Management’s Discussion and Analysis
SaskEnergy is committed to the long-term sustainability of the Corporation, measured through its debt-to-equity ratio, and its regulated return on equity on both the distribution and transmission divisions. Achieving a greener energy future is also a high priority. FINANCIAL
March 31, 2020 Actual
March 31, 2021 Actual
March 31, 2021 Target
March 31, 2022 Target
March 31, 2023 Target
March 31, 2024 Target
March 31, 2025 Target
March 31, 2026 Target
Financial Strategic Measures
58/42
Debt/Equity Ratio
58/42
61/39 59/41 59/41 59/41
58/42 56/44
Regulated Return on Equity - Distribution
N/A
N/A
N/A
7.4% 8.3% 8.3% 8.3% 8.3%
Regulated Return on Equity - Transmission/Storage
N/A
N/A
N/A
6.3% 8.57% 8.57% 8.57% 8.57%
Investment in Green Initiatives ($millions)
N/A
N/A
N/A
$4
$5
$6
$6
$6
Financial Strength SaskEnergy preserves an adequate capital structure while providing reasonable financial returns to its holding company, CIC, and competitive rates to customers. The Corporation balances the interests of both CIC and its customers while focusing on annual profitability and efficient operations with a long-term view on financial sustainability. SaskEnergy’s financial performance in 2020-21 reflected its proven commitment to safely deliver natural gas to its customers in Saskatchewan. Weather was two per cent colder than normal, resulting in higher delivery revenue that was partly offset by anticipated rate increases that did not occur as planned. SaskEnergy completed two large customer projects during 2020-21, which resulted in higher than expected customer capital contributions. Industrial customer demand was impacted by the collapse in global oil prices early in the year, which led to lower than planned transportation and storage revenue, partially offsetting the favourable revenue variances. The collapse in global oil prices, along with the COVID-19 pandemic, negatively impacted SaskEnergy’s customers and created uncertainty around how financial results would be affected. In response, SaskEnergy re-organized its resources to focus efforts on essential core work, dedicating employees to this work and reducing the number of embedded contractors. Vacant positions were
also managed to align resources with core work. These two actions resulted in significant savings in both employee obligations and contract and consulting services. In addition, savings were realized in travel-related expenses due to the restrictions on travel outside and within the province. In addition to operating expense reductions, SaskEnergy reduced its capital program by approximately 40 per cent to align to customer demand. This resulted in lower actual depreciation and interest costs than were budgeted assuming the higher capital outlay. SaskEnergy’s net income before unrealized market value adjustments was $59 million in 2020-21, which was $7 million lower than the $66 million realized in the previous year. This resulted in a consolidated debt-to-equity ratio of 58 per cent debt and 42 per cent equity at March 31, 2021, which is within the target range of 58 to 63 per cent debt. Three new measures are being introduced in 2021-22. The Regulated Return on Equity for both distribution and transmission and storage is a measure that better aligns with industry, providing more comparable results. The measure for Investment in Green Initiatives demonstrates SaskEnergy’s commitment to a greener energy future.
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