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April 17, 2003 - High market prices trigger rate increase request


April 17, 2003

High market prices trigger rate increase request

Today, SaskEnergy became the last major Canadian natural gas utility to respond to high prices in the natural gas market, filing a request before the Saskatchewan Rate Review Panel for a 22 percent increase for the average residential consumer.

With an implementation date of May 1, 2003, average residential consumers would pay an increase of approximately $19 a month on their natural gas bills. The changes will help the Corporation recover an expected $71 million deficit in its Gas Cost Variance Account (GCVA), accumulated over the winter months when its prices for natural gas were more than what SaskEnergy was charging customers.

As per the normal commodity rate process in other provinces, the increase will be implemented May 1, with pending review by the SKRRP. After the Panel files its report with the Province, the Government can choose to confirm the new rate or amend it accordingly.

"A rate increase is always the last alternative, not the first," said Ron Clark, President and Chief Executive Officer of SaskEnergy. "While other utilities in B.C., Alberta and Manitoba were increasing their rates through the heart of the winter, we tried to protect consumers, hoping that prices on the open market would moderate and reduce the deficit in the GCVA. In fact, during November and December, prices were stable and SaskEnergy's GCVA deficit did decrease.

"Unfortunately, with the bitterly cold weather in January, February and early March, prices spiked above the $10/Gigajoule (GJ) level, and it ultimately became clear we would have to adjust rates."

Like other Canadian utilities, SaskEnergy does not profit from the physical sale of gas. The increase will recover the costs of gas already paid for as well as be reflective of future market prices. SaskEnergy's internal costs, reflected by its delivery charge, will not change. There has been only one increase to these charges in the last 10 years.

"In addition to holding the line on our internal costs, we are also continuing to stress conservation and the upgrade to newer, more efficient natural gas equipment, through initiatives such as the Prime Rate Loan Program."

SaskEnergy's last rate change, a 10% average reduction, occurred in November 2001.

Customers with specific questions about how this change may impact their bills can call SaskEnergy's customer service offices at 1-800-567-8899 or visit the rates section of the SaskEnergy web.

For further information, please call:

Ken From
Vice President, Gas Supply
SaskEnergy
Regina
(306) 777-9366