REGINA - SaskEnergy has announced it is applying to the Saskatchewan Rate Review Panel for changes that will result in decreases for the average residential consumer.
“Overall we’re hoping people will be pleased to see a reduction,” said Minister for SaskEnergy Don Morgan to reporters Wednesday at the legislature.
He confirmed the government has authorized SaskEnergy to submit a proposal for a 22.1 per cent decrease to the commodity rate, dropping at from $4.20 to $3.30 per gigajoule. At the same time, they will also bring forward a proposal for the review panel to consider a five per cent delivery service rate increase.
The combined commodity and delivery service rate adjustments are expected to result in the overall bill decreased of $5.66 per month or $68 a year for average residential customers. If it is approved, the bill decrease should take effect by October 1 of this year.
As for why the change is being made now instead of earlier, the indication from the province is that it is due to a drop in the market price of natural gas, as well as SaskEnergy’s continued focus on price risk management.
He noted the variance account had been in a deficit position “so we wanted to make sure that it was out of a deficit position and would continue to stay out of the deficit position and that they were able to do some hedging looking forward on gas rates.”
The province also noted that SaskEnergy uses a hedging strategy to lock in commodity prices of natural gas for purchase in the future, to shield customers from the extreme swings of market volatility.
Morgan noted that a year or so back, they had seen a rapid increase in commodity prices they hadn’t seen in many years.
“It’s spiked up, and nobody knew at that time whether it would be a sustained increase or not. It’s dropped back down so we maintained it at a lower level so they could equalize through the variance account. Our goal going forward will be to try and have better stability. SaskEnergy does a good job of hedging, so we expect to have some stability."
In their response, opposition NDP critic Erika Ritchie accused the government of waiting too long.
“We’ve been calling on the Sask. Party government to scrap their rate hikes to energy bills for months. It shouldn’t take until the eve of a by-election for them to do the right thing," said Ritchie in a statement. "This government is sitting on a billion-dollar surplus, and with commodity prices falling there’s no reason they can’t reverse their power rate hikes too. When families are already paying an average of $200.25 a month just to heat their homes and keep the lights on, a decrease of $5.66 goes nowhere far enough. In terms of the final bill that ends up on your kitchen table, this will mean a two per cent decrease, not 22 per cent. People are having to choose between heating and eating because they can’t afford the Sask. Party’s three rate hikes in the span of eight months.”
