A Cost of Service Methodology (COS) helps us make sure all rates to customers are fair. This means that we provide power to our customers to earn an equal return on the service.
Our COS methodology goes through an separate consultant, Elenchus. Every 5 years they review our methodology. This is to make sure it’s fair and follows industry standards.
Learn how we figure out the COS Methodology here.
Our COS methodology went through an independent review by a consultant, Elenchus. The review happens every five years to ensure our methodology is reasonable and follows industry standards whenever appropriate.
Download the final Elenchus report.
See our reply to the final report.
Questions and answers about the
review and report.
How the review process
- February 8, 2017: The 2017 COS methodology review kickoff meeting presentation.
- March 30, 2017: Review of SaskPower’s Cost Allocation and Rate Design Methodologies – Progress Report
- May 15, 2017: The 2017 COS Methodology Review Draft Report Presentation.
- More presentation slides
- May 15, 2017: Cost of Service Methodology Review Draft Report Presentation (audio) *audio starts on slide 22
1. Review, in cooperation with SaskPower staff, SaskPower’s existing rate design methodology including the development of ideal cost based demand, energy, and customer rates and minimum charges for each rate code.
2. Identify the main functionalization, classification and allocation methodologies used by utilities in Canada and the United States for cost of service modeling. Prepare for each method a written summary of the relevant advantages and disadvantages.
3. Prepare and implement a survey of the functionalization, classification and allocation methodologies currently in use by Canadian and U.S electric utilities. The survey should include the functionalization, classification and allocation results in percentages (minimum of 7 Canadian utilities contacted).
4. As requested by the Saskatchewan Rate Review Panel, specifically review the following items:
4.1- The calculations associated with the Equivalent Peaker Method, which is the methodology employed by SaskPower to classify its generation rate base and expense to demand and energy related components.
4.2- The calculation of the minimum system method to classify distribution lines and transformers.
4.3- The implications of any class consolidation that SaskPower may consider reasonable to propose.
4.4- Whether the Winter/Summer (2CP) allocation method continues to be reasonable for demand-related costs functionalized as generation, transmission and distribution and verification of the data inputs used to determine overall customer class demand allocation.
4.5- The calculation of class coincident peaks and non-coincident peaks, including the appropriate number of historic years of data and number of peaks to include.
4.6- The functionalization and classification of overhead costs.
4.7- Documentation and explanation on how the demand response program affects participating customer class historical peak demand used as input data for cost allocation and any resulting adjustments in the cost of service study.
5. In person in Regina, Saskatchewan, provide a preliminary update of the review to SaskPower, the Saskatchewan Rate Review Panel and interested stakeholders.
6. Prepare and file a draft report to SaskPower, which includes an overall assessment of SaskPower’s cost of service methodology and specific recommendations, if any, on how the Corporation can improve its methodologies. The consultant’s report should include:
6.1- A review and assessment of SaskPower's existing cost of service methodology.
6.2- The Survey results of the functionalization, classification and allocation methodologies currently in use by Canadian and U.S electric utilities as well as the functionalization, classification and allocation results in percentages (minimum 7 Canadian utilities contacted).
6.3- A verification of whether or not the current methodology is consistent with accepted electric power utility practices and is appropriate for SaskPower’s system characteristics.
6.4- A proposal, if required, for the enhancement of SaskPower’s cost of service methodology including the reasons for the changes.
7. Present the draft report and its findings to the Saskatchewan Rate Review Panel and stakeholders at a public meeting in Regina, Saskatchewan. At the meeting, the Consultant will explain the review process; describe SaskPower’s basic system and current cost of service methodology and the results from the draft report. The Consultant will respond to questions directly, as well as invite stakeholders to submit written questions.
8. Respond to all stakeholder questions in writing. Stakeholders will be invited to prepare written submissions to the Consultant on the draft report.
9. Following a review of all stakeholder input, the Consultant will finalize the report and provide an electronic copy of the final report to SaskPower by June 30, 2017. The Consultant will include in the final report responses to the written questions and submissions provided by stakeholders.
Elenchus Research Associates, Inc. was founded in 1980 by John Todd. Elenchus is a leading Canadian consulting firm respected for its expertise and experience in economic regulation, focusing on the energy sector. The firm’s clients include regulators, government agencies, electricity and natural gas utilities, and other stakeholders, including competitors and customer groups. It services include monitoring, reporting and development of regulatory strategy. Associates of the firm include experienced utility and industry individuals as well as former regulators.In addition to conducting the current review of SaskPower’s cost of service and rate design methodology, the Elenchus team for this project is engaged in or has recently completed similar work in British Columbia, Manitoba, Ontario and New Brunswick.
John Todd, President of Elenchus, has specialized in government regulation for over 35 years, addressing issues related to price regulation and deregulation, market restructuring to facilitate effective competition, and regulatory methodology. John has assisted counsel in over 250 regulatory proceedings and other litigation. He provided expert evidence in about one-half of those processes. Cost of service and rate design issues have been the primary focus of his work since 1990.
Michael has been an Associate Consultant at Elenchus since 2010. He has over 35 years of experience in the electricity industry dealing in areas of finance, cost allocation, rate design and the regulatory environment. Michael has been an expert witness at numerous Ontario Energy Board proceedings and has participated in task forces dealing with his areas of expertise.