Federal Fuel Charge
Often referred to as the "Carbon Tax," you've probably noticed the Federal Fuel Charge on your natural gas utilities bills and wondered what's behind this charge, why we collect it, where the funds go and why you have to pay it in the first place?
We want our customers to have as much information as possible when it comes to the
funds they send us each month. Read below for more information!
How this charge came to be...
Canada’s carbon-tax history began in March 2007, when Alberta, under the Progressive Conservative Party, became North America’s first jurisdiction to legislate greenhouse gas reductions from large industrial emitters via a carbon levy. The following month, B.C. joined forces with five U.S. states in the Western Climate Initiative (a market-based group aiming to tackle climate change). Ontario and Quebec followed suit soon after.
In May 2008, Conservative federal environment minister John Baird called carbon trading a “key part” of the government’s emissions plan targeting oil and gas producers and coal-fired power plants. In July of that year, B.C. became the first province to implement a carbon tax—with proceeds going back to taxpayers.
In the 2008 federal election, Conservative and Liberal leaders both included carbon pricing in their platforms. The Conservative government of Stephen Harper won a minority mandate with a campaign that pledged to “develop and implement a North America-wide cap-and-trade system for greenhouse gases and air pollution, with implementation to occur between 2012 and 2015.”
Following the election, Conservative environment minister Jim Prentice began to explore a national carbon market, “something that has never been done before in this country,” he said. That plan was dropped when the Conservatives won a majority government in 2011.
Fast-forward to 2016. By the time Liberal Prime Minister Justin Trudeau announced plans for a national carbon pricing plan, several provinces, including Alberta, already had one in the works. The tax came into force in 2017 with Iron Creek Gas Co-op Ltd. customers seeing the first charge on their February 2017 bills as Alberta Gov't Carbon Levy at $1.011/GJ.
The Alberta Carbon Levy became a contentious political topic and in 2019, Alberta Premier Jason Kenney of the United Conservative Party "cancelled" the levy. This resulted in a six month period, from July -December 2019, where no levy was collected. In December of 2019 a court challenge, arguing that each province has the right to set its own policies to fight climate change, was issued against the federal carbon tax . The challenge came into effect on January 1, 2020.
As part of Canada's global climate commitments and policies, a carbon levy is required. Provinces have the choice to implement their own program wherein funds are collected and controlled by the provincial government OR they can contribute to the national program, wherein funds are collected and controlled by the federal government. With the UCP's cancellation of the provincial program the Federal Fuel Charge came into play, with Iron Creek Gas Ltd. customers seeing the charge starting on their February 2020 bill at $1.05/GJ.
How is the charge rate determined?
In Canada, carbon pricing works a bit differently in each province and territory—but every jurisdiction has to meet the minimum standards set out in the 2016 Pan-Canadian Framework on Clean Growth and Climate Change, and the 2018 Greenhouse Gas Pollution Pricing Act (GGPPA).
The GGPPA places a minimum price on carbon emissions, starting at $20 per tonne in 2019 and rising to $50 per tonne in 2022. These legal minimums are referred to as the Federal Carbon Pricing Backstop. In December 2020, the federal government announced a plan to increase the carbon price by $15 per tonne per year from 2023 to 2030. As long as a province or territory meets these minimum standards, it is entitled to run its own carbon pricing system. If it doesn’t meet the standards, the federal backstop kicks in.
What the heck does that mean?
Simply put, the Federal Fuel Charge rates have been pre-determined by the federal government based on emissions goals all the way to 2030, with the charge rate increasing each year on April 1. The rate is charged based on consumption a.k.a. the amount of gigajoules (GJs) consumed in a given month multiplied by the charge rate at that time.
Questions | Concerns | Complaints
While we understand how extra fees that are continuously increasing are frustrating as a consumer, we as a utility cannot control the legislation or collection of this charge. Click the image links below to be taken to the contact page for Federal and Provincial representatives.
Department of Finance
- GOVERNMENT OF CANADA -
The Department of Finance Canada is responsible for the overall stewardship of the Canadian economy. This includes preparing the annual federal budget, as well as advising the Government on economic and fiscal matters such as the Federal Fuel Charge.
- GOVERNMENT OF CANADA -
Canada is divided into 338 electoral districts, also known as constituencies or ridings, and each is entitled to one seat in the House of Commons represented by an elected MP. Click to image above to locate your MP's contact information.
Member: Legislative Assembly
- GOVERNMENT OF ALBERTA -
Members of the Legislative Assembly, or MLAs, represent Albertans from each of the provinces 87 constituencies or electoral districts. Click the image above to locate your electoral district's MLA contact information.