Panel recommends approval of SaskEnergy commodity rate
The Saskatchewan Rate Review Panel has recommended the provincial government approve SaskEnergy’s application to increase the natural gas commodity rate charged to customers effective November 1, 2021.
The proposed commodity rate increase of 28.1% to 12.78 cents per cubic metre ($3.20 per Gigajoule) will eliminate the outstanding balance in the Gas Cost Variance Account (GCVA) by October 31, 2023, and recover forecast commodity purchases over the same period. This two year period is designed to reduce financial pressures on SaskEnergy customers and provide greater rate stability.
The customer bill impact will depend on the customer class and usage levels. On average, residential customers will see an increase of $74 per year; small commercial customers $361; and large commercial customers $4,713.
In its application, SaskEnergy indicated that the proposed increase was designed to recover the higher forward costs of gas from November 1, 2021 to October 31, 2023. SaskEnergy buys natural gas on the open market and passes on the cost of natural gas to customers at the same price it pays to suppliers, including all expenses. The cost of providing natural gas to consumers this coming year is forecasted to be higher than the current rate of 9.98 cents per cubic metre ($2.575GJ).
The application is also designed to clear any balances in the GCVA at the end of October 2021 over the same two year period. It is forecast that there will be $18.8 million owing in the GCVA from customers by the end of this month that will be recouped by October 31, 2023.
The Panel’s recommendation, which follows a review of the application and other documentation, as well as input from the public, is consistent with the analysis and recommendation made by the Panel’s independent technical experts.
During this review, the Panel also noted other recommendations for SaskEnergy including the need to review the basis for the $20 million threshold for triggering an application for amounts owing to or from customers. The Panel is also recommending that SaskEnergy continue its efforts to bill in energy, which would eliminate the need for forecasting heat value and the associated risks related to heat value variance. SaskEnergy is also requested to provide a report in its next application on its renewable natural gas efforts in order that the Panel may consider the potential benefits, costs or other issues that such a program may present.
The mandate of the Panel is to review the application and provide an opinion on the fairness of the rate adjustments requested, considering the best interests of the customer, the Crown corporation, and the public. The Panel believes these recommended rates, along with its other recommendations, represent a fair balance of the affected parties.
