A Cash Cow Is One Thing; A Cash Elephant Is Another

By: Darren Chu

A consumer message from Spot Power, a community-based local retailer of electricity.

Uninformed consumers are a big corporation’s perfect dream. We believe informed customers can and should advocate for themselves, driving change and ultimately saving you money.

Regulated Rate Option (RRO) prices will hit all-time highs this month. For customers on this default rate in Calgary (through ENMAX), rates will rise to almost 32 cents/kWh. RRO prices have been featured in the news by all major news outlets (which you can find here, here, and here) on the heels of a press release that Spot Power issued last week. Customers can save hundreds of dollars by switching to fixed rates as much as 60% lower than the RRO.

BUT they can save even more if the Premier or Minister of Affordability and Utilities would simply disallow municipalities (like the City of Calgary) from profiting by adding a municipal tax onto consumers’ utility bills. Other jurisdictions charge similar fees under headings such as “Municipal Tax and Franchise Fee Assessment,” “Municipal Consent and Access Fee,” or “Municipal Franchise Fee.”

 The City of Calgary tax is the highest in the province.

The City of Calgary charges this same property tax as a fine print line item on your utility bill called the Local Access Fee. Moreover, Calgary is the ONLY city in Alberta to use a methodology whereby they index the Local Access Fee to the RRO. So when the RRO goes up, it is a windfall tax grab by the City.

This is especially difficult for RRO customers to hear. As was pointed out in a recent CBC article, “For customers who are on the RRO … the local access fee is adding insult to injury.”

So What is the Local Access Fee?

According to ENMAX, the Local Access Fee “is a fee in lieu of property taxes and other fees or charges payable to the City by ENMAX Power.” Let’s be clear, the Local Access Fee has nothing to do with deregulating the electricity market in Alberta. It is purely a scheme that municipalities use to collect property tax.

Last year, the City of Calgary collected $238 million from the Local Access Fee. This year that number will balloon to over $300 million. They make more money off this tax strategy than the ENMAX dividend payouts to the City. Last year they made $62 million on operating dividends; this year, they’re charging Calgarians $300 million in incremental tax.

ENMAX isn’t the only utility corporation to add this flow through property tax to consumers. EPCOR, ATCO Electric, Fortis Alberta, ATCO Gas are among the others that are sticking it to consumers as part of their rates charged for delivery of services. ENMAX just happens to charge the most.

If you live in Edmonton, you pay EPCOR a fixed rate of about $75 per year per customer for the Local Access Fee. Elsewhere in the province, hundreds of small municipalities charge small amounts or do not charge anything. If you live in Sherwood Park, the fee is zero.

What’s the Solution?

The most straightforward solution would be to have the Alberta Government strike the Local Access Fee from all utility bills. It is a property tax, not a utility tax. Stop charging renters, vulnerable Albertans, or families struggling with inflation. That would immediately save Albertans money on their utility costs. The Premier must decide if she is interested in protecting Calgary’s cash “elephant” or helping normal Albertans lower their utility bills. Knowing the latter is unlikely, we suggest the Alberta Government standardize the calculation for the Local Access Fee.

Remember EPCOR? They charge a flat rate. The average homeowner will only pay $6.50 per month. Compare that to Calgary, where every consumer pays 300% more in taxes. If Edmonton can do it, why can’t Calgary?

We ask the mayor and other councillors: Why did you increase property taxes when you were already collecting this amount from utility ratepayers?

Consumers should stand up and ask the Premier or the Minister of Affordability and Utilities to stop this shell game. Our government could immediately save consumers hundreds of millions of dollars. The question is, who is more important: The cities that will charge property taxes regardless or the consumers who are struggling under the weight of added taxes on utility bills?