2020-21 SaskEnergy Annual Report

Management’s Discussion and Analysis

Other Expenses SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation and amortization expense, net finance expense and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefit expenses and operating and maintenance expenses are also driven by the Corporation’s investment in facilities, although less directly. As the number of customers increases, and

infrastructure to serve those customers grows, the costs to operate and maintain the system increases. These expenses increase primarily because the amount of work to service and maintain the natural gas system grows as the kilometres of gas lines, number of service connections, and amount of compression equipment increases. Additional regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives, adding pressure to transmission, distribution and storage rates.

Other expenses, net finance expenses and other losses, as reported in the consolidated financial statements, were as follows:

March 31, 2021

March 31, 2020




102 169 117

Employee benefits


96 $


Operating and maintenance





Depreciation and amortization



- -

Saskatchewan taxes


Impairment loss on trade and other receivables


$ $ $

409 $

390 $


55 $

55 $ 21 $


Net finance expenses

3 $


Other losses

Employee Benefits Employee benefit costs were $6 million higher for the 12 months ending March 31, 2021 compared to the same period in the prior year. This was due to filling certain vacant positions in strategic areas of the business as the Corporation continues to focus on meeting current and future business needs. Increasing focus on operational excellence and management of overtime and planned vacancies resulted in a reduction of full-time equivalents in other areas, partially offsetting these increases. Operating and Maintenance Operating and maintenance expenses for the 12 months ending March 31, 2021 were $5 million higher than 2019-20. Higher transportation contracted by the Corporation on TC Energy’s transportation system

increased operating and maintenance expenses by $4 million in 2020-21 compared to 2019-20. Growing demand and increasing natural gas imports from Alberta is resulting in more natural gas being transported, and over greater distances. Rate increases on third-party transportation systems are also increasing transportation expenses. Federal carbon tax payments are $1 million higher in 2020-21 compared to 2019-20 and make up the remaining increase in comparable operating and maintenance expenses. Depreciation and Amortization Balancing safety and system integrity with the demand for service continued through 2020-21. SaskEnergy reduced initial capital investment expectations for 2020-21 to align with reductions in customer demand for growth and system expansion projects. Many customers reduced,


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