Panel releases recommendations on SaskPower rate proposal
After reviewing SaskPower’s first multi-year rate proposal, the Saskatchewan Rate Review Panel recommended approval of two components, denied a third component, and placed a heavier focus on the need and transparency for capital projects.
The recommendations on rates are:
- approval of a system-average rate increase of 5.5%, which took effect on an interim basis on January 1, 2014;
- conditional approval for a system-average rate increase of 5% to be implemented on January 1, 2015, subject to several additional filing requirements from SaskPower; and
- denial of a request for a further system-average rate increase of 5%, effective January 1, 2016.
“Two items are driving about 88% of the revenue requirement being imposed on customers with this application,” said Panel Chair Kathy Weber. “The main driver is the costs associated with the Capital Projects (72%), while the balance (16%) is the forecasted increases in Fuel and Purchased Power costs.”
The Panel notes there are many financial uncertainties or future variables regarding the 2014-2016 forecasts, and these become less certain when forecasting the accuracy of costs and revenues into 2015 and 2016. On the basis of these future financial uncertainties, the Panel denied the request for a rate increase in 2016.
During the review process, several stakeholders questioned various aspects of SaskPower’s Capital Projects, including the need and timing of certain projects. Because Capital Projects are the main driver of this application, the Panel urges SaskPower to develop a public dialogue to further educate customers and key stakeholders on the need for Capital Projects, and to provide more transparency on its current plans, to ensure they are implemented in a timely and cost-effective manner.
“While many of the capital expenditures are justified and necessary to provide a safe and reliable power supply to the province, the Panel agrees with several customers who expressed concern about SaskPower’s forecasting costs over a multi-year period,” said Weber. “A more transparent process will
assist in educating the general public and the stakeholders, and will provide the Panel with the information needed to make recommendations on future rate increases.”
“This is the first multi-year application the Panel has received from SaskPower. It is in the best interests of all parties, including the public, SaskPower and its customers, to review possible rate increases at a time when more certainty in future cost and revenue information is available.”
