Back on September 13, I asked a simple question; with natural gas futures trading at a 20 month low…
…on what basis was Sask Energy seeking a 17% natural gas rate increase?
Well, as it turns out, that was a good question.
Saskatchewan Residents are paying 14% more for Gas
[…]
By taking the daily difference from Sask Energy’s price and the Spot price Sask Energy comes out $360.34 above. Averaging the difference out over the year gives us a $0.91 per Gigajoule. Based on the average spot price and the average Sask Energy price, Saskatchewan residents are paying 114% of cost for their natural gas.
What is Sask Energy doing with the extra 14%? Would that be part of the dividends going into the General Revenue slush fund? Why are Saskatchewan residents and businesses paying this extra tax when Sask Energy explicitly said they don’t do this?
Why are we getting ripped off?
Why after a full spring, summer and fall of raking in money did Sask Energy get approval for another 5.4% increase?
Socialist kleptocratic economics at work again?
It’s for social justice, of course.
Aside from the obvious money grab, I suspect bureaucratic lag has much to do with this. Sask Energy could very well have been selling gas at a loss when natural gas prices were high. They are just catching up. Of course, this inversion of market principles is not at all surprising. After all, it is a government corporation.
Saskachew juan appreciate da izzy money too:Borat Dion
natural gas futures
You don’t even know what a futures market is, do you?
Robert, the point is that Sask Energy lied.
They said they sell it at cost, that’s proven wrong. They asked for 17% increase and received 5.4. They are more than the spot price -now-, during the period when the NGI traditionally raises the cost to the highest points in the year.
What’s with that? Where is the profit going?
Cheers,
lance
Does anyone know who the members of the SRRP are, their backgrounds, how the panel actually operates at arm’s length from the government, and the various crown corporations they oversee?
Being a good Canadian, and admittedly ignorant of the workings of the “futures market”,I assume oversight panels or committees, are peopled by experts in the fields they oversee. Am I correct, or naive?
dmorris:
http://www.saskratereview.ca / about / members.php
remove the spaces to get the URL. It’s also out of date, everyone who is listed had their terms end 31Dec06.
However, they are the ones that dealt with the increase for Sask Energy.
Cheers,
lance
The list for those who don’t want to go to SRRP:
Boris Kishchuk, Chair – Resigned
Jack Boan, Economist, Vice Chair
Jo-Ann Carignan-Vallee, Member
Bernadette Garrett, Member
Joan Meyer, Member
Linda Thauberger, Member
Pamela Smith, Member
Cheers,
lance
Do utilities buy natgas at the spot rates? I would think that most utilities lock the price in with a long term contract, and the cost therefore becomes that locked-in price. The spot price moves daily above or below the locked in price, in this case, Saskenergy made a bad bet, but back then, who knew what the spot price would be? Lose some win some, but at least you get price stability over the term of the contract.
Mr. McClelland,
Why don’t you share your insight into the futures market with us? Otherwise people might think you were enagaging in a drive by smear.
You obviously see an error in the post, based on how represented your knowledge of the futures market.
Please, do share with us and give us some of your insight…
Mike the Greek:
Are you insane inviting Robert the Red to comment?
In no time flat he’ll be screaming “F+@* the Jews!!” just as he has done in the past. Just thank god he’s fully committed to the Dippers although I’m sure even they would like to be rid of him.
Thanks Lance. The panel has varying qualifications, some with accounting backgrounds, the only constant being U of Sask. alumnus.
I was wondering if they were a panel of political appointees, put in place by the government of the day, to rubber stamp whatever Crown corp.’s apply for.
But , as I have no knowledge of the politics of the U of S, will not further hypothesize on this, and will assume appointments are based on merit, and experience.
When we enjoyed an NDP government here in B.C., it became apparent most of these type of appointments went to former graduates of U. Victoria, which is renowned as a training ground for socialist politicians.
I believe the answer to the Re-education Kamp Kommandant Wannabe’s question is “yes”.
“What is Sask Energy doing with the extra 14%”
…that’s an easy one to answer. It is going towards highway upgrades.
*cough cough*
I have no knowledge as to how SaskEnergy purchases its natural gas commodity for resale to its customers. But I would be surprised if they purchase on either a long term contract or a spot price basis. If they operate like most other Canadian LDCs, they will likely purchase most at a monthly index price and swing volumes on a spot price basis. They may hedge several months or up to a year and lock in either a cap or a collar on the price of some or most of the gas they purchase.
They will set the commodity price to customers based on the expected future price for the next several months (or up to a year), their current hedge position and their current variance account. They will adjust prices periodically to take into account of new conditions.
There will always be a variance between their cost of gas, and the revenue provided by customers, because the cost of gas will vary both above and below the rate set; the variance account is established to measure this difference and provide a basis for refund or add-on the next time the rate changes.
If you are concerned about an apparent long term gap favouring the utility, and an apparent lack of compensating appropriate rate adjustments, you should ask the utility for a detailed explanation. If you are not satisfied, you should go to the regulator and ask for a review.
For use in converting; there are approximately 26.45 cubic metres in a GJ. To obtain 37.8 GJ requires 1000 m3 (that’s what 103m3 means), not 100 m3 as your correspondent appeared to be showing in his post.
It’s always a good idea to challenge the utility. They might be right or you might be right, but both of you will learn something from it. Good luck.
OH! 10^3 m3. Duh. I read as 1 hundred and 3 meters cubed. Duh.
Cheers,
lance
Bc’er,
I am sure that Mr. McClelland has some reason for making the comment. I refuse to believe that Robert would stoop to such a low level.
I cannot believe that he would purposely stoop to a drive-by smering without having pertinent facts.
And I think everyone here should be more respectful to Robert and his kind. There is much we can learn from these people…
“Would that be part of the dividends going into the General Revenue slush fund?”
Actually, the proper term is “rate stabilization fund”… please refer to the Socialist spin-doctoring handbook.
RE: Recent SGI refunds:
‘[Socialist] stressed that the Crown corporation’s philosophy is not to strive to earn a profit, but to act as a trust fund for Saskatchewan [serfs]. It’s designed to be self-sustaining over time.’
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