SaskPower proposes three-year rate hike

Residents may pay $156 more in 2016

REGINA — SaskPower residential customers could be paying an extra $5 per month on their electricity bills next year — $156 more a year by 2016 — if a threeyear rate application by the Crown electrical utility is approved by the Saskatchewan Rate Review Panel and the provincial cabinet.

SaskPower president and CEO Robert Watson announced the proposed system-average rate increases of 5.5 per cent, effective Jan. 1, 2014; five per cent in 2015 and five per cent in 2016, in Regina on Friday.

For average residential customers, the rate hikes would increase their monthly bills by $5 next year, $4 in 2015 and $4 in 2016, while farm customers would see monthly increases of $7, $10 and $9 over the same period. Commercial and industrial customers could see increases of up to 7.0 per cent, while resellers — namely the cities of Swift Current and Saskatoon — will see the largest increases of 7.0 to 7.3 per cent.

“These increases are needed to fund investment in the province’s electrical system, to keep up with our growing economy and maintain reliable electrical service for our customers,” Watson said. “By submitting a multiyear application, we’re able to provide certainty to our large customers for their own business planning and enable residential customers to budget expenses in advance.”

Watson said the proposed five per cent increases for 2014-16 are higher than the three per cent average increases of the last 10 years because of the large capital investment required by SaskPower, as well as growth in electricity demand and rising fuel and purchased power costs.

“INCREDIBLY, DEMAND IS PROJECTED TO GROW EIGHT PER CENT OVER 2013-14.”

ROBERT WATSON

“Incredibly, demand is projected to grow eight per cent over 2013-14. This increased demand for services is expected to continue into the foreseeable future,” at the rate of 2.6 per cent per year, Watson said. By contrast, electrical demand grew by an average of 1.4 per cent annually from 2000 to 2010.

“This shows how necessary it is for SaskPower to invest in renewing and rebuilding the province’s electrical system. Most of our system was built 30 to 50 years ago and the equipment is rapidly coming to the end of its operating life.”

Watson said SaskPower will spend $1.35 billion in 2013 ($2 billion including the $700-million privately owned Northland Power 260-megawatt project in North Battleford, which opened in June) and “approximately $1 billion annually for the long-term on our electrical system to ensure our customers have the power they need for today and for future generations.”

He added the budgeted $1.24-billion cost of the integrated carbon capture and storage (ICCS) project at Boundary Dam Power Station’s Unit 3, which will come on stream in April 2014, is included in the rate application, but a recently announced $115 million cost-overrun is not.

Other capital projects in the 2014-16 time frame include the 205 megawatt (MW) expansion of the Queen Elizabeth II Power Station ($525 million) in 2015, 177 MW wind power project with Algonquin Power near Chaplin in 2016 and the 50 MW Tazi Twe run-of-the-river hydroelectric project at Elizabeth Falls near the N.W.T. border in 2018 ($300 million).

With the 5.5 per cent rate hike next year, Watson said SaskPower will generate only a “modest profit” of $27 million in 2014, given the large capital spend in 2013. And even after the threeyear rate increase, SaskPower rates will be competitive with rates of other thermal (coal and natural gas-fired) power utilities, despite having the fewest number of customers (three) per kilometre of power transmission line in Canada where the average is 12. “SaskPower rates are, on average, 18 per cent lower than charged by other Canadian thermal utilities,” he said.

But Cathy Sproule, NDP critic for SaskPower, said if the new rate hike is approved, power bills will end up being more than 38 per cent higher than in 2009. “With such a strong economy, it’s frustrating to families that the government’s Crowns have to turn to Saskatchewan people to pay more and more,” Sproule said.

Cabinet has the final say on rate applications by SaskPower.