Don’t raise gas rates in 2023, 2024, review panel tells Sask. government
The Saskatchewan government should maintain the natural gas rate hikes it implemented in 2022, but should hold off on approving future increases for the time being, the province’s Rate Review Board recommends.
SaskEnergy had requested multi-year increases in raw material and supply rates. The utility wanted to increase delivery rates by eight percent this fiscal year, by five percent beginning June 1, 2023, and by another five percent in June 2024.
It also tried to increase the price of raw materials – which customers pay to cover the cost of natural gas bought by SaskEnergy – by 31 percent this year.
The Rate Review Panel, whose members are asked to provide an objective assessment of rate requests, proposed maintaining increases in commodity and supply rates implemented by the Saskatchewan government in August, according to a report delivered to Crown Secretary Don Morgan last week became Investments Corp.
However, the panel suggested that the proposed increases in the provisioning rate for fiscal years 2023 and 2024 cannot be accommodated at this time.
SaskEnergy has seen a significant improvement in financial results this year, the panel wrote, so the government should wait until the utility provides updated financial projections in February before deciding on potential increases.
The panel also recommended that Morgan file a future commodity rate cut request in April and delay the effective date of proposed supply rate increases to allow the panel enough time to review the updated finances.
The Saskatchewan government is “carefully considering” the panel’s recommendations, a spokesman said.
SaskEnergy will provide updated financial reports for tariff application to the panel in February, they added.
Panel notes concerns about multi-year applications
The delivery rate increase was the first three-year proposal that SaskEnergy made to the panel.
During the review process, the panel identified several concerns and supports more frequent requests for smaller increases, according to the report.
Rate requests are based in part on SaskEnergy’s financial condition and forecasts.
However, according to the report, SaskEnergy begins its business planning in June and submits its business plan to the Board of Directors for approval each November, so the economic assumptions used in this particular application were more than a year old at the time the application was submitted.
According to the report, SaskEnergy provided a mid-application financial update that showed significant financial improvement for the current fiscal year, but did not provide information for subsequent years.
“The lack of updated financial information for those years does not provide the panel with adequate data to recommend or confirm rates for the second and third years of this application,” the panel wrote.
This uncertainty would add to current economic problems such as inflation and interest rates, the panel added.
Customers also have to pay other gas-related fees like taxes, so the proposed multi-year increases raised affordability concerns, the report said.