Calgary’s Proposed 80% Natural Gas Franchise Fee Increase: What Businesses Need to Know 

In this article:

• What is the Calgary Municipal Franchise Fee (MFF)
• Why Calgary is increasing the MFF in 2027
• How the proposed $5.67/GJ rate could affect commercial and industrial customers
• What the change means for businesses with high natural gas consumption
• Steps businesses can take to manage their overall energy costs

For most Calgary households, changes to the Municipal Franchise Fee (MFF) proposed in August 2026 will add about $2.45 a month to their gas bill. For a business using 10,000 GJ of natural gas a month, it could add $33,600 a year. Because the fee is charged on every gigajoule, the impact grows with consumption. While households will notice it, manufacturers, greenhouses, large commercial buildings and other heavy gas users will be impacted the most. 

With the increase expected to take effect in about three months, in this article we explain what the Municipal Franchise Fee (MFF) is, how its calculation has changed, what the proposed rate could mean for businesses, and how Alberta organizations can prepare.

What is a Municipal Franchise Fee (MFF)?

When companies use public land and infrastructure, they have to pay a Municipal Franchise Fee (MFF), and the cost is passed to customers through their utility bills. Under the City’s agreement with ATCO Gas, the utility collects the fee from Calgary customers and passes the money on to the City. The Municipal Franchise Fee is directly tied to a $98.2 million revenue target for 2027 (compared to $71.6 million in 2026). To reach this target, the City of Calgary plans to increase the fixed gas price used in the fee calculation.

In Calgary, where the franchise fee helps to fund municipal services, the proposed 2027 increase will raise the franchise fee portion of natural gas bills. Although on the surface the fee represents a relatively small addition to the utility bill, costs can add up for businesses that use large amounts of natural gas. The 80% increase applies to the fixed gas price used in the fee calculation. Because the fee also covers other charges, the total franchise fee on a bill rises less. The City expects total fee revenue to grow by about 37%.

(The current fixed rate is $3.15 per GJ. Starting January 1, 2027, the proposed rate would increase to $5.67 per GJ. For the average residential customer, the City estimates this would increase the monthly franchise fee by about $2.45, to approximately $10.90.)

The proposed change still requires approval from the Alberta Utilities Commission (AUC). ATCO Gas, on behalf of the City, was expected to submit the application by September 21, 2026. (The City of Calgary’s Franchise Fee Update page.)

What should Calgary businesses know?

The MFF is charged based on consumption, and that is why the proposed increase matters most to businesses that use large amounts of natural gas: the higher per-GJ rate will have a larger impact on facilities such as manufacturing plants, large commercial buildings, greenhouses and other industrial operations.

For example, a facility consuming 10,000 GJ per month would see its estimated MFF increase from about $3,500 to $6,300 per month, based on the current and proposed rates.

• Current MFF (gas-price portion): 10,000 GJ × $0.35 = $3,500/month
• 2027 MFF (gas-price portion): 10,000 GJ × $0.63 = $6,300/month
• Additional cost: $2,800/month
• Estimated annual increase: $33,600

For facilities using 50,000 GJ or more per month, the additional annual cost could exceed $150,000 (about $168,000 at 50,000 GJ per month), depending on actual consumption.

This means businesses may see higher gas-related costs even if market natural gas prices remain low, or they secure competitive commodity contracts. The MFF is a separate charge and is not reduced through lower commodity prices or traditional gas procurement strategies.

• Budget planning: Since the proposed fixed gas price is 278% higher than current Alberta natural gas spot prices and 127% higher than three-year fixed wholesale contract rates, businesses with high natural gas consumption are advised to evaluate the potential impact and plan for the new costs in their 2027 budgets.

• The calculation method: The City of Calgary moved from a market-based calculation tied to Direct Energy Regulated Services to a fixed-rate model that is less directly linked to actual natural gas prices. Unlike the commodity portion of a gas bill, the MFF is determined by the municipal franchise fee structure rather than market prices, which allows businesses to account for the higher MFF separately from their natural gas commodity costs.

For businesses preparing 2027 budgets, this means:

• Review monthly and annual natural gas consumption.
• Calculate the expected MFF under the new rate.
• Include the additional cost in 2027 forecasts.
• Consider how changes in consumption could affect the total cost.
• Prepare for the increase in operating expenses and cash flow forecasts.

What businesses can do now:

1. Review natural gas consumption

Start with historical monthly GJ usage to understand how much the change could add to annual costs. Businesses with seasonal operations should account for higher consumption during peak periods.

2. Look for ways to reduce consumption

Reducing natural gas use can help limit the impact of a per-GJ charge. Potential opportunities include:

• Improving equipment efficiency
• Upgrading boilers and heating systems
• Recovering waste heat
• Optimizing building temperatures and operating schedules
• Maintaining equipment to prevent energy waste
• Reviewing industrial processes for efficiency improvements

Even a modest reduction in consumption can lower both commodity costs, and the MFF paid on that consumption.

3. Review natural gas contracts

The MFF is separate from the commodity price, so changing a gas contract will not eliminate the franchise fee. However, businesses can still review their supply strategy to make sure they are managing the portion of their energy costs that is affected by market prices.

Fixed-price contracts and other buying strategies can also provide certainty around commodity costs, although they do not protect against changes to the MFF.

4. Consider an energy audit

For facilities with significant gas consumption, an energy audit can help identify equipment, process, or operational changes that could reduce usage. The potential savings should be compared with the cost of implementing each improvement.

5. Keep track of regulatory developments

The public feedback period ended August 25, 2026, but the proposed change still involves the Alberta Utilities Commission approval process.

Businesses can monitor:

• The City of Calgary for any further updates
• The Alberta Utilities Commission for regulatory proceedings
• Industry associations and business organizations for updates concerning commercial and industrial energy users

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Looking beyond the franchise fee

While the Municipal Franchise Fee is outside a business’s control, other parts of the natural gas bill may offer opportunities to reduce costs. A detailed review of your gas bill can reveal where there may be room to reduce energy expenses: commodity rates and administration fees can vary depending on your energy contract and provider, making it important to understand exactly what you are paying for.

Businesses with seasonal operations should calculate peak months separately, since that is where the increase will hit cash flow hardest. (To estimate your increase, take your average monthly gas use in GJ from your last 12 bills, multiply it by $0.28, then by 12. That’s roughly how much more you’ll pay in franchise fees in 2027.)

Not sure where your business stands with the proposed MFF? Our energy experts can review your natural gas bill, explain the charges, and identify potential opportunities to reduce or better manage your energy costs.

Contact our team to schedule a personalized energy review.

Key takeaways:

• The MFF is increasing Calgary’s fixed gas reference price, which is proposed to rise from $3.15/GJ to $5.67/GJ on January 1, 2027.
• High-volume users will see the largest impact. Because the fee is tied to natural gas consumption, costs increase as a business uses more gas.
• The MFF is separate from commodity prices: Lower natural gas market prices or a better gas contract do not eliminate the MFF.
• Budget planning matters: Businesses should calculate their expected 2027 MFF costs and include the increase in their budgets.
• Businesses can review the rest of their energy costs: Even though the MFF is outside of the customer’s control, commodity rates, contract terms and other energy charges may offer opportunities for savings.