Saskatchewan Cites Energy Security in $900M Coal Refurbishment

Saskatchewan is pressing ahead with its plan to keep burning coal for electricity, committing $900 million over four years to refurbish its coal-fired power plants in the face of a projected $349-million budget deficit.

The province considered energy security, reliability, and affordability before deciding to extend the life of its three coal-fired power plants, but energy security was the main driver, Minister Jeremy Harrison told the Globe and Mail. More than 90% of the province’s natural gas is imported from Alberta and the U.S., he said.

“We know where the coal is. We know that we have it and we own it.”

Saskatchewan’s plan to extend coal goes against regulations introduced in 2018 by the Trudeau government to phase out coal-fired electricity across Canada by 2030. In 2019, Saskatchewan negotiated an agreement with Ottawa to pause federal rules and gain latitude for achieving the same emissions outcomes in its own way. Now, the province says coal will serve as a bridge to nuclear generation, promising to bring its grid emissions to net-zero by 2050.

Other options, like building new gas-fired power plants, would cost about twice as much as coal refurbishment to produce the same amount of electricity, provincial utility SaskPower said.

But the $900-million coal expense comes amid a $349-million budget deficit, with the actual shortfall possibly twice as much, according to CKOM News. That’s because the province’s balance sheet includes $467 million in revenue from the “Output-Based Performance Standards,” its own industrial carbon tax as mandated by the federal government, which it no longer collects.

Premier Scott Moe announced in March that the province would stop collecting the levy, calling Saskatchewan the first province in Canada to be “carbon tax free.” Ratepayers had previously been charged the tax on their electricity bills.

Saskatchewan’s finance ministry told CKOM it continued to forecast revenue from the tax due to an accounting requirement till the program is formally repealed.

In its first-quarter statement, the province reported a $163-million decrease in SaskPower’s net income due to abandoning the carbon levy. CKOM reports the ministry said it was absorbing the cost of the industrial tax.

Saskatchewan had originally announced an expected $12-million surplus, but then revised to a $349-million deficit after the first-quarter numbers were crunched, reports to the Saskatoon StarPhoenix.

Harrison said the budget of nearly a billion dollars would cover the “vast majority of the capital needed to keep the coal plants producing power.”

Clean energy advocates say the province lacks an estimate of the actual cost to refurbish the plants.

“These plants had been scheduled to shut down permanently for many years, which normally means that maintenance is allowed to drop off,” Glenn Wright, a lawyer representing three residents of Saskatchewan and Manitoba who’ve asked for a judicial review of the coal decision, told The Energy Mix. “I would not be surprised at all if there would be cost overruns on the refurbishment because the condition of the plants has been allowed to deteriorate, since they were planned to be permanently shuttered.”

Wright also suggested the full cost of the project would only be understood if the province had a price on pollution. “Without making polluters pay, then the social costs of pollution are also ignored,” he said, calling for clean energy to replace fossil sources.

A group of atmospheric scientists is backing the legal action, warning in a formal statement that the decision to prolong coal in Saskatchewan could have dire economic and environmental consequences.

“We’re used to a fairly stable climate over the last hundred years or so and if we’re going to be wandering significantly away from that, that could have significant consequences for our ability to grow crops and to farm the types of crops that we’ve been used to doing here on the prairies,” Ron Hopkinson, a retired meteorologist with more than 50 years of experience, told Discover Weyburn.

Hopkinson spoke to the news outlet on behalf of the scientists, who are calling for increased use of solar and wind energy instead of spending money to keep coal plants running.

“This is not about being anti-development,” he told Discover Humboldt. “It’s about making development sustainable—because we’re all going to live with the consequences.”

Julie Dabrusin, the federal minister of environment and climate change, issued a statement on LinkedIn about Saskatchewan’s coal reversal, reiterating that “phasing out coal is essential” and a “key step in building a climate competitive economy.”

Warning that Saskatchewan’s equivalency agreement with Ottawa expires at the end of 2026, she said the federal government would continue to work with provinces and territories to ensure that all legal requirements and climate commitments are met.

Cover photo:  Regina Saskatchewan Legislature Building across Wascana Lake