The Saskatchewan Rate Review Panel is recommending SaskPower reduce a rate increase scheduled to take effect at the start of January.
On Monday, the regulator recommended a 3.5 per cent increase in the new year. This is after a five per cent increase on July 1 that was authorized by the government.
For the average residential customer, their monthly bill will rise by $3.71 on Jan 1. An average urban small commercial customer will see an extra $10.13 on their bill and a typical urban standard customer will see an increase of $114.80. An average large industrial customer will have an extra $14,703.50 on their bill.
SaskPower originally submitted a rate application that included a five per cent increase in July followed by another five per cent increase on Jan. 1, 2017.
READ MORE: SaskEnergy and SaskPower applying for rate adjustments
The Crown corporation said the increases were necessary as SaskPower needs to update and refurbish existing infrastructure, as well as build new power generation and increase distribution capacity for the future.
SaskPower said it will take approximately $1 billion per year over the next ten years to maintain and renew the company’s generation, transmission and distribution services. These include making expanding the system to include renewable energy.
READ MORE: SaskPower reports lower profits, outlines spending plans
The corporation said capital expenditures will account for a rate increase of approximately three per cent ANNUALLY.
For 2017, however, the Saskatchewan Rate Review Panel said that the second increase should be reduced to 3.5 per cent to soften the impact of two increases in six months.
Al Johnston, chair of the panel, said there were concerns from the public and industrial users that a 10 per cent increase over six months was too much and too quick.
READ MORE: Proposed SaskPower rate hikes draw concern from NDP, business
“That was the basic message, that they needed more time, particularly the big industrial customers and commercial customers that use a lot of power,” Johnston said.
“We wanted to make sure that there was adequate time for everybody to make whatever adjustments they need to.”
The panel said the recommendation will finally impact SaskPower and said the company will have to find areas to reduce expense or enhance other revenue sources.
“SaskPower has some expenses, which they can potentially control by cutbacks, not replacing staff, those sorts of things,” Johnston said.
“We are recognizing that SaskPower will have to find some ways to make up that difference if they want to achieve the return on equity that they are targeting.”
The panel has also recommended SaskPower limit the increase in operating, maintenance and administration costs, per customer, to one-half the increase of the Saskatchewan Consumer Price Index, or inflation.
Other recommendations include increasing stakeholder participation in the next cost of service study and rebalance rates between the different types of customers, demand and energy charges based on a cost of service study.
The panel also said SaskPower should prepare its load forecast, cost of service study and resource plan for the public during future rate applications.
“SaskPower has got to make a lot of changes over the next number of years in order to meet the 50 per cent renewable guideline by 2030,” Johnston said.
“I think that’s important that everyone understands what those changes are going to be and what the rate impacts potentially may be so that it’s not a big surprise when rate increases come along.”
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