refunded is estimated and recorded in deferred revenue until the eligible refund period expires or a refund is earned by the customer. Customer capital contribution revenue for three months ending June 30, 2018 approximated contributions received in June, 2017.
SaskEnergy Incorporated First Quarter Report
March 31, 2011
Other Revenue
Other revenue primarily consists of gas processing fees and natural gas liquid sales from two natural gas liquid extraction plants. Compression and gathering service revenue comprise the remaining balance of other revenue. Other revenue of $2 million equaled revenues for the same quarter in the prior year.
Other Expenses and Net Finance Expense
June 30
(millions)
2018
2017 Change
Employee benefits
$
22 32 25
$
21 35 24
$
1
Operating and maintenance Depreciation and amortization
(3)
1 1
Saskatchewan taxes
3
2
Other Expenses
$
82
$
82
$
-
Net finance expense
$
12
$
12
$
-
Other gains (losses)
$
-
$
(6)
$
6
Expenditures on safety and integrity initiatives, strong customer growth, and the need to import more natural gas from Alberta as Saskatchewan natural gas production declines are key factors contributing to rising cost pressures. Employee benefits expense of $22 million for the three months ending June 30, 2018 were $1 million higher than the same period in 2017, a result of lower allocations to capital in 2018. The Corporation continues to manage vacant positions and overtime costs through productivity and efficiency initiatives. Operating and maintenance expense of $32 million are $3 million lower than the same period in 2017, due continued cost management initiatives, partially offset by rising third party transportation costs as additional cross border transportation pipeline capacity is required to import gas from Alberta. Depreciation and amortization of $25 million for the three months ending June 30, 2018 slightly increased above prior year as capital additions increase the asset base.
Net finance expenses equaled the same period in 2017. During the three months ending June 30, 2018, SaskEnergy issued $101 million of long term debt which was used to fund capital asset requirements and reduce short term debt balances.
Other gains (losses) through the three months ending June 30, 2018 were zero compared to a $6 million loss the same period in 2017. The prior year loss is related to impairments on storage and processing assets.
LIQUIDITY AND CAPITAL RESOURCES
Three months ended June 30
(millions)
2018
2017 Change
Cash provided by operating activities Cash used in investing activities Cash provided by financing activities
$
59
$
73
$
(14)
(38) (18)
(37) (35)
(1)
17
Increase (decrease) in cash and cash equivalents
$
3
$
1
$
2
As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations, debt – which is borrowed through the Province’s General Revenue Fund – and equity advances from CIC, the Province’s crown corporation holding company. Equity advances are rarely used to finance Crown corporations as CIC prefers to use its Subsidiary Crown Dividend Policy to manage its equity interests in its commercial enterprises. Cash provided from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies upon it to fund dividends, debt servicing costs, and a significant proportion of its investment in pipeline facilities. Long- and short-term debt can be borrowed 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. By borrowing through the Province, SaskEnergy has
8
2018-19 FIRST QUARTER REPORT
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