Premier Lorne Calvert today announced the Government of Saskatchewan will spend $80 million to reduce SaskEnergy's proposed rate increase by 18%, saving the average residential consumer $180 a year.

"On Friday, the Saskatchewan Rate Review Panel indicated the case for a rate increase in line with SaskEnergy's original request was valid," Calvert said. "It could have ended there, and with a private company, it would have ended there.

"But the message, from our citizens, from seniors, from our business community, from our community organizations, was clear," Calvert said. "They said, 'we know prices on the open market are high, but please help us.' Those pleas didn't fall on deaf ears."

The reduction was achieved by having SaskEnergy absorb the entire $80 million deficit in the Gas Cost Variance Account (GCVA). The deficit in the GCVA was a result of SaskEnergy selling natural gas this past winter below cost. As a result, SaskEnergy will incur a significant financial loss in 2001 and will not pay a dividend to the Crown Investment Corporation.

This means average residential users will experience an average 24% increase on their entire bill, or about $230 yearly, as opposed to $410 in the original SaskEnergy application. The increase is retroactive to June 1st.

SaskEnergy's rate will remain among the lowest in North America.

"While acknowledging the remaining rate increase will still be significant for consumers," Crown Investments Corporation Minister Maynard Sonntag said, "SaskEnergy should be thanked for saving consumers $125 million over market prices in the last 18 months, and now absorbing an additional $80 million in the GCVA.

"With a private natural gas utility the rate increase, as recommended by the regulator, would have been implemented without question. And the reality is that would have been approved in days, not weeks, without the opportunity for public discussion," Sonntag said. "We have a different solution today because we have a Crown Corporation, and that's why we could meet this extraordinary challenge with an extraordinary solution."

Ken From
Vice President, Gas Supply
SaskEnergy
Phone: (306) 777-9366