If they need to expend over $10 billion over the next 10 years to revive and expand their power generating and transmission infrastructure, SaskPower will require an increase in revenue and that translates into a request for a 4.9 per cent rate hike beginning next year according to their president and CEO Robert Watson.
During a media conference in Regina July11, Watson laid out the future needs for the province's major Crown utility, including the continuation of a major carbon capture and sequestration project at Estevan's Boundary Dam Unit No. 3 (BD3) which is mid-way through a $1.24 billion retrofit that will see 90 per cent of the carbon dioxide emitted by the unit captured and stored underground for future use as an enhancement agent for oil recovery.
Watson told the assembled reporters, as well as those joining in via a conference call, that it is SaskPower's intention to spend $365 million in 2013 on the BD3 project as well as $110 million at the Queeen Elizabeth Station in Saskatoon which is have 200 more megawatts of electrical power added to its capabilities.
Watson pointed to the need of the power utility to provide electricity to a growing province over the next decade. He said he expected the demand for power will grow by about 2.9 per cent annually, compared with a 1.4 per cent average hike in demand over the previous 10 years.
With some of the company's equipment aging out now, there is a need for significant refurbishment, he said. And that includes transmission upgrades along the company's 157,000 kilometres of transmission lines. He noted there are 20 transmission upgrades already underway.
Current and future SaskPower rates will still leave this province about 20 per cent below other provinces where the main fuel sources are natural gas and coal.
If the rate hike request is granted by the provincial Rate Review Panel, it will provide an additional $90 to $91 million per year on SaskPower's revenue side.
The CEO said power demands are increasing in the summer even though peak demand times are still usually recorded during cold winter evenings. The province is currently capable of transmitting over 4,000 megawatts of power, if required, through self-generated power and through agreements with neighbouring provinces and states.
With no shortage of water flows throughout the province, the Crown utility has been able to maximize its hydro power stations and has made good use of its natural gas fired plants while the price of that fuel remains low.
"We have a 40-year strategy for power production and know our major customers are going ahead with big projects so we can't be late in providing power for them," said Watson, referring to upcoming demands from the potash and oil industries as two obvious examples.
Watson said SaskPower will continue to look for partnerships in such things as windmill power facilities but will also maintain a high level of self-generated projects. He said, for example, that the QE project was put up for tender but in the end, it was determined they (SaskPower) could do it more efficiently compared with any other contractor.
If the rate increase is approved, it will represent the first hike in power rates since August of 2010 when the cost to consumers went up 4.5 per cent.
The increase will translate into an average of $4 per urban residential customer, each month, $10 for farmers and between $24 and $29 for commercial power users.
