End the Negative Impacts of Franchise Fees in Alberta

Issue

The current structure and use of Local Access or Municipal Franchise Fees negatively impacts the growth and competitiveness of Alberta businesses and the economy. 

Background

The Municipal Franchise Fee (MFF), also known as a Local Access Fee (LAF), is a rate rider that is determined by municipalities in exchange for a utility service provider’s exclusive right to sell services within a municipality’s boundaries. Utility service providers apply the rate rider to rate payer’s bills, collect the fees, and then pass the revenue to the municipality. Franchise fees are typically calculated as a percentage of the total distribution charges on a bill and are capped at twenty percent for electrical and thirty-five percent for natural gas. The provisions and requirements are found in section 45 and 360 of the Municipal Government Act. 

Our Recommendations

1. Freeze all Local Access Fee (LAF)/ and Municipal Franchise Fee (MFF) rate increase applications; 
2. Mandate municipalities to report LAF/MFF revenues as distinct revenue line items in annual consolidated financial statements; 
3. Publish LAF/MFF on Municipal Measurement Index; and, 
4. Pause renewal applications of tax agreements of Municipal LAF/MFF starting in 2024 and review for removal Section 360 of the Municipal Government Act.