Calgary’s mayor wants to know what’s up with local access fees on energy bills and what can be done about them.
And she wants to know what could happen to utility bills if the provincial regulated rate option (RRO) is phased out, as the premier suggested in a mandate letter to the minister in charge of utilities.
Wednesday morning, Mayor Jyoti Gondek said she wants city council to be briefed on the impacts of energy bill volatility and how changes to the fees could help Calgarians.
“The model the City of Calgary currently uses to set local access fees may not be the most appropriate one in this volatile energy environment, which is creating situations of energy poverty for many Calgarians who are already struggling with affordability,” Gondek said. “Further, it is negatively impacting operating budgets of critical community-based organizations and businesses alike.
“I think it’s really important to revisit a few things.”
Gondek wants council to learn about the history of local access fees, previous research on possible changes to the fees, what changes to the fees in the current energy environment could look like, possible impacts of fee changes to Calgarians and budget impacts to the city.
One energy management and billing expert said Calgary is long overdue in its change to the local access fees.
“It’s timely right now because the RRO is as high as it’s ever been. And to have the LAF (local access fee) tied to a rate that is now hitting its peak is now drawing attention,” said Darren Chu, program development manager at UtilityNet. “But it shouldn’t take a crisis for change to happen. The city should have known about this and they have known about it for some time.”
Chu described the local access fee and current RRO rate as a “double whammy,” especially for vulnerable Calgarians.
“They’re forced to pay almost 32 cents per kilowatt hour, but also they’re paying a local access fee that is also indexed to that same high price, so they’re getting hit twice,” he said.
The mayor admitted there are conversations about the fees as a means of hedging against high prices.
“That benefits us as a corporation, but it’s crushing a lot of Calgarians. So we need to be having an open dialogue and very transparently explaining to Calgarians the decisions that we’re making.”
Gondek said Calgary currently calculates local access fees based on energy consumption and pricing, and wonders what could happen if Calgary joined other jurisdictions to only charge based on consumption.
Chu said provincewide, Albertans are paying nearly half-a-billion dollars in local access fees. He questions whether those fees should even be on utility bills.
“It’s not a utility cost; it’s a property tax. Some municipalities will outright call it a municipal tax. Our question is: why is the municipal tax on a utility bill? That doesn’t make any sense.”
RRO rates for Enmax customers in Calgary have seen steady increases since May 2022. But rates have nearly doubled from May to August after a brief reprieve when the province capped rates at 13.5 cents per kilowatt-hour for the first three months of this year.
Those capped rates are to be repaid through to the end of 2024.
RRO is the default energy pricing plan for new customers and for Albertans who are unable to qualify for a fixed rate on a contract with their utility.
The mandate for Minister of Affordability and Utilities Nathan Neudorf to “address the cost of utilities for Albertans by exploring the potential phase out of the regulated rate option for electricity and otherwise protecting consumers from spikes in electricity and natural gas prices” is something Gondek is also keeping her eye on, especially how it could affect Calgarians’ budgets.
“We need to be prepared for things that may come down the pipe by being knowledgeable about them right now,” she said.
She hopes to hear from Neudorf on what he’s specifically looking at for RRO options.
The ministry of affordability and utilities said it shares Albertans’ concerns about high electricity rates.
“We are currently working with industry and stakeholders to review the Regulated Rate Option and identify longer-term solutions throughout the electricity system to keep electricity affordable,” a ministry spokesperson said in a statement. “No final decisions have been made, but our goal is to minimize the disruptions for Albertans across the province.”
Chu said getting rid of the RRO would leave vulnerable Albertans “in the lurch because they can’t get competitive rates unless the government steps in and says: ‘We’ll guarantee those Albertans.’
“To simply do away with it would be to invite disaster because it doesn’t do anything for the people who need the help the most,” he said.
“If they’re serious about affordability, then they need to really consider what they can do in a targeted method or targeted manner, as opposed to a simple, blanket, band-aid solution.”
Calgary city council is currently on its summer break. The next council meeting is on Sept. 12 and the executive committee meets on Sept. 6.
“We have heard that people are in really dire situations right now and we need to take some action. That action starts with actually understanding the situation and what the potential outcomes could be.”
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