SaskPower estimates carbon tax cost of $141 million in first year

SaskPower is still crunching the numbers to figure out the real cost of the carbon tax on its operations and the potential of those costs to be passed on to customers.

Environment Minister and Minister Responsible for SaskPower Dustin Duncan explained it’s still too early to determine the exact magnitude of costs associated with the carbon tax. He said they are looking at the additional costs of fuel for running the fleet of SaskPower vehicles as well as the cost of operating their buildings on top of the emissions created by burning coal and natural gas to generate power.

“Our early numbers that we’re working to confirm are that it will be – cumulatively between now and 2022 – between $900 million and $1 billion that SaskPower will need to manage and in the first year alone, next year 2019, our estimate at this point is $141 million,” Duncan said.

In a year when SaskPower had already said there would be no rate increase to customers, there will likely have to be an increase just to cover the cost of the carbon tax.

Duncan said the Crown corporation simply cannot absorb $141 million in carbon tax and it will be passed on to customers on power bills across the province. For homeowners, he said this could mean up to a six per cent increase on power bills just next year alone.

With the federal government now bumping back the date of the carbon tax to April to fit with the fiscal year, Duncan said customers likely wouldn’t notice a difference on their bills until then.

Duncan also noted they are looking into whether the rate review panel will have any jurisdiction at all to approve or deny an increase related directly to a federally-imposed tax.

Beyond 2022, he said there are even more questions about what the carbon tax could mean to SaskPower in the future when the price on emissions is set to move up to $50 per tonne.

He added his recommendation to the board will be to include a line about the carbon tax directly on the bill to explain exactly where the increase comes from.

While the Crown prepares for this potential scenario, Duncan said the province is also investigating the legality of taxing another government-owned entity.

“That’s one thing we will be pursuing through the courts is just clarity over whether one level of government can essentially impose a tax on another level of government,” Duncan explained.

He added the carbon tax amounts to a stacking up of federal regulations on coal power emissions already imposed on SaskPower

“We’re already on track to see a 40 per cent reduction in our greenhouse gas emissions by moving (to) more renewables and other types of options between now and 2030,” Duncan said.

Duncan pointed out the carbon tax itself will not have any further impact on reducing greenhouse gases, instead, he said it will be a cost shouldered by customers.