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Effective January 1, 2027, The City of Calgary is implementing an 80% increase to its natural gas Municipal Franchise Fee (MFF), raising the fixed monthly rate from $3.15/GJ to $5.67/GJ.
This change will have a substantial impact on commercial and industrial customers operating within Calgary’s franchise fee area, increasing the per-GJ cost from $0.35 to $0.63 (an additional $0.28 per gigajoule).
Key takeaways for business leaders:
With less than five months until the increase takes effect, this article breaks down what MFF is, how the calculation has evolved, the real-world cost implications, and what Alberta businesses should do now to prepare.
A Municipal Franchise Fee is a charge municipalities levy on utility services (electricity, natural gas, water) in exchange for granting utility companies access to municipal infrastructure like roads and rights-of-way. Essentially, it’s the cost utilities pay cities for the privilege of delivering services through public land, and those costs are passed on to end customers.
In Calgary, the natural gas MFF is calculated as 11.11% of transmission and distribution charges, plus 11.11% of a fixed monthly rate per gigajoule (GJ). This second component (the per-GJ rate) is where the 2027 increase is occurring.
For most businesses, MFF appears as a separate line item on monthly natural gas invoices. While it may seem like a small percentage, the cumulative impact on high-volume commercial and industrial users can be substantial, particularly when the underlying calculation methodology shifts dramatically.
Understanding the impact requires understanding how Calgary’s approach has evolved over time:
Before the current fixed-rate model, Calgary calculated MFF using the Direct Energy Regulated Rate (DERS), which closely tracked Alberta’s natural gas floating or spot price. This meant that as market prices fluctuated, so did the MFF, creating a more responsive, market-aligned cost structure.
Example calculation (Previous):
This approach meant that when natural gas prices were low, MFF costs were also lower. During periods of market volatility, customers faced variability, but the fee remained proportional to actual energy market conditions.
Calgary transitioned to a fixed monthly rate of $3.15/GJ, decoupling the MFF from real-time market prices. This created cost certainty for the City but shifted the financial burden to customers regardless of market conditions.
Example calculation (Current):
This represented an 84% increase over the DERS-based model at the time of implementation.
The upcoming change raises the fixed rate by 80%, from $3.15 to $5.67 per GJ.
Example calculation (January 2027):
According to the Gas Alberta Energy notice, this represents a 232% increase over the original DERS-based methodology ($0.19/GJ to $0.63/GJ) and an 80% increase over the current fixed rate.
The new $5.67/GJ fixed rate is:
This disconnect creates a troubling dynamic: even as businesses benefit from Alberta’s competitive natural gas market and work to optimize procurement strategies, a significant portion of their cost structure is now fixed and detached from those efficiencies.
For commercial and industrial facilities with high monthly gas consumption (manufacturing plants, large commercial buildings, greenhouses, and industrial operations), the per-GJ increase compounds quickly.
Example impact for a mid-sized industrial facility:
For larger operations consuming 50,000+ GJ monthly, the annual impact can exceed $150,000.
Previously, businesses could forecast natural gas costs with reasonable accuracy using market analysis, hedging strategies, and fixed-rate contracts. The MFF increase (especially one so far above market fundamentals) introduces a layer of cost that:
This complicates financial planning for 2027 and beyond, particularly for organizations with tight margins or those in energy-intensive sectors.
With the increase taking effect January 1, 2027, time is limited. Work with your finance and operations teams to:
Ensure all relevant stakeholders understand the change:
Transparency about the cause (municipal policy change) and magnitude of the increase prevents surprises in Q1 2027.
While the MFF increase is outside your direct control, you can still manage your total energy costs through:
Procurement optimization: Ensure you’re on the most competitive natural gas contract for your usage profile. With commodity costs representing a smaller percentage of your total bill, every dollar saved on the commodity side matters more.
Operational efficiency: Identify opportunities to reduce overall consumption through:
Hedging and risk management: Use fixed-price contracts or other instruments to manage commodity price volatility. At least lock in certainty on the components you can control.
Energy audits: Consider a professional energy audit to identify specific reduction opportunities. Even a 5-10% reduction in consumption can offset a meaningful portion of the MFF increase.
While the August 25 feedback deadline has passed, policy landscapes can shift. Stay informed through:
If provincial or industry pressure leads to reconsideration, early awareness allows your organization to respond quickly.
The Calgary MFF increase is part of a broader trend: rising non-commodity energy costs driven by infrastructure investment, regulatory changes, carbon policy, and municipal revenue needs. For Alberta businesses, this means energy cost management is no longer just about locking in favorable commodity rates. It’s about understanding and navigating the full stack of charges that make up the energy bill.
In this environment, businesses that treat energy as a strategic input (not just an operating expense) will be better positioned. This includes:
Calgary’s 80% increase to the Municipal Franchise Fee is a material cost change for commercial and industrial natural gas users. With the new rate set at $5.67/GJ (nearly three times higher than current spot prices), businesses face a significant budget impact starting January 1, 2027.
The consultation period has closed, so the focus now shifts to preparation and mitigation. Model the financial impact, communicate internally, optimize your energy strategy, and build the increase into your 2027 budgets.
While regulatory changes like this are outside direct business control, proactive planning and strategic cost management can reduce the effects. The businesses that adapt quickest will be best positioned to maintain competitiveness despite rising non-commodity costs.
Need to share this information with your team? Download our Calgary MFF Increase One-Pager with FAQs and impact calculations. Perfect for printing, emailing, or presenting in budget meetings.
At DNE, we help Alberta businesses navigate the full complexity of energy costs, from commodity procurement to regulatory changes like the MFF increase. If you’re looking for support in understanding your energy cost structure, optimizing contracts, or building a resilient energy strategy, message us. We’re here to help.
The MFF is a charge Calgary levies on natural gas utilities for using city infrastructure (roads, rights-of-way). It’s calculated as 11.11% of transmission and distribution charges, plus 11.11% of a fixed monthly rate per gigajoule. The fee appears as a separate line item on your natural gas bill and is passed directly to customers.
The MFF is increasing by 80%. The fixed rate jumps from $3.15/GJ to $5.67/GJ, raising the per-GJ cost from $0.35 to $0.63. That’s an additional $0.28 per gigajoule. For a business using 10,000 GJ per month, this means an extra $33,600 per year.
January 1, 2027. The consultation period closed August 25, 2026. Businesses should adjust 2027 budgets now.
All commercial and industrial natural gas customers in Calgary’s franchise fee area. This includes manufacturers, commercial buildings, greenhouses, warehouses, and industrial facilities. The impact is most significant for high-volume users.
The City hasn’t provided detailed public reasons. Franchise fees typically fund municipal operations and infrastructure. The fixed-rate model gives Calgary predictable revenue but disconnects the fee from actual natural gas market prices, shifting cost risk to customers.
Two parts:
Current (until Dec 31, 2026): $3.15/GJ × 11.11% = $0.35/GJ
Starting Jan 1, 2027: $5.67/GJ × 11.11% = $0.63/GJ
Total MFF = Part 1 + (Part 2 × your monthly GJ consumption)
You can’t change the MFF rate, but you can reduce the total impact:
Reduce consumption:
Optimize procurement:
Look in the “Delivery Charges” or “Other Charges” section of your natural gas bill. It’s labeled as:
It shows two components: a percentage of transmission/distribution charges and a per-GJ charge. Contact your retailer if you need help finding it.
