Access and Franchise Fees) Amendment Act, 2010
The City of Calgary strongly recommends the provincial Standing Committee on Community Services not proceed with Bill 203 – Municipal Government (Local Access and Franchise Fees) Amendment Act, 2010.
Bill 203 is proposing sweeping changes to the Municipal Government Act regarding the rules for how consumers are charged for gas and power.
For decades, the province has given municipalities the flexibility to determine what revenue sources could be used to provide municipal services, under Section 360 of the Municipal Government Act (MGA). This is why the MGA gives each municipality the flexibility to determine what revenue mix best enables them to deliver quality public service and to remain competitive.
Bill 203's proposed "one-size-fits-all" approach to franchise fees fails to recognize the complexity and diversity of Alberta's municipalities, and essentially erodes municipal authority to regulate and manage revenues. Municipalities need to continue to have the flexibility to determine the franchise fee methodology that best enables them to deliver quality public services and to remain competitive.
The standardized methodology of Bill 203 represents a change to the franchise fee rate design. The proposal ignores customer differences by imposing a single methodology for all, which may result in the redistribution of costs between different customer classes.
The Bill could restrict use of one of the traditional sources of revenue for municipalities which would negatively impact the ability of local governments to deliver service. If approved, the Bill may well have a number of negative implications for consumers, utilities and even the province, which could:
- Result in increased costs due to the need to re-write about 400 franchise fee agreements in Alberta.
- Shift the financial burden between industry and residential customers.
- Reduce revenue and impact The City's ability to deliver quality public service. A shortfall in revenue from franchise fees would have to be addressed through increases in property taxes and user fees, or cuts to infrastructure investments or service levels.
The City of Calgary is not alone in its concerns about the negative impacts of Bill 203. In fact, The City is working with the Alberta Urban Municipalities Association and cities across Alberta to prevent the passage of Bill 203.
Corporate Tax & Regulatory Affairs