Utility needs extra $7M per year for infrastructure

Saskatoon’s power utility is failing to keep pace, even though it sets aside $16 million a year for maintaining and improving infrastructure.

A Saskatoon Light & Power report says $7 million more is needed each year to stash enough money in reserve funds to keep up with infrastructure needs.

The report suggests freezing the money funnelled from the cityowned power utility to help pay for the city’s operating budget at its current level of $24.66 million for five years.

Rising electricity rates will allow the power utility to divert enough money annually to its reserve fund so that annual funding can rise to the required $23.1 million.

“It’s a better scenario than I thought, actually, when I was wondering how we were going to make sure we were setting up Saskatoon Light & Power for long-term success,” Mayor Charlie Clark said on Monday.

Under the proposed plan, the city’s so-called return on investment, which helps cover the city’s operating budget, would begin to grow again in 2023. Electricity rates are expected to rise by five per cent for three years and then by three per cent in following years.

The report was presented at Monday’s meeting of council’s environment, utilities and corporates services committee; a final decision will be made during yearend budget talks.

The “vast majority ” of Saskatoon Light & Power’s assets are deemed to be in good or very good condition, but some key assets are deteriorating and require attention, the report says.

Much of the power utility’s spending is aimed at preventing outages. Twenty-three per cent of power outages in 2016 were linked to defective equipment, the report says.

The Saskatoon Light & Power report is the latest to suggest the city is not replenishing its various reserve funds with enough money to meet the need to repair and replace infrastructure.

The city estimates $16.2 million a year is needed to maintain adequate spending on buses, parks and bridges. Near the end of last year, the city’s reserve funds were estimated at $158 million.