Panel releases recommendation on SaskPower April 1, 2023 Rate Increase
The Saskatchewan Rate Review Panel today announced that it has recommended that SaskPower’s rate request of an average 4% increase effective April 1, 2023, be confirmed. This recommendation follows an abbreviated review process that included a review of SaskPower’s updated financial statements and material changes to its business operations as well as meetings with SaskPower officials.
This review is part of SaskPower’s original application on February 24, 2022, which requested a 4% rate increase effective September 1, 2022, and a further increase of 4% effective April 1, 2023. The application also proposed rate rebalancing that would consolidate the urban and rural residential customers to one rate class, and that the basic monthly charge would increase for urban customers and decrease for rural customers.
The Panel released its report on this application on July 11, 2022, which recommended approving the September 1 rate increase and rate rebalancing and rate design changes; but the April 1, 2023 increase was subject to a financial review submitted to the Panel by December 1, 2022, before being confirmed.
The updated financial information forecasts that SaskPower’s projected net income of $33 million in 2022-23 and a return on equity (ROE) of 1.1% is now forecast to result in a net income loss of $105 million (an overall decrease of $138 million). This loss is largely due to forecasted increases to fuel and purchased power.
Forecasted increases to operations, maintenance and administration (OM&A) and finance charges also contributed to the forecasted net loss. Forecasted increases to Saskatchewan sales and exports will help offset losses in 2022-23.
In 2023-24, forecasted net income decreased from $109 million in the original application to $23 million in the updated forecast. Forecasted ROE decreased from 3.8% to 0.8%.
In confirming this increase, the Panel recognizes the impact this will have on SaskPower’s ratepayers. Affordability issues are a concern, and while rate relief is always a goal or objective, this must be balanced against the financial needs of the corporation ensuring that Saskatchewan residents have a safe and reliable electricity service today and into the future. A major Crown Corporation forecasting a significant operating loss in the current year is not in the best interests of any of the stakeholders. The Panel continues to urge SaskPower to focus on limiting growth in OM&A costs and specifically per customer accounts to less than inflation by finding efficiencies within the corporation.
SaskPower’s updated financial review and the Panel’s recommendation letter to the Minister can be found on the Panel’s website at www.saskratereview.ca. The final decision to approve the rate increase rests with the provincial cabinet.
For more information please contact Albert Johnston, Chair of the Saskatchewan Rate Review Panel, at 1-877-368-7075 (toll free) or (306) 934-1948 in Saskatoon.
