SaskPower CEO says $20M worth of carbon capture penalties are in the past
SaskPower touts $1.2 billion investment as it releases its annual financial report
SaskPower's CEO says he does not expect to pay anymore penalties because the company's carbon capture facility at Boundary Dam 3 is operating well.
Last year, SaskPower was forced to pay shortfall penalties of $7.3 million to Cenovus Energy for failing to meet its contractual obligations for delivery of captured CO2 at the $1.5-billion Boundary Dam 3 facility.
It paid the Alberta energy company a $12-million penalty in 2014.
The company made $15.1 million in sales of CO2 to Cenovus in 2015-16.
"The revenues more than offset the shortfall payments," SaskPower CEO Mike Marsh said.
"We don't expect to be paying any shortfall penalties as long as the plant continues to operate."
The power company expects to receive between $15 and $20 million dollars in CO2 sales this year to Cenovus alone if the plant is working at capability. SaskPower could stand to make even more if it can find another buyer for CO2.
"We are now in the process of negotiating with other off-takers for potential second contract for additional CO2 sales," Marsh said.
Marsh said the company expects Boundary Dam 3 to capture its first million tonnes of CO2 sometime in the next few weeks. He said the plant should capture 800,000 tonnes of CO2 in 2016.
SaskPower net income down - rate increases to continue
The province changed its financial reporting period to end on Mar. 31 instead of Dec. 31. SaskPower reported net income of $60 million in 2014-15.
For the 15-month period ending Mar. 31, 2016, the company reported a net income of $26 million.
The power company is investing $1.2 billion this year towards building and improving the province's electrical system.
It expects to continue to invest close to that amount over the next few years.
Customers in the province can expect rate increases to continue as well. SaskPower asked to hike rates twice in six months — by five per cent this July 1 and by another five per cent on Jan. 1, 2017.
"Rate increases are inevitable," Marsh said.
"Next year we may be in a position to have a lower rate increase and possibly not even a rate increase at all in the next fiscal year if we can achieve what we've asked for in this rate application," Marsh said.
SaskPower's CEO said he expects a rate increase in 2018-19 of close to five per cent.