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RFD- 4020 Business Items   Item #   11. a.    
Regular Council Meeting Agenda   
Meeting Date: 09/28/2020  
Title:    Natural Gas Franchise Fee Increase for 2021 - Frostad
Department: Corporate Services  
Strategic Vision Element: This topic relates to all three of the City’s strategic vision elements contained in Council’s Strategic Plan Related Goal: Spruce Grove has a robust, growing economic base that generates increased revenues to support the City’s high standards for services and programs.

Information
Request for Decision Summary
This item is intended to allow confirmation of notice to ATCO Gas of a franchise fee increase for 2021 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 30% to 35% effective January 1, 2021.
 
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.  

At the September 23, 2019 regular meeting of Council, Council passed a resolution allowing notice to be given to ATCO Gas of a franchise fee increase from $25% to 30%.  That rate increase took effect January 2020.

The final move in the three year increase is proposed at this time.  This request for decision asks for Council direction to provide ATCO Gas with notice of the move to a 35% rate in 2021.  This would be the final increase for this franchise fee as 35% is the maximum franchise fee allowed through this provider.
Options/Alternatives
Council does have the option to keep rates at 30%, 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 change to the Franchise Fee.  A 14 day window will be open for the residents to ask questions or raise concerns 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 questions 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, 2021.
Impacts
n/a

Fiscal Impact
Financial Implications:
The financial impact of the 2021 change is estimated at $2.19 per month per average residential customer and is estimated to yield the municipality approximately $447,593 in additional revenue.
Attachments
Signed ATCO Gas Agreement

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