Local Access Fees for Electricity in Alberta

Local Access Fees, also known as "municipal consent and access fees", "franchise fees," or "municipal franchise fees" are a surcharge collected by municipal governments and band councils for allowing the utility access to land to construct, maintain and operate the electric distribution system (or the natural gas distribution system) that serves the community's residents.

What is the Local Access Fee (LAF)?

The Local Access Fee is charged by the municipality to the electric utility for the use of municipal land for the electric distribution system and/or for the right to be the exclusive distributor for the area. This is a surcharge that is paid by electricity distribution system owner to the local authority, but is collected from customers by electricity retailers on behalf of the distribution utility. Alberta legislation (Section 360 of the Municipal Government Act) authorizes local authorities (which may be a municipality, county, municipal district, or First Nation band council) to charge a local access fee instead of imposing a tax, based on what the local authority believes is reasonable for the local situation.

Local access fees are therefore not regulated by the Alberta Utilities Commission (AUC).

How is the Local Access Fee Calculated?

Most local authorities charge the local access fee as a percentage of the local distribution tariff charges within the municipality. The municipality is free to choose the exact percentage amount levied on the distribution utility. Local access fees range from 2% to 23% of the distribution tariff charges depending on the municipality, which works out to approximately 50¢ to $12 per month on a typical residential consumer bill.

Local Access Fees by City

Local access fees are different across the province because some municipilities own and regulated their own electric distribution systems (and tariffs), whereas others enter into "franchise agreements" with an electric distribution utility company (either ATCO Electric or FortisAlberta) to build, own, operate, and maintain the system that delivers electricity in their municipality. These franchise agreements are approved by the Alberta Utilities Commission (AUC).

Local Access Fee in Calgary (ENMAX)

Local Access Fees in Calgary are applied to electricity distribution tariffs and the RRO. Since May 2004, the LAF has been:

• LAF Wires Component: 11.11% of distribution tariff rate charges, plus
• LAF Energy Component: 11.11% of the monthly RRO rate (charge per kWh)

Local Access Fee in Edmonton (EPCOR)

In Edmonton the Local Access Fee is applied to total electricity consumption. As of January 2015, the LAF is 0.72¢/kWh.

Local Access Fee in Red Deer (ENMAX)

The Local Access Fee in Red Deer is a component of the distribution tariff. It is set as 33% of each and every component of the Distribution Access Charge and added to the customer's bill as part of the Minimum Monthly Charge.

Local Access Fee in Lethbridge

As of March 2014 (Bylaw 5854) the Local Access Fee for the City of Lethbridge is 24.9% the total Distribution Access Charge and the total Transmission Access Charge or the total minimum charge.

Local Access Fee in St. Paul

As of June 2013, the town of St. Paul charges a Local Access Fee of 7% per cent of ATCO Electric’s delivery revenues (which includes the fixed and variable delivery charges, but excludes the cost of electricity and any amounts refunded/collected relating to rate riders), but the town has also reserved the right to charge taxes on ATCO Electric.

Local Access Fee in Medicine Hat

As the City of Medicine Hat owns and operates its own electric distribution system, it does not charge a local access fee.

Can I Avoid Paying the Local Access Fee?

The Local Access Fee is allowed by Alberta legislation and is not optional. However, as it is a variable charge (percentage based on electricity consumption), you can reduce the amount of the LAF you pay by reducing your overall electricity consumption.  

Local Access Fees and Bill 201

As part of ongoing reviews and improvements to the Alberta electricity system, in December 2014 the Alberta government announced that it will, among others, improve electricity billing transparency by clarifying that Local Access Fees are set and collected by municipalities. These changes are based on the passing of Bill 201 and the recommendations of a team of MLAs (the MLA Retail Market Review Committee Implementation Team) and are expected to be implemented in 2015.