Saskatchewan Rate Review Panel suggests holding off on SaskEnergy delivery rate increases

The Saskatchewan Rate Review Panel is recommending that the provincial government defer delivery rate increases for SaskEnergy after a multi-year application was brought forward.

The panel submitted its report on Friday, noting that the application was looking to increase both commodity and delivery rates.

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“The Panel is recommending that the effective date for the proposed delivery rate increase for 2023-24 be deferred from June 1, 2023 to July 1, 2023; and for 2024-25 be deferred from June 1, 2024 to July 1, 2024 to provide the Panel with a sufficient review period to consider the required updated financial information from the company,” the panel’s summary read.

It recommended that the province maintain both the commodity rate increase of 31 per cent and the delivery rate increase of eight per cent that were implemented in August, but added that the five per cent delivery rate increases for both the 2023-24 and 2024-25 years can’t be considered until financial forecasts are updated.

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The panel noted that net income for this year will be higher than anticipated, adding that affordability needs to be taken into consideration.

“With increasing concerns about affordability, the Panel is of the view that this is not the time to support rate increases of the magnitude requested in the second and third year of the application. Due consideration is required to lowering the average ROE to help address affordability issues.”

“For the first time we had representations from the commercial business sector including the Canadian Federation of Independent Business, Restaurants Canada, and the Saskatchewan Landlords Association — all expressing concern about the significance of increased rates to their members. There was also a submission from the Renters of Saskatoon and Area, which expressed its concern about the impact of these rates on marginalized tenants,” the report added.

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Significant increases were forecasted for SaskEnergy’s expenses in most categories, with operations and maintenance expecting a 17 per cent increase for 2022-23, a 1.5 per cent increase for 2023-24 and a 2.2 per cent increase for 2024-25.

The report said the highest increases was an 8.2 per cent increase for full-time worker wages, a 9.2 per cent increase in transportation and storage, a 6.1 per cent increase for a depreciation expense, a 3.9 per cent increase for a tax expense, and a 0.5 per cent increase for an interest expense.

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It added that other revenues are expected to decrease by 8.3 per cent.

But the panel noted that customers will see an increase in their costs with regard to operations and maintenance, adding that a $321 bill in 2021-22 will rise to $382 in 2022-23.

The report said the original forecast for net income was $9.6 million, but September’s updated forecast shows the expected net income will more than double, landing at $24.8 million for a return on equity of 5.9 per cent.

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Reasons for this revision were listed as expenses being lower than forecasted, but more notably increases in other revenue.

The panel suggested that revenues will be even greater than the mid-application update due to colder than normal weather.

Other recommendations were also given to SaskEnergy to work with other Crown corporations to create more efficiency, as well as to develop measures that take into consideration the impact on customers.

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