Letter to the Editor: Resident concerned about franchise fees

To the residents of Morinville, what do Franchise Fees mean to you? Up until a short time ago, it meant a line item on the Electrical bill and the Alberta Gas bills. It is near the bottom of the bill just above the sub-total. I normally just ignore this line as it is the smallest portion of the bill.

From the little information that I have learned from reading through documents that this so called Franchise Fee appears to be a hidden tax that benefits the Town of Morinville. In fact, if one reviews the Town of Morinville’s 2010 Operating Budget, under Revenue there is a line item called Franchise Fees and it is interesting to see that in 2010, it would appear that just shy of $1,000,000 is budgeted to be received from the various utility companies. Who pays this? Every resident in town that pays their utility bills on a monthly basis!

You will see notification shortly letting everyone know that the Morinville Town Council voted to keep the Fortis Franchise Fee at the same rate of 20% or a projected revenue to the town of $500,000 and so that there will be no increase in the franchise fee line item. While this statement is true, did you know that the Town Council also has the opportunity to LOWER the franchise fee rate to try and keep the rising electrical costs more affordable for their residents?

I realize that this is just one of the many ways of doing business and while it seems to be small in nature, to my small pension budget that does not increase substantially, this means approximately $112 a year for Alta Gas Utilities – Franchise Fee and probably nearly the same on my electrical bill.

I again look at the open and visible government we have here in town and wonder why the Town has never openly advised that the franchise fee is actually revenue and I wonder what they spend it on?

Just another question in my mind.

Linda Lyons

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3 Comments

  1. Thanks for that info Linda! In addition, I believe that the AUMA guidelines for these fees is somewhere closer to 16%, NOT the 20% which our illustrious council is bound and determined to have us pay!!

    I harbour a growing sense of frustration over a number of issues relative to the governance of our town. Included in my concerns is the glaringly apparent reluctance of some of our elected officials (and, by extension, the Town Administration) to “come clean”, especially as concerns our financial status. With any amount of luck, and knowing full well that “Rome wasn’t built in a day”, perhaps the new finance committee will help us understand what is really happening!

  2. Linda, Linda, Linda!

    If you saw it as a line item on your bill then I guess it is not all that well hidden!

    Plus, annually council must vote on whether or not to keep it or get rid of it. Again, not very hidden.

    When I was on council I was a supporter of instituting a franchise fee on one of the bills. (One had it already and one did not. Can’t remember which was which.)

    There was a time when it was on your bill but NOT a line item as it was just included in the total. So council of the day wanted it to be very visible.

    The fee is charged to the utility company for using town, public rights of way for their lines/pipes. They pass it on to you and turn the amount over to the town.

    And, now the reason why you will be glad that there IS a franchise fee!

    The town requires “X” annually to run the town. That money is received through property taxes, fees for services and many other sources including the franchise fee.

    So if there was no franchise fee, then property taxes would be higher for example. The only problem with that is that there are many users of services in town that pay NO property taxes at all, like the churches, schools, other government buildings, etc.

    So, if property tax is how you would get the revenue that the franchise fee brings in, the tax burden would be shared by land owners only.

    By having the franchise fee, all of the above and the ones I did not mention, help in a small way, to pay for the services that they receive because they all use gas and electricity!

    Now, don’t you feel better! 🙂

    PS: 1% tax increase = about 100,000 in revenue, therefor 500,000 would be 5% tax increase with no franchise fee.

  3. Joe, thank you so much for responding. Yes, I did always realize that there were franchise fees on our utility bills as I review these carefully. What I did NOT realize is that the franchise fees collected were then turned over to the Town of Morinville as a revenue. Maybe “hidden” is not a well chosen word. Let me explain, as I feel that many town residents are not aware of the franchise fees being turned over to the town as revenue. We are all aware that taxes would have to increase to cover if franchise fees were discontinued all my letter was meant to do was to make people aware that these fees are being turned over to the town as revenue.

    Linda

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