Natural gas prices have been hovering around the $2 USD mark for a few months now, dipping as low as $1.63 a gigajoule in February, and just recently getting back above $2. With the price of the commodity that helps to heat homes throughout Saskatchewan at prices not seen since June of 2020, it has some wondering if this means SaskEnergy could be looking at a rate decrease.
Lowering the rate isn’t that easy, explained the Minister Responsible for SaskEnergy, Dustin Duncan. The natural gas isn’t purchased at the market rate – it is done by locking in the price on a contract. Other factors are considered as well.
“As we come out of the winter heating season, we’ll take a look at things like the gas cost variance account, what level that’s at, because that really is what we look at to see when we trigger either a rate increase or a decrease,” Duncan explained. “SaskEnergy doesn’t make money on the commodity itself. They make a profit on the delivery – hopefully a profit on the delivery side – because that really is what we look to see when we trigger either a rate increase or a rate decrease.”
The last rate change for SaskEnergy was back in September when the proposed decrease of 24.5 percent on the commodity side was approved. This was combined with an increase in the delivery rate and worked out to the average residential customer seeing a savings of approximately $$6.50 a month.
The cost of natural gas doesn’t just have an impact on SaskEnergy, though.
Roughly 40 percent of the electricity generated by SaskPower comes from natural gas plants. So, does a lower natural gas rate help with the costs for SaskPower in terms of generating electricity for the province?
“SaskPower does look to see what they can do to lock some of their prices in as well,” Duncan explained. “They’ll be doing their forecasting as we’re getting into the spring and the summer months.”
Projections for the rest of the year are calling for the price of natural gas to average out to $2.20 a gigajoule for 2024, which is still a drop of roughly 67 percent from where it was in 2022.