Is expected to announce today that they'll be seeking a 17% price increase for natural gas customers in the province. The provincial owned crown puts us through this little song and dance every year - they're probably looking for less, but it sets up the review board with the opportunity to knock their request back a few percentage points to maintain their facade as a "watchdog" for the consumer.
Market Watch, Sep 1, 2006;
Natural-gas futures close at 20-month lowSAN FRANCISCO (MarketWatch) -- Natural-gas futures closed at their lowest level since January 2005 to mark a loss of 20% for the week, as traders fretted over hefty U.S. supplies and expectations for a near-term decline in demand for the fuel.
[...]
Natural gas for October delivery fell 17.1 cents, or 2.8%, to end at $5.877 per million British thermal units after a low of $5.82. The contract hasn't traded or closed at levels this low Jan. 5, 2005.
October natural gas closed last Friday at $7.344, so it was down $1.47 for the week. The contract ended the month of August with a loss of $2.40, or 28%.For natural gas, "we have a situation where supply is perfectly fine, while demand is dropping off," said Ben Smith, a managing partner at First Enercast Financial.
This raises an obvious question in my laypersons eye - one that I haven't heard in local media so far (which hasn't ventured beyond "oh no! get ready for another price increase" reporting) - on what basis is Sask Energy seeking a 17% natural gas rate increase?
UPDATE - The news conference is on now and being covered live at CKOM - one of the reporters is grilling the Sask Energy president on why he doesn't know the current price they're selling gas at in Nova Scotia.(Update -
A reader sends along this link to Heritage Gas)
Also - there's some good information coming out in the comments thread.
I agree with the post, but SaskEnergy doesn't use the spot price as their justfication, unlike their AB counterparts. They buy three year contracts, and in this case, they lost...
When AB prices went through the roof a couple years back, we had a relatively modest increase. Not that I support this Crown, they just do things in a different way than many...
Because they can. And the NDP government will be only too happy to see increased rates for the citizens of SK while export customers enjoy the benefits of the supply vs demand price drop.
Same thing will happen here in MB with our State owned Utilities and rubber stamp Public Utilites Board. The dippers have been sucking the citizens dry through the pubilc utilities while claiming to hold the line on new taxes. It is to laugh!
And the sheeple of the province will moan about it but still support the incompetent and lying NDP.
Hah!
The new rules for corporations make them mark-to-market all hedging/derivative contracts.
The same doesn't apply to government (if governments were forced to use GAAP, the politicos would all be in jail.)
Energy tax is going up again.
Want to start a pool about how much the NDP are going to skim off the crowns this year to put into general revenue?
Maybe we will get a refund through SGI this year so we will still be the lowest package of utilities... Calvert hasn't refunded crown taxes through SGI yet.
To maintain their profits? (Good profits, that is, Peoples Profits in the state-owned business run for all the people of Sask.)
Sask Energy is probably in a bind, of their own making. They may have locked themselves into $10+ cotracts. Now $6-. How could this have happenned ? Easy...
They just had to listen to the MSM and all the "experts" and the "Profs" and the "doomsayers" and the "politicians" and the "activists". It never fails, that when prices are rising (NatGas) 2 years ago) "it will go up FOREVER", is the "information" the above give out, freely. Well free information is worth just that, nothing.
Instead of gleaning information from the MSM's experts, maybe we should just ask someone who actually walks the walk.
Hhhmmm, wonder were oil is going now ?? The graph looks just like Nat Gas 2 years ago. And the Nasdaq 6 years ago. And oil in the early 80's. Clue ??
Gotta love lock and load economics...Lock in at the highest price levels ever and load up for 3 years.
The sky is falling, the sky is falling!
Makes all those high pressure salespeople energy bundlers look like the greedy opportunists they really are.
"on what basis is Sask Energy seeking a 17% natural gas rate increase?"
To pay for the pensions of retiring baby-boomer Sask Energy employees in a manner not dissimilar to how $2000 of every "Big 3" new car's cost can be attributed to paying for retired auto worker's pensions?
from Sask Energy's 2005 Annual Report:
"Operating and maintenance expenses were
$123 million in 2005, compared with $118
million in 2004.
...
To provide this safe and reliable service,
SaskEnergy and TransGas require a workforce
of approximately 1,000 employees. As a
result of its labour-intensive nature, 60% of
the Corporation’s operating and maintenance
expenses, or $73 million, are labour costs
plus future employee benefit costs such as
pensions and other retirement benefits.
As a result of changes brought about by
the renegotiated Collective Bargaining
Agreement, during the year, SaskEnergy
accelerated the amortization of the future
employee benefit costs. This change, in
combination with other initiatives, resulted
in a one-time charge against earnings of
$3.7 million which will be offset by
reductions in future expenses.
...
Substantially all employees of the Corporation are members of either a defined contribution or a defined benefit pension plan. During the year, the Corporation contributed $2,925 thousand (2004 - $2,824 thousand) on behalf of employees for current services.
The amounts related to the defined benefit retiring allowance plan for management employees and members of the Communications, Energy and Paperworkers Union (CEP),
Local 649 are as follows:
2005 2004
(THOUSANDS)
Accrued benefit liability $ 13,957 $ 12,239
Benefits paid during the year 556 494
Net expense 4,520 2,502
Effective January 1, 2005 the retiring allowance for employees who are members of the CEP was converted to an annual contribution to a registered savings plan.
www.saskenergy.com/About_SaskEnergy/Annual_Report/2005AnnualReport_MDA.pdf
If my math is correct that places natural gas at todays price at 17.4 cents a cubic meter.
Go look at your gas bills and see how much you're paying.
My bill says 25.62 cents a cubic meter in Saskatoon.
and I used a few cubic meters over the summer??? and is cost me 10.50 a month to have it hooked up each summer month that I am not using gas??
This is certainly going to attract new investment in Saskatechewan. Along with it will come jobs, workers from the rest of Canada and abroad, and their families. Future generations will want to remain in Saskatechewan. The population will increase. All of this will result in burgeoning tax revenues. Therefore, there the indexed pensions of the public service class will ever be actuarially viable.
Or maybe not.
I signed on a flat rate contract about the end of winter 2004-2005.
naturally the tactic of union gas at the time was an immediate 2 or 3 cent drop in price to dissuade others signing up. when the promotion ended and all the door knockers faded into the mist, union gas jacked th price up and continues to keep it higher than my fixed rate.
capitalism triumphs with propaganda and half truths at its side !!!
"capitalism triumphs with propaganda and half truths at its side !!!"
Damn you, George Bush!!
Apparently our Sask. NDP gov't is selling natural gas into Nova Scotia at the price of $6.90 per m3 while trying to stiff us this fall with a 17% increase on the 7.10 m3 (plus $10.50/mo. delivery charge) we already pay. How stupid do these dolts think people are?
Kudos to the reporter who persisted with his questioning to get this info from the CEO's colleague named Ken. It seems under intense pressure, the SaskEnergy CEO suddenly had a memory loss and didn't want to admit that he was selling his product at 2 different prices.
Hope Calvert gets roasted for this as he is always trying to convice us that his Communist gov't is providing us with the lowest utility rates in Canada. Where did the 1 Billion in oil and gas revenues go that Sask generated this last fiscal year. Oh, right, they went to more civil service and more social programs...providing the good Sask citizens with the Marxist lifestyle we all would want!
And Calvert wonders why under his last 5 years at the helm, 15,000+ Sask. people have moved to AB and BC.
needlemeyer57,
Better check your math and prices, at $6.90 per cubic meter a small home furnace would cost $13.00 per hour to run.
If it ran 60% of the time (that's average), it would cost the homeowner $5,600.00 a month to heat their home!
Socialist central planners pay no attention to facts.
In fact, to them, there are no facts.
Their response to a fact/s is: What facts? Don't confuse me with the facts.
Socialist central planning is fixated upon dreams, emotions, hug-a-tree, utopian fantasies. Day-dreaming for a lifetime is a waste of CO2; beyond that, the pure-blooded socialist uses extreme force, unto death, for those who will not travel along socialism's yellow-brick-road. To wit; Mao, Pol Pot, Mugabe, Lenin-Stalin, Trotsky, Castro, Tito, et al.
Socialism is the road of the late Rev. Tommy Douglas, P. Trudeau, and the Rev. Lorne Calvert, and Jack "Taliban" Layton/NDP.
One conservative voice, such as SDA, can stop the socialists dead in their tracks. ...-
Conventional oil search back in vogue
Gas prices too low
Claudia Cattaneo, with files from Jon Harding, Financial Post
Published: Wednesday, September 13, 2006
The search for conventional oil is back in vogue in Western Canada, while high-cost natural gas projects are out of favour, as Canadian oil and gas producers look for ways to cope with a natural gas price slump that many worry could continue into next winter. ...-
http://www.paulding.net/bin/url.cgi/13404.14
"capitalism triumphs with propaganda and half truths at its side !!!"
Maybe a better comment would be: The turnip truck is never empty!
does anyone know the conversion factor from million btu's to cubic feet?
David Brown:
I suggest you check your math. Before I wrote my comment, I talked to the horses mouth. I also verified this amount with my latest energy bill.
I called SaskEnergy this a.m. This is the price they quoted me, as was confirmed by management in their radio news conference today.
Doesn't change the fact that the NDP are price gouging and lying through their teeth about it!
mysask.ca
read the article on the right in the ctv news stories about saskenergy
The conversion of mbtu to cubic feet is not exact. MBTU measures heat content of the natural gas, Cubic feet measures volume. Large scale users buy based on heat content rather than volume.
From what I understand it would be safe to say, one cubic foot of natural gas produces approximately 1,000 BTUs, so 1,000 cubic feet of gas is comparable to 1 MBTU.
There can be a lot of reasons why SaskEnergy could be seeking an increase, and not all have to do with the price of the commodity. Costs of delivery could have increased as well. If they really did contract for three year fixed price supply last year when prices were high, the only reason that would cause a need for an increase now is if they didn't factor that into their retail prices at the time. In today's market any retailer needs to have either pricing flexibility or long term contracts or hedges in place to be able to match costs and revenues over a reasonable time period. Of course one can't rule out incompetence or political meddling either.
And Needlemeyer, you may not have to check your math, but you do need to check your units. $6.90 sounds about right if you are talking about GJ, but it's about 26x too high if you are talking about m3.
As much as I enjoy bashing NDP governments, let me share the situation in Ontario with you. Here, we can either buy gas from a remarketer, like Direct Energy, or from the natural gas distributor (Enbridge in my area).
The good old free market boys are charging 39-43 cents/m3 on most contracts. Enbridge, whose price is set by the Ontario Energy Board, is charging 35 cents/m3, plus we're getting a rebate of another 1.6 cents/m3. Enbridge forecasts lower rates, so we'll probably see another rate cut in three months.
The OEB estimates that people who stay with the "standard supply" (Enbridge) will save about $250 on average over last year. People who stay with remarketers? They will save about $13.
Just goes to show sometimes what the government does works. This system was set up by the hated Mike Harris Tories, of course. I liked it seven years ago, when I locked in for five years at 15 cents/m3, and I like it now when I'm back on standard supply. It's nice to have the choice.
Adam Smith? Who in OPEC is Adam Smith*? ...
Oil demand weaker than expected in first half of 2006: OPEC (Adam Smith was right!)
Breitbart ^ | 9/15/06 | Mikey_1962
World oil demand growth was weaker than expected in the first half of 2006, OPEC has said. "World oil demand growth in 2006 has been revised down by 0.1 million barrels per day (bpd) since the last MOMR (OPEC monthly report) to stand at 1.2 million bpd, as recent data shows weaker-than-expected demand in the first half of the year," it said in its report for September on world oil markets. Gasoline demand in the United States "grew by only 0.7 percent, well below the annual average of 1.6 percent despite the stabilization of gasoline prices," the Organization of Petroleum..
http://www.freerepublic.com/focus/f-news/1702098/posts
*Scotsman; long dead; miserly; drank a dram a day ; pay no attention to him; had a hidden hand, supposedly; cousin of Robbie Burns. ...-