On interventions

Naturally, yesterday's revelations about how the Sask Party may have driven up energy bills through political interference in SaskEnergy can't pass without comment. But it's far too soon to say for sure exactly what may or may not have happened in terms of Sask Party intervention. So let's stick to two points which would seem to be beyond dispute: first, the decision which was actually made by SaskEnergy, and second, Dwain Lingenfelter's choice to make the issue public.

Here's what apparently happened with SaskEnergy's supply contracts:

Lingenfelter said the Crown corporation’s decision to lock in a majority of its gas supply last summer when natural gas prices were at an historic high had cost ratepayers $55 million in comparison to spot prices as natural gas costs have tumbled.

And the former deputy premier alleged that the move was made against the advice of SaskEnergy officials at the behest of Crown Investments Corp. (CIC) vice-president Iain Harry, a former communications director of the Saskatchewan Party Opposition and former special adviser to Wall as premier.
...
SaskEnergy rates of $8.51 a gigajoule since Oct. 1 have been generally higher than the market price for natural gas — currently around $4.50 a gigajoule — but Cheveldayoff said that was a circumstance of timing.

“What happened last year was that we had very high prices in the middle of summer. SaskEnergy traditionally hedges in the middle of summer and it was looking like prices would continue to rise at that time,” said Cheveldayoff...

What stands out to me about SaskEnergy's decision isn't the question of whether there was any political interference in the actual hedging, but instead the fact that it relies on a complete disconnect between SaskEnergy's interests and those of the province.

After all, it's well known that increased oil and gas prices had boosted the province's coffers to the point where Wall and his party didn't even know what to do with all the money at their disposal. So it would seem to have been a relatively easy matter for the province to coordinate with SaskEnergy to ensure that increases in market prices didn't have to be passed along to Saskatchewan residents who couldn't afford them.

But then, keeping utility rates affordable is apparently seen as part of the NDP's brand rather than the Sask Party's. Which means that SaskEnergy instead saw a need to enter into a hedging transaction which led to a twisted set of risks and rewards for the province at large.

If prices had indeed kept going up, then the hedging would have provided a benefit at the least useful time possible, adding more money to the pile which the Sask Party still hadn't figured out how to deal with. But instead, the precipitous drop in prices meant that SaskEnergy took a loss from the hedging transaction just as Saskatchewan's economy slowed down and the provincial balance sheet started to look precarious again.

In other words, while the early purchases may have been seen as mitigating risks within SaskEnergy as a distinct entity, they also served as a risk amplifier for the province as a whole. And the fact that Saskatchewan citizens are seeing the downside of that move should offer a reminder of the dangers of a view that detaches our Crowns from the best interests of the province generally.

Turning to how Lingenfelter's announcement will affect the leadership race, I'd draw two main points from the intervention - one a significant positive, the other less so.

On the plus side, Lingenfelter is apparently avoiding the usual front-runner's trap of simply trying to keep his head down and coast to the finish line. Instead, he seems to be entirely willing to take some political risks - which in turn should make the race more lively and more likely to find its way into the public consciousness.

The flip side, though, is that it may be a concern that Lingenfelter's first major public presentation since his competitors entered the race was aimed at criticizing procedure by the Wall government, rather than drawing any principled lines in either the leadership race or the wider political scene. While there can't be much doubt that all of the contestants will get their shots in at the Sask Party, the NDP ultimately needs more of a unifying vision than "tear down that Wall" - and if Lingenfelter plans to focus his efforts in the leadership race on opposition rather than party development, that figures to hurt both his chances in the race and the party's chances of renewal.

(Edit: fixed typo.)