Lack of hydro, high natural gas prices blamed for anticipated $100M shortfall for SaskPower

SaskPower could be facing a shortfall of more than $100 million by the end of the 2022 fiscal year.

The Crown utility’s second-quarter financial report, which was released at the start of December, said it had already lost $97 million as of Sept. 30.

Don Morgan, the province’s minister responsible for SaskPower, said there are a couple of very specific reasons that led to such a significant loss for SaskPower.

“We had extremely low water levels in the South Saskatchewan River, which impacted the ability to generate hydro,” Morgan said. “To compensate for that, we had to use natural gas, which is more expensive and had triggered carbon tax on it.”

Using natural gas to offset hydro wasn’t exactly ideal in the summer, as gas prices hit record highs.

Morgan said the company has had ups and downs before, but nothing like this.

He said now that gas prices have gone down, things will start to sort themselves out, but he worries what could come the company’s way if it has to address the issue again.

“I don’t know what’s going to happen in the long run with natural gas rates. We are a province that’s highly dependent on natural gas,” he explained. “Over 40 per cent of the electricity we generate comes from natural gas, so that’s a significant problem for us going forward.”

He added in order to avoid this from happening again in the future, the province is looking at ways to offset the use of natural gas by transitioning to carbon-capture programs and using nuclear energy as it goes forward.

While Saskatchewan is in the middle of winter, Morgan said there are some promising signs that what happened this year in the South Saskatchewan River won’t happen again.

“In simple terms, it was one of the years we had low moisture. It could happen to us again, but we had low runoff coming from the mountains,” Morgan said. “This year, we’ve seen an unusually high amount of precipitation so far, but that could change in the summer.”

For now, Morgan says the issue won’t impact the people of Saskatchewan directly.

“At this point and time, it is the government. We’ve had things go up and down and they manage things through rate mitigation and balancing, so they will continue to do those kind of things,” he explained.

“We will continue to try and be as efficient as we can. In the past, we’ve injected money directly from the government, but I think our long-term solution is moving towards nuclear and long-term solutions.”