Volume 13, Number 14  March 24, 2006

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Mild temperatures mean big savings on the heating bill

In addition to making life a bit easier for everyone, this year’s mild winter temperatures have also saved the University money on its heating bill.

Heat Plant

The University has under spent on its natural gas budget by about $400,000 so far this year, even though gas prices have jumped significantly recently.  That increase was so large, in fact, that the University amended its 2005-06 natural gas cost projection upward prior to submitting its Operations Forecast to the provincial government late last year, said Laura Kennedy, associate vice-president of Financial Services.

“It was a fairly significant increase,” said Kennedy, “and the picture would have been much worse had we had a normal winter.”

And although the weather has had a bearing on the heating budget’s bottom line, so has the University’s success at buying its natural gas on the futures market.  Paul Becker, associate vice-president of Facilities Management, explained that the U of S uses a consultant in Calgary who provides daily reports on natural gas prices.  When it is advantageous, the University can lock in some or all of its requirements at a fixed price using futures contracts. This is one way, said Becker, “to make maximum use of the public’s money.”

Over the past eight years, the University has done very well with this system.  Speaking on March 10, Becker said the price the U of S was paying for natural gas was about half what it was on the New York market that morning.

“Heating costs come straight out of the operating budget,” he said, “so over-budgeting has a huge impact on the University.  What we try to do is avoid the peaks and valleys.  Of course, we could guess wrong when we buy (gas) contracts but we’ve very cautious, very conservative, very careful, and we’ve done extremely well over the past five to eight years.”

The University is one of Saskatchewan’s largest institutional consumers of natural gas, burning about one million gigajoules per year.

Provost Michael Atkinson said the unspent portion of the heating budget will be used “to help meet the budgetary challenges of 05-06”.  Surprises are not necessarily welcome in the budget process, “but this is a good kind of surprise.”

For more information, contact communications.office@usask.ca

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