Saskatoon Light and Power seeking more funding to address aging infrastructure
According to a report from the city-owned utility company, it needs $7 million more than originally budgeted.
SL&P said it spends roughly $16 million annually on maintaining current infrastructure like aging power lines, old transformers and rusted out power poles. But now, $23 million is needed to replace an increasing amount of infrastructure beyond its lifespan.
“It is estimated that the vast majority of assets are currently in either good or very good condition,” the report read. “But there are a number of key assets in fair to very poor condition that will require increased attention.”
According to the report, 10 per cent of the city’s metering and distribution system is in poor condition, with six per cent of the lighting system considered in poor or very poor condition.
“We’re not keeping up with the replacements as quickly as we need to,” SL&P director Trevor Bell said. “It’s kind of a widespread problem across all of our infrastructure, and really we’re trying to get a hold of it before it becomes a problem.”
According to Bell, SL&P provides a $24 million return on investment annually. The report recommends that the company uses more of its profit to address infrastructure needs, meaning less money going toward the city.
“We’ve all started looking at what the needs are in trying to make sure that we’re spending properly to maintain that infrastructure that’s now starting to get 30, 40 years old,” Bell said.
READ MORE: Saskatoon posts $3.1M deficit in 2017
The city is now looking at a new funding model that would allow SL&P to gradually reduce the money it returns back to the city. By 2022, the company would return 25 per cent of profits to the city, down from the 28 per cent this year. This would increase funding to capital reserves from 9 per cent annually to around 12 per cent, without raising property taxes.
The report says the return on investment for the city would continue to grow in 2023, once infrastructure conditions and reserve levels have increased.
Councillors received the report at the city’s standing policy committee on environment, utilities and corporate services meeting on Monday morning.
According to the report, SL&P has over $702 million in assets ranging from substations, overhead and underground distribution networks, as well as street lights.
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