2020-21 SaskEnergy Annual Report

Management’s Discussion and Analysis

Operational Excellence

SaskEnergy provides price protection for its distribution customers through the practice of hedging natural gas purchases. As a result, customers typically pay higher costs for natural gas but are not subject to the volatility of market prices. Unplanned Distribution Customer Outages Events are unplanned outages that arise from activities such as third-party damage (line hits), operator error, facilities failure and security issues. During 2020-21, there were a total of 33 reported outages, which is below the target of 49 outages for the year. Greener Energy Provider SaskEnergy continues to concentrate on environmental sustainability throughout its operations by measuring the intensity of greenhouse gas (GHG) emissions relative to the amount of compression used to transport natural gas. This measure is calculated using a cumulative average at the end of each quarter. In 2020-21, SaskEnergy introduced a revised environmental success measure. This measure continues to focus on the intensity of GHG emissions per unit of compression, as in previous years, but was modified to reflect the federal emissions metric created by Environment and Climate Change Canada for the transmission industry under the federal Output Based Pricing System (OBPS). The metric is mainly influenced by fuel combustion and flaring, and will fluctuate throughout the year based on operational requirements.

In alignment with the Crown Sector Priority of financial stability, and with a continued emphasis on operational efficiency, SaskEnergy is committed to the cost-effective delivery of natural gas services to its customers. This will be accomplished through operational excellence in daily operations, capital expenditures and effective resourcing. Distribution Operating and Maintenance Costs per Customer were better than target in 2020-21. Customer growth was higher than target, with 3,001 net new customers compared to the 2,300 that were anticipated. Efficiency initiatives and vacancy management also contributed to SaskEnergy exceeding the efficiency target by year end. Major projects that focus on customer service and technological efficiencies were completed during the year. Transmission Operating and Maintenance Costs per Book Value of Assets Managed is slightly higher than target. Cost savings were achieved through continued focus on efficiencies and vacancy management; however, lower capital additions resulted in the net book value of property, plant and equipment and intangible assets being lower than planned. SaskEnergy achieved its goal of having competitive residential delivery rates with the major utilities across Canada. A typical residential customer in Regina paid $556 for delivery service in 2020-21, which is the third-lowest rate in Canada. Hamilton, Ontario remains the lowest with a rate of $432 for a typical customer. SaskEnergy also had the third-lowest total residential natural gas utility rate (delivery and commodity combined) in Canada.


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