LINGENFELTER REPORTS TO LEGISLATURE ON SASKPOWER'S CHANNEL LAKE INVESTMENT

Deputy Premier and Crown Investments Corporation Minister Dwain

Lingenfelter presented a report to the Legislature today regarding

SaskPower's investment in Channel Lake Petroleum Ltd.



"This government is extremely disappointed by these events,"

Lingenfelter told the House. "We deserve our share of criticism for

letting this happen. We ordered a detailed review. We have made that

review public. We are acting to ensure events like this don't happen

again."



Lingenfelter reported on a review by CIC of the management and sale of

Channel Lake. The key findings include:



The original mandate for Channel Lake was to provide security of

supply and predictability of price for SaskPower's natural gas

purchases;



As a result of the insolvency of two companies it was dealing

with, Channel Lake incurred significant gas trading losses;



The losses were not brought to the attention of the SaskPower

Board in a clear manner. A recommendation by SaskPower

management to sell Channel Lake appears to be linked directly

with the question of disclosing trading losses;



Under time pressure, the sale of Channel Lake was conducted in an

informal and ad hoc manner;



Under time pressure, the final sale agreement was signed

without being read or understood and the final sale price

was lower than the Board of SaskPower authorized;



SaskPower management tried to remedy their mistake; the

employment of the Channel Lake official responsible for the

sale negotiations was terminated; an attempt was made to

cancel the sales agreement; legal counsel was sought and an

internal audit was conducted;



SaskPower management ultimately recommended to the Board of

SaskPower that it approve the final sale at the lower price,

on the argument that it was still a good deal. The Board

accepted the advice of its officials.



Lingenfelter told the House that according to a report prepared

by Deloitte and Touche pending final reconciliations

SaskPower realized an overall net return of about $2 million from

its operation of Channel Lake.



"The taxpayers therefore suffered no direct loss, as far as we

can see today," Lingenfelter said.



Lingenfelter announced a number of actions the government is

taking to address the problems found in the Channel Lake review.

These include:



Tightening up oversight and control of Crown corporation

subsidiaries;



Adding new skills and industry expertise to Crown

corporation boards;



Providing the information to the Provincial Auditor, who

will be reviewing the operations and sale of Channel Lake in

the normal course of his duties;



Making SaskPower and CIC officials available to the Public

Accounts and Crown Corporations Committees of the

Legislature to answer questions arising from the review.



"SaskPower is in good shape today and has made dramatic

improvements since 1992," Lingenfelter said. "It will continue

to do better by building on its considerable strengths. These

include the corporation's employees, its success in controlling

costs, its shrinking debt and its preparations for competition in

the electricity market.



"Our power company's number one job is and always will be

providing safe, reliable power to people in all parts of

Saskatchewan at the lowest possible price."



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For more information, contact:



Ted Boyle

Crown Investments Corporation

Regina

Phone: (306) 787-9039