Recreational Facilities Power Costs

Res #: 18-07A
Number: 18
Year: 2007
Midterm: No
Expired: Yes
Responses Received: No
Departments: SaskPower

Resolution No. 18-07A
Recreation Facilities Power Costs

WHEREAS, the Government of Saskatchewan is promoting health and fitness; and

WHEREAS, recreation facilities provide access to health and fitness; and

WHEREAS, recreation facilities’ power bills are based on demand and not consumption, making their power bills substantially higher;

THEREFORE BE IT RESOLVED, that SARM lobby SaskPower to base recreation facility power bills on consumption rather than on demand.

Response from Honourable John T. Nilson, Q.C., Minister Responsible for SaskPower: 

My officials at SaskPower advise me that the resolution is predicated on the assumption that recreation facilities’ power bills are based on demand and not consumption which, in fact, is not the case.  All of SaskPower’s rates are composed of a basic charge, a demand charge, and an energy charge.  SaskPower has supplied me with a brief description of these components. 

Basic Monthly Charge/Basic Seasonal Chage – $x.xx/month
The basic monthly or seasonal charge reflects the costs of providing service.  These are the costs which are incurred to supply the customer with a minimal amount of electricity and also includes customer service costs (e.g. meter reading, billing, and administrative costs). 

Energy Charge – xx cents/kV.A/month
The Energy Charge is the cost of the coal and natural gas used to generate electricity.  Included are the provincial royalties and water rental (for hydroelectric facilities). 

Demand Charge – $x.xx/kV.A/month
The demand charge is for the facilities and infrastructure that are in place to meet the peak loads on the SaskPower system.  The infrastructure consists of all electrical facilities not described in the Basic Monthly Charge.  For some customer classes, like residential customers, the demand charge is included in the energy charge to simplify metering and billing requirements.  In most billing periods the demand charge is applied to the maximum kV.A registered on the customer’s demand meter.   

The “demand” component of an electrical rate is undoubtedly the least understood by SaskPower customer.  The demand rate is based on the peak demand (or highest amount of power) that a customer has used during a billing period.  SaskPower must build and maintain sufficient facilities (i.e. transformers, power lines, and generating capacity) to meet the peak needs of all of its customers.  Recreational facilities place demands on SaskPower’s system to meet their peak electrical needs whenever they operate significant, power-consuming equipment such as an ice plant.  It is only fair that demand rates be designed to allocate the costs associated with providing the required facilities to those customers creating the peak electrical demand on SaskPower’s infrastructure.  If the appropriate costs are not fully recovered from each customer class other customers will be forced to pay more in order to provide the subsidy. 

All SaskPower rates incorporate a demand component charge whether or not it is shown separately on a bill.  Smaller customers such as residential customers are metered with inexpensive energy only meters.  Although their demands are not metered or billed separately, all associated demand costs are recovered through the energy rate.  Larger customers on the other hand, are metered with demand/energy meters and are billed appropriately with rates designed for the demand and energy components separately.   

SaskPower could design an energy only rate for recreational facilities, however any such rate would incorporate the demand costs within the energy rate (similar to the residential rate noted above).  It has been suggested in the past that recreation facilities not be billed for the demand component of the rate and they be billed only for their energy consumption at existing rates.  Such a practice would result in significant subsidy particularly for larger facilities with high demand while smaller facilities with little or no demand would see no benefit.  In addition to introducing a subsidy contrary to the fair and equitable treatment that SaskPower has been striving to attain for all of its customers, such a rate would not encourage efficient operation of facilities and result in a higher demand on the SaskPower system without corresponding revenue to meet the higher associate costs. 

Currently, SaskPower rates are designed such that there is no charge for the first 50 kV.A of demand per month.  The costs for the first 50 kV.A of demand are included in the first block of energy rate.  Consequently, many smaller recreation facilities are effectively on a flat energy charge per kilowatt-hour under the current rate structure. 

SaskPower receives numerous requests from various interest groups such as rink boards, civic authorities, figure skating clubs, and other with an interest in recreational activities for special treatment with regard to their rates.  The Corporation has cisistently denied these requests on the basis that it is unfair to otyher non-profit, community, or charity minded groups, and also to all classes of customers who must then pay more.  Customer classes who historically have been doing the subsidizing, that is paying more than their fair share, continue to lobby SaskPower, Government officials, and the Saskatchewan Rate Review panel to eliminate the subsidies as quickly as possible.  To this end, SaskPower has made efforts to apply a rate design philosophy under which all customers pay their appropriate share for the services provided.   

While SaskPower recognizes the financial challenges faced by recreational facilities throughout the Province, the electricity rate structure is designed to reflect a fair and balanced approach for all customer classes.  SaskPower encourages its customers to conduct an energy audit to identify cost saving s that can be achieved through the efficient operation of equipment and appliances.