Saskatchewan government says tax agency recognizes it as sole distributor of natural gas

The Canada Revenue Agency (CRA) has agreed to a request from the Saskatchewan government, naming the government as the province's natural gas distributor rather than SaskEnergy, a provincial Crown Corporation.

The decision comes as Saskatchewan continues to resist the Greenhouse Gas Pollution Pricing Act (GGPPA), a federal law that requires the collection of the federal carbon tax.

Not decision yet on handing over carbon tax money

Sam Sasse, a spokesperson for the Government of Saskatchewan, said the province has not yet decided whether it will remit the carbon tax charges for the month of January.

Those payments are due later this month.

A request for a comment from the Canada Revenue Agency was not immediately returned on Tuesday.

Dustin Duncan, Saskatchewan's minister responsible for Crown corporations, including SaskEnergy, has been the chief spokesman lately in the government's carbon tax scrap with Ottawa. (Michael Bell/The Canadian Press)

The CRA decision is the latest update in a dispute that began when Ottawa decided to pause the carbon tax on home heating oil. The Saskatchewan government said it believed the decision to not similarly exempt natural gas was unfair.

Under the federal government's Greenhouse Gas Pollution Pricing Act, a corporation registered as a distributor is required to remit the carbon tax it collects.

If it fails to do so, the corporation could face steep fines and executives could potentially face jail time.

Until now, SaskEnergy was registered with the federal government as the province's sole distributor of natural gas.

Last year, the provincial government passed legislation that it said designated the province as the sole distributor.

However, it still required the federal government to agree to register the province.

On Tuesday, Sasse said the province had received confirmation SaskEnergy had been deregistered under the GGPPA and that the provincial government would be registered instead.

Sasse said the changes are made in accordance with the legislation passed by the province in last year.

The statement stunned University of Alberta economics and law professor Andrew Leach, who said he's interested to hear how the federal government responds and how the CRA authorized the change.

"As far as I can tell the federal legislation prohibits both of those actions," Leach said of SaskEnergy being deregistered and Saskatchewan filling its role.

"If you actually distribute natural gas by means of a distribution system — if you measure it and bill consumers for it — you are required to be registered."

To his knowledge, SaskEnergy still distributes natural gas in the province, he said.

Leach spoke under the caveat that he's not sure how the legislation could be given the green light, given it appears to circumvent the law, and isn't aware of the federal government's explanation of the change.

"Doing that and saying, 'We're going to, as the federal government, just sort of be fine with a provincial government overriding federal law — in fact, what we'll do is we'll just ignore the federal law ourselves,' to me seems like an absolutely terrible road to go down," he said.

Minister refers to 'carbon jail'

Dustin Duncan, the minister responsible for SaskEnergy, has previously said he's willing to go to "carbon jail" for not remitting the tax.

The province would be responsible for paying fines, he added.

A request for a comment from the office of federal Environment Minister Steven Guilbeault was not immediately returned.

Last year, SaskEnergy remitted $172 million in carbon tax to the federal government.