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Town council reviews ATCO franchise fee

Posted on September 26, 2019 by Vauxhall Advance

By Cole Parkinson
Vauxhall Advance

With the ATCO Gas franchise agreement due this coming November, Vauxhall town council was eager to define new terms for the deal well before the date came up.

During council’s regular meeting on Sept. 3, councillors were apprised of the options of the new deal with ATCO Gas.

Earlier in the year, a delegation from ATCO Gas was in council chambers to explain the franchise agreement and the terms to the new deal.

“The old agreement has the other formula and there are, I think three communities (including Vauxhall) left in the province that doesn’t have the new agreement system. In order to bring it approximately the same revenue on the franchise agreement, we would need to increase the percentage by 44 per cent, not to 44 per cent but by 44 per cent. It’s currently at 5.5 per cent so it would be 7.936 per cent to bring in the equivalent revenue of the current franchise agreement,” said CAO Cris Burns.

He also explained to council the different options in moving forward.

The different options for council were leave it the same, collect the franchise fee at eight per cent with no linear tax, collect franchise at eight per cent and have linear tax, 12 per cent fee with no linear tax or set the fee at whichever percentage council felt appropriate.

“In discussing this (option three) with ATCO, all they will do is take the tax notice and break it down into a percentage and charge that to the customer and send it back to us,” explained Burns. “I was going to recommend to council to go to 15 per cent and that includes the tax so ATCO does not collect the linear tax, it comes through the franchise fee. It comes back to the office and skips a step.”

The current fee in Vauxhall is 5.5 per cent of ATCO’s revenue, while neighbouring municipalities such as Taber have 20 per cent (35 per cent for high usage), Barnwell is 13 per cent, and Coaldale is also 13 per cent.

“The current agreement the town has with ATCO is, they collect the franchise fee but they will not pay the linear tax on their underground equipment. It is just in the contract we have had for many years,” added Mayor Margaret Plumtree. “It seems to me that we would want to start at least at eight per cent so that we are the same as we were before. Are we better off to collect a linear tax? It seems that if you are having to bill them and then deduct it, it is a process in the office.”

Council was more in favour of updating their agreement to include the linear tax portion.

“Every municipality that I have worked for has collected the linear tax. For some, it is a substantial amount of money. For us, it doesn’t look like that much, $20,000 a year roughly,” said Coun. Ray Coad. “I think we should be looking at 10 per cent.”

A motion was made to increase the ATCO Franchise agreement to a 10 per cent franchise fee and to collect linear tax and was carried unanimously.

As part of the agreement, town council also carried the first reading of Bylaw 952-19 and a public hearing is needed before they can carry second and third readings.

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