SaskPower is in the red regarding its finances so far this fiscal year.
The crown corporation’s second-quarter financial report showed a net loss of $97 million as of September 30.
That is compared to $13 million in net income in the same period last fiscal year.
The $110 million decrease was due to a $172 million increase in expenses, which was offset by a $62 million increase in revenue.
Don Morgan, the minister responsible for SaskPower, said that the deficit is due to multiple factors.
“Over the summer, we had lower water levels coming through the river, and as a result, we were not able to do as much electrical generation through hydro as we’ve done in the past,” he said. “To supplement that, we had to use more energy from natural gas, which is much more expensive and attracts carbon tax.”
The increase is also attributed to higher fuel and purchased power costs which increased by $121 million primarily due to higher natural gas and coal prices, a greater proportion of generation from more expensive renewable fuel sources, and increased generation volumes to meet higher demand.
Morgan noted that while the deficit is a substantial amount of money, it doesn’t come as a surprise.
“It’s something that was anticipated as we went into an increase for commodities,” he said. “The previous year, we had a net income of $160 million. This year we will bring it down close to break even. SaskPower knows that the issues are, and they are trying to work through.”
Despite this fiscal year looking bleak, Morgan said there are some recent positives.
“The good thing is that in the last few weeks, the natural gas rates have fallen substantially. I can’t say whether that’s a permanent thing or not, but it’s certainly coming back, and with the high amount of moisture we’ve had, we are expecting that we will have a better hydro year this year.”
As for the deficit, SaskPower projects a total $105 million loss by the end of this fiscal year. That would represent a sharp drop compared to last year’s $11 million in net profit and $160 million in 2020-21.
Morgan noted that if SaskPower does run a deficit, the crown utility will reach into their cash reveres.
The last time the crown cooperation ran a deficit was in 2015-16, when it reported a net loss of $19 million.
Morgan added that they are watching the situation carefully and that another rate increase is always a possibility but would be a last resort.
“The primary focus that we’ve got is maintaining affordable rates and maintaining competitive rates for businesses that are coming to the province,” he noted. “Our goal is to make sure that the power that we provide is consistent and reliable and it is affordable for us citizens.”
Morgan said that the deficit reaffirms the need for other power options, like nuclear power.
“It does not attract carbon tax, and it does provide strong baseload power,” he said. “Ontario and New Brunswick have had nuclear energy for decades. A nuclear facility would have an expected life space of 60 years, which is a long-time for a lot of electricity coming out of it.”