Changes to natural gas franchise fees
We’re updating our franchise fee rates with ATCO Gas. This changes the fixed rate for natural gas in 2027.
The current calculation used to determine the natural gas franchise fee is:
11.11 per cent of Delivery Tariff charges + 11.11 per cent of monthly gas cost price (currently fixed rate of $3.15 per GJ x GJ consumed).
These are not new fees; we're improving how we calculate them.
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What are franchise fees?
What's changing
In May 2026, Council directed that The City collect $98.2 million in revenue from the natural gas franchise fee in 2027, up from a target of $71.6 million in 2026.
To obtain the revenue target, we will replace the current fixed rate of $3.15/GJ with a new rate of $5.67/GJ.
What this means
At the request of ATCO Gas, the use of the existing franchise fee methodology that uses a fixed monthly rate will remain in place for an additional year. The 2027 fixed rate for natural gas will be increased to $5.67 per gigajoule. The average monthly franchise fee for a residential consumer is estimated to be $10.90 per month in 2027, up about $2.45 per month.
These amounts are based on currently available demand forecasts and are subject to change.
Submit your feedback
The City works with our partner ATCO Gas to apply for a new franchise agreement. The application is sent to the Alberta Utilities Commission (AUC) for review and approval. Learn more about the AUC process.
A Public Notice period is open from August 7-25, 2026 to gather feedback on our proposed change to the natural gas fixed rate. Your feedback will be incorporated into our fall application.
Timeline
Completed work
March 1, 2025 - New natural gas franchise fee rate takes effect.
Feb. 2025 - AUC approves natural gas franchise fee rate.
Jan. 1, 2025 - New electricity franchise fee rate takes effect.
Dec. 17, 2024 - AUC approves electricity franchise agreement and new franchise fee rate.
July 30, 2024 - Council approves a new start date of Jan. 1, 2025 for the quantity only model.
June 20, 2024 - The Utilities Affordability Statutes Amendment Act, 2024 requires us to update franchise agreements by March 17, 2025.
March 18, 2024 - Council approves the change to a quantity only model for franchise fees by Jan. 1, 2027.
FAQs
Is this a new fee added to my bill?
This is not a new fee. Franchise fees are currently charged to customers in Calgary and across Alberta. It’s simply an improvement in how franchise fees are calculated on utility bills. Franchise fees are common among Alberta municipalities. They are an important source of revenue that utility companies pay for the exclusive right to operate within a municipality, and compensates The City for letting utilities build, run and take care of utilities on City land.
How will The City set franchise fees?
Since 2024, Council sets the target amount of franchise fee revenue yearly. Once a revenue amount is set, a charge per unit of energy will be calculated for electricity and for natural gas. Setting fees yearly allows The City to consider and incorporate:
- Changes based on current inflation and population growth.
- Affordability for Calgarians.
- Revenue needed for City services and projects.
Franchise fee rates will be submitted to the AUC each year for approval.
Why is the natural gas franchise fee increasing?
The fixed rate for natural gas will be increased to $5.67/GJ for 2027 to meet the increased revenue target set by Council. The updated franchise fee is estimated to generate $98.2 million in revenue for 2027, a $29.2 million increase from 2026.
Overall, the franchise fees paid by Calgarians are expected to increase in 2027. The City estimates that, for an average residential customer, the natural gas franchise fee will increase by about $2.50 per month.
Note: These amounts are based on currently available demand forecasts and is subject to change.
Why are you implementing the quantity only model for natural gas in 2028 instead of 2027?
We’re working with our partner ATCO Gas to implement changes that will allow us to calculate the franchise fee using the new quantity only model; a model that is in the best interest of Calgarians. The City proposed a two-year timeline, which was agreed to ATCO Gas, to allow for sufficient time to transition to this new model. ATCO Gas has requested an additional year to complete the transition. To protect Calgarians from volatile fees during this transition period, we will fix the natural gas rate for 2027.
What are the estimated amounts franchise fees will collect for natural gas?
The updated franchise fee is estimated to generate 98.2 million in revenue for 2027, a $29.2 million increase from 2026.
How are the franchise fee amounts to be collected determined?
The franchise fee amounts are determined based on collecting only what’s needed to fund capital projects to support services. It also considers the 10-year average of actual revenues from electricity and natural gas franchise fees, without adjusting for inflation.
What is the quantity only model?
The quantity only model is an innovative way to calculate franchise fees offering these benefits:
- Provides consumers with clarity, predictability and control around franchise fees. Fees will be a transparent fixed rate tied to the amount of energy consumed, not volatile energy prices.
- Encourages consumers to reduce their energy consumption. This benefits both their finances and the climate.
- Allows The City to meet its budget targets. This minimizes the risk of collecting more or less than we need and provides stable revenue to fund services.
The quantity only model is how we currently calculate franchise fees (also known as Local Access Fees) for electricity. Visit Understanding franchise fees and local access fees for more info.