The annual increase in the federal government’s charge on carbon pollution will result in higher electric rates for Swift Current residents and businesses.
Swift Current councillors approved a motion at a regular council meeting on Jan. 13 to implement the carbon charge electric rate increase effective Jan. 1.
For residential customers there will be an average increase of 1.5 per cent, which will amount to an average monthly increase of $0.95 for an apartment, $1.82 for an average size home, or $2.63 for a large home. Small, medium and large commercial customers in Swift Current will see an average increase of two per cent on their total annual billing.
“The federal government has announced that they’re increasing the carbon charge,” City General Manager of Infrastructure and Operations Mitch Minken said after the meeting. “This is year two of a five-year plan to continue to increase the carbon charge Jan. 1 each year.”
The price on carbon pollution started at $20 per tonne in 2019 and will increase by $10 a year to $50 per tonne in 2022.
The federal carbon pollution pricing system applies to electricity generation in Saskatchewan and SaskPower is passing the cost of this carbon tax on to all its customers. The Crown corporation will estimate the annual carbon charge recovery rate, based on anticipated emission levels from its operations, and it uses a carbon charge variance account to manage differences between the amount collected from the carbon tax and the actual amount that must be paid to the federal government.
“This is a little different than what you would experience on say gasoline that you would buy at a pump, because this is calculated at the end of the year based on the generation mix that SaskPower uses,” he explained. “If they use more hydro than they would use coal or natural gas, then that would affect the actual charge. So this is what they estimate it will be, and they collect that throughout the year and then balance it out at the end of the year, and if it’s out of balance at that point then they’ll go ahead and readjust in subsequent years to recover or pay back that amount.”
Swift Current Light & Power always matches electric rates with those applied by SaskPower and in turn also passes on the carbon tax increase to Swift Current residents.
“We’re kind of in the same position as SaskPower,” he said. “So they charge us that carbon charge on what we pay them for the electric rates, and then we collect from our customers. Then at the end of the year we’ve got to match those two up to see where we’re sitting, whether we’re good or we’re not. So one way or the other we’ll true-up at the end of the year as well.”
The City wants to ensure the money collected for the carbon tax will remain revenue neutral, but it will only be clear at the end of the year if they are on target.
“If we don’t collect enough, then we’ll be going back to SaskPower and say we need to adjust the mix so that we do end up being in neutral,” he said. “If we collect more than we pay to SaskPower, then obviously those funds will be used for something City-wise. So whether it’s used to fund a capital project or putting into operating costs, it will be used within the city, but those adjustments will happen on an annual basis as SaskPower does their true-up.”
The carbon tax is meant to put a price on pollution that will change consumption patterns, but consumers still pay GST on this emission charge.
“It’s actually a portion of the rate and the decision has been made to show it separately so that customers have the transparency of understanding where that charge is coming from, but because it’s actually part of the rate, it is subject to GST tax as well,” Minken said.
Until now the carbon tax has not been indicated separately on Swift Current utility bills, but the City is implementing a new online utility billing portal that will show carbon charges.
“Our previous utility billing software didn’t have the ability to show that as a separate amount,” he said. “In our new system, as it’s rolling out here over the next little while, that is going to be shown as a separate amount on the utility bill.”
The federal government's climate action plan includes carbon pricing rebates to residents in four provinces, including Saskatchewan. These climate action incentive payment amounts for 2020 can be claimed through the 2019 personal income tax returns.