SaskPower asking for 5% rate hike

If approved, average consumer will face $6-per-month increase

Following two increases in the past 13 months, SaskPower is requesting another rate hike.

This one would be a 5.1-per-cent increase effective March 1 of next year.

The Crown Corporation cites challenges of growing electricity demand, environmental commitments and an aging electrical system as reasons for the increase.

“The impact on homeowners, on people on fixed incomes, on lowincome, certainly we appreciate the impact it has,” said SaskPower president and CEO Mike Marsh.

He said the company is working to keep increases “as low and as regular as we can without causing undue hardship.”

An approved rate increase will mean that someone whose power bill was $100 a month in June 2016 will pay $114.12 per month in March 2018 — about $170 more a year.

SaskPower rates went up by five per cent on July 1, 2016, and 3.5 per cent on Jan. 1.

Cumulatively, power bills have increased almost 27 per cent in the past five years, not including the proposed rate hike.

The company says this latest increase will mean a $6-a-month increase for the average residential power bill, which will increase SaskPower’s revenues by about $124 million annually.

The rate request is not a guarantee: Provincial cabinet must approve it after a review by the Saskatchewan Rate Review Panel.

The most-recent increase of 3.5 per cent was after a request of five per cent.

SaskPower is banking on another five-per-cent rate hike in the next couple of years, followed by a two- or three-percent increase.

“We see a couple of years in the next five to 10 where we don’t need rate increases. The infrastructure in this province needs to be rebuilt and that’s going to be a continual investment well into the future,” Marsh said.

“I think it’s the people at low to moderate income that are going to be hit the hardest,” said Paul Gingrich, a retired professor from the University of Regina who has co-authored recent reports on poverty and cost of living in Saskatchewan.

“People who don’t have a lot of flexibility in their budget, they cut back on things probably they really shouldn’t,” which might include healthy food, purchasing a house and investing in their children’s post-secondary education.

“Wages may not be increasing as much as the costs now,” Gingrich added.

SaskEnergy has also requested a 2.3-per-cent rate increase (albeit after a two-per-cent decrease last fall), and the provincial sales tax increased by one per cent in the spring.

Saskatoon Light and Power has traditionally increased its rates on par with SaskPower, its bulk wholesale supplier, Marsh said.

SaskPower’s aging infrastructure includes one million wooden power poles that predate 1990, coal generation largely built in the 1970s and ’80s, hydro generation built in the 1930s through ’60s, and a transmission system built before the 1980s.

The company is forecasting a capital investment of $1.2 billion in 2017-18.

Major projects include replacing wooden power poles ($320 million over the next five years), and construction of the Chinook power station ($680.5 million) and the Pasqua to Swift Current transmission line ($223 million).

In the past two years, the company has reduced budgeted operating, maintenance and administration spending by $73 million, while deferring $484 million in capital spending.

“We’re doing this to ease the impact on customers. We’ve taken a reduction in our net earnings over the past few years to try to keep things as flat as possible. We’re going to continue to do that where we can going forward,” said Marsh.

Two-thirds of the energy produced in this province serves industry, said Marsh, although “everybody is the reason for the expansion.”

He said peak power usage records were set twice this summer.

SaskPower’s rate application states that its rates are roughly middle-of-the-road when compared to power rates across Canada, although it doesn’t list province by province.

A 2016 Hydro-Québec comparison of 21 North American cities put Saskatchewan’s rates at 10th highest, more expensive than New Brunswick, Newfoundland and Labrador, British Columbia, Alberta, Manitoba and Quebec.

Marsh said power costs depend somewhat on Mother Nature, as hydro keeps fuel costs low, and moderate weather can help on the load side.

Marsh said the recent spate of power meter fires does not figure into the rate increase request. “The cost for these meter fires are way, way less than the impact of this rate application,” he said. “We’re talking a few million, we’re not talking $150 million.”

Meters at more than 5,000 homes have been inspected, and about 2,500 have needed remediation. There are still about 1,000 to be inspected.

Marsh said that, in the Regina area, about 50 to 60 per cent of the meters inspected needed to be repaired or replaced.