SaskPower plant benefits to Moose Jaw great, but short-term outlook still overcast
The signing of a deal to build a $700 million natural gas co-generation plant in Moose Jaw will cement this city’s future.
When industry looks for location sites, four factors tip the balance in decisions: skilled reliable pool of labour, access to markets, reliable supply of water and energy. Moose Jaw has the labour pool, the access to markets by rail and highway, the water and now a better supply of energy. Increasingly, industry seeks energy produced with low greenhouse gas emissions. Natural gas has the lowest emissions outside of uranium, solar or wind energy. The plant is part of the provincial program to lower greenhouse gas emissions from shifting power sources by 2030. This plant could add about 10 per cent to SaskPower’s generating capacity,
Aside from acting as an attraction for business, the plant will have other benefits — 600 employees here during the three year construction period, about 25 full-time employees, a major user of water, and possibly municipal tax revenue.
The provincial government ended grants in lieu of taxes from crown corporations in 2016. Hopefully the city was able to negotiate grants for this plant. The full grant in lieu would add $10 million a year to local property tax revenues. Current property tax revenues are $27 million a year.
Politics often enters into major Crown Corporation decisions: witness the natural gas co-generation plant under construction at Swift Current, home of the premier when it was announced.
To the extent that politics influenced this decision, our two Saskatchewan Party MLAa may have more clout in caucus than previously thought.
The next decade looks a lot brighter for Moose Jaw but the immediate economic outlook isn’t anything to write or text home about.
The Royal Bank’s outlook in December reduced growth estimates in Saskatchewan to 1.6 per cent of GDP from 1.7 per cent this year.
The Saskatchewan part of the outlook, titled Bumpy Road Ahead, cautions of pressure on the energy mining sector on a number of fronts. Oil price weakness will have a greater impact on investment than previously anticipated.
Uranium looks weak with some recovery in potash. Unfortunately for potash and oil, political decisions by cartels – OPEC for oil and Russian potash giants – can suddenly shift prices up or down.
Agriculture has offset some of the mining decline. Of course, assumptions about agriculture include “normal crop growing conditions.”
The last provincial crop report indicated one-third of cultivated land and almost half of pasture/forage land is short or very short of moisture.
This province needs lots of snow, a good spring run-off and timely rains to develop average agriculture crop and livestock production next year.
The province remains influenced by that “Next Year” hope that has gripped Saskatchewan since the first settlers broke sod.