Panel recommends reduced rate increase for Saskatchewan Auto Fund
The Saskatchewan Rate Review Panel is recommending an overall average increase of 0.6% to Saskatchewan Auto Fund rates, effective August 4, 2012. The Panel is also recommending a temporary, two- year overall average rate surcharge of 1.0%, to help replenish the Auto Fund’s Rate Stabilization Reserve.
The SGI Auto Fund had proposed an overall average rate increase of 3.7%.
“It’s a matter of an appropriate balance,” says the Panel Chair Kathy Weber. “Thorough public consultations, plus detailed study and advice from our technical experts, led us to recommend what we believe is a balance that provides sufficient resources for the company and appropriate rates for consumers.”
The recommendation proposes that the 1% rate surcharge would be charged annually over a two-year period and identified separately on customer billings and in the Auto Fund’s internal accounting. The purpose of the Rate Stabilization Reserve is to protect the Auto Fund’s customers from large rate changes caused by such things as severe weather conditions or adverse financial events. During its review the Panel learned that the level of funds in the Rate Stabilization Reserve is at or near the lower end of its target range, and evidence is strong that it will fall below that level.
“The temporary surcharge will support a reserve fund that provides protection and stability,” said Weber. “Identifying the surcharge on billings and in accounting would provide a clear picture for the public, so consumers can know what they’re paying for and why.”
The Panel makes several other recommendations in its report, including support for the Auto Fund’s objective to achieve rating fairness through further rate rebalancing in future rate applications.
The Panel congratulated the Saskatchewan Auto Fund for completing its multi-year Auto Fund Redevelopment Project essentially on budget and on time. “The new system has enhanced online service delivery for customers, and has already resulted in substantial savings,” said Weber. “In addition, it is projected to produce approximately $1.75 million in annual savings for the Auto Fund, with the promise of more services and more efficiencies to come.”
Weber also noted the Panel received 76 communications from organizations and individuals during the review process, a significant increase over previous reviews.
The Panel has submitted its report to the Minister responsible for the Crown Investments Corporation, and is making the report available to the public on the Panel’s website at www.saskratereview.ca.
The Provincial Cabinet will make the final decision on the rate application.
The complete report of the Panel’s review can be downloaded at www.saskratereview.ca.
