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A franchise fee is rent that the City charges utility distributors for having infrastructure (pipes, wires, etc) on City of Chestermere land. The City collects franchise fees from distributors and uses the funds only for the replacement or major repairs of municipal infrastructure. Learn more here.
Beginning in 2014, residents will notice a “Municipal Franchise Fee” on their Natural Gas and Electricity utility bills.
Essentially, a franchise fee is rent that the City charges utility distributors for having infrastructure (pipes, wires, etc) on City of Chestermere land.
The utility distributors charge this fee back to consumers then forward the payments to the municipality. The vast majority of municipalities in Alberta have franchise fees.
While other municipalities put revenues from franchise fees into general revenues, Chestermere has chosen to use the fees only for the replacement or major repairs of municipal infrastructure (i.e. the RCMP building, the bridge over Chestermere Lake, etc.).
This year, and for the next ten years, franchise fees will be used to make the payments for borrowing for the new RCMP building. With the franchise fees revenues, the City will be able to have a 10 year loan on the new RCMP building instead of a 20 year loan. This will save residents approximately $1.4 Million in interest because a lower borrowing rate was available for a 10 year term and because of the shortened borrowing time frame