Sask. getting $174 million as part of deal with federal government over carbon pollution funding

The Saskatchewan government will receive $174 million from the federal government, as part of an agreement on how Ottawa will reimburse the province for funds originally collected from industry through Canada's carbon pricing plan.

Don Morgan, Saskatchewan's minister responsible for SaskPower, revealed that the $174 million is part of a larger pool of $480 million that has been collected by Ottawa since 2019 through its output-based pricing system, which regulates large emitters. He expects the remaining money to be released at a later date. 

"It was money based on the emissions that would have been made by SaskPower for the last number of years ... So they are returning [$174 million] and allowing us to release the remaining funds subject to certain conditions," Morgan said. 

Federal Environment Minister Steven Guilbeault announced the decision to release $174 million to the Saskatchewan government on Friday. 

"Investments from this fund are helping to create clean air, good jobs, and the development of a resilient low-carbon economy," Guilbeault said in a statement. 

The money will be shared through a funding agreement and will be part of Canada's Future Electricity Fund, which is meant to advance clean electricity in the province.

A timeline for when the money will be shared with the province was not immediately available. 

Morgan said the funding is good news but that the provincial government isn't entirely happy with the agreement. 

It remains the province's position that the money collected through the federal carbon pricing scheme should not have been paid to the federal government, Morgan said. 

Saskatchewan, Alberta and Ontario opposed the policy meant to curb greenhouse gas emissions, arguing that natural resources were in provincial jurisdiction. 

However, a 2021 Supreme Court decision found the federal government can impose nationwide pricing standards and left the provinces with little recourse. 

The $174 million in funding was the result of negotiations between the provincial and federal government that took place over a "number of months," according to Morgan. 

The project list that has been developed includes things the province wants to do, he said. "However, we would rather have the money so we control what amounts go to what projects and over what period of time."  

The $174 million will help fund three projects.

One is the rollout of "smart meters" across the province, which is meant to allow residents to efficiently power their homes and potentially save money by reducing their energy usage.

Another project is targeted at rural areas and will move power lines out of farm fields and into public right of ways. This is meant to help reduce the number of power lines that are lost due to aging infrastructure as well as providing more efficient and modern equipment that will improve the performance of SaskPower's systems. 

The third and final project is an upgrade of the E.B. Campbell Hydroelectric Station, located on the Saskatchewan River near Nipawin. 

Morgan said the province is not allowed to use any of the carbon pricing funds on reducing consumers' bills and that it will have to be put toward lowering emissions. 

The  remaining $306 million will be used for a number of different projects. They include upgrades to the Coteau Creek Hydroelectric Station on Diefenbaker Lake. 

"There are four pen stocks there, only three that are being used right now, so they would be able to add a generating turbine in the bottom of the fourth one," Morgan said. 

Other projects include upgrading the grid in parts of northern Saskatchewan as well as the planning and development of small modular nuclear reactors in the province.