SaskPower announces $8M increase in net income

SaskPower ended the 2019-20 fiscal year in the black, but COVID-19 could mean the current fiscal year won’t end the same way.

The Crown corporation tabled its annual report Monday, reporting a net income of $205 million. That was an $8-million increase in net income for the electrical utility over 2018-19.

The pandemic didn’t have a big impact on SaskPower in the last fiscal year, other than the time and logistics it took to have more than 2,000 people work from home.

In the first three months of this year, however, it has resulted in about a 10 per cent decrease in sales volumes and capacity, translating to about a $50-million decline in revenues from the same period last year.

The company also joined other Crowns and allowed customers to not pay the interest on their bills for six months to help with customers’ COVID-19 pressures. The company has identified about $47 million in deferred bill payments through June 30.

Dustin Duncan, the minister responsible for SaskPower, said he was very mindful of what the pandemic has done to the local and global economies.

“We are still, largely, an export-based, commodity-based economy and right now the world isn’t buying as much of Saskatchewan as what they would have in the past,” Duncan said. “And that has a direct relationship to the amount of power that SaskPower is selling and has been able to sell over the last number of months, and is going to sell over the next year.”

Duncan explained officials are keen to see what the overall financial impact will be. Duncan also said it’s too early to say whether the losses from COVID-19 will mean a rate increase.

“The intent was not to have a rate increase but we’ll see what the future holds in the coming months,” said Duncan.

The minister explained that, in considering a rate increase, the company wants to balance the needs of SaskPower with not putting an undue burden on ratepayers.

But Duncan pointed out SaskPower also has to reinvest in capital projects and it has some significant decisions to make soon which require a healthy balance sheet and financials.

Energy sales down

For the first time since 2009, energy sales saw a decline in the 2019-20 fiscal year.

Troy King, the chief financial officer with SaskPower, said most of that is unrelated to COVID-19. He said it was seen in large industrial, commercial and residential customers.

King said before the pandemic hit, officials didn’t expect that decline to be an ongoing trend but that’s not as sure now.

“We continue to monitor that and see how quickly the economy recovers to see what the ultimate impact will be on our sales for this coming fiscal year,” said King.

Reducing emissions

SaskPower has a goal of reducing emissions by 40 per cent of 2005 levels by 2030. With the deadline for that goal only 10 years away, SaskPower CEO Mike Marsh said the Crown is on track.

Marsh pointed to the retirement of two coal plants in the last decade and the installation of the Chinook plant this year. He said the company has turned the corner on emissions and could even exceed the target by 2030.

“The profile was expected to drop later in the 2020s. We’re going to start to see a significant reduction in the emissions profile going forward to the end of the decade now,” said Marsh.

Dollars and cents

SaskPower announced revenues of $2.771 billion, up $46 million from the previous year.

Saskatchewan electricity sales rose to $2.626 billion, a figure that included $83 million collected through the addition of the federal carbon tax to customers’ bills on April 1, 2019.

That money is to be set aside to pay the carbon tax to the federal government.

Expenses during the year were $2.566 billion, an increase of $38 million from the previous year.

Capital expenditures were $696 million, down $137 million from 2018-19. The expenditures last year included $374 million to upgrade generation, transmission and distribution infrastructure and $253 million on growth projects.

SaskPower now has seven natural-gas fired stations and three coal-fired stations in thermal generation facilities. It also operates seven hydroelectric stations and two wind power facilities in non-thermal facilities.

During the year, SaskPower:

• Commissioned the 353-megawatt natural gas-fired Chinook Power Station near Swift Current;
• Completed the Pasqua to Swift Current Transmission Line, a $185-million project that will move electricity from the Chinook station while also supporting future wind generation development;
• Announced a Request for Proposal (RFP) for the new 350-MW natural gas-fired Great Plains Power Station that’s to be located in Moose Jaw and operational in 2024;
• Opened a competition for up to 300 MW of wind-generated power to be developed and operational by the end of 2023;
• Announced a 25-year power purchase agreement with the Meadow Lake Tribal Council for up to eight MW of biomass-generated electricity from a facility next to a sawmill near Meadow Lake;
• Signed a 20-MW utility-scale solar opportunity agreement with the First Nations Power Authority for the development of First Nations-led projects estimated to be worth $85 million over 20 years;
• Continued work on a $248-million project to extend the life of the 289-MW E.B. Campbell Hydroelectric Station near Nipawin; and,
• Approved 23 new customer projects bringing 34 MW of solar and carbon-neutral flaregas projects to the grid as part of our Power Generation Partner Program.

The Crown also plans to continue its evaluation of small modular reactors, having signed a Memorandum of Understanding with the governments of Ontario and New Brunswick.

During the year, nearly 2,000 residential and small business customers volunteered to have smart meters installed as SaskPower continued to seek improvements to its power grid.