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RFD- 3607 Business Items   Item #   10. a.    
Regular Council Meeting Agenda
Meeting Date: 09/23/2019  
Title:    Natural Gas Franchise Fee Increase for 2020 - Frostad
Department: Corporate Services  
Strategic Vision Element: Related Goal:

Information
Request for Decision Summary
This item is intended to allow confirmation of notice to ATCO Gas of a franchise fee increase for 2020 as previously approved in the 2019 - 2021 Corporate Planning process.

Proposed Motion
That notice be given to ATCO Gas of a franchise fee increase from 25% to 30% effective January 1, 2020.
Background/Analysis
In the 2019 - 2021 Corporate Planning process a service change initiative was approved to update the natural gas franchise agreement.  The update involved changing the calculation method in 2019 and phasing in revenue increases over 2019, 2020, and 2021.  In 2019, Bylaw C-1064-19 was passed to enter into the new agreement which changed the calculation method and established the franchise fee at 25%. 

The 2019 - 2021 Corporate Plan service change approved included a move to 30% in 2020 and 35% in 2021.  

This request for decision asks for Council direction to provide ATCO Gas with notice of the move to a 30% rate in 2020.
Options/Alternatives
Council does have the option to keep rates at 25%, which would impact projected Corporate Plan revenues.  
Consultation/Engagement
n/a
Implementation/Communication
If this rate increase is approved by Council, administration will provide a written notice to ATCO Gas and they will provide the City with a Publication Notice for advertisement to the public prior to November 15.   This publication notice will inform the residents of Spruce Grove of the financial impact of the proposed changed to the Franchise fee.  A 14 day window will be open for the residents to ask questions about the increase.   Spruce Grove will then need to provide ATCO Gas with a second letter outlining compliance with the advertisement and any action taken by the municipality to deal with objections or concerns.  Once this letter is received by ATCO Gas, they will look after filing the application to the Alberta Utilities Commission and follow up with a change of the rate by January 1, 2020.
Impacts
The financial impact of the 2020 change is estimated at $2.27 per month per average residential customer and is estimated to yield the municipality approximately $400,000 in additional revenue.
Attachments
Signed ATCO Gas Agreement

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