City to follow Saskpower on carbon tax increase and relief measure
The City of Swift Current is implementing the same carbon tax increase and relief measure being applied by Saskpower.
The initial announcement by the City on Dec. 6 indicated that its Light and Power utility will implement the same relief program for residential customers on electric home heating costs.
This was followed by a decision during a regular council meeting on Dec. 11 to give notice of motion to the public of council’s intention to apply the same carbon charge electric rate increase than Saskpower.
In both cases the City’s decision is based on a long-standing policy to maintain rate parity between the Light and Power utility and Saskpower.
“Our goal or our primary objective for our customers, who are our owners, is to stay in step with Saskpower,” City Director of Light and Power Darryl Tunall said. “Thereby nobody gets penalized for being our customer. We’re all in Saskatchewan and so we buy wholesale from Saskpower, and we don’t want our people getting penalized for being our customers. So we’re staying in step.”
All Light and Power customers will experience an electric rate increase due to Saskpower’s adjustment of the carbon charge rate rider, but only a small number of residential customers will benefit from the carbon tax relief.
The federal carbon tax on emissions above certain thresholds was established in 2019. It will continue to increase annually until it reaches $170 per tonne of CO2 emissions in 2030.
“Saskpower has registered for the output-based pricing system, which applies the carbon charges to their various sources of generation,” he said. “Saskpower will estimate the carbon charge recovery it requires on an annual basis and set a rate rider by customer class applied to the KWH used. Saskpower will maintain a carbon charge variance account to manage any differences between the amount collected and the amount required to be paid to the federal government.”
There will be an adjustment to the carbon charge rate rider on Jan. 1, 2024, because the federal carbon tax on Saskpower’s carbon emissions will increase from $65 to $80 per tonne on that date.
According to Saskpower the average residential customer’s carbon tax bill for the year will increase by $5 to $85. The electric rate increase for each customer will vary due to differences in power use and rate class.
Tunall said the electric rate increase for Light and Power customers will be on average less than 0.4 per cent. For an apartment it will be on average about 20 cents per month, around 40 cents per month for a medium-sized home and around 55 cents per month for a large home.
Some residential customers in Swift Current will benefit from the carbon tax relief that comes into effect on Jan. 1, 2024. This is a result of the provincial government’s recent decision to provide relief from the carbon tax for people who use electricity to heat their homes.
Saskpower was tasked with implementing this carbon tax relief measure. The cost of heating a home with electric heat is estimated to account for up to 60 per cent of power consumption during winter months. Saskpower will therefore eliminate the carbon tax on electrical heating by reducing the rate rider by 60 per cent and the City of Swift Current will do the same.
Tunall estimated that less than 200 Light and Power customers are using electricity as the primary source to heat their home. It might be even fewer than the estimate, because the City only received enquiries from about 20 customers after the announcement.
Households in Swift Current must register with City Light and Power for the carbon tax relief if electricity is their primary source of heat for their principal residence. They can send an e-mail to lightandpower@swiftcurrent.ca or call 306-778-2770 during regular business hours (Monday to Friday, 7:30 a.m. to noon or 1:00 p.m. to 4:30 p.m., closed over lunch).
Council approves amendment to borrowing bylaw:
Council members approved an amendment to the borrowing bylaw during the regular council meeting, Dec. 11.
This change will make it possible to convert a portion of a revolving line of credit for property development into term debt with a fixed interest rate.
The City has been using its revolving line of credit to finance property development, including the Cypress Point development at the Elmwood golf course, the Springs Valley commercial servicing agreement, the Saskatchewan Valley development, Munro Industrial Park and the former school site concept plans.
The current borrowing limit on this revolving line of credit at Innovation Federal Credit Union is $24.6 million and the total amount outstanding is $20,897,609.01.
The City has experienced an increase in the carrying costs on this outstanding amount due to slow lot sales and a significant increase in the prime lending rate.
The amendment to the borrowing bylaw will allow the City to convert the outstanding amount on the revolving line of credit into term debt at a fixed interest rate. At the same time, the City’s borrowing limit on this line of credit will be reduced to $3,710,000 at an interest rate of prime less 0.50 per cent and any draws will only be used for investment in property development.