SaskEnergy rates going down in January
The province has accepted the Saskatchewan Rate Review Panel’s recommendations for SaskEnergy’s proposed commodity and delivery service rates, which will reduce average residential natural gas bills by $4.42 per month or $53 annually.
However, the changes will be implemented Jan. 1, 2016, instead of Nov. 1, the government announced Wednesday.
The government delayed the rate changes by two months to allow SaskEnergy to eliminate the deficit in the utility’s gas cost variance account (GCVA), which tracks the difference between what SaskEnergy pays for natural gas on the open market and the rates charged to customers. The account had accumulated a $34-million deficit due to the severe winter of 20132014.
SaskEnergy had anticipated the deficit in the GCVA to be down to $5 million by Nov. 1 when the application was filed this past spring, but the Crown corporation now estimates the deficit will be more than double that amount or $11 million.
“SaskEnergy requires a two-month extension to continue repaying this account as less natural gas has been used by customers due to warmer than average weather in the spring and fall of 2015,” said Jim Reiter, minister responsible for SaskEnergy.
“With the GCVA fully recovered, the corporation will be able to provide the rate protection and stability customers depend upon during what is often the coldest winter months and the most volatile pricing on the commodity markets,” Reiter said in press release Wednesday.
SaskEnergy spokesman Dave Burdeniuk said abnormally warm weather this spring and fall caused gas consumption to fall below expectations, which reduced the pace of deficit reduction in the GCVA. “Had we had more average temperatures in spring and even the fall, (the GCVA deficit) would have been closer to the $5-million mark,’’ he said.
Burdeniuk added when SaskEnergy changed its rates in July 2014, it projected up to 24 months would be required to recover the deficit in the GCVA. “This is still a (GCVA) recovery six months ahead of where we thought (we would be).’’
SaskEnergy rate changes include a decrease in its commodity rate from $4.84 per gigajoule (GJ) to $4.30 per GJ and an increase of 4.5 per cent to its delivery service rate. For residential customers, the increase in the basic monthly charge of $1.75 will be more than offset by the lower commodity cost.
Despite the delay in reducing its rates, SaskEnergy still has among the lowest natural gas rates in the country. “SaskEnergy will still offer the lowest residential delivery rates of any natural gas utility in Canada and will maintain its competitiveness by managing cost pressures through future productivity improvements and internal efficiency measures,” Reiter added.