SaskEnergy has applied to cut its natural gas commodity rate, a move that could save farm customers $28 per month.
The crown corporation last week said natural gas prices have dropped substantially in the last year and a rate cut is warranted.
It has asked the Saskatchewan Rate Review Panel to approve a 27 percent decrease, to $6.23 per gigajoule from $8.51.
Chief executive officer Doug Kelln told reporters that, if approved, the new rate would take effect April 1 and be the lowest since May 2003.
SaskEnergy buys its gas on the open market, and sets its rates with no markup or profit.
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“Our goal is to provide our customers with stability and competitiveness,” Kelln said.
But some say by the time the decrease is implemented, customers will have already paid the high price through the period of highest consumption.
“A rate decrease at any time is always welcomed but I can’t help but notice that if approved, this new lower rate will take effect just as the weather starts to warm up,” said NDP crown corporation critic Kim Trew.
He called on the government to offer rebates or assistance to help those struggling to pay high heating bills.
Kelln said the province has had the lowest commodity rates of all the provinces in seven of the last 10 years.
In the last 12 months SaskEnergy’s average rate of $7.83 per GJ was higher than that in Edmonton, Calgary and Montreal but lower than in Toronto, Winnipeg and Vancouver.
NDP leadership candidate and former agriculture minister Dwain Lingenfelter recently criticized the corporation for locking in high rates last summer.
During the summer, the corporation focuses on filling its storage caverns when prices are typically lower in order to ensure adequate supply for the winter demand.
Officials characterized what happened in 2008 as extraordinary, as prices fell through the fall and into the colder season.
“We did not see a lot of predictions of that (happening),” Kelln said.
SaskEnergy has been able to buy additional gas through the winter at favourable prices, he said.
SaskEnergy tracks the difference between its cost of gas and what it receives from customers in its gas cost variance account. Balances in this account are refunded to customers or collected from them, depending on the rate.
A forecast suggesting customers would owe SaskEnergy $8.7 million has now swung the other way, with a projection that the corporation will owe its customers $7.4 million.
That is part of the request for the rate change.
The commodity rate represents about 70 percent of the charge on a monthly bill. The delivery charge of $16.60 per farm or $14.50 per home or cottage, plus taxes and other items, are not affected by a rate change.
The estimated saving for residential customers with the new rate would be $20 per month.
Savings for commercial customers will depend on building size.
