SaskEnergy has filed a combined one-year commodity and three-year delivery service rate proposal with the Saskatchewan Rate Review Panel. The proposal would ensure the maintenance of safe, reliable and affordable natural gas service across Saskatchewan over the next three years.
The impact of the proposal on SaskEnergy’s residential customer bills is an increase, on average, of $11.95 per month (16.8 per cent) in year one, $2.43 per month (2.9 per cent) in year two, and $2.53 per month (3.0 per cent) in year three.
“SaskEnergy’s residential customers currently have the lowest natural gas bills in Canada and will continue to have the lowest natural gas bills in the country if this proposal is approved,” Acting President and CEO Mark Guillet said.
SaskEnergy bills consist of the commodity rate combined with the delivery service rate. The commodity rate is set on a cost-recovery basis, reflecting the market costs of natural gas, with no profit or loss earned or incurred by SaskEnergy.
SaskEnergy is implementing the combined commodity and delivery rate increase on August 1, 2022. Year two and year three delivery service rate changes would take effect on June 1, 2023, and June 1, 2024, respectively.
SaskEnergy has a hedging (price risk management) strategy that locks in the commodity price of natural gas for purchase in the future, providing some price stability and shielding customers from the extremes of market volatility.
“Following the sharp rise in natural gas prices in 2022, some utilities across Canada have implemented commodity rates of more than $8 per gigajoule, which is almost double what we are proposing,” Guillet said. “Our hedging strategy has allowed SaskEnergy to propose a commodity rate of $4.20 per gigajoule, which is much lower than the market price of natural gas. Without this strategy, SaskEnergy would need a commodity rate of at least $6 per gigajoule.”
SaskEnergy has been managing costs and limiting the extent of possible delivery rate increases through internal efficiencies such as business process changes, Crown collaboration, leveraging technology and mitigating operating and capital costs.
SaskEnergy’s delivery service rate supports planned investment in system integrity and safety efforts of about $50 million annually, as well as investment in the growing communities of Saskatchewan.
“Every year we invest in system expansion and upgrades, leak surveys and repair programs. It is because of these programs that customers can be confident in the safety of our system and can expect the natural gas they need for their homes and businesses to be there with 99.99% reliability,” Guillet said. “This rate adjustment will allow SaskEnergy to continue maintaining, upgrading and expanding the system while managing the rising costs of fuel and other operating expenses impacted by inflationary pressures.”
This would be just the second commodity rate increase by SaskEnergy since 2014. The last change to SaskEnergy’s delivery service rate took place in April 2019.
For more information on the rate review process or to download SaskEnergy’s rate proposal, visit the Saskatchewan Rate Review Panel website.