The Saskatchewan government says its natural gas utility will stop collecting the carbon tax from residential customers starting Monday.
The move comes after Prime Minister Justin Trudeau exempted those who use home heating oil from paying the tax, primarily benefiting residents of the Atlantic provinces.
Saskatchewan requested an exemption for all other forms of heating, but Ottawa rejected the request. In response, the province said it would stop collecting these fees in early 2024.
The minister responsible for SaskEnergy, Dustin Duncan, said the deadline to pay the tax to the federal government is the last day of February.
If SaskEnergy does not remit this amount, it would violate federal law and executives could face fines or prison time.
Saskatchewan, however, passed legislation to protect executives from legal consequences, placing this burden on the province.
Mr. Duncan said in December that SaskEnergy had asked the federal government to remove it from its status as a registered natural gas distributor.
He said the company wanted Ottawa to designate the province as distributor instead.
“The sooner we get clarity from the federal government, whether or not they recognize what the bill says and agree to this change in registration, I think that will dictate the next steps for us to make a decision in January (not to remit the tax),” Mr. Duncan said.
The Canadian Press asked the Canada Revenue Agency if it had delisted SaskEnergy.
The agency said in a statement that the Greenhouse Gas Pollution Pricing Act prevents it from discussing the details of specific cases.
SaskEnergy declined interviews on the issue and redirected media inquiries to the provincial government.
Mr. Trudeau said he expects all provinces to follow the law. He also said that fuel oil costs much more than natural gas.
Ottawa also said the carbon pricing system provides rebates, putting more money back in the pockets of most Canadians, and that revenues are returned to the provinces where the charges are collected.
Saskatchewan has argued that the average resident can expect to save $400 next year by not paying the tax.
Also starting this month, Saskatchewan will no longer collect a carbon tax from those who use electricity to heat their homes.
However, the province does not anticipate legal consequences for the decision because it controls the carbon tax that applies to its electricity utility, SaskPower.
Mr. Duncan indicated that SaskPower would deposit into an investment fund what customers paid for these levies.
He said the move will cost SaskPower more than $3 million this year.
“The reason we decided to order SaskPower to keep all of these carbon tax payments is because we don’t want to risk the federal government stepping in and saying ‘you’re not honoring our agreement and, therefore, you take back all of those funds,’” Duncan said.
The Saskatchewan Party government has argued it plans to use money from the fund for emissions-free electricity projects, including a possible small modular nuclear reactor.
Carbon taxes imposed on other large emitters must be deposited into a separate technology fund for projects that reduce, sequester and capture emissions.
Saskatchewan took Ottawa to court over the carbon tax in 2021, but the province lost its challenge when the Supreme Court ruled it was constitutional.