Calgary natural gas franchise fee proposal would add $2.45 to monthly bills
Calgary seeks to raise the natural gas franchise fee to meet a $98.2M 2027 target; households could pay about $2.45 more per month if AUC approves this change.
Calgary has applied to the Alberta Utilities Commission to amend its natural gas franchise fee agreement, a move that could add about $2.45 to the average household’s monthly natural gas bill beginning in 2027. The proposed change would raise the fixed reference price used to calculate the franchise fee and is part of a city effort to meet a $98.2-million revenue target for franchise fees next year. The application was submitted to the provincial regulator as the city seeks to increase revenue without directly raising property tax.
City files application to AUC to raise natural gas franchise fee
The City of Calgary filed a notice of application with the Alberta Utilities Commission asking permission to update the natural gas franchise fee agreement it holds with ATCO Gas and Pipeline. The application, submitted in early August, would authorize ATCO to collect a revised franchise fee from Calgary customers and remit those revenues to the municipality in lieu of property tax.
City administration says the change is intended to capture more than $25 million in additional revenue in 2027 and to align franchise fee collections with council’s approved targets. If the AUC approves the amendment, the new fee framework would take effect on Jan. 1, 2027.
Projected impact on Calgary household bills
Under the proposal, the typical Calgary household receiving gas from ATCO could see the monthly franchise fee portion of their bill rise by roughly $2.45. The city estimates the average monthly franchise fee would be approximately $10.90 in 2027, up from current levels.
Franchise fees appear as a sub-charge on utility bills rather than as a line on property tax notices, which means the increase would be spread across customers who use natural gas. City officials and councillors note that while individual amounts are modest, the aggregate revenue is intended to help close a widening infrastructure funding gap.
Methodology change: fixed gas reference price raised
The key technical change in the application is an increase to the fixed monthly gas cost price used in the franchise fee calculation. Calgary’s current methodology uses a reference price of $3.15 per gigajoule; the city proposes raising that reference to $5.67 per gigajoule effective Jan. 1, 2027.
Franchise fees are calculated as a percentage of that fixed price rather than based directly on market fluctuations, and the city says the higher reference rate is necessary to reach the $98.2-million target. The application also includes a request — at ATCO’s suggestion — to extend use of the fixed-price methodology for an additional year.
Public consultation window and regulatory timeline
A public notice period is open until Aug. 25, 2026, giving residents an opportunity to review the proposed franchise fee amendment and provide comment. Those interested in weighing in are being invited to submit feedback during that window ahead of the regulator’s review.
The city has indicated the next formal step is for ATCO Gas, acting on the municipality’s behalf, to apply to the AUC for approval of the new franchise fee agreement and rate by Sept. 21, 2026. If accepted, the regulator will determine whether the proposed rates and methodology meet legal and policy guidelines before any change is implemented.
City’s fiscal rationale and council targets
Calgary council privately discussed franchise fee strategy in May and directed administration to pursue a $98.2-million franchise fee target for 2027, up from a $71.6-million target for the current year. City officials say franchise fees are a component of the operating budget that help fund municipal services while keeping property tax increases lower than they otherwise would be.
Mayor Jeromy Farkas has framed the move as one of several options to address Calgary’s multibillion-dollar infrastructure deficit without placing additional pressure on property taxpayers. Ward 10 Coun. Andre Chabot argued the approach is more equitable because volume-based fees capture contributions from consumers who use utilities rather than relying solely on property tax.
ATCO’s role and municipal fee collection framework
ATCO has confirmed it collects franchise fees from customers on behalf of municipalities and remits the total fee revenue back to the city. The utility said municipalities set franchise fee rates and methodologies within guidelines established by the AUC, and any municipal change is reflected in the charges the utility passes through to customers.
In public statements, ATCO indicated it will support the City of Calgary’s application process and implement any approved fee adjustments in customer billing. The company also noted that if a municipality alters its franchise fee, the amount collected from customers changes correspondingly.
Calgary residents now face a short window to review and respond to the proposed natural gas franchise fee amendment while the AUC prepares to consider the city’s application ahead of the scheduled Sept. 21 regulatory filing. Decisions from the regulator will determine whether the proposed increase is adopted and how the city’s effort to shore up operating revenue will affect household utility bills in 2027.
