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Council presses on with cost-saving natgas contract

Aug 13, 2013 | 12:49 PM

Despite a last-minute effort by the company currently supplying the City of Prince Albert’s natural gas to win a contract extension, council voted to move ahead with a one-year fixed agreement the executive committee recommended approving.

On Friday, Connect offered to provide the city’s natural gas at a rate lower than what France Financial (Twin Eagle) – the company Prince Albert will soon get its natural gas from – has offered. A one-year fixed contract with Connect under those terms would have yielded an additional savings of $38,000 on top of the $403,000 the city will save by switching to France Financial.

But council voted to stick with the deal that the executive committee had already forwarded last week. Prince Albert is nearing the end of a five-year contract with Connect to supply it with natural gas, and had until Sept. 1 to tell SaskEnergy which supplier would be providing the city with natural gas through the SaskEnergy-owned lines.

“We did do a process,” Mayor Greg Dionne said on Monday. “Unfortunately, this one came in too late, and we have a savings of over $400,000 and it’s a one-year agreement.”

He suggested that Connect could watch for the request for offers for the natural gas supply contract next year and submit a proposal.

However, the city will pay France Financial $0.1425 per cubic metre for its natural gas under the fixed-rate agreement.

Coun. Rick Orr agreed that right now agreeing to a fixed rate for the natural gas is the way to go – if you want to go with a variable rate, you play the market, he said. “We’re saying, we’re better off going short and going with a fixed, because then we know what our costs are for the year.”

But as the city will save on the natural gas it purchases, it will see additional funds flow out of its pocket for the transmission of the gas.

Earlier on Monday, Saskatchewan’s Rate Review Panel has agreed to let SaskEnergy hike the rates for transmitting natural gas through its lines by 3.5 per cent. The city will have to pay SaskEnergy the charge for using the lines.

“SaskEnergy sets the delivery charge, the transmission charge, which we end up paying regardless of who we purchase the actual natural gas from,” director of finance Joe Day said.

The supply agreement with France Financial begins on Nov. 1 and runs until next October.

tjames@panow.com

On Twitter: @thiajames