The Frontier Centre for Public Policy, an independent research institute based in Winnipeg, Manitoba, released today an independent valuation of the potential market value of SaskPower, the provincial Crown electric power utility owned by the citizens and taxpayers of the province of Saskatchewan, based in Regina. The report is authored by Ian Madsen.
Using established financial analysis methods, the valuation study used two different, complementary and nonconflicting methods to estimate the value of SaskPower at this time, were its common equity or shares to be publicly listed.
The analysis found that the firm’s current potential public listing value could be between $2.35 – 2.62 Billion. The lower figure in the range is based on the valuation of similar Canadian and U.S. firms applied to SaskPower. The higher figure was derived from a proprietary financial (DCF) model.
SaskPower and other utilities face major uncertainty as the power and energy sectors face unprecedented change and disruptive technology, such as the shale revolution, distributed (customer-generated) power, and cross-jurisdictional competition. The risks include an actual reduction in net worth of the company, and an increasing debt burden to pay for continuing capital expansion plans.
The possible sale of SaskPower is not imminent, but the Frontier Centre’s analysis is intended to determine what the potential value of the assets of SaskPower is. “Armed with this information, citizens and taxpayers can make better decisions whether to retain ownership of Crown corporations and other assets, with all the risks that may be entailed; or, to use sale proceeds to lower taxpayers’ debt burden and debt servicing costs, or for needed public services or infrastructure improvement or expansion,” said Madsen.
View the full study here: http://archive.fcpp.org/posts/valuation-analysis-of-saskpower