Saskatchewan residents can expect major changes on their power and heating bills this winter, as the provincial government announced that SaskEnergy would affect a 10 per cent rate decrease and SaskPower would pursue a 6.8 per cent rate increase.

With the SaskEnergy decrease, the average residential homeowner will now pay about $112 less a year, or $138 for farm customers. With the proposed SaskPower increase, however, the average residential customer can expect a $48 increase per year.

The rate decrease by SaskEnergy must still be reviewed by the Saskatchewan Rate Review Panel (SRRP), who will make a recommendation to the provincial government over whether to fully implement the decrease by December.

However, customers will be given a break much sooner, as the rate decrease will become effective on Thursday, Nov. 1, said SaskEnergy vice-president of gas supply Ken From.

The SRRP, therefore, will be deciding whether to change the rate decrease or even keep it.

SaskEnergy last hiked their rates in June to deal with increasing gas prices. At the time, the corporation made a promise that, should prices fall, the returns would be directed back to the customer.

"Falling gas prices have allowed us to have a lower cost of gas, and we're able to pass the savings to the customer," said From.

From said the process used by the SRRP to evaluate the rate change is up to the panel, but he said the factors examined in a decision like this are usually market price and buying patterns.

From noted that, because the decrease is a result of falling gas prices, it is possible the rate would have to be hiked if prices suddenly increased. But because 90 per cent of SaskEnergy's costs are price-protected, he said, "it would take a real uptake in prices."

SaskPower's rate increase

Natural gas also plays a role in the proposed SaskPower increase. John Wright, CEO and president of SaskPower, said that SaskPower basically uses hydropower, natural gas and coal to provide power.

Most energy comes from hydropower. However, due to dry conditions, water flow conditions this year are "the worst in 15-20 years," said Wright, and to meet a growing consumption of electricity, SaskPower must turn to natural gas.

The increase in natural gas purchases will be about 30 per cent next year, said Wright, adding that, while gas prices have fallen recently, it is still more expensive to produce power with natural gas than hydropower.

Also, noted Wright, SaskPower's capital expenditures will be about $335 million next year, with a large amount going towards its considerably aging system next year; this aid will take the form of several new generation projects like the Cory Potash Mine near Saskatoon.

Without the rate change, Wright said SaskPower will make only about $23 million in revenue next year, which is not enough to meet the costs; low profits mean there will not be enough capital for these expenditures.

"If we didn't need to do this, we wouldn't do this," said Wright. "But you need the profitability."

The decision must again be approved by the SRRP and the provincial government. Wright said SaskPower met with the panel on Friday to discuss its method of review.

There will likely be public hearings held throughout Saskatchewan until mid-November, and the panel would make a recommendation by early December.

Wright said he would expect a decision in mid-December. If approved, the rate would be effective and retroactive to Dec. 1, 2001.

Wright noted that it was highly unlikely a rate hike would become unnecessary, as this would require a significant and sudden change in the province's hydro conditions.