July 10, 2018 2:13 pm

SaskEnergy bills expected to drop due to low gas prices

Cold winter months were a driving factor in a financially successful year for SaskEnergy.

Sean Lerat-Stetner/ Global News
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Natural gas is a traditionally volatile market, but it has been experiencing an extended period of low prices. Because of this, Minister responsible for SaskEnergy Bronwyn Eyre is anticipating around a 10 per cent drop in the commodity portion of the bill.

“The commodity is half the bill. If there’s a 10 per cent reduction on the commodity side of it, it’s five per cent of the overall bill,” Eyre explained.

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The other half of a SaskEnergy bill involves the service rate, which includes supplying gas, sending out technicians and other factors in heating your home. Eyre said they do not anticipate any changes to that side of the bill.

READ MORE: SaskPower sees demand grow, mulling rate increase

SaskEnergy CEO Ken From said the average annual household bill in Saskatchewan ranges between $875 and $925 annually. A five per cent reduction could mean savings of around $40 to $45.

The Crown corporation is currently drafting a submission for the Saskatchewan Rate Review Panel to be submitted sometime in November. The price of natural gas will be based on that commodity’s year, Nov. 1 to Oct. 31.

“For the area we’re concerned with, three, five, maybe even ten years, the low commodity price is forecast by almost every fundamentalist to be relatively low,” From said.

READ MORE: Province expands SaskEnergy municipal surcharge to all communities

Low prices also mean more gas is going to have to be imported from jurisdictions like Alberta. Both From and Eyre said that production is down in Saskatchewan due to the price.

Currently 35 per cent of Saskatchewan’s natural gas is produced locally, the rest primarily comes from Alberta.

From said this is a satiable market, and with prices currently low in the volatile natural gas market, SaskEnergy is looking at securing a five year supply contract.

“We’ve done it in the past and now with this current very, very low price environment we are accelerating our process to ensure that the winter time, when price volatility is likely more prevalent, especially on the upside, we want to make sure our customers are protected,” From said.

READ MORE: Extreme cold sets records as SaskEnergy usage soars

This year’s cold winter months were a major contributing factor in increased income for SaskEnergy. Coupled with increased industrial demand, SaskEnergy pulled in $110 million in income, a $40 million increase over last year.

Cash coming in from operations topped out at $312 million, an $87 million increase over 2017. The extra money helped fund $255 million in capital projects and shrink the debt ratio.

SaskEnergy’s debt ratio is currently 56 per cent. The Crown corporation said their manageable target range is 58 to 63 per cent debt to equity ratio.

This strong fiscal year means SaskEnergy will provide $39 million in dividends to the Crown Investment Corporation, which is $10 million more than last year.

© 2018 Global News, a division of Corus Entertainment Inc.

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