The SaskPower application said the included financials assumed the province’s industrial carbon tax, in the Output Based Performance Standards, wouldn’t apply to it in the 2026-27 fiscal year, and it’s unclear what a continued tax would mean to the rate application. (CJME file photo)

Industrial carbon tax could factor into SaskPower rate increase application

By Lisa Schick Jan 7, 2026 | 5:40 PM

SaskPower is set to move ahead with the first of two upcoming rate increases in less than a month, but the application could change depending on the industrial carbon tax.

The Crown’s application is to increase rates by 3.9 per cent as of Dec. 1, 2026, with another 3.9 per cent increase on Feb. 1, 2027. Each increase works out to about $5 more per month for the average residential customer, and $11 more per month for the average farm customer.

SaskPower said the increase will go to capital investments like improvements to the transmission infrastructure and to retrofit the coal-fired power plants to continue operations.

Within the application, SaskPower said the financials assumed the province’s industrial carbon tax scheme, the Output Based Performance Standards (OBPS), would no longer apply to it in the 2026-27 fiscal year, which starts in April.

While the Government of Saskatchewan directed SaskPower to stop collecting the carbon tax from customers in April 2025, the power company still has a legal obligation and is still accruing the cost of it – forecasted at $368 million in the current fiscal year.

It became a factor in the recent fiscal update where the province reported a deficit, and a recent approval of increased government spending for SaskPower.

In the 2025-26 year, SaskPower’s rate application said it expected to get $175M in Clean Electricity Transition Grant money and $187 million from the provincial government, which would nearly equal the cost of the OBPS obligation for the year.

SaskPower included an assumption on the tax into its rate application, but the provincial and federal governments, as of yet, don’t have any deal laid out. There’s been no indication of progress either, with the provincial government only saying negotiations are ongoing.

The Government of Saskatchewan has been vocal about wanting the industrial carbon tax scrapped, but in November, Prime Minister Mark Carney gave a speech about the MOU signed with Alberta and talked about “strengthened industrial carbon pricing in Canada.”

In the application, SaskPower said, without the OBPS being applied, it won’t have that cost, but it also won’t get the Clean Electricity Transition Grant Money – that would create a shortfall in funding. To help with that, the Crown anticipates it will get $175 million in funding from the province in 2026-27.

SaskPower referred questions about the rate application to the provincial government, and the Government of Saskatchewan wouldn’t explain what a continued obligation on the industrial carbon tax would mean for the rate application – whether it would be the same, raise or lower it.

The government’s statement only quoted SaskPower’s application documents, which said the corporation would include an update on any changes to the OBPS which materially impact its financial projections – that update would be filed later on in the review.

Timing

In the past, there have been several months between SaskPower filing an application for an increase to the rate review panel and when it would come into effect.

In this case, the application was filed Jan. 2, and it will come into effect on Feb. 1, before the application gets through the approval process.

SaskPower said in a news release the increase will be applied on an “interim basis, but will still be subject to the public rate review process.”

Past rate review processes have taken as long as six months.

The Government of Saskatchewan said the increase is being implemented before the process is finished “because of SaskPower’s immediate need for funding.”

It said the last time SaskPower implemented an interim rate increase was 2016.