Natural gas bills in the province could be going up, quite substantially, by the end of the month. The proposal would see increases over the next three years.
SaskEnergy has put in a proposal to the Saskatchewan Rate Review Panel for an increase of 16.8 percent for the first year, 2.9 percent in the second year and 3 percent in the third year. This works out to increases of $11.95, $2.43 and $2.53 for the average residential customer.
“SaskEnergy’s residential customers currently have the lowest natural gas bills in Canada and will continue to have the lowest natural gas bills in the country if this proposal is approved,” Acting President and CEO Mark Guillet said.
The increase comes as the price of natural gas continues to be well above where it has been in recent years. At the end of 2021, the price was $3.73 per gigajoule on the spot market, but it has steadily increased since then, reaching a peak of $9.32 a gigajoule on June 6th, and was at $6.34 Monday morning.
The increase proposed for this year, which would take effect August 1st if approved, would be a combined commodity and delivery rate increase. The other two increases would be to the delivery service rate.
“Following the sharp rise in natural gas prices in 2022, some utilities across Canada have implemented commodity rates of more than $8 per gigajoule, which is almost double what we are proposing,” Guillet said. “Our hedging strategy has allowed SaskEnergy to propose a commodity rate of $4.20 per gigajoule, which is much lower than the market price of natural gas. Without this strategy, SaskEnergy would need a commodity rate of at least $6 per gigajoule.”
The hedging strategy used by SaskEnergy locks in the commodity price for purchase in the future, which is intended to help provide stability for customers.
The increase to the commodity rate would be the first increase by SaskEnergy since 2014. There were changes made to the delivery service rate in 2019.
The proposal is now before the Rate Review Panel. The Rate Review Panel will then submit their recommendations on the proposed increase to the provincial cabinet for final approval.
The news of the proposal comes at the same time the Rate Review Panel has given their recommendation that a proposed 4 percent rate hike from SaskPower be approved by the cabinet. That increase would be effective September 1st. An increase for April 1st of next year was also recommended to be approved.