SASKPOWER SEEKS RATE INCREASE
4.9% hike expected
REGINA — SaskPower is seeking a 4.9 per cent rate increase, which if approved would cost the average urban residential customer about $4 per month, effective Jan. 1, 2013.
For average rural residential customers, the rate hike would add another $6 to their monthly power bills, while average farm customers would pay another $10 per month.
Urban commercial customers are facing an average $ 24- per- month increase, while rural commercial customers are facing an average $29-per-month hike.
Even with the rate increase, SaskPower rates will be competitive with other provinces with largely thermal (coal or natural gas) generation, such as Ontario, Alberta and the Atlantic provinces, the Crown corporation said.
Currently, SaskPower residential rates are eight per cent below the Canadian av- erage and 22 per cent lower than rates charged by other Canadian thermal utilities.
SaskPower president and CEO Robert Watson said the rate hike — the first in three years — will help the company fund its $10-billion capital program over the next decade. There were no rate increases in 2011 and 2012, while the last increase was 4.5 per cent in August 2010.
“This increase is needed to fund investment in the province’s electrical system to keep up with our growing economy and maintain the electrical (system’s) reliability within the province,’’ Watson told reporters at the utility’s head office. “The lights have to stay on.’’
Watson said the province’s electrical grid is under increasing pressure, with demand projected to grow by 2.9 per cent annually from 2011 to 2021, compared with 1.4 per cent between 2000 and 2010.
“In 2011, we received a record number of services applications, and 2012 is starting the same way. Earlier this year, Saskatchewan set a new record high for the amount of power use in Jan. 18, with a total of 3,265 megawatts.’’
More important, SaskPower is faced with a massive rebuild of its electrical generating system, most of which was built 30 to 50 years ago.
“We plan to spend just under $1 billion in 2012 and another $1.2 billion in 2013. In fact, over the next 10 years we expect to spend $10 billion in infrastructure and another $5 billion in power purchase agreements, if necessary,’’ Watson said.
Specifically, SaskPower is investing $1.24 billion in the carbon capture and storage project at Unit 3 of the Boundary Dam Power Station, including $365 million next year, and $555 million to expand the Queen Elizabeth II Power station in Saskatoon, including $110 million next year. The BD3 project is expected to be complete in 2013, with commercial production set for 2014, while 200 MW expansion of QEII is expected to come on stream by 2015.
Also included in the $10 billion are proposed clean coal projects at Units 4 and 5 at Boundary Dam, which will cost around $1 billion each, SaskPower officials said.
Watson added that the corporation is embarked on several upgrades that will automate electrical meter reading and increase system efficiency and monitoring, improve billing systems and expand transmission capacity and distribution lines in 2012 and 2013.
While the proposed rate increase will increase revenues by $90.8 million annually, the corporation will save $220 million by 2013 through its business renewal program, which seeks to reduce operating, fuel and capital costs, Watson added.
But NDP SaskPower critic Trent Wotherspoon said the rate increase amounts to a “back door” tax in- crease as the $90.8 million revenue increase almost offsets the “special dividend” of $120 million taken by the Sask. Party government from last year’s $248 million profit.
“Without that unplanned cash grab from government, this rate increase wouldn’t be required today,’’ Wotherspoon told reporters.
However, Watson said the “shareholder” has the right to take special dividends when profits exceed expectations and that the corporation is not planning on paying dividends for the foreseeable future.
The rate application has been sent to the Saskatchewan Rate Review Panel, which will hold public meetings on the rate proposal. The panel will deliver its recommendations to Crown Investment Corp. on Nov. 19.