SaskEnergy recently announced that its price for natural gas for residential customers has decreased by 16 per cent and its monthly basic charge has increased by 6.7 per cent resulting in the average annual bill dropping by $50. Is this good news? Not necessarily.
Under the SaskEnergy rate structure, the monthly service charge is about 47 per cent of the average residential bill. No matter how much you cut back on your energy use, those monthly charges will not be reduced. The increased reliance by SaskPower and SaskEnergy on monthly service charges is a disincentive to energy conservation.
A high efficiency furnace that reduces total household gas consumption by 40 per cent does not yield a 40 per cent reduction in your SaskEnergy bill but rather it yields only a 21 per cent reduction. Expressed another way, the payback period doubles for that high efficiency furnace or for any other residential energy efficiency project.
Another way to describe the inequity of the monthly service charge is to consider the cost per unit of energy consumed. I have a friend whose energy efficiency improvements to his home dropped his annual electrical consumption from 9,320 kilowatt-hours (kWh) to 4,822.5 kWh, a reduction of 48.3 per cent. However, based on 2010 rates, his electrical bill only dropped from $1,243.68 to $805.87, a reduction of 35.2 per cent.
Most importantly, his cost per kWh consumed rose from $0.1334/kWh to $0.1671/kWh. Because of monthly service charges, the more energy efficient you make your home, the higher the per-unit cost of the energy you consume.
To encourage conservation, SaskPower and SaskEnergy should rely less on monthly service charges and put more emphasis on charging for actual energy consumption.
Prince Albert, Sask.