2020-21 SaskEnergy Annual Report

Management’s Discussion and Analysis

long-term debt interest expense, resulting from additional long-term debt used to fund a portion of the current year’s capital investment in the Corporation’s natural gas line infrastructure. Other losses For the 12 months ending March 31, 2021, other losses were $18 million lower than the same period in 2019-20. Other losses through 2020-21 primarily relate to asset disposals, which were partially offset by gains on decommissioning liability adjustments implemented based on a third-party consultant review. Other losses through 2019-20 relate to storage cavern exploratory costs being written off and a permanent impairment loss realized on natural gas inventory.

cancelled or deferred capital investment projects throughout 2020-21 in response to COVID-19 pandemic restrictions and the early year oil price shock experienced worldwide. Strategic capital investments required to ensure the necessary infrastructure is in place to meet current customer demand continued and is resulting in increased depreciation and amortization. For the 12 months ending March 31, 2021, depreciation and amortization was $8 million higher than the same period in 2019-20. Net Finance Expenses Net finance expenses for the 12 months ending March 31, 2021 equaled the same amount for the prior year. Lower short-term debt interest expense, a result of historically low interest rates, was fully offset by higher As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations and debt — which is borrowed through the Province’s General Revenue Fund. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies on it to fund a significant proportion of its investment in its natural gas facilities, and the debt servicing costs on those investments. Long and short-term debt can be borrowed LIQUIDITY AND CAPITAL RESOURCES

through the Province of Saskatchewan to meet any long or short-term incremental capital requirements, and to repay debt as it matures. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans, and a $35 million uncommitted line of credit with the Toronto-Dominion Bank. Under The SaskEnergy Act , the Corporation may borrow up to $2,500 million of debt upon approval of the Lieutenant Governor in Council.

March 31, 2021

March 31, 2020





Cash provided by operating activities Cash used in investing activities Cash provided by financing activities Decrease in cash and cash equivalents


270 $









(1) $

(5) $


Operating Activities Cash provided by operating activities declined $66 million through the 12 months ending March 31, 2021 compared to the same period in 2019-20. Cash flows from operations decreased due to the impact of lower commodity and asset optimization margins, higher employee benefit costs and higher operating and maintenance expenses.

Investing Activities Cash used in investing activities through 2020-21 declined $106 million compared to 2019-20. Capital investment levels declined in 2020-21 due to the deferral of some system expansion projects, which were the result of changing customer requirements. In addition, the prior year included substantial system expansion spending around the City of Saskatoon. Lower capital maintenance


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