Understanding franchise fees and local access fees
On your utility bills, you will see different types of fees and charges for using and delivering energy to your home or business.
The fee collected by The City is a franchise fee. It’s also called a Local Access Fee on your electricity bill. This is the only charge that is set and collected by The City on your electricity and natural gas bills.
What are franchise fees?
Franchise fees are payments we get from utility companies for letting them build, run and maintain utilities on City land. They also give utility companies the right to be the only ones providing their services in certain areas. These fees are added to utility bills and sent to The City.
Franchise fees make up a small percentage of your overall utility bill.
Why do we have franchise fees?
Franchise fees are an important factor in supporting the operating budget and help keep property taxes low. They contribute to The City’s capital budget and support new facilities, services and important maintenance, directly benefiting Calgarians.
They also allow The City to collect revenue from properties that don’t pay property tax like hospitals, schools, places of worship and nonprofits.
How are franchise fees calculated?
Franchise fees are currently calculated based on the formulas below.
Starting Jan. 1, 2025, The City is proposing that franchise fees will be calculated using the quantity only model. Learn more.
For electricity
There are two components of the franchise fee calculation for electricity:
- Distribution cost
- Amount of electricity consumed
The distribution cost is approved by the Alberta Utilities Commission. The City uses the monthly Regulated Rate Option (RRO)* on personal customer usage in calculating the franchise fee. This means the percentage of your bill attributed to franchise fees may vary. The percentage changes depending on what price you pay for electricity.
| RRO (no electrical contract) | Contract |
|---|---|
|
Cost of distribution* (approx. 50% of bill) + Consumed electricity* (approx. 25% of bill) The City charges 11.11% of the monthly RRO to calculate the Local Access Fee (franchise fee). |
If the electricity price in your contract is:
the LAF will make up a higher portion of your bill and will be more than 11.11% for the month in question.
the LAF will be equal to 11.11% for the month in question.
the LAF will make up less than 11.11% of your bill for the month in question. |
* rates are approved monthly by the Alberta Utilities Commission
For gas
There are two components of the franchise fee calculation for natural gas:
- Distribution cost
- Amount of Gas flow-through
The Gas Cost Flow-through Rate (GCFR) is applied to the customer usage component of the bill. The GCFR is approved by the Alberta Utilities Commission. The natural gas franchise fees for all consumers are based on the GCFR and collected by ATCO Gas.
| GCFR (no gas contract) | Contract |
|---|---|
|
Cost of distribution* (approx. 50% of bill) + Consumed gas flow-through* (approx. 25% of bill) The City charges the monthly GCFR, at 11.11% on the consumer's usage to calculate the franchise fee. |
If the price in your natural gas contract is
the LAF will make up a higher portion of your bill and will be more than 11.11% for the month in question.
the LAF will be equal to 11.11% for the month in question.
the LAF will make up less than 11.11% of your bill for the month in question. |
* rates are approved monthly by the Alberta Utilities Commission
Proposed changes to franchise fees
We’re updating franchise fee rates on your electricity and natural gas bills.
Looking for information on how to read your electricity and gas bills?
The Utilities Consumer Advocate (UCA) provides detailed information.
Franchise fees and your bill
Franchise fees make up a small percentage (typically less than 10%) of your utility bill.
*Adapted from the Alberta Utilities Commission
Monthly cost estimates based on a typical residential consumer’s electricity bill in Alberta. Costs will vary depending upon the distribution service area, the municipality where you live, your energy use and billing period.
Using franchise fees to support Calgarians
The Reserve for Future Capital played a crucial role in supporting projects in 2023:
FAQs
What is the difference between franchise fees and Local Access Fees?
Local Access Fees are a type of franchise fee. These fees are called Local Access Fees on electricity bills and franchise fees on natural gas bills.
How will franchise fees be collected?
Franchise fees are charged to consumers on their electricity or natural gas bills. Energy companies collect the fees and send them to The City.
What are the different charges on my electricity and natural gas bills?
You can find more information on how to read your energy bills on the UCA’s website.
Where can I learn more about utilities in Alberta?
You can find more information about Alberta’s energy market on the UCA’s website.