Don't raise gas rates in 2023, 2024, review panel tells Sask. government

The Saskatchewan government should maintain the natural gas rate hikes it implemented 2022, but ought to hold off from approving future increases for now, the province's rate review panel recommends.

SaskEnergy had applied for multi-year commodity and delivery rate increases. The utility sought to increase delivery rates by eight per cent this fiscal year, five per cent starting June 1, 2023, and another five per cent in June 2024.

It also sought to increase the commodity rate — which customers pay to cover the cost of natural gas purchased by SaskEnergy — by 31 per cent this year.

The rate review panel, whose members are asked to give an objective evaluation of rate applications, suggested maintaining the commodity and delivery rate increases implemented by the Saskatchewan government in August, according to a report submitted last week to Don Morgan, the minister of the Crown Investments Corp.

However, the panel suggested that the proposed delivery rate increases for the 2023 and 2024 fiscal years cannot be considered at this time.

SaskEnergy had significant improvement in financial results this year, the panel wrote, so the government should wait until the utility provides updated financial forecasts in February before deciding on potential increases.

The panel also recommended to Morgan that a future application to decrease the commodity rate should be made in April, and to push back the effective date for the proposed delivery rate increases so the panel has enough time to review updated finances.

The government of Saskatchewan is "carefully reviewing" the panel's recommendations, a spokesperson said.

SaskEnergy will provide updated financial statements for the rate application to the panel in February, they added.

Panel notes concerns of multi-year applications

The delivery rate increases were the first three-year application SaskEnergy had made to the panel.

Through the review process, the panel found several concerns, and supports more frequent applications for smaller increases, according to the report.

Rate applications rely, in part, on SaskEnergy's financial situation and forecasts.

However, the report says, SaskEnergy starts its business planning in June and submits its business plan to the board of directors for approval in November of each year so the economic assumptions used in this particular application were more than a year old by the time the application was filed.

SaskEnergy provided a mid-application financial update, which showed significant financial improvement for the current fiscal year, but showed no information for subsequent years, according to the report. 

"The lack of updated financial information for those years does not provide the panel with adequate data to recommend or confirm rates for the second and third years of this application," the panel wrote.

That uncertainty would be in addition to the current economic troubles, such as inflation and interest rates, the panel added.

Customers also have to pay other fees associated with natural gas, such as taxes, so the proposed multi-year increases raised concerns about affordability, the report says.